3. The Paris Conference  
The third conference with M. Poincaré over reparations has ended, like its two predecessors, in a complete breakdown.
 
The first was held in August, the second in December, and the third fiasco has just been witnessed.
 
I congratulate Mr. Bonar Law on having the courage to face a double failure rather than agree to a course of policy which would in the end prove disappointing, and probably disastrous.
 
Agreement amongst allies is in itself a desirable objective for statesmen to aim at, but an accord to commit their respective countries to foolishness is worse than disagreement.
 
France and Britain must not quarrel, even if they cannot agree; but if French ministers persist in the Poincaré policy, the companionship of France and Britain over this question will be that of parallel lines which never meet, even if they never conflict.
 
[Pg 131]
 
What is the object of this headstrong policy? Reparations?
 
There is no financier of repute, in any quarter of the globe, who will agree that these methods will bring the Allies any contributions towards their impoverished resources.
 
At the August conference all the experts were in accord on this subject, but whilst these methods will produce no cash, they will produce an unmistakable crash.
 
My recollections of the August discussions enable me to follow with some understanding the rather confused reports which have so far reached me here.[2]
 
It is common ground amongst all the Allies that Germany cannot under present conditions pay her instalments.
 
It is common ground that she must be pressed to put her finances in order, and by balancing her budget restore the efficiency of her currency, so as to meet her obligations.
 
But M. Poincaré insisted that, as a condition of granting the moratorium, pledges inside German territory should be seized by the Allies.
 
[Pg 132]
 
These pledges consisted of customs already established, and of new customs to be set up on the Rhine and around the Ruhr, so that no goods should be permitted to pass from these German provinces into the rest of Germany without the payment of heavy customs dues.
 
The other proposed pledges were the seizure of German forests, of German mines, and of 60 per cent. of the shares in certain German factories.
 
Mr. Bonar Law, judging by his official communiqué after the breakdown of the conference, seems to have raised the same objections to these pledges as I put forward at the August conference.
 
They would bring in nothing comparable to the cost of collection;
 
They would provoke much disturbance and irritation and might lead to consequences of a very gra............