VIIIWHAT IS FRANCE AFTER?

2. The Rhine(Continued)

The breakdown of the London conference, and especially the reason for that breakdown, proves the warning I uttered in my last chapter was necessary and timely.

M. Poincaré demanded the occupation of the only rich coalfield left to Germany as a guarantee for the carrying out of impossible terms.

It is because I am profoundly convinced that the policy represented by this project will lead to trouble of the gravest kind for Europe and the world that I felt moved to sound a note of warning. I knew it would provoke much angry misrepresentation. I am accustomed to that. I deemed it to be my duty to face it.

The statement I made in my last chapter about the existence of a strong party in France which regarded the Rhine as the natural barrier of thatcountry has provoked a storm of denial, repudiation and indignation. It is denounced as a wicked invention. Some are amazed at the impudence of the calumny. Where is the party? France knows nothing of it. Is it not a monster which has emanated from the brain of the enemy of France?

Repudiations have their value, especially if they come from men of authority, and I shall bear invective with the fortitude to which all men who wish to be happy though politicians should be hardened provided I elicit denials which may render future international mischief difficult.

But a further perusal of the evidence on which I based my statement has served to deepen my apprehensions. What was the statement? Let me quote the actual words I used:—

"There was a strong party in France which urged M. Clemenceau to demand that the Rhine should be treated as the natural frontier of their country, and that advantage should be taken of the overwhelming defeat of Germany to extend the boundaries of France to that fateful river."The most moderate and insidious form this demand took was a proposal that the Germanprovinces on the left bank of the Rhine should remain in French occupation until the treaty had been fulfilled. That meant for ever. Reparations alone—skilfully handled by the Quai d'Orsay—would preclude the possibility of ever witnessing fulfilment."The pact was designed to strengthen the hands of M. Clemenceau against the aggressive party which was then, and still is, anxious to commit France to the colossal error of annexing territory which has always been purely German."

"The most moderate and insidious form this demand took was a proposal that the Germanprovinces on the left bank of the Rhine should remain in French occupation until the treaty had been fulfilled. That meant for ever. Reparations alone—skilfully handled by the Quai d'Orsay—would preclude the possibility of ever witnessing fulfilment.

"The pact was designed to strengthen the hands of M. Clemenceau against the aggressive party which was then, and still is, anxious to commit France to the colossal error of annexing territory which has always been purely German."

What was the basis on which I made this assertion? It was thoroughly well known to all those who were engaged in the operations of the Peace conference. The Rhine was the background of all manœuvre for weeks and months. Whether the subject matter was the League of Nations, the German fleet, or the status of Fiume, we knew that the real struggle would come over the Rhine.

On one hand, How much would France demand? on the other, How much would the Allies concede? There was a subconscious conflict about the Rhine throughout the whole discussion, however irrelevant the topic under actual consideration happened to be.

But unrecorded memories are of little use astestimony unless corroborated by more tangible proofs. Do such proofs exist? I will recall a few.

There was a party which considered the Rhine to be the only natural frontier of France. It was a strong party, with a strong man as its spokesman—in many ways the strongest in France—Marshal Foch. His splendid services in the war gave him a position such as no soldier in France or in any other country could command. The soldier who, by his genius, leads a nation to victory, possesses a measure of influence on the public opinion of the people he has saved from destruction such as no other individual can aspire to—as long as his services are fresh in the memory of his fellow-countrymen. That, I admit, is not very long. Gratitude is like manna—it must be gathered and enjoyed quickly, for its freshness soon disappears. But in the early months of 1919 Marshal Foch was still sitting at the banquet table of popular favour enjoying the full flavour of grateful recognition. His word on all questions affecting the security and destiny of France was heard with a deference which no other man in France could succeed in securing. He has also a quality which is not usually an attribute of generalship: he is a lucid, forceful and picturesquespeaker. He was, therefore, listened to for what he was, for what he said, and for the way he said it.

What did he say? He said a good deal on the subject of the Rhine frontier and I cannot quote it all. I will take a few germane sentences out of his numerous utterances on the subject. On the 19th day of April, 1919, there appeared in the LondonTimesan interview with Marshal Foch. From that interview I take these salient passages:—

"'And now, having reached the Rhine,we must stay there,' went on the Marshal very emphatically. 'Impress that upon your fellow-countrymen. It is our only safety, their only safety. We must have a barrier. We must double-lock the door. Democracies like ours, which are never aggressive, must have strongnatural military frontiers. Remember that those seventy millions of Germans will always be a menace to us. Do not trust the appearances of the moment. Their natural characteristics have not changed in four years.Fifty years hencethey will be what they are to-day.'* * * * * * *"From the table at the other end of the room Marshal Foch brought a great map, six or eight feetsquare, on which the natural features of this part of western Europe were marked. The Rhine was a thick line of blue. To the west of the river the Marshal had drawn in pencil a concave arc representing the new frontier that France will receive under the Peace treaty. It was clearly an arbitrary political boundary conforming to no natural feature of the land."'Look at that,' said Marshal Foch. 'There is no natural obstacle along that frontier. Is it there that we can hold the Germans if they attack us again? No. Here! here! here!' and he tapped the blue Rhine with his pencil."'Here we must be ready to face our enemies. This is a barrier which will take some crossing. If the Germans try to force a passage over the Rhine—ho! ho! But here'—touching the black pencilled line running north-west from Lorraine past the Saar valley to the Belgian frontier—'here there is nothing.'* * * * * * *"'No; if you are wise you insist on having your locks and your wall, and we must have our armies on the Rhine. Some people object that it will takemany troops to hold the Rhine. Not so many as it would take to hold a political frontier. For the Rhine can be crossed only at certain places, whereas the new political frontier of France can be broken anywhere and would have to be held in force along its entire length.'"

* * * * * * *

"From the table at the other end of the room Marshal Foch brought a great map, six or eight feetsquare, on which the natural features of this part of western Europe were marked. The Rhine was a thick line of blue. To the west of the river the Marshal had drawn in pencil a concave arc representing the new frontier that France will receive under the Peace treaty. It was clearly an arbitrary political boundary conforming to no natural feature of the land.

"'Look at that,' said Marshal Foch. 'There is no natural obstacle along that frontier. Is it there that we can hold the Germans if they attack us again? No. Here! here! here!' and he tapped the blue Rhine with his pencil.

"'Here we must be ready to face our enemies. This is a barrier which will take some crossing. If the Germans try to force a passage over the Rhine—ho! ho! But here'—touching the black pencilled line running north-west from Lorraine past the Saar valley to the Belgian frontier—'here there is nothing.'

* * * * * * *

"'No; if you are wise you insist on having your locks and your wall, and we must have our armies on the Rhine. Some people object that it will takemany troops to hold the Rhine. Not so many as it would take to hold a political frontier. For the Rhine can be crossed only at certain places, whereas the new political frontier of France can be broken anywhere and would have to be held in force along its entire length.'"

He expounded his doctrine in greater detail in an official memorandum which, as commander-in-chief of the Allied armies, he submitted to M. Clemenceau:—

"To stop the enterprises towards the west of this nation, everlastingly warlike, and covetous of the good things belonging to other people, only recently formed and pushed on to conquest by force regardless of all rights and by ways the most contrary to all law, seeking always the mastery of the world,Nature has only made one barrier—the Rhine. This barrier must be forced on Germany. Henceforward the Rhine will be the western frontier of the Germanic peoples...."

He repeated this demand in a subsequent memorandum. Many of us recall his dramatic irruptioninto the placid arena of the Peace conference in May, 1919, still brandishing the same theme.

It may be said that Marshal Foch is not and does not pretend to be a statesman. He is only a great soldier. Nevertheless, his political influence was so great that even in 1920 he overthrew the most powerful statesman in France within a month of his triumphant return at the polls with a huge supporting majority in the French Parliament. It was Marshal Foch who, by his antagonism, was responsible for M. Clemenceau's defeat at the presidential election of 1920. But for Marshal Foch's intervention M. Clemenceau would have been to-day president of the French republic.

Why was he beaten, at the height of his fame, by a candidate of infinitely less prestige and power? The wrath of Marshal Foch and his formidable following was excited against M. Clemenceau because the latter had, under pressure from the Allies, gone back on the agreed French policy about the Rhine. M. Tardieu, as is well known, was one of the two most prominent ministers in M. Clemenceau's administration, and closely associated with his chief in the framing of the Peace treaty. He has written a book, and in that book he gives at length adocument which he handed to the Allies on March 12th, 1919, containing the following proposal:—

"In the general interest of peace and to assure the effective working of the constituent clause of the League of Nations, the western frontier of Germany is fixed at the Rhine. Consequently Germany renounces all sovereignty over, as well as any customs union with, the territories of the former German empire on the left bank of the Rhine."

There is a sardonic humour about the words "in the general interest of peace and to assure the effective working of the constituent clause of the League of Nations."

But it demonstrates that at that date M. Clemenceau and his minister had become converts to the doctrine of the Rhine as the natural boundary of Germany. American and British pressure subsequently induced him to abandon this position and, as I said in a previous chapter, the pact was part of the argument addressed to him. But the party of the Rhine never forgave. Hence his failure to reach the presidential chair. It was an honourable failure and will ever do him credit.

The reasons assigned for that defeat by theAnnual Register, 1919-20—certainly not a partisan authority—prove that even an unexcitable chronicler laboured then under the delusion—if it be a delusion—which possessed me when I wrote the offending article. Explaining the remarkable defeat theAnnual Registersays:—

" ... Clemenceau's supporters contended that the terms of the Treaty of Versailles were satisfactory from the French point of view; his opponents declared that he had given way too much to the American and British standpoints and that the peace was unsatisfactory, particularly in respect of the guarantees for the reparations due to Franceand in the matter of the French eastern frontier. It will be remembered that a large body of French opinion had desired that France should secure the line of the Rhine as her eastern frontier."

I can if necessary quote endless leading articles in French journals and writings and speeches of French politicians. Men of such divergent temperaments and accomplishments as M. Franklin Bouillon and M. Tardieu gave countenance to thisclaim that Germany should be amputated at the Rhine. One carried the theme along on the torrent of his clattering lava and the other on the dome of an iceberg. Later on at the reception of Marshal Foch when he was elected a member of the French Academy, M. Poincaré, turning at one moment in his discourse to the Marshal, said in reference to the veteran General's well-known attitude on the Peace treaty, "Ah, Monsieur le Maréchal, if only your advice had been listened to." Has he also gone back on an opinion so histrionically expressed? Let us hope for the best.

I know it will be said that although the boundaries of Germany were to end at the Rhine, the province on the left bank was not to be annexed, but to be reconstituted into an "independent" republic. What manner of independence and what kind of republic? All German officers were to be expelled; it was to be detached by special provision from the economic life of Germany upon which it is almost entirely dependent for its existence. It was not to be allowed to associate with the fatherland.

The Rhine which divided the new territory from Germany was to be occupied in the main by Frenchtroops: the territories of the independent republic were to be occupied by foreign soldiers. Its young men were to be conscripted and trained with a view to absorbing them into French and Belgian armies to fight against their own countrymen on the other side of the Rhine. The whole conditions of life in the "free and independent republic" were to be dictated by an "accord" between France, Luxemburg and Belgium, and, in the words of Marshal Foch, "Britain would be ultimately brought in."

But I am told that these proposals did not mean annexation. Then what else did they mean? You do not swallow the oyster. You only first give it an independent existence by detaching it from its hard surroundings. You then surround it on all sides and absorb it into your own system to equip you with added strength to prey on other oysters! What independence! And what a republic! It would have been and was intended to be a sham republic. Had the plan been adopted it would have been a blunder and a crime, for which not France alone but the world would later on have paid the penalty.

In the face of these quotations and of these undoubted facts, can any one say that I calumniated France when I said there was a powerful party inthat country which claimed that the Rhine should be treated as the natural barrier of Germany, and that the Peace treaty should be based upon that assumption?

Let it be observed that I never stated that this claim had the support of the French democracy. The fact that the treaty, which did not realise that objective, secured ratification by an overwhelming majority in the French parliament and subsequently by an emphatic verdict in the country, demonstrates clearly that the French people as a whole shrank with their invincible good sense from following even a lead they admired on to this path of future disaster. But the mere fact that there are potent influences in France that still press this demand, and take advantage of every disappointment to urge it forward, calls for unremitting vigilance amongst all peoples who have the welfare of humanity at heart.

In conclusion I should like to add that to denounce me as an enemy of France because I disagree with the international policy of its present rulers is a petulant absurdity.

During the whole of my public career I have been a consistent advocate of co-operation betweenthe French and British democracies. I took that line when it was fashionable in this country to fawn on German imperialism.

During the war I twice risked my premiership in the effort to place the British army under the supreme command of a French general. To preserve French friendship I have repeatedly given way to French demands, and thus have often antagonised opinion in this country. But I cannot go to the extent of approving a policy which is endangering the peace of the world, even to please one section of a people for whose country I have always entertained the most genuine affection.

London, December 9th, 1922.

3. The Paris Conference

The third conference with M. Poincaré over reparations has ended, like its two predecessors, in a complete breakdown.

The first was held in August, the second in December, and the third fiasco has just been witnessed.

I congratulate Mr. Bonar Law on having the courage to face a double failure rather than agree to a course of policy which would in the end prove disappointing, and probably disastrous.

Agreement amongst allies is in itself a desirable objective for statesmen to aim at, but an accord to commit their respective countries to foolishness is worse than disagreement.

France and Britain must not quarrel, even if they cannot agree; but if French ministers persist in the Poincaré policy, the companionship of France and Britain over this question will be that of parallel lines which never meet, even if they never conflict.

What is the object of this headstrong policy? Reparations?

There is no financier of repute, in any quarter of the globe, who will agree that these methods will bring the Allies any contributions towards their impoverished resources.

At the August conference all the experts were in accord on this subject, but whilst these methods will produce no cash, they will produce an unmistakable crash.

My recollections of the August discussions enable me to follow with some understanding the rather confused reports which have so far reached me here.[2]

It is common ground amongst all the Allies that Germany cannot under present conditions pay her instalments.

It is common ground that she must be pressed to put her finances in order, and by balancing her budget restore the efficiency of her currency, so as to meet her obligations.

But M. Poincaré insisted that, as a condition of granting the moratorium, pledges inside German territory should be seized by the Allies.

These pledges consisted of customs already established, and of new customs to be set up on the Rhine and around the Ruhr, so that no goods should be permitted to pass from these German provinces into the rest of Germany without the payment of heavy customs dues.

The other proposed pledges were the seizure of German forests, of German mines, and of 60 per cent. of the shares in certain German factories.

Mr. Bonar Law, judging by his officialcommuniquéafter the breakdown of the conference, seems to have raised the same objections to these pledges as I put forward at the August conference.

They would bring in nothing comparable to the cost of collection;They would provoke much disturbance and irritation and might lead to consequences of a very grave character.

They would bring in nothing comparable to the cost of collection;

They would provoke much disturbance and irritation and might lead to consequences of a very grave character.

In fact, these pledges are nothing but paper and provocation.

The customs barrier on the Rhine was tried once before, and was a complete failure.

It was tried then as a sanction and not as a means of raising money. For the former purpose it may have achieved some measure of success, but from the point of view of collecting money it was a ludicrous fiasco.

There are at the present moment hundreds of millions of paper marks collected at these new tollhouses still locked up in the safe of the Reparations Commission. They are admittedly worthless.

As long as these tolls lasted, they were vexatious; they interfered with business; they dealt lightly with French luxuries working their way into Germany, but laid a heavy hand on all useful commodities necessary to the industry and life of the people.

They were ultimately withdrawn by consent. M. Poincaré now seeks to revive them.

The seizure of German forests and mines will inevitably lead to even more serious consequences. The allied control established in the far interior of Germany would require protection.

Protection means military occupation in some shape or other.

Military occupation of these remote areas means incidents, and incidents quickly ripen into more serious complications.

Hence the reluctance of the British government of which I was the head to concur in this dangerous policy. Hence the refusal of Mr. Bonar Law's government to accept the responsibility for sanctioning such a policy. Even logically it is indefensible.

There are only two alternative points of view. One is that Germany cannot pay under present conditions until her finances are restored, and that a moratorium ought to be granted for a period which will enable that financial restoration to mature. The second is that Germany can pay, that she is only shamming insolvency, and that all that you have to do is to apply the thumbscrew firmly and cash will be forthcoming.

Logically I can understand either of these two alternatives, but I fail to comprehend the reason for a proposal that will grant a moratorium on the ground that Germany cannot pay, and at the same time apply the thumbscrew until she pays.

I am glad the British Prime Minister has had the wisdom not to associate himself with a policy which will bring inevitable discredit upon those who share the responsibility of enforcing it.

Meanwhile, the prospects of Europe's recovery are once more to be retarded by the vain stubbornness of some of her rulers.

Ronda (Spain), January 6th, 1923.

FOOTNOTE:[2]This chapter was written at Ronda (Spain).

[2]This chapter was written at Ronda (Spain).

What is the reparations problem? Why does it appear to be further from solution than ever?

The great public in all lands are perplexed and worried by its disturbing insolubility. It keeps them wondering what may happen next, and that is never good for a nerve-ridden subject like postwar Europe.

The real trouble is not in solving the problem itself, but in satisfying the public opinion which surrounds it. I do not mean to suggest that it is an easy matter to ascertain what payments Germany can make, or for Germany to pay and keep paying these sums once they have been ascertained. But if the difficulty were purely financial it could be overcome. The heart of the problem lies in the impossibility at present of convincing the expectant, indignant, hard-hit and heavily burdened people ofFrance that the sums so fixed represent all that Germany is capable of paying.

The question of compelling a country to pay across its frontiers huge sums convertible into the currency of other countries is a new one. At first it was too readily taken for granted that a wealth which could bear a war debt of £8,000,000,000 could surely afford to bear an indemnity of £6,000,000,000 provided that this smaller sum were made a first charge on the national revenues; and it took time for the average mind to appreciate the fundamental difference between payment inside and transmission outside a country.

When I think of the estimates framed in 1919 by experts of high intelligence and trained experience as to Germany's capacity to pay cash over the border I am not disposed to complain of the impatience displayed by French taxpayers at the efforts made at successive conferences to hew down those sanguine estimates to feasible dimensions. I am content to point with pride to the fact that the common sense of the more heavily burdened British taxpayer has long ago taught him to cut his loss and keep his temper. When his example isfollowed all round, the reparations question is already solved.

When public opinion in all the Allied countries has subsided into sanity on German reparations, as it already has in Britain, financiers can soon find a way out, and trade and commerce will no longer be scared periodically from their desks by the seismic shocks given to credit every time a French minister ascends the tribune to make a statement on reparations.

Regarding the payment of reparations solely from the point of view of finance, the issues can be stated simply, and I think solved readily.

It is always assumed by those who have never read the Treaty of Versailles, and the letter that accompanied it, that this much-abused and little-perused document fixed a fabulous indemnity for payment by Germany. The treaty may have its defects; that is not one of them, for it fixed no sum for payment, either great or small.

It stipulated that a reparations commission should be set up in order,inter alia, to assess the damage inflicted by Germany on Allied property and the compensation for injury to life and limb in Allied countries.

In the second place—and this is also overlooked—it was to ascertain how much of that claim Germany was capable of paying. On both these questions Germany is entitled to be heard before adjudication.

It is in accordance with all jurisprudence that as Germany was the aggressor and the loser she should pay the costs. But it would be not only oppressive but foolish to urge payment beyond her capacity.

The amount of damage was to be ascertained and assessed by May, 1921. Capacity was to be then determined and revised from time to time, according to the varying conditions. Even so fair a controversialist as the eminent Italian statesman Signor Nitti has ignored the latter provision in the Versailles treaty. No wonder that he should, for there are multitudes who treat every alteration in the annuities fixed in May, 1921, as if it were a departure from the Treaty of Versailles to the detriment of the victors; whereas every modification made was effected under the provisions and by the machinery incorporated in the treaty for that express purpose.

But there has undoubtedly been a departure fromthe treaty—a fundamental departure. It has, however, been entirely to the detriment of the vanquished. In what respect? I propose to explain, for the whole trouble has arisen from this change in the treaty. The treaty provided that the body to be set up for deciding the amount to be paid in respect of reparations should consist of a representative each of the United States of America, the British Empire, France, Italy, and Belgium.

With the exception of the United States of America, all these powers are pecuniarily interested in the verdict. At best it was therefore on the face of it not a very impartial tribunal. Still, Britain, as a great trading community, was more interested in a settlement than in a few millions more or less of indemnity wrung out of Germany; and Italy also was a country which had large business dealings with Germany and would not therefore be tempted to take a violently anti-German view on the commission. The presence therefore of the United States of America, Britain and Italy together on the commission constituted a guarantee for moderation of view.

Now the only disinterested party has retired from the tribunal. The most interested party is inthe chair, with a casting vote on certain questions. That is not the treaty signed by Germany.

If you sign an agreement to pay a sum to be awarded by A, B, C, D, and E, trusting for a fair hearing largely to the influence of A, who is not only very powerful but who is the only completely disinterested referee and A then retires from the board of arbitrators, you are entitled to claim that the character of the agreement is changed. The representatives of France and Belgium on the Reparations Commission are honourable men who are most anxious to do justice, but they are watched by a jealous, vigilant and exacting opinion constantly ready to find fault with concession and to overpower moderating judgment.

The balance of the treaty has therefore been entirely upset. What is really needed is to restore that balance so as to secure a fair verdict on the only question in issue—how much Germany can pay.

When you come to consider that issue you must view the claim for reparations as you would any ordinary debt. You must make up your mind whether you wish to ruin the debtor or to recover the cash. If there are no sufficient realisable assets,then, if you want your money, you must keep your debtor alive. If you want beef from your cow you must forgo the milk. If your object is to destroy your debtor, you press for payment of more than he can be reasonably expected to pay, and then seize his house, his lands, and his chattels, whether they can be disposed of or not.

On the other hand, if you want your money, you will find out what he can pay, and then proceed judiciously, patiently, and firmly to recover that amount. By that I do not mean what he can pay by condemning himself to a life of servitude and poverty. No brave nation will stand that long. That is not a method of recovering an old debt, but of creating a new one. I mean, what a nation can be expected to pay steadily without revolt for a whole generation.

If you scrape the butter from the bread of every German child for thirty years you may add to the sum of your indemnity a milliard or two of gold marks. That is not what was intended by the Treaty of Versailles. Hungry faces make angry hearts, and the anger spreads further than the hunger. I mean, what Germany can pay without condemning a generation of workers to Egyptianbondage, and their children to semi-starvation. Every oppression, if persisted in, ultimately ends in the ruin of the Red Sea for the oppressors. Europe has only just escaped with great loss from its waters. We do not want to be overwhelmed in another.

How are you to arrive at the exact figure of the annuities Germany can reasonably be expected to pay without creating these intolerable conditions for her people? That is the question. The answer was given in the treaty as signed: by setting up a commission to inquire and determine. That commission has been weakened, and its character almost destroyed by the defection of the United States of America.

Is it possible to find a substitute? I am afraid a reference of that question to a new committee of experts would not advance matters, for each country would demand a representative on that committee, and that would only mean the Reparations Commission over again under another name.

The only hope of a fair and final decision is to secure the presence of a representative of the United States of America on the adjudicating body, whatever it may be. Is that impossible?

I need hardly say that I am not venturing to express any opinion as to the American refusal to ratify the treaty as a whole. I am only stating quite frankly my view that, unless America takes a hand in reparations, real settlement will be postponed until the hour of irreparable mischief strikes. If for reasons of which I am not competent to judge America cannot occupy her vacant chair on the tribunal which may decide fateful issues for humanity, I despair of any real progress being made.

Allied ministers can accept from a body representing the leading powers who won the war decisions they dare not take on their own responsibility. That is the essence of the matter. It is no use blaming politicians. If they of their own initiative attempt to ride down public sentiment, which alone confers authority upon them, they will inevitably fail. In every country there are plenty of itching partisans ready to take advantage of tactical blunders committed by political opponents or personal rivals. But the judgment of an international tribunal is another matter, and statesmen can accept it and act upon it without being taxed with responsibility for its conclusions.

British opinion cannot and will not accept asettlement based on the assumption that abatements in the sum claimed for reparations, if and when made, must be discounted by the British taxpayer alone.

France undoubtedly suffered more severely from the ravages of war than any other belligerent. But that is recognised in the proportion allocated to her of the reparations payments. She is to be paid 52 per cent. of the total,i. e., more than all the other Allied countries put together.

Britain comes next in the damage sustained by her people, and she is given 22 per cent. In many respects she has suffered more heavily than any other Allied country, especially in taxation and in trade. She is willing to stand in with the Allies for loss as well as for profit, but she will resent bitterly the suggestion that the loss must necessarily be her share, whilst such profit as there is belongs to others.

The American people, who receive no part of the compensation awarded and collected, willa fortioritake the same view of their obligations in the matter. They certainly will not see the force of a settlement to be made at their expense, as if they had been condemned to pay an indemnity.

The question is not what remission or indulgence shall be granted to Germany, but what payment she is capable of making. If Germany can pay a large indemnity France gets 52 per cent. of that, and Britain only 22 per cent. If Germany can only make a disappointing payment, France still gets 52 per cent. and Britain 22 per cent. There is, therefore, no ground for debiting Britain and America with the cost of reduced expectations.

The offer to hand over the worthless "C" bonds to the British Empire in return for her claims is an insult to the intelligence of the British public. Let us get away from these shifts on to the straight road. Back to the treaty—that is the real remedy. There is no need to revise it—all that is required is to restore it.

If America reappears on the arbitrating tribunal she need not accept the rest of the treaty. Then a fair and enduring settlement would soon ensue, this irritating sore would rapidly heal, and the condition of the world would steadily improve.

Algeciras, January 1st, 1923.

The preceding chapter was written at Algeciras on January 2nd, 1923. On January 3rd there appeared in the Spanish papers a compressed report of the speech delivered by the American Secretary of State, Mr. Hughes, at New Haven. It made suggestions on the subject of reparations which were obviously intended for consideration at the forthcoming Paris conference. I knew the chairman of that conference, M. Poincaré, would not be too anxious to bring these proposals to the notice of his colleagues, but I had some hope that the British, Italian, and Belgian premiers might do so. I therefore cabled the following message to the British and American press:—

"I have read with gladness Secretary Hughes's important speech. As far as I can judge from compressed report appearing in the local paper of this remote corner of Spain his suggestions and mine travel in same direction. Earnestly hope Parisconference will give American proposals priority of consideration. All other expedients will but postpone mischief which will in the end have to be redeemed with compound interest at usurious rates by an embarrassed Europe."

I constantly refer to this speech in subsequent articles, and as it has been suggested that the interpretation I placed on it is not borne out by the text, I append the full report which appeared inThe Timesof December 30th, 1922:—

"Mr. Hughes, the Secretary of State, in a speech which he delivered before the American Historical Association at New Haven, Connecticut, to-night lifted yet another corner of the veil which has shrouded the immediate plans of the United States government. Much of his address concerned the Washington conference of 1921, but it ended with a discussion of economic conditions in Europe which are of prime importance."Mr. Hughes began with the admission that 'we cannot dispose of these problems by calling them European, for they are world problems, and we cannot escape the injurious consequences of failureto settle them.' They were, however, European problems in the sense that they cannot be solved without the consent of the European governments, and thecruxof the situation lay in the settlement of reparations. 'There will be no adjustment of other needs, however pressing, until a definite and accepted basis for the discharge of reparations claims has been fixed. It is futile to attempt to erect any economic structure in Europe until the foundation is laid.'"Then followed a passage referring to the attempts to link up the debts owed to the United States with the question of reparations or with projects of cancellation, attempts which had been steadily resisted. It led up to a discussion of the attitude of the United States towards reparations, 'standing, as it does, a distinct question, and as one which cannot be settled unless the European governments concerned are able to agree.' First came a denial that America desired to see Germany relieved of her responsibility for the war, or of her just obligations, or that America wished that France should lose 'any part of her just claims.' On the other hand, America did not wish to see a prostrate Germany. Some Americans hadsuggested that the United States should assume therôleof arbitrator, but Mr. Hughes did not think 'we should assume such a burden of responsibility.'"From this point the speech deserves quotation in full:"'But the situation,' said Mr. Hughes, 'does call for a settlement upon its merits. The first condition of a satisfactory settlement is that the question should be taken out of politics. Statesmen, have their difficulties, their public opinion, the exigencies they must face. It is devoutly to be hoped that they will effect a settlement among themselves, and that the coming meeting in Paris will find a solution. But if it does not, what should be done?"'The alternative of forcible measures to obtain reparations is not an attractive one. No one can foretell the extent of the serious consequences which might ensue from such a course. Apart from political results, I believe that the opinion of experts is that such measures will not produce reparation payments, but might tend to destroy the basis of those payments, which must be found in economic recuperation. If, however, statesmen cannot agree, and such an alternative is faced, what can be done? Is there not another way out? The fundamentalcondition is that in this critical moment the merits of the question as an economic one must alone be regarded. Sentiment, however natural, must be disregarded; mutual recriminations are of no avail; reviews of the past, whether accurate or inaccurate, promise nothing; assertions of blame on the one hand and excuses on the other come to naught."'There ought to be a way for statesmen to agree upon what Germany can pay, for no matter what claims may be made against her that is the limit of satisfaction. There ought to be a way to determine that limit and to provide a financial plan by which immediate results can be obtained and European nations can feel that the foundations have been laid for their mutual and earnest endeavours to bring about the utmost prosperity to which the industry of their people entitles them."'If statesmen cannot agree and the exigencies of public opinion make their course difficult, then there should be called to their aid those who can point the way to a solution."'Why should they not invite men of the highest authority in finance in their respective countries—men of such prestige, experience, and honour that their agreement upon the amount to be paid andupon the financial plan for working out payments would be accepted throughout the world as the most authoritative expression obtainable? The governments need not bind themselves in advance to accept the recommendations, but they can at least make possible such an inquiry with their approval and free the men who may represent their country in such a commission from any responsibility to foreign offices and from any duty to obey political instructions."'In other words, they may invite an answer to this difficult question from men of such standing and in such circumstances of freedom as will ensure a reply prompted only by knowledge and conscience. I have no doubt that distinguished Americans would be willing to serve on such a commission. If the governments saw fit to reject the recommendation upon which such a body agreed they would be free to do so, but they would have the advantage of impartial advice and of an enlightened public opinion. The peoples would be informed that the question would be rescued from assertion and counter-assertion and the problem put upon its way to solution."'I do not believe that any general conference would answer the purpose better, much less that any political conference would accomplish a result which prime ministers find it impossible to reach. But I do believe that a small group, given proper freedom of action, would be able soon to devise a proper plan. It would be time enough to consider forcible measures after such opportunity had been exhausted.'"Mr. Hughes's closing words were:"'There lies the open broad avenue of opportunity, if those whose voluntary action is indispensable are willing to take advantage of it. And once this is done, the avenues of American helpfulness cannot fail to open hopefully.'"

"Mr. Hughes began with the admission that 'we cannot dispose of these problems by calling them European, for they are world problems, and we cannot escape the injurious consequences of failureto settle them.' They were, however, European problems in the sense that they cannot be solved without the consent of the European governments, and thecruxof the situation lay in the settlement of reparations. 'There will be no adjustment of other needs, however pressing, until a definite and accepted basis for the discharge of reparations claims has been fixed. It is futile to attempt to erect any economic structure in Europe until the foundation is laid.'

"Then followed a passage referring to the attempts to link up the debts owed to the United States with the question of reparations or with projects of cancellation, attempts which had been steadily resisted. It led up to a discussion of the attitude of the United States towards reparations, 'standing, as it does, a distinct question, and as one which cannot be settled unless the European governments concerned are able to agree.' First came a denial that America desired to see Germany relieved of her responsibility for the war, or of her just obligations, or that America wished that France should lose 'any part of her just claims.' On the other hand, America did not wish to see a prostrate Germany. Some Americans hadsuggested that the United States should assume therôleof arbitrator, but Mr. Hughes did not think 'we should assume such a burden of responsibility.'

"From this point the speech deserves quotation in full:

"'But the situation,' said Mr. Hughes, 'does call for a settlement upon its merits. The first condition of a satisfactory settlement is that the question should be taken out of politics. Statesmen, have their difficulties, their public opinion, the exigencies they must face. It is devoutly to be hoped that they will effect a settlement among themselves, and that the coming meeting in Paris will find a solution. But if it does not, what should be done?

"'The alternative of forcible measures to obtain reparations is not an attractive one. No one can foretell the extent of the serious consequences which might ensue from such a course. Apart from political results, I believe that the opinion of experts is that such measures will not produce reparation payments, but might tend to destroy the basis of those payments, which must be found in economic recuperation. If, however, statesmen cannot agree, and such an alternative is faced, what can be done? Is there not another way out? The fundamentalcondition is that in this critical moment the merits of the question as an economic one must alone be regarded. Sentiment, however natural, must be disregarded; mutual recriminations are of no avail; reviews of the past, whether accurate or inaccurate, promise nothing; assertions of blame on the one hand and excuses on the other come to naught.

"'There ought to be a way for statesmen to agree upon what Germany can pay, for no matter what claims may be made against her that is the limit of satisfaction. There ought to be a way to determine that limit and to provide a financial plan by which immediate results can be obtained and European nations can feel that the foundations have been laid for their mutual and earnest endeavours to bring about the utmost prosperity to which the industry of their people entitles them.

"'If statesmen cannot agree and the exigencies of public opinion make their course difficult, then there should be called to their aid those who can point the way to a solution.

"'Why should they not invite men of the highest authority in finance in their respective countries—men of such prestige, experience, and honour that their agreement upon the amount to be paid andupon the financial plan for working out payments would be accepted throughout the world as the most authoritative expression obtainable? The governments need not bind themselves in advance to accept the recommendations, but they can at least make possible such an inquiry with their approval and free the men who may represent their country in such a commission from any responsibility to foreign offices and from any duty to obey political instructions.

"'In other words, they may invite an answer to this difficult question from men of such standing and in such circumstances of freedom as will ensure a reply prompted only by knowledge and conscience. I have no doubt that distinguished Americans would be willing to serve on such a commission. If the governments saw fit to reject the recommendation upon which such a body agreed they would be free to do so, but they would have the advantage of impartial advice and of an enlightened public opinion. The peoples would be informed that the question would be rescued from assertion and counter-assertion and the problem put upon its way to solution.

"'I do not believe that any general conference would answer the purpose better, much less that any political conference would accomplish a result which prime ministers find it impossible to reach. But I do believe that a small group, given proper freedom of action, would be able soon to devise a proper plan. It would be time enough to consider forcible measures after such opportunity had been exhausted.'

"Mr. Hughes's closing words were:

"'There lies the open broad avenue of opportunity, if those whose voluntary action is indispensable are willing to take advantage of it. And once this is done, the avenues of American helpfulness cannot fail to open hopefully.'"

The argument developed by Mr. Hughes in this speech is identical with that upon which I based my appeal in the previous chapter for an impartial investigation into Germany's capacity, and he concludes with a proposal which is in effect identical with mine. He does not state categorically that the American government would be prepared to be officially represented on the commission. But whenhe says, "I have no doubt that distinguished Americans would be willing to serve on such a commission," it means that the government would be indirectly represented. The Allied governments would certainly have consulted the government of the U.S.A. as to the American representative nominated to sit on the commission, and no American expert would be appointed without full assurance that he was acceptable to the government of his country.

It is a misfortune that such important proposals should have been put forward so timorously that those who wished to ignore them could easily pretend they had never heard them made. Speeches delivered even by Secretaries of State at an academic function in a small provincial town might very well be overlooked in foreign chancelleries, whose postbags bulge with weighty despatches from many lands, without any suggestion of studied neglect. It was clear from Mr. Bonar Law's subsequent attitude in the course of the debate in the House of Commons on the Ruhr invasion that he at any rate had not seen Mr. Hughes's New Haven deliverance. Timid diplomatic flutterings make no impression in a great situation, and so lead tonothing. This is an excellent example of how not to speak if you wish to be heard, and of how to speak if you have no desire to be heeded.

London, July 4th, 1923.

France has once more jumped on the prostrate form of Germany, and the sabots have come down with a thud that will sicken the hearts of multitudes on both sides of the Atlantic whose friendship for France stood the losses and griefs of a four years' war.

Germany having been overthrown and disarmed after a prodigious effort, involving a strain upon the combined strength of America, Italy, and the whole British Empire, as well as France, and her arms bound with the thongs of a stern treaty, the process of dancing upon her while she is down can at any time now be performed with complete impunity by any one of these powers alone.

The spectacle every time it is repeated, provides much satisfaction to those who indulge in the barren delights of revenging the memory of past wrongs. There is no doubt some joy for theunsportsmanlike mind in kicking a helpless giant who once maltreated you and who, but for the assistance of powerful neighbours, would have done so a second time.

But what good will it bring devastated France or her overtaxed Allies? The additional coal and timber that will be wrung out of Germany will barely cover the direct cost of collection. Although Germany bears the extra cost, the expense of these punitive measures must all in the end diminish the means of reparation, and therefore fall on the victor.

How many students of the problem of reparations have ever taken the trouble to ascertain the extent to which the maintenance of Allied armies of occupation has already drained the resources of Germany? Between direct cash payments, the cost of supplies, and outlay in labour and material for building huge barracks, these armies have already cost Germany 6,000,000,000 gold marks—roughly 1,200,000,000 dollars, or over £300,000,000.

How much better it would have been if most of this money had gone towards rebuilding the devastated area!

It is not without significance, now that war isbeing waged against Germany for what the American representative in Paris termed her technical default, to recollect that, between the expense of the army of occupation and contributions already made towards reparations, Germany has already paid to the Allies over three times the amount of the total indemnity exacted by Bismarck in 1871.

This is without making any allowance for the vast and highly developed colonies which she surrendered. Let, therefore, no one approach this problem as if he were dealing with a recalcitrant country that is deliberately refusing to acknowledge any of her obligations under a treaty which she has signed.

The costs of the last war are acknowledged to be irrecoverable. It is difficult enough to find the means for payment of damages. Who will pay the growing cost of this new war?

So far I have referred only to the direct outlay upon these aggressive measures. The indirect cost to victor and vanquished alike will be crushing.

It is already accumulating. The mere threat has depreciated the value of the franc, and thus reduced its purchasing capacity abroad. This loss must be borne by the French consumer. There may be arally; but I shall be surprised if the improvement is more than temporary.

All that is obvious for the moment to the untrained eye is the way in which the mark is dragging the French and Belgian franc slowly along its own downward course.

As the distance between them lengthens and the invisible cord which ties them together becomes more and more attenuated, it may ultimately snap and the franc be released from this dangerous association. That I doubt, for a bankrupt Germany means a country to which even the most hopeful cannot look as a means of redeeming French deficits.

Once that is clear to the French peasant he will not so readily part with his savings, and the real difficulties of French finance will begin at that stage. A policy, therefore, which demoralises the German currency is one which is also fatal to the solvency of French finance.

Let us follow the probable sequence of events. The terrified German mark is rushing headlong to the bottom of the pit where the Austrian krone is already lost beyond rescue.

As long as reparation coal is dug out by bayonets,and reparation timber is cut down by swords, it is idle to talk of restoring the mark by putting German finance in order.

No tariff, however nimble, can keep pace with the runaway mark. It would baffle the most resourceful finance minister to adapt his budget to a currency which disappears beyond the horizon while he is sitting at his desk to pen his proposals.

If the mere threat of force has produced such a panic, what will be the effect of the actual measures? It is safe to predict that the advance of French troops into Germany will not restore the composure of the frightened mark and arrest its flight.

What, then, becomes of the hope of renewed payments of the annuity? At best Germany could only be expected to pay when her foreign trade was so improved that she could provide a margin out of her exports with which to pay her annuities. Her foreign trade is largely dependent upon her foreign exchanges. These are now destroyed beyond prospect of recovery for years.

Britain proposed a voluntary moratorium for a short term of years in order to place Germany in a position where she could at the end of that term pay a reasonable annuity. The Frenchgovernment have in effect substituted a compulsory moratorium for an indefinite period with no prospect of payment in sight.

The only chance of securing an early instalment of reparation payments was by pressing Germany to put her finances in order and giving her fair time in which to do so. The only chance of negotiating a loan on German security to assist France to pay for the repair of her devastated provinces, and to enable her to put her own finances in order, was by restoring the stability of German currency.

French statesmen have deliberately thrown both these chances away. The effect on the value of their own currency must be grave, and Frenchmen will have to pay in increased cost of living for a venture dictated by short-sighted and short-tempered statesmanship.

When one thinks of the consequences one is driven to ask whether French politicians are really seeking reparations or are pursuing another purpose quite incompatible with the recovery of money payments under the treaty.

This is the wrong road to reparations. It leads in exactly the opposite direction.

Whither, then, does it lead? There is no doubtthat its effect will be ruinous as far as German industry is concerned. I have already dealt with its disastrous influence upon German currency, and with the indirect effect of a rapidly depreciating currency upon German foreign trade. The seizure of the Ruhr mines will have another serious effect.

Even now the result of the compulsory alienation of so much of Germany's coal supply in the Ruhr, in Silesia, and the Saar, from German industry, has diminished German productiveness. The fuel deficiency thereby created inside Germany has been partially supplied by purchases of coal from outside sources. The necessity for providing gold to pay for foreign coal has added considerably to Germany's financial difficulties.

A still larger foreign purchase will be the inevitable result of the forcible diversion of large quantities of Ruhr coal to France and Italy, with further financial embarrassments as a consequence.

That is bad enough. But I fear worse. Will the German miner work with the same regularity and efficiency for a foreign master as he does for a German employer? Is there the least possibility of the production being maintained at its present level?

The influence of this added muddle on worldtrade is incalculable. Nobody gains; everybody is a loser by the move. How is a Germany whose embarrassed finances are made still more involved—how is a Germany whose industry becomes more and more difficult—how is a Germany reduced to despair to be of the slightest use to France, Belgium, Italy, or anybody else?

The feather-headed scribes who have advocated this rash policy assume that France will be helped because Germany will thus be reduced to impotence. For how long?

The disintegration of Germany is not an unlikely consequence of this move. I know that is the expectation. Frenchmen still hanker after the days when Saxons and Bavarians and Wurtembergers were allies, and almost vassals, of France against Prussia. It was the lure that led the Third Napoleon to his ruin. It is the attraction which is now drawing France once more to a sure doom. The policy will bring no security to France in the future. It deprives her of all hope of reparations in the immediate present. There will no longer be a Germany to pay. It would be too hopeless a task to attempt recovery from each of the severed states.

But what of increased security? Nothing can keep Germans permanently apart. They will, at the suitable moment reunite under more favourable conditions, freed from external as well as internal debt. France will have lost her reparations and only retained the hatred of an implacable foe become more redoubtable than ever.

How would Europe have fared in the interval whilst France was learning from events what every other country can see now? There is no knowing what will happen when a brave people of 60,000,000 find themselves faced with utter ruin. Whether they turn to the left or to the right will depend on questions of personal leadership, which are not yet determined. All we can be sure of is that they can hardly go on as they are, maintaining an honest struggle for ordered freedom and democratic self-government. The French proclamation, with its threat of "severest measures in case of recalcitrancy," is ominous of much that may happen. No people accustomed to national independence have ever been able long to tolerate a foreign yoke.

Chancellor Cuno's action is the first manifestation of the spirit of revolt. It will certainly grow in intensity. The lash will then fall, sooner orlater, and Germany will be inevitably driven to desperate courses. A Communist Germany would infect Europe. European vitality is so lowered by exhaustion that it is in no condition to resist the plague. Would a reactionary Germany be much better—brooding and scheming vengeance?

Russia, with her incalculable resources of men and material, is at hand, needing all that Germany can best give and best spare. The Bolshevik leaders only require what Germany is so well fitted to supply in order to reorganise their country and convert it into the most formidable state in Europe or Asia.

Nations hard pressed on the East have in the past moved forward irresistibly to the West. In obedience to the same law a people hard pressed on the West will look to the East.

When the French troops marched on Essen they began a movement the most far-reaching, and probably the most sinister in its consequences, that has been witnessed for many centuries in Europe. And these are the people who, after fifty years of patient and laborious waiting, have demonstrated to the world in 1918 the stupidity of abusing victory in 1871.

If the teacher so soon forgets his own special lesson the pupil is not likely to remember when fury overcomes terror.

Algeciras, January 15th, 1923.

The French government, having conspicuously failed to win its anticipated coup, is doubling the stakes each time it loses. When will it end? And where will it end? It is ill gambling with human passions. They are all engaged in this wild venture—on both sides of the table. Pride, greed, vanity, obstinacy, temper, combativeness, racial antagonisms, but also patriotism, love of justice, hatred of wrong and high courage. Each side draws from the same arsenal of fiery human emotions. Unless some one steps in to induce a halt I fear the result will be devastating.

France has now abandoned all hope of being able to run the mines, railways, and workshops of the Ruhr by military agencies. In these days you cannot shoot every worker who fails to excavate so many hundredweights of coal per diem, or who refuses to fill a wagon or drive a locomotive when and by whomsoever he is told to do so. Francecannot provide the necessary complement of miners and railwaymen from outside to fill vacancies created by sulky workers. And even if she could it would take many months ere they become sufficiently accustomed to their new conditions to work without peril to themselves. So a new policy has been improvised. It is nothing less than the siege of Germany. Sixty millions of Germans are to be starved into surrender. That is a long business, as every one knows who has been engaged on the difficult operations of strike breaking. We have often witnessed workers with little support or sympathy from the rest of the community hold out for weeks after their funds have been exhausted. In Germany all classes are united in resistance. The national pride fortifies endurance and incites to sacrifice. And the ports are still open. Meanwhile incidents may happen, developments may occur which will create a situation that will baffle all the resources the invaders can command.

It is very little use looking backward. But there are many who are disposed to say that the invasion of the Ruhr was bound to come and the sooner the safer. The Ruhr coal mines were the wild oats of reparation. Get it over quickly. The headachewill bring repentance and France will then settle down to a quiet life. That is the argument. I must enter an emphatic protest against this view. If this ill-judged enterprise had been put off for a few more months I do not believe any French government would have embarked upon it. There is no French statesman of any standing who, in his heart, believes in its wisdom. Now that the credit of France is involved in its success they will all support it. But French opinion, as a whole, was moving with startling rapidity from this policy. The Parisian pulse was still feverish, but the provinces had completely calmed down. Vacancies occurring in the Senate, the Chamber of Deputies and the provincial assemblies during several months have afforded an opportunity of testing real French opinion and the results have been sensational. At election after election, fought in typical constituencies all over France, the champions of Ruhrism have been beaten by emphatic majorities. Masses of French workmen have always opposed this policy. The peasant in every land always moves slowly. But there can be no doubt that the French peasant has had enough of military adventures. His sons were never numbered amongst the"exempts," and the losses in the peasant homes of France were appalling. Driving through the villages in agricultural France you find yourself asking, "Where are the young men?" The answer invariably comes, "This village suffered severely in the war." You will receive the same answer in the next village, and the next. We cannot wonder, therefore, that by-elections in rural as well as in urban France display an unmistakable weariness of plans which involve the marching of armed Frenchmen into hostile territory. The sorrowing people of France have good reason to shrink from any course of action that leads to further shedding of blood.

For these reasons I have steadily favoured every scheme that had the effect of postponing decision as to the Ruhr. Delay meant ultimate defeat for the Chauvinists. That is why they strove so hard to rush their government into this precipitate action. The abrupt termination of the Paris conference was their opportunity and they seized it with tingling fingers. Until then there had never been a clean break on which violence could be founded. The friends of moderation both here and on the continent had seen to that. There had beenreference of questions for the scrutiny of experts and calming adjournments to await their report. When it arrived there were endless suggestions and counter-suggestions to meet difficulties. In the end Europe was saved from the catastrophe of once more handing over its destinies to the guidance of blind force. Unhappily, weariness or impatience induced the Paris negotiators in a few hours to drop the reins which had for at least four years held the furies from dashing along their career of destruction. There were many alternative plans that might have been discussed. There was the proposal to refer the whole question to the League of Nations. It is true that when I suggested it in August last M. Poincaré summarily rejected it. But the Allies also rejected M. Poincaré's proposals by a majority of four to one at that conference. That did not prevent his repeating them in January—and this time he succeeded in winning over the majority to his view. A little more persistence and less pessimism might have persuaded Belgium, Italy and Japan to aid our appeals to France to trust rather to the League of Nations than to the uncertainties of war.

What is still more inexplicable is the failure ofthe conference to take any note of Mr. Secretary Hughes's New Haven speech. Neglected opportunities litter the path of this troublesome question. There were the Cannes conversations, broken off just as they were reaching fruition. Had they been continued another week they would have ended in a helpful settlement which would have brought reparations to France, confidence to Germany, and peace to Europe. They struck on one of the many sunken reefs which bestrew the French political seas, and it will not surprise me to find that the whole cargo of reparations disappeared then beyond salvage into the deep with these shipwrecked negotiations.

Again, Germany threw away a great opportunity at Genoa when all the nations of Europe came together for the first time to discuss their troubles in the spirit of equality and amity. It is true that reparations were excluded at the instance of France from the programme of the conference. But the spirit engendered by a friendly settlement of all other outstanding questions would have rendered a reasonable and temperate consideration of reparations inevitable. Germany, by its foolish staging of its Russian agreement, made all that impossible.Resentment and suspicion were once more equipped with a scourge and they used it relentlessly to drive out all goodwill for Germany from the purlieus of that great congress. Another lost opportunity.

Then there was the bankers' committee, appointed to consider the question of raising an international loan to help France to finance the repair of her devastated area and also to assist Germany to restore her demoralised currency. I remember how eager poor Rathenau was to float that loan and how sanguine he was that it would succeed. He was confident that the German nationals who have invested their gold in other lands could be induced to subscribe heavily to the loan. The bankers concerned—all were of the highest reputation in the financial world—were confident that if German reparations were fixed at a reasonable sum investors throughout the world would gladly put their money into a great international loan which would help to restore Europe. The French government testily declined to consider the essential conditions indicated by the bankers. Another lost opportunity, and Europe once more lumbered along its dreary way to seek another.

It came with Mr. Hughes's famous speech. Itwas clearly the result of prolonged consideration. For weeks there had been rumours of much consultation in Washington on the state of Europe, and we were encouraged to hope that America meant business. The result was Mr. Secretary Hughes's offer. It was made four days before the Paris conference and was obviously intended to be discussed by the Allies there. An endeavour has been made to minimise the importance of this American approach to Europe, but it is incomprehensible to me how so momentous a pronouncement has been treated as if it were merely the casual utterance of a politician who had to find some topic of more or less interest with which to illuminate a discourse. Another opportunity lost—perhaps the greatest—perhaps the last. Never has luck striven so hard to save stupidity. But luck loses its temper easily and then it is apt to hit hard.

London, February 15th, 1923.

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