1 .".'". . i - . -THE
OREGON SUNDAY JOURNAL, PORTLAND, SUNDAY .MORNING, OCTOBER 29, 1922.
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Statinard
This Installment
Peace" Tells the Different
Views on Hom Much Ger-?
riiany Should Pay;
CHAPTER XUi
j By RayStannard Baker
' The Sunr17 . Journal heir with presents the
wfrwi tn.iinitr nt Tim Btaniiard Baker's
tory.
"The Pee.ce, which U an iouiomiu araon
hw the peace tf Pri w coerluded. "Wood tow
Wilson rare Mr. Biker aoeeie to ell hie penon.. tt
pu Wished paper, which ere the only reliable en
ineontrorertible report of tbe facta, and 'which here
tofore hare . never been made public. The epochal
feature will be pubjiahed ia The .Journal aerially -throughout
the rear. . ' ;
tCopyricht, 1822. by Doubleday. Paew Cv. Pi
t lihed by Speeial Arraneement with the ' , ;
, McClnre Newepaper Syndicate. s "
TV7HEN the greatvwar closed' and the
- world looked out over, the smoking ;
Tulns left by the invading; armies, ths
question above all ether question that (
arose was tints:
How shalrthese vast losses, this ruth
less destruction,-be repaired?
No one problem. Indeed, bulked larger 4
In the peace conference than that ofrep-'
' aration of damages; none received so
much complicated attention In the treaty; '
none has presented such mountainous
difficulties since.
Three aspects of this supreme problem
presented themselves at the jpeace con
ference: " I t ',.,
1. How much should Germany be
forced to jay ?
2. How should this be divided among
the allied powers, great and small, when
the losses and services of each had been
so widely different?
3. In; what manner waa Germany to
pay it so as not to bring the entire eco
nomic organization of the world to ruin ?
The first of these subjects, the problem
of total demand upon Germany, will be
treated in this chapter; the : other two
subjects in the following chapters.
Much?ihlnking had been done upon the
problem?. of how much Germany should
be required to pay before the war closed.
Two points of view had developed. One
was that she should be required to pay
an "indemnity'"' for the entire" costs of
the war; the other was'that she should
be required only to repair material dam
ages caused by the war. In the begin
ning the: European allies, particularly ,
France, stood for-the first view; America
for the second. ' .-
President Wilson had early seen the
danger of a peace settlement" which
should .be so extreme and revengeful, no
matter how serious the offenses of the
enemy, that it would inevitably lead to
future wars and endanger the whole
project of international, cooperation,
which was the keystone of the American
program. Thus he told congress Decem
ber 4, 1917:
"The wrongs, the very deep wrongs,
committed in this war will have to be
righted. That, of course. But they can
not and jnust not b righted by the 'com-
mission of similar fwrongs against Gef
many and her allies."
Out of this grew his fundamental prin
ciples of the settlements, set fjorth again
and again, and well expressed in the
address to congress, February 11, 1918:
"There shall "be no annexations, no
contributions, no punitive damages."
The allied leaders accepted this idea
and it was embodied in the crucially im
portant note to Germany, November 5,
1918; invaded territories must be
restored; as well as evacuated and freed.
The allied'governments feel that no doubt
ought to be allowed ,o exist as to what
this provision Implies.' By it they under
stand that compensation will be made by
Germany for all damage done to the civil
ian population of the allies and their
property by the aggression of Germany
by land, by sea and from the air."
X UT immediately , the armistice waa
. signed there followed the momentous
"slump in idealism." Demands that Ger
many "pay the last shilling" swept both
England and France. Indemnities were
also to be punishments. 1,16yd George
. won his election of December 14, 1918,
on .-the program far exacting enormous
and impossible, indemnities; and it soon
appeared that the FrencbJ expected to' re
cover from Germany the entire cost of
the was not mere reparation of damage
as-had been promised InJhearmistice.
In short, the allies prepasdi jfh the eco
nomic as In the political field, to nega
tive the whole spirit and intent of Presi
dent Wilson. '
... On the very first occasion that the sub
ject arose in the peace conference (Jan
uary 22, council f ten)V. when JUoyd
George spoke of "reparation and indem
nity," "Wilson iistantly countered with a
remark, significant of the coming strug
gle: - ,
"President Wilson suggested it might
be weir to omit the word Indemnity.
The allies apparently accepted the
president's point and the next day adopt
ed a resolution constituting a commis
sion to study the: whole matter of repa
rations. -.. ... '
But neither Lloyd George nor Clemen
ceau. of course., really accepted the pres
ident's view. Lloyd George packed the
commission witlw his reactionaries
Hughes. SumnejyCunliffe- r who Joined
' the French lor support of crushing in
demnities. They demanded that th Ger- !
mans pay members Davis. Baruch. . Mc- 1
Cormlck - took sharp issue with1 them
and a controversy developed which cam
o ajhead in-February, Just after Presi
dent Wilson sailed home to America.
- Here waa a direct clash' upon a vital
vfcriBpcipla, What waa to be done? v
'j'WO questions arose immediately as to
the .amount of reparation to be do- '
manded. of Germany, the Grst as to' what
- 0erma&7 Should. pay. the second as to
- : a . - w : - .
-v- aaWaSBSSfeaswlSasasawBKfcV
Baker in r-f 7
of The
----
I.
what she could pay. These were very
different questions, as many a creditor
has discovered In considering a case of
bankruptcy.
The demands at first put in by the
French Loucheur were fantastic; . they
accepted Lloyd George's stump speech y
figures of $120,006,000,000, and even sug-
. gested that it otight to be $200,00,000.
000. They proposed to collect $5,000.-
,000,900 at once, and the remainder in
Nsums, Of $(,000,000,000 or $7,009,000,00
a year for 50 yeare! , V i
The special committee of three at-
w tackeoVhe whole problem ,of the demand
' on Gerjnany with great vie;or. and with
real desire" for a straightforward solution
based upon the facts of the case. Even ,
Loucheur was convinced for the moment i
by Davis of the advisability of facing re
alities and being; honest at least with the
heads of statea Abrut . March 0. , this
committee presented to - the council of
three a memorandum drawn iip by Davis
in presenca of the others, which is an-in-valuable
document as a statement of so
ber opinion of responsible men at the
. moment of crisia It Is a pity that this
has never yet been published . in fnJV
" After a brief but clear survey of Ger-.
s many'a economic status, the . three con-
eluded: ' .- v .... - . " " -
"On a liberal basis, we estimate that
Germany might possibly pay from $10,-
, 000.000.000 to $20,000,000,090 over a pe-
" rlod of 20 to SO years.-.
' - -. ; --.'-
"PSTIMATE3 of $2,000.000,000 . to $4,-
000,000,000 annuities they character"-
. ized as uterly impossible." . Th.e three
economists, however, also stated that, "as" I
? nearly as -we can judge from the present . ;
y stlmates, the bill ; for damages would i
rua to about $30.000,00$.eoo. and 'that -
'. 'eS
: AM :
A I lies Prepare to Annihilate
With Demands for Immense In-
demnities, Although a Few Days
Before War1 Ended Tuetons f
v". i.;,-, - -. - - - .-. --.-.- -. . ' - :..--: i"..
1Fee
Lord RobertJCeeil Was
Chairman of tBe Supreme
Economic Council
"moral opinion" demanded that this
amount be asked. Now ther was a con
siderable gap between this figure and
that which they had set as Germany's
capacity to pay. They bridged this gap
Ingeniously. They recommended that
Germany be called upon to pay $30,000,- .
000,000. but stipulated that half the,
amount should be tpayable in German
currency at the rate of exchange at the '
time Of. payment). Thus lt, was calcu
lated that -Germany need pay only $ 15,
000,000,000." in actual export of gold or
goods and time was to be given her even,
for the payment of that, thus further re
ducing her obligation. The other $15,
000,000,000 would be reinvested, as rap
idly a received in German, industries, to
be gradually withdrawn in the-next 30
to 60 years, s .....
' , ; ... !
A S Klatz put this clever scheme -s be
fore the four, in the critical session
of March 28, at the very .height of the
dark period and . only a few-days .before
the president fell ill, the. commission jcas
to serve merely as an adding- machine, so
far as the total; sum was concerned
registering the final claims for damages
as they came in. "Then, according to
the amount of the debt thus ascertained,
he concluded "it will settle the figure of
fthe annuitles.and the length of payment-
The only consideration given Germany's
. caljacity. to make payments would be in
the form of lengthening- the period given
her to'feomplete them twhieh.lby the ac
cumulation of interest jn the.un paid por- .
tlon, "might be extended to 'Infinity. It
practically, amounted to a perpetual ' eeo-"
nomic control of Germany by an. allied
commission.
President Wilson . and his tadvlsers
fought this proposition bitterly. '.But the
arguments in its -favor, were too attrac
tive to all -the, European politlcUas to
si it v- ' s k
" M f-
7b Only Repara
tions Would Be
Exacted
- :
... M
. i "i x 1 - -.1... tThMim-''''" (
i Bernard Baruch Was One of -the
Economists to Whom
WUson Looked for
Adrice ',; " . :
be overcome by any amount of reason,
Lloyd George rallied to it instantaneously.
Although the president did inot give UJ
"the fight for a lump or limited; sum ' at
once, he could not .refuse to allow the
experts to try their hand at jworking but
an acceptable scheme on the new basis.
' His position was that the period of delay
before statement of the totalj sum should
be made as brief as possible nd that the
sum must be such as Germany could' rea
.sonably. be expected to discharge in full
within a generation. In short, that it
must be based upon "capacity to. pay."
The conference was now at its crisis.
Some decision had to be reached, some
basis 'of compromise, else the - delegates
might as well go home, . On the next day
(March 29) Lloyd George submitted a
vague plan which led to long-and heated
discussion. It took for granted the Wholly
'Unsettled question, that pensions should
be included among Germany's liabilities.
No American at this trme wuld accept
this proposal at all.. Lloyd "George's draft
simply stated that the Germahs should be ;
required to pay the amount ! of damages
and pensions, "at whatever cpst to' them
selves," and left the commission a free
rein- to fix the amount and the time over
which it Bhould be paid.j This was
promptly accepted by the French; but
the Americans demanded that the pay
ments' required were to cover 'a series of
years not to exceed 30, and in general to
be based upon5tjie reasonable capacity of
the enemy stats o pay," and this the
British " experts tentatively accepted,
though It certainly did not express Lloyd
George"s ideai In the face f vehement
criticism byjTthe j French of ! even this:
qualification. the . Americans insisted on
'April ".2 upon a still further change
from Lloyd George's "at whatever cost to
themselves" to "to the extent of their ut
most capacity." 'To this the British also .
finally agreed; but the Frenjch declared
obstinately that they could nbt accept it.
H
ERE was a complete impasse between
one hand and the French onlthe other
with the result thai the whole matter ,
was put up to the hard-driven council of
four on April 5; It is a great misfortune
that such a vital question as the basis of
reparation payment should f have been
thrashed out while the president was ly
ing 111 in his bed. For this economic
question transcended in importance many
of the political questions -upon which the
conference was so near being ship
wrecked. '.("- T ' , .
-The Americans approached this meet
ing with aomefrhope,. but -it was soon '
dashed by another reaction of the Brit
ish, who threw over the tentative agree- .
ment w4th the Americans Jof April 2.
Lloyd George." had .gono x ovjsr again to
the reactionaries and was sponsoring- a
new scheme by Lord Sumner which prac
tically supported the French rather than
the American proposals, leaving the .
American " advisers again , Isolated. , Un
fortunately, Colonel House, who was- sit
ting m the four . during the president's
illness and who was now eager :for a set
tlement on almost any terms, saw noth
ing of the violation in this! to the bed
rock .principles laid down by the presl-,
, dent and his. advisers. He expressed his
willingness to forego even the statement
of any time limit for the paymenrof rep--
arationa x and when ' the jubilant French '
accepted the form ' of , the f British pro-
posal of Lord Sumner, Cplonel House ob-
, .... -.. . . l a
Germany w
.. ' , f
"It seems to me
ceau's conclusion is
that -. Mr. Clemen
very close to- the
American proposal." .
A a matter of fact, the difference be-?
twen the .Americans and - French" was ,
fundamental and Davis contradloLedhlm
at once by the statement: '- ; .f j
."This is a complete departure fromithe
principles upon which -we have been
working for three months." .; , .
.. V The, great -argument of ; the '. American
experts in support of the final compro-,
mise arrangements is that, as -they.. vis-'
ualized the reparation r commission. It
would have worked "out all right. It was
net what they wanted, but peace had
somehow to be made, and given Amer
lean representation, a moderating influ
ence would - be established as A. check,
upon all extremist interpretations of the
treaty,-virhich, under the unanimity rule,
would have, proved 'decisive. It. tiannot,.
be doubted that if the United States' sen- '
ate had ratified the treaty and American i
representatives had-, taken ' their
upon this vital . commission thev
have steadily and powerfully argued, as j
tney .did at Paris, economic good sense, v
reconstructive measures. : and lent , their "
support to awakening British reasonable- .
nss upon these subjects. - We t should .i
have been cooperators in a practical way
with Europe In meeting ' common prob- ;
lems, and, American- public opinion would'
. no doubt have awakened more quickly to
the necessity of solving K new problems
, with . new sacrificea But the ' United
States senate, by rejecting; thp treaty,
closed this hopeful UooK v. - Vj'
.-, J - e ' .. . "
ANB other Important "element in tho i ,
reparation settlement-: must here be
discussed, that of pensions. This , is not ;
a small matter, as some critics have as-1-serted.
The bill of May 21, 1921; amount- '
ed to from $20,000,000,060 to $22,000,- ;
000,009 for pensions and allowances jaut '
of the total reparation sum ot $33,000.
?- Jit"" -r.V'. -
w
000.000 about two-thirds of thewhole. f irh -oresldent.' ' .The '; lawyers, headed b
xi. was mtn a. mailer. 91 .tuu importances
The idea-of making a special lasue of
this -matter: seems '.to rhave'11' been seized
upon by" the British at "the time'- the 'war
cost principle was' being, forced - out of
court through Wilson's determined pol
icy. The dominion premiers,, and . espe
cially Hugjaes. had been stronr for uslnr.
&5aJ
- LIoyd-Georce Kept His l
Vitality at FighUns Pitch by!
, His Fishing Golf Playing i
"- and Indulgence in Outdoor '
: , , Sports
Lucien Klatz, One of the Cleverest of the Advisers
' Who Supported ' Clemenceau ! i
the total cost of the war as a basis
calculation, not 'only as . being moi
. vengef ully Just," but as giving the domir
ions a share of, receipts 4. from whic
they would' be excluded entirely by th
. adoption of a material basis of damage
Hughes had argued both for this and fc
- the annexation of colonies bj the domii
Ions, and saw himself being; done out
J both. His - bitter ' publlo speeches ' 1
' .March forced the British government t.
seek means of conciliation on both issue
,In the matter of reparation. Its own Ir
tercsts - were at stake, not only as cor
Icerned its standing "with parliament an
the electors, : but as concerned the , rigt
"of Great Britain herself to participate: 1
the distribution of receipts. In her ea&
'actual damage . waj relatively ? smal
--There was every, motive tbj. seek-for ar,
s other basis of reparation-than that wai
ranted by a narrQw 'Interpretation of th
pledge of November, 1 1918. and the Wll
son policy." The solution of the difficult
places was found In the Inclusion oj pensions s
wouldL. a category of damage. . The distributlo
(would thus be placed on a dual basis c
material damage and sacrifice of UVeju
, The - whole proposition was really dii
advantageous to the French; for the dur
basis' meant a smaller proportion of re
'ceipts for them than the singW basis t
damage,;.:,", -' f: ' ' . . : -But
the French," forced . by "WUson -1
abandon the war costs; accepted the pen
sion plan in order to keep the total sur
as high as possible-rand thus do as mac'
harm as possible !- to , Germany, eve
'though; their percentage of reparatio
was smaller. - J ;M":"!. i'':A;: !
- - The 'Americans put up ' fight on th
whole proposal on the question of prir
clpie, but not so stubbornly as over th
total war costs. The issue was cot s
'-clear,' and when the ordinarily libera!
minded Smuts made himself spokesma
for the : dominions in this struggle,, hi
influence .and his arguments convince
Xmlles, who had done yeoman service 1
the defeat of the war costs, objected the
Smuts'; logic was false and. that the de
mand was unjustifiable under the term
of the pre-armlstice, pledgee ,
'(To bo continued next CsnlarO
r4. "I