§ 57. Sir F. WISEasked the Chancellor of the Exchequer if Germany has made any anticipatory payments under discount under the Dawes plan?
§ Mr. CHURCHILLIn September last an Agreement was made with the German Government whereby a fixed payment of 300,000,000 gold marks (£15,000,000) during the third annuity year of the Dawes plan (1st September, 1926, to 31st August, 1927) was substituted for a contingent liability of 250,000,000 gold marks (£12,500,000) payable in the fourth and fifth years, or 500,000,000 gold marks (£25,000,000) in all. The reparation payments since September last include the proper addition due under this Agreement.
A full explanation of the Agreement was published in the Press by the Agent-General for Reparation Payments on 3rd September, and I am having a copy of this statement circulated in the OFFICIAL REPORT.
§ Sir F. WISEWhat was the discount allowed on these prepayments?
§ Mr. CHURCHILLI must ask for notice of that question.
§ Following is the statement mentioned:
§ The Agent-General for Reparation Payments announces that, with the approval of the Reparation Commission and the Governments concerned, he has now concluded an agreement with the Finance 1686 Minister of the Reich liquidating by a lump-sum payment the two supplemental budgetary contributions payable by the German Government in respect of the third and fourth annuity years. The new arrangement substitutes for a total contingent liability of 500 million gold marks a fixed payment of 300 million gold marks, all of which is to be paid during the third annuity year, which began 1st September, 1926, and ends 31st August, 1927.
§ Under the provisions of the experts' plan the reparation annuity payable by Germany for the third annuity year would amount to 1,200 million gold marks, and for the fourth annuity year to 1,750 million gold marks. Of these payments the plan provided that the German budget would contribute 110 million gold marks for the third annuity year, and 500 million gold marks for the fourth annuity year. At the same time, however, the plan and the London Agreement provided that these budgetary contributions should be subject to modification by amounts not to exceed 250 million gold marks for each year, depending on the yield of the controlled revenues. If the aggregate yield of the controlled revenues were to exceed or fall short of 1,000 million gold marks during the annuity year (1926–1927), or 1,250 million gold marks during the annuity year (1927–1928), the budget contributions of the next succeeding years respectively were to be increased, or reduced, as the case might be, by an amount equivalent to one-third of the excess or deficit in the controlled revenues, but not to exceed 250 million gold marks for either year. In actual experience, the aggregate yield of the controlled revenues during the first annuity year (1924–1925), amounted to 1,706 million reichsmarks, and the estimates indicate for the second annuity year (1925–1926), aggregate returns of over 1,900 million reichsmarks. On this basis, the yield from the controlled revenues in the third and fourth annuity years was likely to bring the contingency into operation, and to make the German budget liable, in all probability, for supplemental contributions on account of both years. The agreement which has now been concluded replaces the two contingent annual contributions, which might otherwise have risen to a total of 500 million gold marks, with a single definite 1687 payment of 300 million gold marks, which Germany is to make during the third annuity year.
§ The result is an important change in the arrangement of the annuities payable under the terms of the plan. Without the new agreement, the annuities would have risen from 1,200 million gold marks in the third annuity year (1926–1927), to 2,000 million gold marks in the fourth annuity year (1927–1928), and 2,750 million gold marks in the fifth annuity year (1928–1929), assuming that the maximum supplemental contributions had become payable. This would have meant an increased burden on the German economy of 800 million gold marks in the fourth year, as compared with the third, and a further heavy increase in the fifth year as compared with the fourth. The new arrangement, on the other hand, means that the third annuity will amount to 1,500 million gold marks, as compared with 1,220 millions in the second annuity year, while the fourth annuity will stand at 1,750 million gold marks and the fifth at 2,500 millions. The result is a better arrangement of the annuities, which will reduce the danger of undue strain on the German economy and facilitate the even flow of deliveries and payments.
§ The agreement as a whole will contribute substantially to the smooth operation of the experts' plan, and, incidentally, will facilitate its administration by eliminating factors of uncertainty that might otherwise be troublesome. One further effect will be to increase by a substantial amount the funds available for deliveries in kind during the third annuity year.
§ This settlement of the question of the supplementary budgetary contributions has been made by the mutual consent of all the parties, in the conviction that it will facilitate the operation of the experts' plan and promote the best interests of all concerned. It is thus a further evidence of the spirit of friendly accommodation, and a new earnest of the good will and mutual understanding that lie at the basis of the plan itself.