1921. Germany has upset everything. A new experiment does not attract us.

48. This paragraph entirely distorts our ideas, which were, however, clear enough. We said, in so many words, that if the two questions of the Ruhr and security were distinct "we should always be happy to enter on conversations with the British Government regarding this last question." This surely meant "let us negotiate immediately if you so wish, but do not let us mix up two distinct questions."

France showed sufficiently clearly quite recently on the Disarmament Commission of the League of Nations, that she was ready to discuss all questions concerned with the consolidation of peace, and she even had the satisfaction of seeing the British representatives agree with her point of view. Moreover, at the beginning of 1923 (sic), when Mr. Lloyd George offered us a unilateral pact of guaranty contingent on the prior settlement of all pending questions between France and Great Britain, limited to five years and containing no precise indication of the military assistance to be rendered, we replied that we should be happy to examine these propositions, on condition, however, that the duration of the pact exceeded that of the occupations provided for in the treaty, that it was mutual, and that it was accompanied by reciprocal and effective military guaranties; that is to say, on condition that it had a practical value for the two countries. Hitherto no reply has been given to us. France is ready to-day to renew the examination of all problems relating to security. But guaranties, even effective ones, against new attacks can not be allowed to deprive her, in whole or in half, of her right to reparations. 49. In brief:

50. It is impossible to estimate once and for all the present and future capacity of payment for Germany. It is at present at its lowest, and an estimate made at present would merely benefit Germany.

51. The impartial inquiry can and should be made, not only at present but also later and from time to time by the Reparation Commission and its own experts in accordance with the provisions of the treaty.

52. Germany has refused to establish her finances on a sound basis and to stabilize her currency in spite of repeated demands by the Allies. The sooner Germany understands the necessity of realizing these reforms, the sooner she will be able to restore her credit and to improve her economic conditions. She will then be able to find, little by little, means of transferring her internal wealth, which is immense.

53. It is German resistance to the occupation, and not the occupation itself, which has reduced the deliveries made on account of reparations, especially those of coal and coke. Before ever we entered the Ruhr Germany was demanding a general moratorium, and was declaring her inability to continue deliveries in kind on the existing scale. It is strange

that the British Cabinet argues as though these declarations had never been made.

54. If the British Cabinet, as is its right, does not feel able to modify the percentages nor to accord priority to reparations we, for our part, are forced to stand strictly by the figures which were promised to us, with the explicit agreement of England, both under the treaty of Versailles and under the London Schedule of Payments.

55. The Government of the Republic, as much as the British Cabinet, ardently desires to maintain peace in the world, to re-establish there normal life and to develop the facilities of commerce. But it does not believe that an economic restoration of Europe is possible without an observance of treaties or by methods other than those of justice. It has taken action, not isolated but distinct from that of Great Britain, only after express consideration by the Reparation Commission. It is conscious of having remained true to its engagements to its Allies, it remains resolved never to deny them.

ANNEX: DEBT TO BRITAIN

1. The British Government, by subordinating the question of interallied debts to the valuation of German capacity for payment, and by wishing to estimate this capacity at the moment when it is lowest, are driven inevitably to the conclusion that the interallied debts shall be fixed at the highest figure.

2. It is quite legitimate that the British Government should claim from Germany what they have to pay to the United States. But if they claim from us what they do not receive from Germany, we shall naturally be obliged to maintain as far as necessary the right to recover from Germany within the limit of our admitted rights.

3. In offering not to claim against Germany under the heading of C bonds except to the extent to which claims are made against her for her interallied debts, France, whose material losses are greater than those of all the Allies put together, and whose human losses are much greater than those of any one of the other Allies, has shown herself ready to make a sacrifice much greater than that of England.

4. The total which France claims from Germany is much smaller than the expenditure which she is compelled to make to restore her devastated regions, quite apart from that which she would have the right to demand on the score of pensions.

5. We for our part gravely fear that the policy set forth in the British note does not take account of the abnormal economic situation of France, and that it tends to impose on her a burden which she can not carry.

6. The British Cabinet, therefore, definitely intrusts the settlement of

interallied debts to an international examination conducted by irresponsible financiers and to the constitution of a commission in which France and Belgium will find themselves in a minority.

7. The British Government persist in attributing to the occupation of the Ruhr the consequences of a policy followed by Germany before that occupation and pursued by her since that occupation, as if that policy would have changed had we not occupied the Ruhr. Such an argument, or, to speak more exactly, such a statement, is in contradiction with all the facts which are the result of the labors of the Reparation Commission in 1922, and even with the repeated declarations of the British Government, who more than once last year proclaimed the ill-will of Germany and the danger of her financial methods.

8. We understand very well that the British Government reserve their rights. They will understand, no doubt, that we reserve ours vis-à-vis Germany.

9. We have never questioned England's claim. We have merely said, and repeat, that our debt, contracted as it was in exceptional circumstances and with a common object in view, could not be compared from the point of view of morality and justice with the German debt for reparations.

10. The expenditure which the Government met by means of these advances was nevertheless for the essential object of equipping and maintaining armies fighting for the common cause.

11. If no suggestion was made when the loans were incurred that their repayment depended on sums to be recovered from Germany, it was because at that moment the Allies considered only the pooling of their efforts and were all working with the same ardor for a common victory; at the end of the war the figures suggested for reparations, whether by the treaty of Versailles itself (a minimum of 100 milliard marks guaranteed by bonds), or by the London Schedule of Payments, would have permitted France to repay England the whole of her debt without difficulty.

12. France has never repudiated her debts, nor will she do so, but she is convinced that no British Government will ever bring to bear on an allied country the pressure which the London Cabinet does not think it possible to bring to bear to-day on the ex-enemies of France and England. We can, therefore, only repeat that we shall only be able to repay our debt to England, or even to pay interest thereon, when payments from Germany shall have placed us in a position to complete the reparation of damages caused to our country by invasion and the shock of war.

III. THE BELGIAN STUDIES OF A SETTLEMENT

Immediately after the receipt of the German note of June 5-7 by the Governments, the Belgian foreign minister forwarded, on June 9, 1923, a lengthy note which covered technical studies of German methods of payment in a more objective and scientific manner than any similar document of allied origin. These studies, which are here published in English for the first time, were in the hands of the Committees of Experts of the Reparation Commission and considerably affected their findings.

The document bore no fruit for several months. Dispatched on June 9, it was based upon the insistence that "the enterprise of January 11 last [the Ruhr occupation] must end in a success and not in a defeat." The British Government, holding definite views as to the illegality of that enterprise, did not at the time accept the premise. The controversy to which the previous chapter has been devoted intervened. On September 26, however, German passive resistance was discontinued in the Ruhr. The way was consequently opened for the consideration of the plans on their merits and without conditions. On October 13 the Belgian Government was able to issue the following communiqué:

The Belgian Government has called the attention of the French, British and Italian Governments to the technical studies of the reparation problem communicated by the Brussels Government to the allied Governments, suggesting the advisability that they be examined by the Reparation Commission. These technical investigations indicate methods by which Germany could pay her debt.

The Belgian Government feels that these reports are destined to serve, partially at least, as a basis for a concrete reparation plan. In submitting them to the Allies she had only one purpose, namely, to assist in bringing about a practical solution of the reparation problem. The Belgian Government had thought that when the Reich should have abandoned its policy of resistance, fulfilling the condition upon which, according to the French and Belgian communiqué of June 6, the question of resumption of negotiations hung, it would be extremely desirable for the Allies to be in accord concerning the solution of the reparation question.

Doubtless the cessation of passive resistance may not yet be considered complete, but the Belgian Government takes the view, owing to the

technical character of the reports which it submitted to the Allies, that a preliminary examination should be made of them by experts, thus facilitating the task of the Governments of the Allies when they are again called upon to study anew the reparation problem.

The French, British and Italian Governments have accepted the Belgian Government's proposal and the Reparation Commission will undertake the work.

Within the week the technical studies were officially before the Reparation Commission as a starting point for their investigations. Meanwhile, the German Government, which knew the substance of the studies and from which a move was due, was preparing a new offer. This took the form of a note from the Kriegslastenkommission to the Reparation Commission, dated October 24, which formally surrendered the position held from the previous January and proposed negotiations on the Belgian plan. This note, defining the situation at that time, reads as follows:

On January 13 last the German Government informed the Reparation Commission that, owing to the occupation of the Ruhr basin, it had discontinued the performance of reparation obligations to the powers taking part in that occupation. By a note dated January 26 last the Reparation Commission replied to this notification to the effect that it considered as null and void thenceforth the requests formally made by the German Government with a view to reaching a new settlement of the reparation question, and that, this being so, all the provisions of the Schedule of Payments of May 5, 1921, became due.

Now, the German Government, having by its declaration of September 26, 1923, called upon the population of the occupied territories to give up passive resistance against the occupation of the Ruhr basin, and having annulled the ordinances and the instructions issued with regard to the resistance, its decision to discontinue the performance of the reparation obligations to the powers participating in the occupation of the Ruhr has simultaneously become inoperative. The German Government consequently states expressis verbis that it is in principle prepared to resume the execution to these powers of the obligations provided for in the treaty of Versailles.

On the other hand, the change which has taken place in the state of affairs in Germany since January last and has brought about the present economic situation has, in point of fact, deprived the German Government of the possibility of raising at present the funds requisite for enabling it to finance the obligations stipulated in the treaty of Versailles. Since the German Government's statements of November 14 and 27, 1922,