ADOPTION OF THE REPORT The reception of the report was immediately favourable, and it was finally adopted by the Governments concerned in the London Agreement on Aug. 30, 1924. Steps were immediately taken to put it into operation. So far as all formal acts and the setting-up of the machinery for the future working of the Plan were concerned, it may be said that everything went satisfac torily. The Reparation Commission officially stated : "Germany is faithfully fulfilling her reparation obligations as far as they are at present fixed." The actual test of the working of the full apparatus would come later, since the reparation payments to be made by Germany in its early stages were comparatively negli gible. That a new spirit was secured is beyond question. The first report of the Agent-General, Mr. S. Parker Gilbert, said: It is too early to draw conclusions regarding the ultimate effects of the Plan. Broadly, it is an endeavour to stimulate confidence among peoples and to apply principles of reason and justice to a difficult, vital problem. The success of the Plan will be measured not alone in terms of payments effected. It will be determined also by the extent to which it helps to replace distrust and discord with con fidence and conciliation. Its early operation has fulfilled expectations.
In his report during the third year he said : The execution of the Plan is proceeding normally. Germany has made all the payments required of her during the first nine months of the third Annuity year, and deliveries and payments for the benefit of the creditor Powers have gone forward regularly and without interfering with the stability of the Exchange.
The pivot of the whole Plan for the first year was the German External Loan of 4o millions sterling or Boo million gold marks. In the words of the report, this was necessary to assure currency stability and financing essential deliveries in kind during the pre liminary period of economic rehabilitation.
It enabled the Allies to receive something on account of repara tions without, at the same time, any burden being placed upon the German budget. Negotiations were completed on Oct. io, 1924, and on Oct. 13 the Reparation Commission constituted the service of the loan as a first charge on all the payments provided for under the Plan, and also on the collateral security of the controlled revenues and any other assets or revenues of Germany to which the powers of the Commission extended under the treaty. The
transfer committee at its first meeting recognized the priority of the loan, and gave it an absolute right of remittance irrespective of the effects upon the exchange. This loan provided Boo million gold marks out of the total of i,000 million gold marks, which constituted the first year's annuity, and the balance of 200 million gold marks came from the German Railway Company as interest on the bonds. Apart from this 200 millions, there was no drain whatever on the current resources of Germany for the first year.
The revised distribution of the third Annuity (year to Aug. 31, 1927) showing the shares of the respective Powers is given in the table in the next column.
The transfer committee had time to examine their problem before having to take any executive action on its chief difficulties. They were not called upon to decide delicate questions of ex change priority or pressure. Their first years were taken up in making arrangements for deliveries in kind and Reparation Re covery Acts. The latter in particular presented difficult questions which were described by the Agent General in his report. By forcing the German exporter to look to the German Government or Agent General for the deductions made by the British Govern ment in respect of a total which had no relation to the Dawes Plan or to the sums transferable by the transfer committee, the British Government could virtually ride around the powers of the committee, "confronting them with an accomplished fact." In the report of the negotiations between the British Treasury and the Agent General, it was arranged for the German exporters as a whole to deliver to the Reichsbank monthly 3o% of the sterling proceeds of their exports to Great Britain. Deposits are made at the Bank of England for credit to the Agent General's account. The transfer committee regains control and the system adjusts itself automatically to the British Government's share in the available annuity.
Towards the end of 1925 Germany passed from a stage of comparatively easy conditions into an industrial crisis which re tarded the full development of her fiscal resources towards the position demanded by the final scale of the Plan, but her subse quent recovery was satisfactory from that point of view.