Leaving on one side for the present the items of pensions and allowances and loans to Belgium, let us examine the data relating to the material damage in Northern France. The claims made by the French Government did not vary very much from the spring of 1919, when the Peace Conference was sitting, down to the spring of 1921, when the Reparation Commission was deciding its assessment, though the fluctuations in the value of the franc over that period cause some confusion. Early in 1919 M. Dubois, speaking on behalf of the Budget Commission of the Chamber, gave the figure of 65 milliard francs “as a minimum,” and on February 17, 1919, M. Loucheur, speaking before the Senate as Minister of Industrial Reconstruction, estimated the cost at 75 milliards at the prices then prevailing. On September 5, 1919, M. Klotz, addressing the Chamber as Minister of Finance, put the total French claims for damage to property (presumably inclusive of losses at sea, etc.) at 134 milliards. In July 1920 M. Dubois, by that time President of the Reparation Commission, in a Report for the Brussels and Spa Conferences, put the figure at 62 milliards on the basis of pre–war prices.[63] In January 1921 M. Doumer, speaking as Finance Minister, put the figure at 110 milliards. The actual claim which the French Government submitted to the Reparation Commission in April 1921 was for 127 milliard paper francs at current prices.[64] By that time the exchange value of the franc, and also its purchasing power, had considerably depreciated, and, allowing for this, there is not so great a discrepancy as appears at first sight between the above estimates.
For the assessment of the Reparation Commission it was necessary to convert this claim from paper francs into gold marks. The rate to be adopted for this purpose was the subject of acute controversy. On the basis of the actual rate of exchange prevailing at that date (April 1921) the gold mark was worth about 3.25 paper francs. The French representatives claimed that this depreciation was temporary and that a permanent settlement ought not to be based on it. They asked, therefore, for a rate of about frs. 1.50 or frs. 1.75 to the gold mark.[65] The question was eventually submitted to the arbitration of Mr. Boyden, the American member of the Reparation Commission, who, like most arbitrators, took a middle course and decided that 2.20 paper francs should be deemed equivalent to 1 gold mark.[66] He would probably have found it difficult to give a reason for this decision. As regards that part of the claim which was in respect of pensions, a forecast of the gold value of the franc, however impracticable, was relevant. But as regards that part which was in respect of material damage, no such adjustment was necessary[67]; for the French claim had been drawn up on the basis of the current costs of reconstruction, the gold equivalent of which need not be expected to rise with an increase in the gold value of the franc, an improvement in the exchange being balanced sooner or later by a fall in franc prices. It might have been proper to make allowance for any premium existing, at the date of the assessment, on the internal purchasing power of the franc over that of its external exchange–equivalent in gold. But in April 1921 the franc was not far from its proper “purchasing power parity,” and I calculate that on this basis it would have been approximately accurate to have equated the gold mark with 3 paper francs. The rate of 2.20 had the effect, therefore, of inflating the French claim against Germany very materially.
At this rate the claim of 127 milliard paper francs for material damage was equivalent to 57.7 milliard gold marks, of which the chief items were as follows:
| Francs (paper), millions. | Marks (Gold), millions. | ||||||
| Industrial damages | 38,882 | 17,673 | |||||
| Damage to houses | 36,892 | 16,768 | |||||
| Furniture and fittings | 25,119 | 11,417 | |||||
| Unbuilt–on land | 21,671 | 9,850 | |||||
| State property | 1,958 | 890 | |||||
| Public works | 2,583 | 1,174 | |||||
| Total | 127,105 | 57,772 | |||||
This total is one which I believe to be a vast, indeed a fantastic, exaggeration beyond anything which it would be possible to justify under cross–examination. At the date when I wrote The Economic Consequences of the Peace, exact statistics as to the damage done were not available, and it was only possible to fix a maximum limit to a reasonable claim, having regard to the pre–war wealth of the invaded districts. Now, however, much more detail is available with which to check the claim.
The following particulars are quoted from a statement made by M. Briand in the French Senate on April 6, 1921, supplemented by an official memorandum published a few days later, and represent the position at about that date:[68]
(1) The population inhabiting the devastated districts in April 1921 was 4,100,000, as compared with 4,700,000 in 1914.
(2) Of the cultivable land 95 per cent of the surface had been releveled and 90 per cent had been plowed and was producing crops.
(3) 293,733 houses were totally destroyed, in replacement of which 132,000 provisional dwellings of different kinds had been erected.
(4) 296,502 houses were partially destroyed, of which 281,300 had been repaired.