Mr. LLOYD GEORGEThe Prime Minister asked me to repeat today a question which I put to him last week regarding the Allies' Conference. I would like to know whether he has any information to convey to the House?
§ The PRIME MINISTERI am happy to inform the House that on Saturday an agreement was reached between the Allies on certain matters arising out of the Experts' Report. The documents embodying the agreements have been published in the Press and are now being scrutinised by a committee of lawyers. It may be convenient if I indicate the substance of our agreement.
The basis of the Experts' Report is the raising of a loan for Germany in order to put it on its feet economically and enable it to meet its obligations and re-enter the economic system of Europe. On the British and American markets confidence in the Reparation Commission as a judicial body for declaring default has been completely forfeited, and we were informed that so long as it could destroy the economy and credit of Germany by a declaration of default which as a matter of fact might not exist, the security for the loan would be of so little value that the loan would not be subscribed. It was not our business to arrange for this loan (that will be done in the ordinary way), but it was our duty to remove obstacles which would have made the loan fall dead on the money market.
I may take this opportunity of expressing my regret that it has been so often stated that the difficulties we encountered in this part of our work were created by bankers and financiers. They confined themselves to advising as to the state of mind of the investing public, and guided us against coming to agreements that would fail to produce the loan required. We are all much indebted to them for the information and help they gave us.
The arrangement finally made was that a citizen of the United States shall be added to the Reparation Committee chosen by the unanimous vote of the Committee, or, failing that, by the President of the International Court, as a full member of the Commission, when the 2527 question of default is under consideration. The Allied Governments bind themselves to take no sanctions until default has been declared after all the safeguards have been employed.
Provisions have been made for setting up a Committee of six, equally representative of the German and the Allied Governments, with power to co-opt a neutral if necessary, to arrange for deliveries in kind from a list of products settled by it in accordance with the provisions of the Experts' Report. This is to secure smooth delivery and to obviate disagreements.
As regards the steps to be taken to restore the fiscal and economic unity of Germany, an elaborate series of actions was agreed to, setting forth the steps that the German Government would have to take with the approval of the Reparation Commission, and also those which the Allied Governments, or some of them, would also have to take, especially the removal of all vetoes on fiscal and economic legislation passed by Germany, the restoration of full powers to German administrators regarding customs, commerce, railways which have been taken away as part of sanctions undertaken since 11th January, 1923; the same as regards economic control of private properties. Dates have been fixed for this, full operation being fixed not later than the 15th October next. This document includes technical details relating to the transition periods, and also an amnesty and declaration of no molestation for acts done by individuals in consequence of events since the 11th January, 1923. This applies to both sides.
It was essential to provide, so far as foresight would allow of it, some machinery by which interpretation of the Experts' Report and of the agreement we were building up should not be left to individual Governments or mere majorities or interested representatives. The Conference had therefore to agree upon what in the nature of the case had to be a somewhat elaborate and intricate system of arbitration and safeguards, the chief points of which are:
- (1) In declaring default the Reparation Commission must be unanimous, or, failing this, an appeal can be brought before a body of three,
2528 appointed unanimously by the Commission, or, failing that, by the President of the International Court at The Hague. - (2) In taking sanctions, the Governments agree that they muse act as trustees for all the interests created by the Experts' Report, and especially do no damage to the security of the loan.
- (3) Disputed interpretations of the Experts' Report and the London agreement shall be referred to a committee of jurists.
- (4) If the Transfer Committee be equally divided on the question of had faith of Germany the point shall be decided by the arbitration of a Committee of Economic Experts.
- (5) Disputes between the Transfer Committee and the German Government shall be referred, on the motion of either party, to an arbitrator appointed by agreement or by the President of the International Court.
As each Government has some doubts as regards one detail or another of the experts plan, any Government may have referred any defect which it has experienced to the Reparation Commission, which shall forthwith refer it to a committee consisting of the Agent-General for Reparations Payments. Trustees for the Railway and Industrial Bonds, and the Railway, the Bank and the Controlled Revenues Commissioners, and arbitration is again provided for if the German Government or Reparation Commission do not agree on the report presented to them.
These safeguards have been taken to secure all parties against decisions which will be regarded as partial and unjust. The effect of the agreement, all of the Allied Governments hope, will be to create a new spirit of co-operation on both sides so that some points that may have still been left open owing to the impossibility of settling them in the present state of the public mind may become negotiable by a change in that mind.
It was agreed that we had reached a point when it was necessary to pursue the discussions with representatives of the German Government, and we hope to 2529 constitute the Conference to morrow morning with these representatives present. In the end, it is proposed at present that three agreements will be executed:
- (a) An agreement between the German Government and the Reparation Commission in regard to matters within the competence of the Reparation Commission.
- (b) An agreement between the Allied Governments and the German Government regarding matters which require to be settled by direct agreement between these Governments.
- (c) An agreement between the Allied Governments themselves regulating matters of inter-Allied concern.
I cannot conclude this Report without expressing my great obligation to and admiration of the Premiers and leading delegates and the members of the Expert Committees who, in a spirit of loyal accommodation, have worked so hard to bring these agreements about
§ Mr. R. McNEILLMay I ask one question arising out of that very important statement? So far as I was able to follow the statement, it has been agreed between the Allied Governments that in the event of default being declared they shall proceed to confer with each other as to the steps to be taken. I want to ask whether the matter is left there, and whether any provision is being made for possible differences of view between the Allied Governments as to what sanctions, if any, should be taken in those cases?
§ Sir F. WISEMay I ask whether any part of this loan is guaranteed by the British Government? If not, what is the security? If the £40,000,000 loan goes through, are all the Allies applying for this loan in some sort of proportion? Otherwise it will affect our money markets. Can I persuade the right hon. Gentleman, seeing that Germany has gone on to the rentenmark, to consider increasing the provision in the German Reparation (Recovery) Act from 5 per cent. to 26 per cent., which it was before?
§ The PRIME MINISTERI am afraid that I cannot carry all those points in my mind. Would my hon. Friend be good enough to remind me of them as I go 2530 along? First of all, with regard to the action which the Governments may take with reference to sanctions. That matter remains where it is at the present moment.
§ The PRIME MINISTERAt the present moment it is here: when the Governments meet and disagree, then it has been held to be possible for each Government to pursue its own policy. That is how it was left by the Treaty of Versailles. I am not responsible for that. Obviously, that is a very unsatisfactory position. We have got to deal with points as they arise, and there is this to be said: I think that, if hon. Members will turn over in their minds the question as to how the machinery will work, if we can secure that a state of unanimity would be necessary before default is declared, that is the key to the whole situation. Up to now that has been impossible. Now we have secured that. Any further matter that remains, I am profoundly convinced, can be settled if we would once settle down to a state of co-operative confidence in each other. At any rate, hon. Members may rest assured that the question of Governments taking sanctions is not likely to arise in a hurry. The Government will continue to work away at that as best they can after the London Conference has come to an end.
Now as to the point about the loan—and if I do not answer all the points which have been raised might I be reminded, because I want to answer them all. We have nothing whatever to do with the loan. As I have said in my reply, we were not negotiating the loan, we were negotiating a political agreement which, in its provisions, would, in the opinion of those who would be responsible for asking the public to subscribe to the loan, provide a good enough security for the would-be creditors. As soon as we finish this work the bankers and financial houses in New York, London, Paris and elsewhere must set about setting up the loan. All we could do was to satisfy them that the machinery created to make a declaration of default would be so satisfactory that no declaration of default could naturally or humanly he made unless it was perfectly plain that default had taken place. I understand that this covers all the points.
§ Sir F. WISEAre all the Allies going to participate in the loan?
§ The PRIME MINISTERWe are not concerned as Allies.
§ Sir F. WISEThe money market is.
§ The PRIME MINISTERWe are not concerned with the money market. In a sense we are. The Government must be concerned with the money market. This is a general proposition and not a specific one in relation to the point with which I am now dealing. When we make our agreement, and the bankers have interviewed the German Government, and the arrangements have been made for the security, then the loan will be floated. But the loan will be floated not under the auspices of Governments and not with the responsibility of Governments.
Mr. LLOYD GEORGEThe Prime Minister has made an important statement in reference to the Treaty of Versailles. Does he take the view that France was right in taking separate action under the Treaty of Versailles, or does he not hold the view taken by the late Government and their advisers, that France has no right to take separate action without the assent of all the other Allies? A second question which I would like to put is this. I am not going to put any question as to his very important statement, because it will take me some time to read and consider it very carefully, and I will seek to put some question on the Third Reading of the Appropriation Bill to-morrow. But I wish to know whether the bankers have been consulted upon the agreement arrived at, and whether they regard it with sufficient satisfaction to feel that they can recommend it to their clients to advance the necessary money?
§ The PRIME MINISTERAs regards my attitude concerning the interpretation which the French Government put upon the Treaty and the view taken by my predecessors, when I was in opposition I took the view that the British Government was perfectly right in thinking that independent action was not sanctioned by the Treaty. Since I have had the advantage of being in office I have gone through the whole matter again, and I am more confirmed now than ever in the view that the position of the British Government was right. I ought to give 2532 the House an assurance on this matter when this is in final form. At the present moment these are in the form of Resolutions, drafted by the Committees, and some of them were drafted in the early hours of the morning and under very great pressure. I declined to put my signature to those. With the substance I agreed, on some points after a great amount of pressure, but a bargain is a bargain, and we cannot have everything our own way in this matter. But when those decisions have all been co-ordinated and examined by our legal experts, and then brought before us in a finished and proper form, should I find that there is anything in those agreements that might be used by anybody, either friend or foe, to indicate that I have sanctioned anything that has taken place since the 11th January, 1923, I shall propose to put an addendum to the documents saying that nothing in those documents must be held to commit me to those transactions.
§ The PRIME MINISTEROr to any acceptance of that point of view. What I should like, I candidly confess—and I do not care who knows it—is to apply what I hope is going to be in its working a successful system of arbitration. I should like to apply the same idea to an interpretation of the Treaty of Versailles, so that all disputed points as to Clauses in the Treaty of Versailles shall be referred say—I am only giving it as an illustration—to the International Court of Justice at The Hague. But I am rather afraid, and I am very sorry, that in the present state of public opinion, not in this country but elsewhere, such an agreement would be impossible. I hope sincerely that at the end of six months we may be in a position to arrive at an agreement upon that point, but at the moment it will have to be left over.
Mr. LLOYD GEORGEWith regard to the bankers, will the right hon. Gentleman say whether the agreement has been submitted to the bankers?
§ The PRIME MINISTERThe bankers are aware of these agreements, and I have had conversations with them since they have had the agreements in front of them. I hope the House will pardon 2533 me if I do not go further than that, because quite obviously, before the bankers can definitely say whether they are going to float this loan, they must consult the German representatives, and it has been impossible for them to do that. After all, as the House will remember, especially those who have studied the Dawes Report, the State that is really responsible in the end is not France and is not ourselves, but Germany, and, until the creditors find out the mind of Germany, it is impossible for those who are advising people to put money into the loan to say whether the security is a good or a bad one. But, certainly, I can assure the House of this as the result of consultation with the bankers which I had last night and in the early hours of this morning—altogether contrary to my principles, but in the state of affairs we have to be a little liberal with our consciences sometimes—that I think before the London Conference adjourns, we shall have a definite statement from the bankers upon the matter.
§ Sir F. WISEThere is one point on which the Prime Minister did not reply to me.
§ Mr. SPEAKERI understand that there is to be a Debate to-morrow.
§ The PRIME MINISTERIs it tomorrow?
§ Sir F. WISEMay I have a reply to my last question? As the Germans have gone on the rentermark gold basis, will the Prime Minister consider increasing the German Reparation (Recovery) Act from 5 per cent, to 26 per cent.?
§ The PRIME MINISTERThat is a point which I think, if it is raised in the conversations we are going to start tomorrow, had better be raised then, and I must have Treasury advice before I commit myself.
§ Sir A. SHIRLEY BENNI should like to ask if any arrangement has been made to set up a Committee to decide the extent to which each country must receive reparation in kind?
§ The PRIME MINISTERA suggestion is made—and this, of course, must receive the approval of the German Government, 2534 because it is a matter in which we are in no position to impose and do not desire to impose it upon her—that a Committee, the name of which it is proposed should be the Organisation Committee, should be set up, three and three—three representing the Allied Governments to be nominated unanimously by the Reparation Commission and three representatives of the German Government—and that that Committee should take the schedule of goods which may be paid over in kind in accordance with the Dawes Report and arrange how the transfer is going to take place in such a way as to smooth over the transfer and to remove all sorts of disputes that may arise between the German Government and the German industrialists on the one hand and the receiving countries on the other.
§ Mr. T. JOHNSTONMay I ask if the right hon. Gentleman has made any provision whereby this country may renounce its share in the reparations providing that it finds that the acceptance of these reparation goods is detrimental to our industry and employment?
§ Mr. SCRYMGEOURAre we to understand that the negotiations are still being continued on this very important point in the event of any disagreement regarding the cause or causes of default and that we shall have a report?
§ The PRIME MINISTEROn that point the settlement is complete. We are not negotiating that. We have agreed to it. A matter like that, if it be not unanimously agreed to in the first instance by the Reparation Commission, will be subject to arbitration. Regarding the first question, the whole question of the receipt of reparations will be watched. The great advantage of setting up these Committees and the putting of the Dawes Report into operation is that for the first time we have the prospect of a scientific examination of the result of reparations, and my hon. Friend may depend upon it that, should we observe anything happening as the result of these deliveries, we shall at once take steps to stop it if it be bad. The House, I hope, will not overlook the fact that the provision has been made, and agreed to, that all the workings of the Dawes Report shall be subject to the very closest 2535 examination by all the Governments concerned; and, whenever any one Government has got anything to raise regarding it, it reports to the Reparation Commission, and the Reparation Commission, without considering the matter itself so as to prejudge the matter—that is an important point—shall at once refer it to the heads of the control departments created by the Dawes Report, every one of whom will be experts with the fullest knowledge how things are going and with everything at their fingers' end.
Mr. LLOYD GEORGEOn the question put by my hon. Friend the Member for Plymouth (Sir A. Shirley Benn), may I take it that there is no disturbance of the proportions arrived at under the Spa Agreement between the Allies—the distribution?
§ The PRIME MINISTERI declined absolutely to discuss that at the London Conference. It was not the business of the London Conference. The business of the London Conference was the Dawes Report.
§ The PRIME MINISTERNo, none whatever. There should be no misunderstanding. Should there be any proposal of any such thing, it will be the subject of a separate conference.