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country, except at times when the exchange between the countries was in an abnormal condition. The Austrian debtor would buy in Vienna a bill of exchange on London. In other words, he would buy from a resident in Austria an asset that could be collected in England, and would transfer that asset to his English creditor in discharge of his liability. This was, of course, convenient to all the three parties concerned in the transaction. This method on a larger scale has been adopted in Article 249 and the Annex for the discharge of the liability of the Austrian Government to this country and its nationals. Austrian nationals had assets in this country that could be easily realized hero. Those assets will be retained and liquidated by the British Government—Article 249, subsection (6) —and the proceeds will be credited to Austria in part-discharge of its debt —subsection (//,) (i)— Austria having adopted Section 1.11 of the Treaty and the Annex thereto. Austria agrees to compensate her nationals in respect of their property in this country so retained and liquidated—subsection (j). The effect of all this is, in short, that Austria purchases compulsorily from her nationals their property in this country, and hands over that property to its British creditors in part-discharge of its liability to them. No confiscation of Austrian nationals' private property is intended or effected. The method provided for discharge of the liability of the Austrian Government should, if the provisions of the article be observed, be as convenient and as equitable for all parties concerned as in the simple case to which I referred above. Should Austria fail to compensate its nationals fully —that is to say, should fail to pay the full purchaseprice for their property in this country —they will no doubt bo subjected to some hardship. This, however, will not bo the fault of the Treaty and cannot affect its proper construction. If I am right in the view that 1 take of the true effect and purpose of Article 249, it is clear that its provisions in no way interfere with the liquidation, compulsory or otherwise, of the general assets of an Austrian national who has property in this country. The only effect of the article in this respeot is to substitute an asset in Austria for an asset in this country. If the Austrian national has a credit in a bank in this country he will have substituted for it, again on the supposition that his Government fulfils the conditions of the Treaty, cither cash or an equivalent credit with a bank in Austria. 15. The special position arising from the failure of the ox-enemy Powers to pay adequate compensation to their nationals in respect of the retention and liquidation of their property rights and interests in the Allied and Associated States is discussed in the extracts from Lord Blanesburgh's report, which are quoted in paras. 26-27, infra. Amounts credited to the German Liquidation Account by the New Zealand Clearing Office. 16. In order that Germany may receive, for the purpose of paying compensation to its nationals as provided in para, (i) of Article 297 of the Treaty of Versailles authentic information regarding the property rights and interests belonging to its nationals which are retained and liquidated by the Allied and Associated Powers in pursuance of Article 297 (b) it is necessary for the Allied Clearing Offices to prepare schedules showing the amounts realized in respect of the property of each German national affected. On these schedules sufficient particulars arc given to enable the individual German nationals to identify the various assets which have been retained. 17. The total amount credited to the German Liquidation Account up to the 31st March., 1.924, in respect of German property rights and interests retained and liquidated in the Dominion was £87,407. Further schedules containing credits totalling £95,749 were subsequently forwarded to the High Commissioner for New Zealand in London for transmission to the German Clearing Office. The grand total which has been credited to Germany by the New Zealand Clearing Office under Article 297 at the date of writing is £183,156. Three credits amounting to £53 12s. sd. have, with the concurrence of the German Clearing Office authorities, been withdrawn from the Liquidation Account, as it has been definitely ascertained that the persons beneficially entitled thereto are not German nationals whoso property falls within the provisions of Article 297 of the Treaty. 18. The disposal of several amounts is being held in abeyance pending the determination of the question of ownership. Owing to the frequent lack of satisfactory proof of title or ownership, caused no doubt by the abnormal conditions created by the war and the lapse of time, the task of crediting the proceeds in accordance with the legal rights of the parties concerned is a matter of considerable difficulty. Every effort is being made to protect the intcreste of all parties, and especially of those who arc finding it impossible to supply full legal proof. In one case where approximately £17,500 is involved proceedings have been commenced in the Supreme Court of New Zealand for the purpose of obtaining a declaration as to the ownership of the New Zealand assets which have been realized by the Custodian of Enemy Property. Amounts credited to the Austrian Liquidation Account by the New Zealand Clearing Office. 19. Under para, (j) of Article 249 of the Treaty of St. Gcrmain-en-Laye Austrian nationals are entitled to receive from their Government compensation in respect of the retention and liquidation of their property rights and interests in New Zealand. It is understood that the Austrian Government has instituted a scheme for compensating its nationals who through the exercise of the powers reserved by the financial clauses of the Treaty have been dispossessed of their private property in Allied countries. Sterling Bonds carrying interest at 5 per cent., and repayable in ten years, are being issued to them. It is reported that these bonds can be realized at a discount of about 40 per cent., and that Austria may not be in a financial position to permanently maintain this scheme. 20. On the 10t.h May last a further schedule was forwarded to the High Commissioner for transmission to the Austrian Clearing Office containing additional credits totalling £56 10s., thereby making the total sum credited lo the Austrian Liquidation Account £367 4s. Ild. New Zealand Govkunment Stock held by Enemy Subjects resident in the United Kingdom. 21. The High Commissioner has forwarded a list of holdings in New Zealand Government inscribed stock totalling £12,233 on which a restraint has been placed by the Custodian of Enemy Property for the United Kingdom owing to evidence of enemy ownership. The persons whose names appear on this list are all resident in the United Kingdom. The British Custodian has been advised by counsel that it is impossible in the case of Government stock to ignore the fact that the rights of