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V. THE GERMAN COUNTER-PROPOSALS

The German counter-proposals were somewhat obscure, and also rather disingenuous. It will be remembered that those clauses of the reparation chapter which dealt with the issue of bonds by Germany produced on the public mind the impression that the indemnity had been fixed at £5,000 million, or at any rate at this figure as a minimum. The German delegation set out, therefore, to construct their reply on the basis of this figure, assuming apparently that public opinion in Allied countries would not be satisfied with less than the appearance of £5,000 million; and, as they were not really prepared to offer so large a figure, they exercised their ingenuity to produce a formula which might be represented to Allied opinion as yielding this amount, whilst really representing a much more modest sum. The formula produced was transparent to anyone who read it carefully and knew the facts, and it could hardly have been expected by its authors to deceive the Allied negotiators. The German tactic assumed, therefore, that the latter were secretly as anxious as the Germans themselves to arrive at a settlement which bore some relation to the facts, and that they would therefore be willing, in view of the entanglements which they had got themselves into with their own publics, to practise a little collusion in drafting the treaty -- a supposition which in slightly different circumstances might have had a good deal of foundation. As matters actually were, this subtlety did not benefit them, and they would have done much better with a straightforward and candid estimate of what they believed to be the amount of their liabilities on the one hand, and their capacity to pay on the other.

The German offer of an alleged sum of £5,000 million amounted to the following. In the first place it was conditional on concessions in the treaty ensuring that 'Germany shall retain the territorial integrity corresponding to the armistice convention,[63] that she shall keep her colonial possessions and merchant ships, including those of large tonnage, that in her own country and in the world at large she shall enjoy the same freedom of action as all other peoples, that all war legislation shall be at once annulled, and that all interferences during the war with her economic rights and with German private property, etc., shall be treated in accordance with the principle of reciprocity'; that is to say, the offer is conditional on the greater part of the rest of the treaty being abandoned. In the second place, the claims are not to exceed a maximum of £5,000 million, of which £1,000 million is to be discharged by 1 May 1926; and no part of this sum is to carry interest pending the payment of it.[64] In the third place, there are to be allowed as credits against it (amongst other things): (a) the value of all deliveries under the armistice, including military material (e.g. Germany's navy); (b) the value of all railways and state property in ceded territory. (c) the pro rata, share of all ceded territory in the Germany public debt (including the war debt) and in the reparation payments which this territory would have had to bear if it had remained part of Germany; and (d) the value of the cession of Germany's claims for sums lent by her to her allies in the war.[65]

The credits to be deducted under (a), (b), (c), and (d) might be in excess of those allowed in the actual treaty, according to a rough estimate, by a sum of as much as £2,000 million, although the sum to be allowed under (d) can hardly be calculated.

If, therefore, we are to estimate the real value of the German offer of £5,000 million on the basis laid down by the treaty, we must first of all deduct £2,000 million claimed for offsets which the treaty does not allow, and then halve the remainder in order to obtain the present value of a deferred payment on which interest is not chargeable. This reduces the offer to £1,500 million, as compared with the £8,000 million which, according to my rough estimate, the treaty demands of her.

This in itself was a very substantial offer -- indeed it evoked widespread criticism in Germany -- though, in view of the fact that it was conditional on the abandonment of the greater part of the rest of the treaty, it could hardly be regarded as a serious one.[66] But the German delegation might have done better if they had stated in less equivocal language how far they felt able to go.

In the final reply of the Allies to this counter-proposal there is one important provision, which I have not attended to hitherto, but which can be conveniently dealt with in this place. Broadly speaking, no concessions were entertained on the reparation chapter as it was originally drafted, but the Allies recognised the inconvenience of the indeterminacy of the burden laid upon Germany and proposed a method by which the final total of claim might be established at an earlier date than 1 May 1921. They promised, therefore, that at any time within four months of the signature of the treaty (that is to say, up to the end of October 1919), Germany should be at liberty to submit an offer of a lump sum in settlement of her whole liability as defined in the treaty, and within two months thereafter (that is to say, before the end of 1919) the Allies 'will, so far as may be possible, return their answers to any proposals that may be made.'

This offer is subject to three conditions. 'Firstly, the German authorities will be expected, before making such proposals, to confer with the representatives of the Powers directly concerned. Secondly, such offers must be unambiguous and must be precise and clear. Thirdly, they must accept the categories and the reparation clauses as matters settled beyond discussion.'

The offer, as made, does not appear to contemplate any opening up of the problem of Germany's capacity to pay. It is only concerned with the establishment of the total bill of claims as defined in the treaty -- whether (e.g.) it is £7,000 million, £8,000 million, or £10,000 million. 'The questions', the Allies' reply adds, 'are bare questions of fact, namely, the amount of the liabilities, and they are susceptible of being treated in this way.'

If the promised negotiations are really conducted on these lines, they are not likely to be fruitful. It will not be much easier to arrive at an agreed figure before the end of 1919 than it was at the time of the conference; and it will not help Germany's financial position to know for certain that she is liable for the huge sum which on any computation the treaty liabilities must amount to. These negotiations do offer, however, an opportunity of reopening the whole question of the reparation payments, although it is hardly to be hoped that at so very early a date, public opinion in the countries of the Allies has changed its mood sufficiently.[67]

I cannot leave this subject as though its just treatment wholly depended either on our own pledges or on economic facts. The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable -- abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilised life of Europe. Some preach it in the name of justice. In the great events of man's history, in the unwinding of the complex fates of nations, justice is not so simple. And if it were, nations are not authorised, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.