APPENDIX XI Financial Status of Germany Statement by Mr. Lloyd M. Robbins of the United States Delegation Reparations Commission, December 10, 1922. THE TREATY OF VERSAILLES did not fix the amount of reparation Germany should pay to the Allied Powers, as many have mistakenly believed. The Treaty of Versailles, instead, set up the "Reparations Commission" and empowered this commission to fix the total German liability and also to fix the amount from time to time to be paid by Germany, according to Germany's capacity to pay. In 1921 the Reparations Commission fixed the total German liability at 132 milliard gold marks, an approximate equivalent of $31,000,000,ooo, and also required Germany to pay for the cost of the army of occupation. Germany was required to pay this in three series of bonds, an annual payment, covering sinking fund and interest, of approximately $440,000,000 plus 26 per cent of the value of her exports. The 26 per cent could be exacted by import duty on goods coming from Germany, and it was provided that the allied countries receiving such import revenue must credit Germany with the amount received. The annual sum of $440,000,000 was to be paid by Germany in quarterly installments, and two installments were to be paid in 1921. Germany discharged her obligations in 1921, that is, she paid the sum of $220,000,000 and also 26 per cent on the value of her exports. Toward the end of 1921 there was a tremendous drop in the value of the German mark, which led to a meeting at London between M. Briand, Prime Minister of France, and Lloyd George, Prime Minister of England. As a result of this meeting, known as the "London Conference," recommendation was made that the amount of reparations for Germany to pay during 1922 be modified. This recommendation was put before a conference of the allied representatives at Cannes, France, in 1922. In the midst of this conference the French government then in power came to an end and M. Briand ceased to hold office. At this time the Reparations Commission was assembled at Cannes and on March 21, 1922, at a meeting between the allied finance ministers, there was imposed on Germany a modified obligation for 1922 payment. Under this modified arrangement Germany was required to pay instead of $440,000,000 in cash and 26 per cent of value of her exports as follows: Approximately $160,000,000 in cash and $322,000,000 in kind. Germany was also told to increase her taxes. She also was required to stop subsidizing bread, which resulted in industrials getting labor at a cheaper rate. She was told to stop operating her railroads at a deficit, which resulted in goods being carried at less than a proper rate. She was further told to stop operating her postoffice at a loss. Also she was told to allow the Reisch Bank to operate free of government control, which too greatly facilitated the manipulation of paper money. In September last it took 7,500 marks to make an American dollar. Germany's liability for reparations has made it impossible for her to obtain a loan, for the security for a loan would be a sort of second mortgage on the security for her reparations. Germany has brought about her own present financial and economic difficulties, because during the war she met her expenses, not by taxation, but by borrowing. When the war ended her system of taxation was inadequate, and her post-war government has not been strong enough to correct this. She made no attempt to balance her budgets. Her deficits were met by printing notes. As the mark decreased in value, salaries and wages increased. As the latter increased more notes had to be printed, and thus a vicious circle was kept up, and is still continuing, in a measure, although improvement is noted. |