June 28.
President Hoover's offer of a year's moratorium naturally at-{vacts immediate attention aspect of its bearing on the general economic difficulty with which the world, as a whole, is confronted. It is hoped that Lilith the weight of debt temporarily lifted from its shoulders the world will be able successfully to adjust itsd? to the task of reconciling excessive production with decreased. Powers of consumption, possibly by checking the fall of prices and bringing wages on to a plane more in accord with the fall which has already occurred, due regard being had to the political difficulties attendant on reduction in the standards of living. Eventually these ease~ ments, if they duly come into play, should have a tonic effect on the markets here, But it should not be overlooked that, technically, the President's welcome announcement is simply concerned with the Reparations issue. It should therefore be examined in that light. Without following in detail the course of the conferences which endea-youred to settle the question of Germany's "capacity to pay" and the political wrangling therein involved, it may be recalled that, in August 1921, Mr. 5, M. Keynes sounded the note of warning that the "assessment" made by the Reparations Commission in that year would Tead to Germany's default. During the months which followed, proving the accuracy of that ophecy to the extent that a virtual moratorium had given in August 1922 and various proposals and counter-proposals made to temper the wind to the shorn lamb, there was a rapid modification of the political outlook. The stern rigour of the Spa Conference of July 1920 became radically altered by the growth of appreciation of the fact that, in the event, the solution of the world's " economic blems must to a large extent!
brought about by cooperation with rather than coercion of Germany. This found full politi. cal expression in the Treaty of Locarno. Financially it was embodied in the Dawes Plan which, for all its defects, soon to be made apparent, enshrined a new spirit. It definitely recognized that Germany was "faithfully fulfilling her reparation obligations." It endeavoured to ensure that Germany's financial rehabilitation was assisted and not merely controlled with exclusive care for her indebtedness, Yet within four years, al though it had facilitated a marked recovery in Europe, the Dawes Plan came to be regarded fas imposing on Germany a burden beyond her capacity to bear. To enter satisfactorily into' the highly technical details of the Plan would re-more space than this column can vouchsafe, sufficient to note Dr. Stresemann's declaration in the Reichstag on November 19, 1928, that the question. of the Reparations should be studied solely from the standpoint of Germai capacity to pay and the subsequent appointment of the Committee of Experts, under the Chairmanship of Mr. Owen, Young.
This Committee met in February 1929, It on June 7 of Its findings endorsed the underlying soundness of the Dawes Plan but] recognized that that Plan could but produce the outlines of financial reconstruction. - The Young Plan continued and completed the work of the earlier committee; it eliminated the uncertainties, by substituting definite settlement under which the extent of the debtor's obligations -were known. With this and in view, it proposed to give Germany relief from the Dawes' basis of an Index Prosperity and to ensure to he financial autonomy. Of special interest at this moment is the Young provision for postponement of part of the annuities in the event of adverse economic circumstances arising. Tt was recognized that, should a safeguard have to be brought into effect, the result would be a revision of the payments under the Plan, unless the postponement were for a very short period. The proposed moratorium may, in the same way imply a revision -but that must depend on the course of events.
Text read from the printed page and cleaned; old type leaves the occasional error.