BRITAIN’S REPLY.

Hokitika Guardian, 14 August 1923, Page 3

BRITAIN’S REPLY.

U’STUAI.IAN AND N.Z. CA-I’I.E ASSOCIATION. LON mix. .Ann 'When therefore it is now sii};opsted she ought to receive twenty-six milIninls net. her lotn! debts to Britain and Fnitod States being cancelled. it will he seen the demand is tor an amount, between three and lour times burner limn could on a balance fall to her share under the existin'; ugreements. It is difficult to see on what grounds the failure of (fermany to meet the obligations whereunder lirit.ain is indemnilied ef|tlally with the Allies ran be held to justify the claim by France to be placed at expenses of her Allies in a far more favourable position than she would have occupied under the schedule of payments itself. The Belgian proposal to "rant special priority in the restoration of the devastated areas seems to rest on a somewhat artificial distinction. ft is a suggestion that not merelv priority he conceded in venaril to material damage over war pensions. lint that one particular type of material damage, namely damage by land, should lie selected in the exclusion of oilier forms. No justification for ■ ■■■—mi nimi ■■■■■■■Ml (For continuation ot news see fourth page.)

such a proposal can ho found in tlie armistice terms or Peace Treaty, nor is it easy to conceive arguments which can be adduced in support. Sunken ships and rotting cargoes may not shock the eye like mined villages, but they are equally material damage. Nevertheless the (Government does not favor priority to material damage, if only for the reason that certain other Allies would he gravely and adversely affected. Tn practice the suggested priority would he equivalent to an alteration favoring France and Belgium of the percentages of division fixed by the Spa agreement, for it, is dear ii' the Belgian and French claim in respect t.i the devastated regions were met in full, and at the same time the total sums recoverable from Germany are diminished, the loss inevitably falls on those not enjoying the' privileges of priority. The British Government cannot admit any ground whatever for revising the Spa percentages. It cannot leave out of account the position of its own country. Tfio Government is involved in heavy payments to meet unemployment on which it has been tomludled to spend uvor four hundred million sterling sim e the armistice. They alone among the Allies are paying interest on debts incurred abroad during the war, on a i apita! sum of a thousand million. They alone have been deprived in Allied interests of foreign rarities estimated from seven to eight hundred millions. winch nthere, iso i v. on hi substantially assi.-t in the pay- ' meal of Ihe British debt to America. Notwithstanding those gigantic burdens, Britain offered at the Paris CoiiiVreiice in January to forego its reimbursement ot her damages and expressed readmes:, by reducing her debts to her Allies, to treat her share of the (p'ltnan reparations as it repayment by liie Allies of their debts due to JJrit;iin. It would he inequitable and impossible to ask British taxpayers alroadv much more heavily but demsl ilntis French or Belgian, to make further sat riticos by modifying the Spa jiercentage.s lor the ' l u-i l l ot I'rum o and Belgium.

While the Belgian Government attach their consent m an investigation of the conditions which render it of little value, the French Government remits the plan altogether and appeal's justify the refusal of putting a senes nf questions wliicli might lead tn an indefinitely protracted discussion at a nine wlmn a prompt decision is of essential importance.'’ The reply then points out the Hep nation's Commission's finding of BFJ milliard gold marks was simply an estimate of We amount damages for which compensation "-is ilaimablc under the Treaty. r.ithoiit a in - regard to the question ot mariy's capacity in pay them. The schedule nf payments subsequently adopted while purporting to Provide pavmeni in lull, in tact granted substantial concessions representing even in the opinion ot rapporteur ot the Frenrh Budget a virtual reduction approximately half the sum, 1 -H2 milliards. Tlie fact that these were approved by Allied Prime Ministers in drafting the schedule u! payments tespeei ively answers the emnentioii that tic sum as originally fixed was not considered 100 high by anyone. At tlie

-tone lime it cannot tic denied tlie concessions were the outcome ot anything dcseribab!.' ns an expert enquiry of Germany’s capacity to pay. The duly of ultimately deciding that rests partly with the Beparations Commission and partly with the Allied Got ornments, wlui arc ill posit ion of trustees, since the interests iiflecteil were not only their own hut also those oi Government's not represented on the ( otnmission. Government venture to think the French Government overlooked this when declaring France never would consent In cancellation, except o| tie* proportion wherein their war debts may lie (HHeolled. An enquiry, therefore. In impartial experts to assi-l the Gomm is - ion and Allies clearly cannot la held Pi violate any principle expressed cr implied in the treaty. French anil Belgium eiaim that the Reparation: Gommission wtts competent to hold stieh an enquiry, must lie u'r.nttily qtialilied in the nbseme oi the

; Fniled Snucs representative as on gieal.'v contemplated. I' 'ranee am | Ih Igium are in a intuition to carry an l j proposition \\ 11! 1 the lie!t* o! tile ear; ‘ file '.*ol e 111 tile Froilell el 10 111)1 Mil. It I | m lotion- tha i til" '..omunsMon ha. he Mime, in |naetirc*. the instrument, nl the l l 'rit iir-o-He lei mu j.oiiey alone. ’J In British Government would w illiti;ily set n ]>■ M i the ( j.pcri i oiiiiint lee nominee, not only ol the powers ettmled !i repnrnl ions hiii- I'iiited States and power- whieh tool; no purl in tin 1 war, and it seemed desirable of ftoi many l h- hill the Government will willingly (onsidif any other form preferred by I' - ranee. While th ■ British Government was entirely willing to agree t h:i t the limling's of the evpens he binding on the serertd Governments, it would he Ci nt. lit if the functions are advisory only. A nswering Fra tieo-Be' gin it com plan I s that Germany repeated.ly fttiled to net. up to her undertakings, the British Government reintiitts of ojiinloti that the nnderlaliinp.; were freely entered into because it was just and reasonable and '.lands oil a difl'eront fooling from the engagement subscribed in nuclei e impulsion ol an u I lima 1 11:11, and protested against at the moment of signaI HIV. Ull the subject nl I lie ..coupa 1 inn if the Rid:!, whilst the Government indicat'd its rcnd-tif-s to join in ndvistUo 1 lie German Government in withdraw without delay the ordinance and decrees whieh were organised or promoted for passive resistance, tliev cannot siibserihe to t lie thesis that passive resistance must cease unconditionally, because it is contrary to the Versailles Ireaty. The German Government tun - sistentlv held that the oeetipal ion does mu 011 llie proper interpretation of para graph eighteen of annex two to pail eight ol the Treaty fall within the category ol economic and financial prohibitions and reprisals, and such other measures as the respective Oovernmcids may determine to be necessary in t lie circumstances. the highest authorities 111 Britain ndvi.se l Germany's contention is well founded. Ihe British t eivernmonl never eonecaled its view that FrancoBelgian action in occupying the Ruhr was < 111 itc apart from expediency and a sanction not authorised by the Treaty itsell, hut it would he willing that this or any other difference respecting tin l legal interpretation of the vital provisions treaty he automatically submit- j tor to Hague or other suitable arbitra- 1 tion. There is no inconsistency in Britain's Government refusing to acknow- j ledge the legality of the occupation of Ruhr, after joining in the presentation of the ultimatum and actually partiei- 1 pating in the l occupation of Dusseldorf. ; Duisburg and Ktihort in 1920. The ' action then taken was never elaimed to he in pursuance of reparation c lauses of the Treaty. The Allies jointly decided ; to threaten Germany with the oeeupa- j tion of further territory, just as they 1 might have threatened a renewal of war for the failure to perforin treaty

obligations, some of which have no connection whatever with reparatins. In tin 1 British Government's view, it cannot legitimately he claimed that the measures of the Allies tinder

paragraph eighteen of annex two of the Treaty are athorised to include military occupation of territory. If the Government hitherto had abstained from formally contesting the legality ot the Franco-Belgian occupation, it has done so simply in continuity with Mr . Bonnr Raw's declaration at the Paris Conference in -limitary, that the Go- 1 veriiment desired to avoid causing needless embarassment to the Allies. This cannot he' made a reproach to the Government, which not even now would not have taken up the question j of legality, had it not been challenged , to do so. Keen if-Britain joined in the occupation. and passive resistance j never had been started, it is not clear \ how this would bring the problem of , Reparations appreciably nearer a solu- , tion. I The French Government has now de- ; dared its objects in entering Ruhr was j not to prompt or complete payment of i Reparations but to break Germany a resistance, a .ml create a will on her |

part to pay, but a will to pay is useless without power, and Germany’s power to pay. in the opinion of His Majesty’s Government Jh likely to lie rapidly diminished, and in Lite end extinguished altogether, by a contination of the occupation with its slrangles-liold on the most highly and delicately organised German industries. A parallel which the French Government seek to draw with German action in 1871 can hardly he sustained. No similar authority can he cited in the ease of Ruhr. The real analogy in the present case is the occupation of the left hank of the Rhine. Further it may be pointed out that the recovery after the short campaign of 1870-71. of an indemnity c-qnal to four milliard gold marks, is not really comparable with the enforcement of the thirty-three fold claim against a. country financially exhausted by four years of strenuous warfare and blockade. The case with which the indemnity hi 1871 fib pan! was largely the result of credit facilities, which Frame was able to obtain. Germany, on the other hand lUlfered fiom a complete inability to obtain foreign loans largely because of the long period which elapsed he!ore the Reparations liabilities were defined and the world-wide uncertainty regarding her ability to discharge ihein. ft is yet lair to suite through His Majesty's Government by no means is satisfied with the performance that Germany in fact paid in respect to reparations, and in tic cost of armies of occupation more than twice the amount exacted from France iu 1871 as well as considerable sums in connection with clearing oHimuml miscellaneous treaty ol,ligations. The French Government is iu error in attributing to His Maje. tv's Government. a stiLrgesiii.il simultaneously with advice to l>e given to German I .' to abandon passive resistance on Ruhr. .Matters must he made to return to normal conditions. The suggestion made in the British note of July gitth. was that proposals should he mad" for 'he r, st.iraiimi of Ruin' to conditions whirl: would enable it lo become an area. o. fruitful product in rather than one of

international strife. Government was surprised and disappointed at the French and Belgian Governments finding difficulties in agreeing to so reasonable and advantageous a proceeding. Although it was vaguely intimated t hat France and Belgium muv. when passive resistance ceased, consult us to Imw it 11 ■; 1 V he possible to lighten I lie burden in Ruhr, nothing tangible baboon suggested whit ll holds out ali.v hope of the occupation being terminated. even when the avowed objects of breaking Germany's "ill to resist is ol:ininod. llis .Majesty's Government believed in shotting the Inllesi consideration to the position ol France and Belgium as well as ensuring an effective guarantee of continued steady payments. When they suggested tile occupation would naturally terminate from the moment guarantees or pledges less economically hurtful and more effective productive than the ot < upation of Ruhr should have been not merely devised and obtained, but either to he sutisjaeterily uncrating, even this sugge-Piou met with a definite ivfu-al. The French and Belgian Government- emI hatirtillv declared there "'ill lie no question of evaelial ion except ill proportion a. Geiiaauv makes payment

partitions liuhiliiv are integrally discharged and reiterates an announceme..! to this effect can nnlv bo interpreted as tot i: 1111 i iti lo remain in <> •. "toil in, of Ruhr at lea-t lor a period of mil le-S than thirty-six tears, tihirli in view of the general!, admitted imp' obahiiity of a complete exeeUlinn ot i he s.f h< dole b. dig found pruel ic.alile. may he extended iinleliitilelv. if not hi pel pel nit . Sin I: a situation i annul bur be \ iewed liv the Guveniiileui "ill; the greatest (omern. It vividly conjures up the danger ol international relations being afbs t.ed hi a manner threatening i i disturb international peaio. I'lie Government caiitiot believe lie French and Belgian Governmiaits will he .able to reconcile the opinion of tlie world to the indefinite matiitomuitfo of -o perilous a .• ituntion. Already the ot pupation of the Ruhr is having directly and indirectly a crave efiect ( a lb, economic industrial outlook, not oniv in Germany, whose capacity to I reparations has boon rendered more and more precarious, bul in the rest of F.itfiitie il not ol the world, and

no I least in thi- country. I I'.xphiiniiiK th.’ nti.iiude regarding Ihe inter-allied di- "I'-simi lor a linaurial M-ttlemenr. '.'iggested in the H'»t•' ,-f .fide epth., the in.no principle ot -.■•mine is timi Britain u- ready. -uh.'i vl in th'' lest : a, im.. 01 oilier part-, ot the Fmt.iiv to 'limit her demand hw n oat - 1 men! by the Allies and Germany t"■g. 1 her. get a sum approximating to fourteen dei im.d two milliards oj gob I marks. This sum repri-sent mg th ■ j-1 .».-(• 111 value 1,1 ill" I'ei'eilily tuilded Hnti-h debt and l ititeil Stales tin(Imcniii't ill may he aide to oiler in ~.... io intel- Mlie I debt- tuU't ae emdingly depend largely on the preeeitl- ..- > of this sum wlmli they can recovei from Cermaiiy. t'onee-Mon.s ctn only lie granttd in siih.-i am ive lorut. when a general reparation settlement 1 ac;r. i up mi and is slid: that the Government can re pil'd their share ol the Get man pay iiu'ii las an asset nl real tittaiieial value. The lirst step must he to lix tile maximum s 1 j., 1 the Allies, can tea--nimbly ll'ipe to I’ec'Ver, to he tn]h 1 W c: I or a.ceompatde;! by arjiingeim uts w hi', h will en.-ure the cifeetive re- tab!is!i-| im ut of Gormany'.. liimtiecs ait I credii I Oil a sound basis, with a guarantee of the pniictnal payment of the German 1 debt In a. system oi eoilliol. Ires'- I rolil v: (Mi. ain idlv unsound impediments inf 1:i t. i la- military oecupation of Ruhr. Government .dieted to discuss sympathetically the -iiie.-t ion <.l the Gttitre seviiritv ot lleigitim and v.niml.y v.ehoie'l the oiler. Fra nee r-Muar! e.l thl tin.' ohieel has nothing 1 1 do with Ruhr and the di-eii-sioii was postponed ; to an unnamed date. Having I’gat'd to ! the French Governments new declined \ iiidili'eiouee, no useful purpose will he i served bv pursuing the matter. J Summarising the arguments put forj ward, the reply says ill the view of his Majesty's Government, the terrible interference with Germany's’ economic life, cannot assist in the necessary res I ..".ration. Not only will it prevent tlm realisation of any siiiplus lor reparations. hut by intensifying the disorder of German iiminee, and cuncney has the gravest reactions on trade. Government tlieroforo regard as doomed to failure the methods pursued by France and Belgium to secure reparations. Government consider the impartial fixation of German liability at a figure not consistent with the practical. to the power making a payment of great urgency. When steps are taken to ascertain the real value ol th" asset- represented by German reparations, and secure it' realisation without further depreciation, the Government is icad.v t.) deal as generously as cir. iintstanees permit, and in the light of their respective capacity to [sly. with the debts due Britain by the Allies. The policy laid down by Mr Hollar Raw at the Paris Conference in .January has not changed. It means that Britain is prepared to waive interest of complete general a very large amount whieh the British taxpayer

holds are due to obligations from Allied Governments. The reply concludes—-The Government hope tlie above explanations will convince the French and Belgian Governments of the British position and will wilt their assent to its acceptance, the Government is reluctant to con template the possibility of separate action that may be required in order to hasten a settlement which cannot much lungei be delayed without the gravest consequences to the recovery of trade and the peace of the world. In a separate memorandum on the in- j tcr-Alliet! debts, the Government says i the willingness which they and their ] predecessors have shown to discuss the j French Government's arrangements whereby the burden of the French debt to Britain might he mitigated, must I not be interpreted as a waiver oi their i rights as creditors, which is governed j Hib'lv by contracts under which the money 'was advanced on securities wldch they hold. It is an iiuidmissalilo doctrine that the French Government Treasury Bill given the British Government for value received i- less binding an obligation tuan a .-imihii hill given to a private investor. Rttymeuts due on French I Bdb represent- amounts which the British Treasury is in fact paying to holders ol securities, issued on b"ha!; et '-he French Treasury, of which the French Treasure received proceed-. M hde the Government have, by (ontinning to renew bills beyond the period of cm it met mcilh recognised that the time has not yet arrived for giving elfeet to Fee intention, they should he redeemed cm or !• reiieli loans rais' d on the B udciii market when French credit is sttfficienllv re-established, ll must lie clearly understood that the carrying out of this intention remains an obligation oi French Government, which cannol he hoiauirahly repudiated, and that m the meant ime the i| 1 e " interest to titpltal cauno: be inddinHely contined. and that fit lilt"*Mi- <■! hi *4. ;U Jtisy i" ! * tho iiIUTOSt . slimiM 111’ Hl.-lilf ;( •> s .h\\l ns the reaiivmul.lv si;iMe.