From International Press Correspondence, Vol. 3 No. 13, 6 February 1923, pp. 103–104.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
At the present moment (beginning of January), the main point of interest is the break which has taken place in Paris between France and England. This event cannot have caused any surprise to our readers. In our report on the London conference in July 1922 we had already stated our conclusions:
“The Entente still exists. But the English Parliament recently granted an extraordinary subsidy of £100,000 for the study of means of defence against poisonous gases, and further two million pounds for the building of 500 new war aeroplanes. And when the member of the Lower House, Wedgewood, addressed the question to Lloyd George, whether these aeroplanes were necessary in view of France’s extensive armaments, Lloyd George replied: ‘In adopting these measures we have taken all circumstances into consideration.’”
If we study the documents of the January conference in Paris, we arrive at the conclusion that the breach in the Entente is to be attributed to the same causes which had already rendered the first London conference in July, and the second conference in December of last year, so lacking in tangible results. The cause is the conflict of interests of the two European imperialist powers: England and France. The reparations question is only a small part of this world wide antagonism.
It is not our task here to recapitulate the whole entangled history of the reparations question. We shall merely touch upon the main tendency of its development. At the time of the conclusion of peace, the victors were of the opinion – without in the least examining Germany’s paying capacity – that Germanv had to pay for all the damages suffered by the allied states during the war. After a time the decisive question became one of arriving at a correct estimate of what Germany was able to pay. And as Germany’s paying capacity is very small, every succeeding phase of the reparations negotiations reduced the figure of Germany’s obligations. In January 1921, the total obligation was fixed at 226 milliard gold marks. In the ultimatum of May 5, 1921, the reparations were fixed at 132 milliards gold marks. But at the same time it was obvious that this sum was not to be taken seriously, for interest bearing bonds were issued only to the amount of 50 milliard gold marks, while the remaining 82 milliards remained without interest and undistributed until further notice.
Nothing but the fear of public opinion in England and France kept the allies from stating candidly that they did not hope to get any more than 50 milliards out of Germany. As Keynes predicted, Germany proved incapable of paying even the sum fixed in the London ultimatum: 2 milliards gold marks and 20 per cent of the export. A moratorium was thus granted for the year 1922, according to which Germany’s obligations for that year were fixed at 720 million gold marks and 1,450 millions in kind. But in 1922 Germany could not raise even this sum, and a fresh moratorium had to be granted for the last 5 months, the payments due to Belgium were covered by treasury notes to be paid later.
As we have seen, no agreement could be reached between England and France on the question of this moratorium. Already Poincaré had produced his demand that no moratorium be granted to Germany without a “productive pledge”. At that time the question was passed on unsolved to the Reparations Commission, and as the demand concerned was a special one of Belgium’s, France had not the possibility of pressing forward to the breaking point at that time.
A circumstance playing an important role here is the existence of two antagonist tendencies in French politics. While the great peasant masses, pensioners, and officials, desire a peaceful policy, and only wish for the stabilization and possible improvement of the rale of exchange of the franc, there are, on the other hand, wide strata of heavy industrial undertakings striving for a military and imperialist policy. This policy is dictated by the necessity of combining French ores with German coal; the attempts to bring this about by peaceful negotiations with the German bourgeoisie have so far been without avail. It must here be taken into consideration that the consequence of a policy of violence the further depreciation of the franc – is by no means undesirable to the French capitalist. Depreciation of the franc signifies an automatic reduction in wages, and French heavy industry, rendered dependent on extensive exports (by having gained Lorraine, and by the combination with the iron industry of Luxemburg and Belgium), would find its struggle for the world markets facilitated by the low value of the franc. It must finally be taken info consideration that France’s finances are on the verge of ruin, and that she has already expended 100 milliards of francs for the restoration of the devastated regions, without having received any large cash payment from Germany. It is thus comprehensible that, despite the fear of war like adventures prevailing among wide strata of the people, the whole of bourgeois public opinion nevertheless firmly supports Poincaré in the question of “productive pledges”. The antagonism which has split the Entente is not a new one. At the London conference of last summer, England refused to accede to the measures demanded by France, demands in all essentials the same as those now formulated.
It may be assumed that the events of the last quarter of 1922, are in general known to our readers. After the Reparation Commission had visited Berlin in the beginning of October, Bradbury produced a plan for a 5 years’ moratorium. To this Barthou replied, on the 25th of October, that a moratorium could not be granted without pledges, and that the reparations question would have to be solved together with the question of the interallied debts. The same was repeated by Poincaré in his Senate speech of November 9 he said:
“On behalf of the French government, I declare that we will not tolerate a further reduction of French demands, and Parliament and country alike support me in this ... I have shown that German industry is enjoying actual privileges behind a show of misery. A great part of the revenues of the country are free from any taxation whatever, and enrich the treasuries of the great industrial magnates or of their foreign banking accounts.”
He repeated the demands he had formulated in London, as follows:
“A 60 per cent participation in the proceeds of certain industries, erection of a customs line around the Ruhr area, – collection of taxes in the occupied German territory, and collection of the proceeds of the state mines in the Ruhr area and and of the forests in the various provinces of Germany.”
There then followed, on November 14, the official note of the German government to the Reparations Commission, requesting a moratorium for three or four years for all payments, whether in cash or kind, and further, a foreign credit of at least 500 million gold marks. In return for this, Germany offers: action towards the stabilization of the mark; the German Reichsbank is to place 500 million gold marks, in gold or securities, at the disposal of this action. As soon as the rate of exchange of the mark will have regained confidence at home, the German government will raise an inner gold loan. Even during the period of the moratorium one half of the proceeds of the internal loan, and the whole of the foreign loan, are to be used to pay reparations.
This measure is to bring about a stabilization of the mark. Essentially the same plan is contained in the letter sent by Cuno, representing the new government, to the English prime minister, on December 9. Both German propositions were rejected.
It was under these circumstances that the London conference met Here the conflicting interests of England and France clashed. While France maintained that the German state was depreciating the mark and steering towards bankruptcy intentionally, in order to avoid paying the reparations, Britain was of the opinion that Germany’s economics were actually ruined.
“According to all information which I have received, said Bonar Law, “Germany is on the brink of collapse. I regret having to say this, but I believe it to be true. The tragical thing about it is that there can doubtless be no improvement for Germany until the mark is stabilized, but that the experience of the whole world, our own experience during the past year, and the opinion of every political economist, go to show that precisely the attempt to stabilize the mark will lead to the break-down of industry which we ourselves have experienced. We must keep all this in view.”
He formulated the question as follows: “What is the best method of getting out of Germany the amount which it should pay?” The Allies could not agree on the method, for France demanded productive guarantees, that is, the occupation of German territory, while the English were of the opinion that such a procedure would bring about Germany’s complete economic ruin without gaining the hoped for payments for France.
The unbridged chasm between England and France having thus become apparent, France set to work in the Reparation Commission, in agreement with Belgium and Italy, to create the legal premises required for an invasion of Germany. It was decided on December 27, against the vote of the English representative, that Germany had become guilty of a voluntary default by the incomplete delivery of the wood ordered. This verdict was delivered in spite of the fact that Germany offered to deliver the shortage by March 31, 1923. It was further decided that the oft-mentioned difference between a “default” and a “voluntary default” does not exist, that the two terms were synonymous. After these preparations the conference of the Allies began on January 2. England as well as France brought ready-made solutions to this conference. We shall briefly outline the substance of these two propositions in the next section.
Last updated on 9 July 2021