THE DAWES PLAN TO COLLECT FROM GERMANY

A Contemporary Analysis from "Current Opinion".

EARLY in 1924, Charles Gates Dawes, a former Comptroller of the Currency and Chairman of the General Purchasing Board of the A. E. F. during the Great War, headed a committee appointed by the Reparations Commission to investigate the possibilities of a German budget and the capability of Germany to pay her debts under the terms of the Treaty of Versailles. After an exhaustive investigation, the Dawes Report, or Plan, was laid before the Commission, and was promptly accepted by France (with some reservations), Great Britain, Italy, Belgium and, last but not least, Germany. The United States offered to assist in a loan of $400,000,000 to Germany, on condition that the Dawes Plan be applied as written.

Here is a summary and interpretation of it, taken from "Current Opinion" for May, 1924, which reflects the general attitude of the creditor nations toward Germany at that time. Dawes was elected Vice-President in 1924.

AFTER deluges of rumor, we now have the Dawes Report. In substance, it is British ; in form, it saves the face of France ; and it represents a momentous advance towards economic peace in Europe. Here is precisely what the report means :

First, the French army remains in the Ruhr, but the occupation becomes "invisible." All German industries are restored to Germany.

Secondly, while the total of German reparations, namely 33 billion dollars, is not in terms reduced, the annual payments from Germany, at present amounting to a nominal 2 billion dollars, are limited to 250 million dollars the first year; rising to about 600 million dollars in the fifth or normal year. If the Allies take commodities, Germany is to be credited with the value. In other words, the above sums are inclusive. This represents a cut of Germany's total annual payments of seven-eighths at the outset and two-thirds in a normal year. The British payments to the United States are, by the way, about 150 million dollars a year.

The contributions by Germany are to be assisted at the outset by a foreign loan, but, in a normal year, are to be derived from (1) the budget, (2) the railways and (3) a mortgage on all Germany's industries.

In a normal year 300 million dollars will come from the taxes. On the railroads, bonds will be secured, the interest on which, with other receipts, will produce 225 million dollars. And on the general industries there will be bonds producing 75 million dollars for a normal year. There is to be a prosperity index which will show at any given time whether Germany can be expected to pay larger sums than stipulated.

All Germany's internal debts are wiped out with the fall of the mark. She can thus create external obligations like the above and still balance her domestic budget. She will be expected to do this. As for her credits abroad, the Committee over which the British banker, Reginald McKenna, presides, has reported that at the end of 1923 Germany had about $1,700,000,000 thus deposited in foreign countries, chiefly as the result of selling marks to a million too trustful buyers, who have suffered a total loss.

The Reichsbank (or a substitute) is to be set up in Berlin and is again to issue a currency, backed by the gold standard. This means that German marks, as now reckoned by the quadrillion, will cease to be a grim financial jest.

In order to meet her initial payments of reparations and to establish a gold reserve as basis of her new currency, Germany must borrow 200 million dollars from other countries. And she must submit to a measure of international control of her finances, her railways and her industrial bonds, allocated to reparations. For the control of these vast affairs, there is to be a dependence, in some measure, on the League of Nations, with the hope that the United States will participate, if only by "observation" and friendly counsel.

A document so detailed and complicated as the Dawes Report, which is made public as we go to press, and the acceptance of which is expected of both France and Germany, is not easy thus rapidly to summarize. Naturally, it has been blessed by Sir John Bradbury, the spokesman of the Bank of England. It is not less natural that, even in accepting the Report, Paris should be suspicious. Will Germany pay even the reduced amount? Is she not building up an army of 300,000 men, or three times the allowance under the Treaty of Versailles? Did not Bismarck's birthday lead to demonstrations on behalf of a Kaiser? Is not Stresemann himself talking in favor of the monarchy? And has not Bavaria acquitted Ludendorff amid profuse demonstrations of exuberance? At the German Elections, so often postponed and now inevitable, the German National Party is demanding a plebiscite on "the king question," and attacks of toothache have necessitated frequent visits to Berlin on the part of the Crown Prince. The Imperial Flag is popular and there is "a drive" for the creator of the German Navy, Admiral von Tirpitz. The results of the Bavarian elections are reactionary. And Germany has anticipated the Dawes Report by a reluctant howl of calculated anguish, accentuated by the death of her chief industrialist, Hugo Stinnes.

All this has given France a fit of the nerves. And she has approached Great Britain in order to obtain a defensive alliance as the price doubtless of acquiescence in the Dawes Report. Prime Minister Macdonald in London has replied that such guarantee must depend on agreement over reparations and must be arranged through the League of Nations. To this, the attitude of Poincare [the French Premier] is reported to be that he would be ready to admit Germany in September to the League of Nations, provided that Germany has accepted the Dawes Report and submitted to examination of her alleged armaments.

In the teeth of this situation, the "Berliner Tageblatt" has published what it declares to be the secret treaty signed by France and Czecho-Slovakia on January 25, 1914. In any war with Germany, France and Czecho-Slovakia will support one another. And both powers will support Poland in a war with Germany. In a war between Poland and Russia, the two signatory powers will remain neutral. If Austria tries to join Germany, the two powers will occupy her territory; and if Germany restores the Hohenzollerns, war on her will be declared. While attempts are to be made to establish friendly relations with Russia, any attack by Russia on Roumania will be resisted by France and Czecho-Slovakia. The two powers will oppose Italy's attempt to dominate the Mediterranean.

While Foreign Secretary Benes, of Czecho-Slovakia, declares that these documents are "forged," one does not seem to find so explicit a disclaimer on the part of France. . . . The calm economics of Messrs. Dawes and McKenna are thus enunciated amid a whirlpool of intrigue.