the League of Nations pact. According to Article VII of the League of Nations pact, in quarrels between members of the League of Nations and a State which is not a member of the League, the procedure of arbitration provided for by Article XV is also to be applied. Germany is not a member

of the League, but she has signed the pact of the League, and I therefore announce in the name of the German Government an appeal to the Assembly of the League of Nations against the sanctions with which we are menaced.

Mr. President and Gentlemen,—I come to my conclusion now. More important for me than the question of right is the reflection that any sanction, if it fails to attain its purpose, must call for new sanctions, and so, finally, instead of executing the Treaty, lead up to preparing a new state of violence. But we all of us very badly want to get out of the unhealthy atmosphere of compulsion and into the wholesome atmosphere of voluntary cooperation. Mr. Lloyd George has said that it is not the intention of the Allies to ruin and enslave Germany, but that they recognize a restored and flourishing Germany as a condition of their own welfare. These generous words meet with a lively echo on our side. We are likewise conscious that Germany can never come under the restoration of her own destroyed economic life so long as her former adversaries have to suffer so immensely under the consequences of the war. However the question of war guilt may one day be decided, we are all in a common distress which can only be removed by a common effort. Believe me that Germany is ready to exert herself more than the others.

We ask the Allies to assist us in finding ways to fulfil our obligations. We believe that the manner of our payments should be examined separately for each of the Allied countries. Perhaps we shall have to adopt different methods of balancing payments in cash and payments in kind to France as compared with England and to Belgium as compared with Italy. We shall also have to examine how far the demands which other Powers which are not parties to the Peace Treaty

will put to us will be able to be satisfied on the basis of our agreement with the Allies.

All these questions, in order to be practically solved, require being thoroughly studied by technical experts to be appointed from both sides. I hope that the joint labours of these authorities in the economic life of Europe may succeed in finding a way out of the labyrinth of grave economic difficulties under which we all of us jointly struggle.

IV

REPLY OF THE RT. HON. DAVID LLOYD GEORGE TO THE GERMAN DELEGATION,

MARCH 7, 1921

Dr. Simons and gentlemen,-I very much regret that I have to state on behalf of the Allied Governments that not only the proposals made by Dr. Simons this morning are not acceptable, but that, in spite of the interval which has occurred since our last meeting, they do not represent such an advance upon the first proposals as to justify us in postponing the execution of the sanctions. I need hardly say that we all very deeply deplore having to come to this decision. In the interests of the peace of the world, and in spite of the fact that our action was liable to a good deal of misapprehension in our own countries, we made an effort to secure a better understanding, and it is not for lack of effort and discussion that I have now to announce on behalf of the Allies this failure to come to anything like an approximate understanding with Germany.

I will now indicate as shortly as I possibly can why we regard Dr. Simons's last proposals as inadequate. It is common ground to all the parties concerned that it is essential in the interests of the peace of the world that there should be a definitive settlement of the outstanding questions between us. Germany urged it. The Allies pressed the same consideration. And the neutrals were equally insistent. In fact, the friends of peace throughout the world said to us, "Settle up as soon as you can the amount of your liabilities, so that every country should know exactly where it stands." Germany appealed to us to do so, and for obvious reasons. Germany said, "How can we settle down to our business to rebuild our economic life when there is an indefinite, unknown liability hanging over us?" Quite right. The Allies said,

"How can we restore devastated provinces unless we can make some kind of plan, some kind of scheme-unless we know something of the resources at our disposal?" So it suited them. And the neutrals said, "How can we trade with either Germany or the Allies until we know what their financial position is?" Therefore, all those who are responsible for the direction of the affairs of a very shaken, distracted, and uncertain world said, "Do settle once for all what your differences are and let us know the worst!"

It was an appeal to common sense. It is perfectly true experts, failing to come to an agreement, made some suggestion about trying to agree for five years, but that was not a plan which was adopted by any conference of statesmen in either country. For the reasons which I have indicated we wanted each of us to know exactly where we stood, so as not to be building on a rocking foundation, but on something which, however low it was, was firm and touched bottom.

Now I am going to examine Dr. Simons's proposals in the light of what I consider to be the paramount interest of Germany, the Allies, the neutrals-in fact, the whole people of this world; and it is in the light of that examination that I think they completely fail, and until we get proposals from Germany that will mean a definite, unchallenged settlement there can be no peace between us.

What is Dr. Simons's proposal? There is an appearance of accepting the Paris proposals for five years, and five years only. But that is apparent and not real. It is subject to conditions which make it uncertain, which might terminate it in the course of the next few weeks. It is subject to the plebiscite in High Silesia. If the plebiscite in High Silesia, or in part of it, is adverse to Germany, Dr. Simons, if we accepted his proposal, would be perfectly justified in coming here and saying, "The situation has changed. Germany has been deprived of the territory upon which she depended to pay those annuities, and therefore the arrangement which I made in London is at an end."

That is, it is not a proposal for five years; it is a proposal

for five weeks. It is subject to other conditions, which I do not want to dwell upon at the present moment because they have not been elaborated; proposals with regard to guarantees for German trade-I do not examine those now because the first condition is in itself a complete demonstration of the fact that so far from settling anything we are unsettling; we are not looking ahead a couple of months, let alone five years. Then what happens after the end of five years? Supposing High Silesia voted in favour of remaining in Germany; supposing we were ready to accept the conditions about German trade, and all went well for five years, what happens afterwards?

After the five years we have no proposal; not even a conditional one; not a figure. Not even a precise method of arriving at a figure. There is no minimum, even. It is perfectly vague. There is nothing the Allies, especially those who want to raise money for repairing their ravaged country; there is nothing they could raise one paper franc in the market upon in the proposals made-not one; letting alone a gold mark. There are some indications which are disquieting; for instance, it is part of the five-year proposals that Germany should pay even the low figures fixed for the annuities for those five years not out of her current revenue, but by means of a loan. She is to borrow. By borrowing she mortgages her future. She will borrow-must necessarily borrow-with a guarantee of priority for those who lend even over reparations. So that what happens after the five years is that Germany, not anticipating that she will be able to pay out of her current revenue for the first five years, will mortgage her income for the years that come after in order to pay the annuities of the first five.

Now that is the only indication of what is in the German mind as to what is likely to happen after five years. There is no other test; there is no other promise; and there is only one certainty. We have been asking for some sort of certainty-there is only one certainty, and that is the certainty that it will be inadequate.