In this question of Reparations the position changes so fast that it may be worth while for me to remind you just how the question stands at this moment.  There are in existence two inconsistent settlements, both of which still hold good in law.  The first is the assessment of the Reparation Commission, namely, 132 milliard gold marks.  This is a capital sum.  The second is the London Settlement, which is not a capital sum at all, but a schedule of annual payments calculated according to a formula; but the capitalised value of these annual payments, worked out on any reasonable hypothesis, comes to much less than the Reparation Commission’s total, probably to not much more than a half.

THE BREAKDOWN OF GERMANY

But that is not the end of the story.  While both the above settlements remain in force, the temporary regime under which Germany has been paying is different from, and much less than, either of them.  By a decision of last March Germany was to pay during 1922 L36,000,000 (gold) in cash, plus deliveries in kind.  The value of the latter cannot be exactly calculated, but, apart from coal, they do not amount to much, with the result that the 1922 demands are probably between a third and a quarter of the London Settlement, and less than one-sixth of the Reparation Commission’s original total.  It is under the weight of this reduced burden that Germany has now broken down, and the present crisis is due to her inability to continue these reduced instalments beyond the payment of July, 1922.  In the long run the payments due during 1922 should be within Germany’s capacity.  But the insensate policy pursued by the Allies for the last four years has so completely ruined her finances, that for the time being she can pay nothing at all; and for a shorter or longer period it is certain that there is now no alternative to a moratorium.

What, in these circumstances, does M. Poincare propose?  To judge from the semi-official forecasts, he is prepared to cancel what are known as the “C” Bonds, provided Great Britain lets France off the whole of her debt and forgoes her own claims to Reparation.  What are these “C” Bonds?  They are a part of the London Settlement of May, 1921, and, roughly speaking, they may be said to represent the excess of the Reparation Commission’s assessment over the capitalised value of the London Schedule of Payments, and a bit more.  That is to say, they are pure water.  They mainly represent that part of the Reparation Commission’s total assessment which will not be covered, even though the London Schedule of Payments is paid in full.

In offering the cancellation of these Bonds, therefore, M. Poincare is offering exactly nothing.  If Great Britain gave up her own claims to Reparations, and the “C” Bonds were cancelled to the extent of France’s indebtedness to us, France’s claims against Germany would be actually greater, even on paper, than they are now.  For the demands under the London Settlement would be unabated, and France would be entitled to a larger proportion of them.  The offer is, therefore, derisory.  And it seems to me to be little short of criminal on the part of The Times to endeavour to trick the people of this country into such a settlement.