German Reparation.

Oral Answers to Questions — Ireland. – in the House of Commons on 13th July 1922.

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Captain BENN:

28.

asked the Prime Minister whether he can make any statement as to the present internal position in Germany and the reported request for a further moratorium in the payment of reparations?

Photo of Mr George Lambert Mr George Lambert , South Molton

36.

asked the Prime Minister if, in view of the chaotic condition of German finance, he is prepared to make a statement as to what action the Government proposes to take in order that the reparation conditions of the Treaty of Versailles may not be evaded?

Photo of Mr David Lloyd George Mr David Lloyd George , Caernarvon District of Boroughs

A communication has been addressed by the German Government to the Reparation Commission on the subject of a further moratorium in the case of cash payments due in respect of reparation and under various other Articles of the Treaty of Versailles. The text of this communication will be circulated in the OFFICIAL REPORT. It will obviously be necessary for His Majesty's Government and the other Governments concerned to take this matter into serious consideration and to consult with each other and with the Reparation Commission upon it. I am not at the moment in a position to make any statement as to the British Government's attitude beyond saying that we regard it as urgently necessary that such respite should be given to Germany as will enable her to restore order to her public finances and so be in a position to begin to make reasonable payments on account of her obligations at the earliest possible moment.

Captain BENN:

Are we to understand that the further consideration of the matter will be taken out of the hands of the Reparation Commission and considered by the Governments together?

Photo of Commander Hon. Joseph Kenworthy Commander Hon. Joseph Kenworthy , Kingston upon Hull Central

Why should we wait for a catastrophe to occur? Why not try to prevent it? Will the right hon. Gentleman try to do that in future?

Photo of Mr John Whitley Mr John Whitley , Halifax

Lieut.-Commander Konworthy—

Photo of Sir Harry Brittain Sir Harry Brittain , Acton

The catastrophe has occurred!

The text of the communication mentioned is as follows:

Deutsche Kriegslastenkommission.

K. No.

Paris, 12th July, 1922.

Translation.

In spite of grave economical objections which already have been set out in the note of 28th January of this year the German Government have up to now effected these payments. which had been fixed by the deci- sions of the Reparation Commission of 13th January and 21st March of this year.

Meanwhile conditions in the rates of exchange have further altered to the detriment of Germany. In May, 1921, a rate of 60 paper marks for the dollar formed the basis for the fulfilment of the German reparation payments, while in March, 1922, the rate of exchange of the dollar has risen to 285 and in 6th July, 1922, to 500 marks. Supposing that in accordance with the agreements concluded at that time an amount of about 2 milliards of gold, mark3 of the obligations fixed by the London Schedule of payments of 5th May, 1921, was to be paid in cash, this amount would have required an inner covering of about 28 milliards of paper marks. For effecting the cash payments, reduced to 720 million gold marks by the decision of the Reparation Commission of March, 1922, an amount of 51.4 milliards of paper marks would, according to the rate of exchange of March, 1922, have been necessary, which amount, taking into consideration the present conditions of exchange, has now risen to 80 milliards of paper marks. To this sum must be added the other obligations of payments in foreign currencies which Germany is bound to make under the Treaty of Versailles, totalling about 600 million gold marks or 66 milliards paper marks annually.

If, under these circumstances, the German Government would further be obliged to procure foreign currencies to an extent similar to the present for fulfilment of the obligations arising out of the Treaty of Versailles, the present depreciation of the value of the German paper mark would progress rapidly and perpetually and lead to a complete dissolution of the financial, economical and social life of Germany. For this reason the German Government are under the actual conditions unable to continue the cash payments in accordance with the decision of the Reparation Commission of 21st March, 1922.

With reference to Article 234 of the Treaty of Versailles the German Government therefore request to grant them a respite for the cash payments falling due according to the said decision during the calendar year of 1922.

As to the amount being due on 15th July next, this is to be reduced by at least 17 million gold marks which must be credited to Germany with regard to former payments. As to the remainder of 33 million gold marks, this amount is, it is true, at the disposal of the German Government, owing to their having been able to purchase, during the last few months, certain amounts of foreign bills, and owing also to the fact that, according to the state of account, no payment is to be made in the month of July for the clearing. However, the German Government would be short of the said amount, and they would be obliged to purchase the respective bills again at the actual rate of exchange as soon as the foreign cereals to be delivered within the next few months must be paid. The German Government are the more obliged to draw the attention of the Reparation Commission to this situation as they have spent during the last few weeks, together with the Reichs-bank, important means in order to stop the falling of the mark. In consideration of these circumstances, the German Government recommend to leave the amount in question at their disposal.

With regard to the enormous seriousness of the actual situation, the German Government will only be able to restore the social and financial conditions, if they find the assistance of the Reparation Commission. There is no doubt for the German Government that, in order to re-establish the rate of exchange of the mark, measures must be immediately taken the effect of which would be felt still after the year of 1922; therefore, they consider it indispensable that Germany should be freed also during the years of 1923 and 1924 from payments in cash resulting of the Schedule of payments of 5th May, 1921.

The decision asked for by the German Government will only attain its purpose, if all other payments arising besides the proper reparation payments out of the Treaty of Versailles in as far as they have to be paid in foreign currencies will likewise find due consideration. Among such payments are in particular to be regarded the obligations of the German Government arising out of the carrying out of Section IV of Part X of the Treaty of Versailles. The same reasons which make it impossible for the German Government to fulfil the obligation of payment arising out of the decision of 21st March, 1922, also apply to the carrying out of the agreements which were concluded on 10th June, 1921, with respect to the German payments to the Allied Clearing; Offices. For this reason the German Government will address a letter to the interested Governments with a view to arrive at another arrangement with respect to these clearing payments. They will inform the Reparation Commission of this and request the Reparation Commission to support on their part such demand with the respective Governments.

The recent development of the rate of exchange of the mark, which began with the adjournment of the negotiations of the Loan Committee, necessitates a speedy, provisional settlement of the cash payments, the relief expected from a foreign loan having not yet been realised. In consideration of the above the German Government would be glad if the Commission would take their decision as to the demand for a respite with possible speed; they trust that such a decision will favorise the resumption of the loan negotiations.

(Signed) FISCHER.

To—

The Reparation Commission,

Paris.

Photo of Commander Hon. Joseph Kenworthy Commander Hon. Joseph Kenworthy , Kingston upon Hull Central

35.

asked the Prime Minister whether time can be found before the Adjournment for a discussion of the Motion on German Reparations standing in the name of the hon. Member for Kingston-upon-Hull, Central Division—[That, in the opinionof this House, the Reparation Clauses of the Treaty of Versailles have proved to be unworkable in practice and injurious to the trade and commerce of this country; and that these Clauses should be revised forthwith].

Photo of Mr David Lloyd George Mr David Lloyd George , Caernarvon District of Boroughs

No, Sir; I see no prospect of time being found for this Motion, but the subject can be raised on the Appropriation Bill.

Photo of Colonel Josiah Wedgwood Colonel Josiah Wedgwood , Newcastle-under-Lyme

43.

asked the Prime Minister whether he will defer any interview with M. Poincaré in connection with the fall of the mark, and the, result of the fall on reparations, until an agreement has been arrived at with the French Government for a reduction of the claim for reparation?

Photo of Mr David Lloyd George Mr David Lloyd George , Caernarvon District of Boroughs

I do not think it advisable to defer the interview.