Where Are We Going?

by David Lloyd George

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.

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 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.