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From International Press Correspondence, Vol. 3 No. 14, 8 February 1923, pp. 109–111.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
“The French government declares that it is unwilling to accept any reduction of its share of Germany’s obligations. In actual practice, this share is already insufficient to cover the expenditures for the restoration of the devastated regions. A reduction of the French share could only he taken into consideration by the French government if some of its allies would agree to modify their demands on Germany, or to give priority to the restoration of the devastated regions. The French government will not be in a position to pay either interest or principal on its debts to the allies, until it has at least been compensated by Germany for the expenditures which it has borne and which it has yet to bear in the restoration of the devastated area.”
France is however prepared to discharge her debts by renouncing the bonds of Series C, provided that this procedure is accepted by all European powers. These lines show France’s fundamental standpoint as opposed to England. The measures with regard to Germany then follow.
The French program provides for:
In order that these measures may be carried out, the Guarantee Commission is to take over the control of German Finances.
The exact wording is as follows:
“The Guarantee Committee is to be enabled to observe the execution of this program, and especially to inform itself at any moment regarding every detail of financial management of the Reich and of the separate states; the committee must be accorded the, possibility of exercising every description of control which it considers necessary for this purpose, it can prohibit any expenditure which it holds to be inopportune, and prescribe any method of increasing revenues which it considers possible.”
The headquarters of the Guarantee Committee were to be in Berlin.
It is obvious, that were this program accepted, German Finances would actually no longer be in the hands of the German government, but completely in those of the Guarantee Commission. Germany’s financial dependence would be much greater than that of Turkey before the war.
The French government would not be inclined to grant a moratorium for longer than two years. This moratorium would not include the costs of maintaining the army of occupation, and the various commissions, nor the payments in kind as prescribed by the existing agreements.
“But as the three years just past have shown that it is impossible to rely on Germany’s meeting the obligations winch she has taken upon herself, the French government cousiders it imperative to take pledges. The French government is of the opinion that the realization of the pledges named below does not exceed Germany's paying capacity, and the pledges are not of a nature preventing Germany from placing her finances on a sound basis.”
The guarantees demanded are of two categories:
1. Pledges guaranteeing deliveries in kind.
2. Pledges guaranteeing payments in cash and kind.
3. Sanctions.
Should the German government fail to execute every point prescribed by the commissions, as provided for in the program the following sanctions come into force:
The plan submitted by Bonar Law to the Entente conference provides for a joint regulation of the reparations and of the inter-allied debts of the European states. Unlike the French plan, which is based on the assumption that Germany does not want to pay, the English plan assumes that Germany would pay if the payments lay within the limits of Germany’s paying capacity, and if the terms, of payment were so arranged as to make it desirable for Germany to liquidate her debts as quickly as possible.
The provisions of the English plan are an follows. [1]
Germany is to be free tor a period of 4 years from both, payments in cash and in kind. During the four years then following Germany is to pay.
2 milliard gold marks annually; during, the 2½ years then following, – 2½ milliard gold marks,
and from then onwards Germany to to make constant payments of at least 2½ milliards,
possibly 3½ milliards, of gold marks.
The instalments exceeding 2½ milliards, amounts which may be designated as the variable instalments, are not finally fixed, their payment or non-payment is to be determined by special commission, which to to examine the state of Germany’s economics.
5% bonds are to be issued in two series: The first series for the 2½ milliard gold marks, the second series for the additional 1 milliard gold marks.
Amortization is not provided for, but Germany is to be granted large deductions; the debt will be discounted at a very high rate of interest, provided Germany begins to pay off the debt rapidly.
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The bonds can be redeemed by Germany: |
An earlier redemption would bring Germany an annual gain of interest amounting to 8–10 per cent. The bonds can be redeemed on the same conditions by payments in load during the stated periods.
This plan is to be submitted to Germany on condition that if undertakes:
England is prepared to annul all the inter-allied debts, of the following conditions:
We may further emphasize the following points of the plan:
It to obvious that this plan would signify a radical modification of the reparation policy hitherto pursued.
In the French criticism of the English reparation plan, after it was submitted to Poincaré, it is claimed that the English plan signifies the annulment of the Versailles peace treaty, for the allies would no longer decide on the German obligation and on their possible reduction, but a foreign commission, in which France, Belgium, and Italy, whose collective claims on Germany amount to 70 per cent of the German debt, might be placed in the minority by the casting vote of the German minister of finance.
The cancellation of the obligatory deliveries of coal in another violation of the Versailles treaty, etc. But the main objection raised is that a moratorium is to be granted for four years without any pledge or guarantee whatever. But no guarantees give perfect security that Germany would really pay after the moratorium expired.
But France’s main objections are of a political nature. The following is the exact wording:
“The English plan is illusory; its dangers become even more apparent when we examine the alleviations accorded to Germany, which enable her to shirk an easily borne debt.
“At the present time Germany has no foreign debts; the collapse of the mark has proportionately reduced her internal debt, so that it does not amount to more than a few milliards gold marks, and would be reduced still more by the next fall of German securities. Were Germany’s burden to be thus reduced to a single debt only, that of its reparation obligations, and were this debt to be reduced to about 20 milliards by the discounting device provided for in the British plan, a debt which could be redeemed in about 15 years, and which amounts to less than one third of the French national debt then, within a few years, Germany would be the only country in Europe without any foreign debts; with its increasing population, its healthy industry, which would not cease to take advantage of the exceptional situation, with its untouched natural treasures of coal, wood, and potash, it would become the ruler of Europe, and would confront a France reduced to one half of its population, and which would have to bear the continued and tremendous burden of the restoration of the devastated regions.
“The German hegemony in Europe, which was to be destroyed by the war, would be restored and consolidated by the allies.”
It throws an interesting light on the confused situation when we see that this same train of thought, in almost the same words, was expressed st one time by Lloyd George in the English House of Commons.
The new English prime minister, Bonar Law, expressed himself similarly in one of his speeches. The import of the English plan was that the proximate danger from France, is much greater than the distant danger (bat may be occasioned by the possible economic reconstruction of Germany. Poincaré’s criticism shows with perfect clearness that the French attach less importance to obtaining large sums from Germany in the near future (which would be rendered possible by foreign loans, were the English solution adopted), than to the political subjugation at Germany.
Poincaré proceeds to point out that, as the redemption of the bonds of Series B, provided for in the English plan, is unite uncertain, and as the greater part of the payments to be made by Germany will be used to pay the costs of occupation, commissions, etc, Germany will not have to pav more than 26 milliards in actual reparations, and of this sum, France would not receive more than 11 milliards. He then makes the following calculation:
“In the balance sheet, England and France would be found to emerge from the war as follows:
With regard to (he cancellation of France's debts to England, Poincaré makes the following bill:
“In order to obtain 11 milliards of war debts from Germany, France would renounce:
And all this apart from the sacrifices entailed by France in the obligations A and B.”
We may further observe that Italy and Belgium are essentially on France’s side.
1. The English plan has been technically worked out to the smallest details; here we shall only outline its essentials.
Last updated on 9 July 2021