What is the reparations problem? Why does it appear to be further from solution than ever?
The great public in all lands are perplexed and worried by its disturbing insolubility. It keeps them wondering what may happen next, and that is never good for a nerve-ridden subject like postwar Europe.
The real trouble is not in solving the problem itself, but in satisfying the public opinion which surrounds it. I do not mean to suggest that it is an easy matter to ascertain what payments Germany can make, or for Germany to pay and keep paying these sums once they have been ascertained. But if the difficulty were purely financial it could be overcome. The heart of the problem lies in the impossibility at present of convincing the expectant, indignant, hard-hit and heavily burdened people of[Pg 137] France that the sums so fixed represent all that Germany is capable of paying.
The question of compelling a country to pay across its frontiers huge sums convertible into the currency of other countries is a new one. At first it was too readily taken for granted that a wealth which could bear a war debt of ￡8,000,000,000 could surely afford to bear an indemnity of ￡6,000,000,000 provided that this smaller sum were made a first charge on the national revenues; and it took time for the average mind to appreciate the fundamental difference between payment inside and transmission outside a country.
When I think of the estimates framed in 1919 by experts of high intelligence and trained experience as to Germany's capacity to pay cash over the border I am not disposed to complain of the impatience displayed by French taxpayers at the efforts made at successive conferences to hew down those sanguine estimates to feasible dimensions. I am content to point with pride to the fact that the common sense of the more heavily burdened British taxpayer has long ago taught him to cut his loss and keep his temper. When his example is [Pg 138]followed all round, the reparations question is already solved.
When public opinion in all the Allied countries has subsided into sanity on German reparations, as it already has in Britain, financiers can soon find a way out, and trade and commerce will no longer be scared periodically from their desks by the seismic shocks given to credit every time a French minister ascends the tribune to make a statement on reparations.
Regarding the payment of reparations solely from the point of view of finance, the issues can be stated simply, and I think solved readily.
It is always assumed by those who have never read the Treaty of Versailles, and the letter that accompanied it, that this much-abused and little-perused document fixed a fabulous indemnity for payment by Germany. The treaty may have its defects; that is not one of them, for it fixed no sum for payment, either great or small.
It stipulated that a reparations commission should be set up in order, inter alia, to assess the damage inflicted by Germany on Allied property and the compensation for injury to life and limb in Allied countries.
[Pg 139]
In the second place—and this is also overlooked—it was to ascertain how much of that claim Germany was capable of paying. On both these questions Germany is entitled to be heard before adjudication.
It is in accordance with all jurisprudence that as Germany was the aggressor and the loser she should pay the costs. But it would be not only oppressive but foolish to urge payment beyond her capacity.
The amount of damage was to be ascertained and assessed by May, 1921. Capacity was to be then determined and revised from time to time, according to the varying conditions. Even so fair a controversialist as the eminent Italian statesman Signor Nitti has ignored the latter provision in the Versailles treaty. No wonder that he should, for there are multitudes who treat every alteration in the annuities fixed in May, 1921, as if it were a departure from the Treaty of Versailles to the detriment of the victors; whereas every modification made was effected under the provisions and by the machinery incorporated in the treaty for that express purpose.
But there has undoubtedly been a departure from[Pg 140] the treaty—a fundamental departure. It has, however, been entirely to the detriment of the vanquished. In what respect? I propose to explain, for the whole trouble has arisen from this change in the treaty. The treaty provided that the body to be set up for deciding the amount to be paid in respect of reparations should consist of a representative each of the United States of America, the British Empire, France, Italy, and Belgium.
With the exception of the United States of America, all these powers are pecuniarily interested in the verdict. At best it was therefore on the face of it not a very impartial tribunal. Still, Britain, as a great trading community, was more interested in a settlement than in a few millions more or less of indemnity wrung out of Germany; and Italy also was a country which had large business dealings with Germany and would not therefore be tempted to take a violently anti-German view on the commission. The presence therefore of the United States of America, Britain and Italy together on the commission constituted a guarantee for moderation of view.
Now the only disinterested party has retired from the tribunal. The most interested party is in[Pg 141] the chair, with a casting vote on certain questions. That is not the treaty signed by Germany.
If you sign an agreement to pay a sum to be awarded by A, B, C, D, and E, trusting for a fair hearing largely to the influence of A, who is not only very powerful but who is the only completely disinterested referee and A then retires from the board of arbitrators, you are entitled to claim that the character of the agreement is changed. The representatives of France and Belgium on the Reparations Commission are honourable men who are most anxious to do justice, but they are watched by a jealous, vigilant and exacting opinion constantly ready to find fault with concession and to overpower moderating judgment.
The balance of the treaty has therefore been entirely up............