Part 27

7. Germany will issue one hundred milliards of gold marks of bearer bonds, and afterwards all such issues as the Reparations Commission shall demand, until the amount of the debt be reached in order to permit the stabilization of credit.

8. The payments will be made in money and in kind. The payments in kind will be made in coal, live stock, chemical products, ships, machines, furniture, etc. The payments in specie consist of metal money, of Germany's credits, public and private, abroad, and of a first charge on all the effects and resources of the Empire and the German States.

9. The Reparations Commission, charged with seeing to the execution of this clause, shall have powers of control and decision. It will be a commission for Germany's debt with wider powers. Called upon to decide, according to equity, justice and good faith, without being bound by any codex or special legislation, it has obtained from Germany an irrevocable recognition of its authority. Its duty is to supervise until the extinction of the debt Germany's situation, her financial operations, her effects, her capacity for production, her provisioning, her production. This commission must decide what Germany can pay each year, and must see that her payments, added to the budget, fall upon her taxpayers at least to the extent of the allied country most heavily taxed. Its decisions shall be carried out immediately and receive immediate application, without any other formality. The commission can effect all the changes deemed necessary in the German laws and regulations, as well as all the sanctions, whether of a financial, economic or military nature arising from established violations of the clauses put under its control. And Germany is obliged not to consider these "sanctions" as hostile acts.

In order to guarantee the payments an inter-allied army--in reality a Franco-Belgian army--occupies the left bank of the Rhine, and is stationed at the bridgeheads. Germany is completely helpless, and has lost all the features of a sovereign State inasmuch as she is subject to "controls" in a way that Turkey never was. In modern history we can find no parallel for this state of things. These are conditions which alter the very bases of civilization and the relations between peoples. Such procedure has been unknown in Europe for centuries. The public has become accustomed in certain countries to consider responsible for the War not the government that wished it or the German people, but the future generations. Thus the indemnities are to be paid--were such conditions possible--in thirty years and for at least twenty years afterwards by people still unborn at the time of the War. This cursing of the guilty people has no parallel in modern history. We must go back to the early ages of humanity to find anything of the kind.

But even the most inhuman policies, such as Germany has never adopted in her victories, although she has been accused of every cruelty, can find at least some justification if they had a useful effect on the country which has wished and accepts responsibility for them. The conqueror has his rights. Julius Caesar killed millions of Germans and retarded perhaps for some centuries the invasion of Rome. But the practices established by the Treaty of Versailles are in effect equally harmful to victors and vanquished, though maybe in unequal measure, and in any case prepare the dissolution of Europe.

I had my share in arranging at San Remo the Spa Conference, in the hope and with the desire of discussing frankly with the Germans what sum they could pay by way of indemnity without upsetting their economy and damaging severely that of the Allies. But the ministerial crisis which took place in June, 1920, prevented me from participating at the Spa Conference; and the profitable action which Great Britain had agreed to initiate in the common interest, ours as well as France's, could not be proceeded with. The old mistakes continued to be repeated, though many attenuations have come about and the truth begins to appear even for those most responsible for past errors.

We shall have to examine with all fair-mindedness if Germany is in a position to pay in whole or in part the indemnity established or rather resulting from the treaty. France especially believes, or has said on several occasions she believes, that Germany can pay without difficulty 350 milliards.

After many stupidities and many exaggerations which have helped considerably to confuse the public, in face of the new difficulties which have arisen, new arrangements for the payment of the indemnity have been established. On May 11, in face of the situation which had arisen, the Allies proposed and Germany accepted a fresh scheme for the payment of the reparations. Germany is constrained to pay every year in cash and in kind the equivalent of 500 million dollars, plus 26 per cent. of the total of her exports.

The rest of the accord refers to the procedure for the issue of bonds guaranteed on the indicated payments, to the constitution of a guarantee committee, and to the date of payment. Probably Germany will have been able to get through the year 1921 without insurmountable difficulties.

At Spa, on April 27, 1921, the proportionate sums assessed for each of the conquering powers were established on a total indemnity notably reduced in comparison with the earlier absurd demands.

But leaving alone the idea of an indemnity of 250, 150, or even 100 milliards of gold marks, it will be well to see in a concrete form what Germany can be made to pay, and whether the useless and elaborate structure of the Reparations Commission which, with its powers of regulating the internal life of Germany for thirty years or more, ought not to be substituted by a simpler formula more in sympathy with civilized notions.

Shortly before the War, according to successive statistics, the private wealth of France did not amount to more than 250 milliards.

The wealth of France, according to successive valuations, was calculated at 208 milliards of francs in 1905 (de Foville), at 214 milliards in 1908 (Turquan), at about 250 milliards according to other authors. The wealth of Belgium, according to official statistics published by the Belgian Ministry of Finance in 1913, amounted to rather less than 30 milliards of francs. The estimate is perhaps a trifle low. But this official figure must not be considered as being a long way from the truth. At certain moments Belgium's demands have surpassed even the total of her national wealth, while the damages have not been more than some milliards.

The value of the land in France was calculated before the War at between 62 and 78 milliards; the value of the buildings, according to l'Annuaire Statistique de la France, at 59-1/2 milliards. The territory occupied by the Germans is not more than a tenth of the national territory. Even taking into consideration the loss of industrial buildings it is very difficult to arrive at the figure of 15 milliards. At the same time it is true that the Minister Loucheur declared on February 17, 1919, in the French Chamber that the reconstruction of the devastated regions in France required 75 milliards--that is, very much more than double the private wealth of all the inhabitants of all the occupied regions.

In all the demands for compensation of the various States we have seen not so much a real and precise estimate of the damages as a kind of fixing of credit in the largest measure possible in order that in the successive reductions each State should still have proportionally an advantageous position.

Making his calculation with a generosity which I assert to be excessive (and I assert this as a result of an accurate study of the question, which perhaps I may have occasion to publish), Keynes maintains that the damages for which Germany should be made to pay come to 53 milliards for all losses on land and sea and for the effects of aerial bombardments--53 milliards of francs all told, including the damages of France, Great Britain, Italy, Belgium, Serbia, etc.! I do not believe that the damages reach 40 milliards of gold marks, unless, of course, we calculate in them the pensions and allowances.

But these figures have but small interest, since the demands have been almost entirely purely arbitrary.

What we must see is if Germany can pay, and if, with a regime of restrictions and violence, she can hand over, not the many milliards which have been announced and which have been a deplorable speculation on the ignorance of the public, but a considerable sum, such as is that which many folk still delude themselves it is possible to have.

Germany has already consigned all her transferable wealth; the gold in her banks, her colonies, her commercial fleet, a large and even the best part of her railway material, her submarine cables, her foreign credits, the property of her private citizens in the victorious countries, etc. Everything that could be handed over, even in opposition to the rights of nations as such are known in modern civilized States, Germany has given. She has also hypothecated all her national goods. What can she give now?

Germany can pay in three ways only:

1. Merchandise and food products on account of the indemnity: coal, machines, chemical products, etc.

2. Credits abroad coming from the sale of merchandise. If Germany exports, that is sells eight milliard marks' worth of goods abroad, she pays two milliards to the Reparations Commission.

3. Property of private citizens. Germany can enslave herself, ceding the property of her private citizens to foreign States or citizens to be disposed of as they wish.

Excluding this last form, which would constitute slavery pure and simple, as useless, as impossible, and calculated to parallel the methods in use among barbarous peoples, there only remain the first two methods of payment which we will examine briefly.

It must be remembered that Germany, even before the War, was in difficulties for insufficient avenues of development, given the restricted nature of her territory and the exuberance of her population. Her territory, smaller than that of France and much less fertile, must now nourish a population which stands to that of France as three to two.

If we have had gigantic war losses, Germany, who fought on all the fronts, has had losses certainly not inferior to ours. She too has had, in larger or smaller proportion, her dead and her mutilated. She has known the most atrocious sufferings from hunger. Thus her productive power is much diminished, not only on account of the grave difficulties in which her people find themselves (and the development of tuberculosis is a terrible index), but also for the lowered productive capacity of her working classes.

The statistics published by the Office of Public Health of the Empire (Reichsgesundheitsamt) and those given in England by Professor Starling and laid before the British Parliament, leave no doubt in the matter.

Germany has had more than 1,800,000 dead and many more than 4,000,000 of wounded. She has her mass of orphans, widows and invalids. Taken altogether the structure of her people has become much worse.