The Payment of Reparations and Inter-Ally Debts

Abstract

came into operation, and now at last promises to bring order out of the reparations chaos. Finally, since the beginning of 1925 most of the Continental Allies have opened formal or informal negotiations looking to the regularization of their debts. The world is thus entering on an era, almost certainly of pro longed duration, in which very large annual payments from cer tain governments to certain other governments will become a part of the normal course of events. The crux of the situation, in the first instance, lies in German reparations. If reparations payments actually reach the anticipated volume, the further economic problems created by the liquidation of the Inter-Ally debts will become comparatively insignificant. The net debt payments, regarded as a matter of governmental finance alone, will be largely or entirely offset by the receipts from Germany, and the direct burden they impose will really fall upon the German budget. But ever since the Treaty of Versailles the most serious doubts and forebodings have been expressed on this whole question, both in Germany and in other countries. It is said that Germany cannot pay reparations of substantial size without ruining her foreign exchanges and currency, and para lyzing her economic life; that similar results will attend the effort to pay off the Inter-Ally debts; and that the wisest practical course, whatever the ethics of the situation, is to wipe all of the larger inter-government obligations off the books and start afresh. This latter view, however, seems to me largely if not wholly erroneous. Granted the exercise of certain monetary and bank ing precautions, which before the war would have been regarded as reasonable and ordinary, and granted a certain amount of sincerity on the part of Germany, it will be entirely possible to make reparations transfers of the desired size. Nor need dis w