From the London Conference to the Dawes Committee

In Aug. 1922, after Germany had asked for 21 years' mora torium, the third London Conference and the Reparation Com mission suspended cash payments, and agreed to accept the bal ance of instalments for 1922 in six months' bills at 41%. It was laid down that further default would bring about the seizure of productive guarantees. In Nov. the German Government replied requesting a definite moratorium and the revision of the total payments. They asked for time to carry out the plans for stabi lization recommended by the currency experts.

The British Proposals of Jan. l923.

In Jan. 1923 there was a Conference in Paris of the prime ministers, when a some what complicated proposal was put forward by Britain for an issue of 5o milliards of "A" bonds maturing in 1954, with inter est deferred entirely for the first four years, and 1% for the next four down to the end of 193o. There was to be an issue of "B" bonds, to be definitive unless Germany proved to a tribunal before April 1933 her inability to meet the pay ment, and deliveries in kind were to be continued for deter mined amounts, with any excess to be set off against the bond interest. This plan was linked up with the question of inter Allied debts and their cancellation. Germany was to agree to the currency stabilization plan recommended by the foreign experts a few weeks previously. She was to balance her budget within two years and accept a foreign finance supervision which should supersede the Reparation Commission in all executive functions. There were also conditions as to Germany's forfeiture of customs and the allocation of loans, issued in the Allied markets, to the redemption of the bonds.

At the same time the French prime minister put forward a proposal to adhere to the capital sums determined in May 1921, with a moratorium of two years, giving Germany the power to repay under discount. The customs were to be retained as pro ductive pledges, and the Reparation Commission were to take control of German finance. France agreed that if any of her debts to the Allies were remitted, she would be prepared to con sider the question of reducing Germany's total indebtedness.

The Ruhr Occupation.

During the comparative deadlock that followed, France began to carry out her proposals for the occupation of the Ruhr. In the immediate ensuing period con siderable doubt existed as to the effect of the occupation upon reparations, but by May and June the Germans had become thoroughly alarmed, and their proposals for the evacuation of the Ruhr Valley and the restoration of Germany's economic freedom, were contained in special German notes the net effect of which was that the capital debt should be fixed at 3o milliard gold marks, of which 20 milliards would be covered by an inter national loan in July 1927, 5 milliards two years later, and 5 milliards by July 1931, the proceeds to be given over to the Reparation Commission. As guarantees for the service of these

loans they were to mortgage the railways for io milliards, yielding 500 million gold marks per year ; Soo million from the general mortgage on the industries and natural resources of Germany and, thirdly, the pledge of their consumption taxes, i.e., luxury, tobac co, beer, wine and sugar, to an amount probably exceeding 200 million gold marks.

Germany suggested an international conference to determine her capacity to make further payments. The effect of inflation and the general disintegration of German finance, became very marked, and Germany's whole constitutional fabric was in grave danger. (See GERMANY : Economic and Social Conditions.) Appointment of the Dawes Committee.—Towards the end of the year active steps were being taken to set up an interna tional committee of experts to consider Germany's position, and to make proposals for stabilizing the currency and balancing the budget. The credit for this proposal has been variously assigned to Mr. Hughes of the United States, to Sir John (afterwards Lord) Bradbury on the Reparation Commission, and to the Inter national Chamber of Commerce Conference at Rome. The repre sentatives of this Committee were in form chosen by the Reparation Committee and appointed by them. But their se lection was made a matter of Government interest in each coun try, there being two representatives from France, Belgium, Italy, Great Britain and the United States respectively. The chairmanship was put into the hands of the United States in the person of General Dawes, and this Commission became after wards known as the "Dawes Committee," and its report as the "Dawes report." The personnel of the Committee was as follows: United States—General Charles G. Dawes, Owen D. Young; Great Britain—Sir Robert Kindersley, G.B.E., Sir Josiah Stamp, K.B.E. ; France—J. Parmentier, Professor Alex; Italy—Dr. Al berto Pirelli, Professor Flora ; Belgium—E. Franqui, Baron Hou tart. (There was a second committee, under the chairmanship of the Rt. Hon. Reginald McKenna, set up "to consider the means of estimating the amount of German exported capital and of bringing it back to Germany.")