HC Deb 26 July 1939 vol 230 cc1667-90

I do not rise to continue the very interesting, if somewhat exciting, discussion which I have been listening to for the past two or three hours. I propose to call attention to a totally different matter, and, although I think it is one of equal, if not greater, gravity, I am of the opinion that the Chancellor of the Exchequer and I will be more likely to discuss this matter in an atmosphere of greater calm, and I shall be surprised if at the end of the discussion we do not find ourselves in agreement. I wish to deal with the Young Report on Reparations. I do so with much reluctance, but I am not taking up this question in order to embarrass the Chancellor of the Exchequer in any negotiations which may take place. On the contrary, I think this discussion may strengthen his hands when he comes to the very important conference which must take place at some time or other. I have read the Young Report, and it seemed to me so incredible that I read it a second and a third time, and each time I read it with feelings of amazement that such a report could be presented to the British Treasury as a fair settlement of the claims of Great Britain.

I have no desire to criticise the very distinguished expert who represented us in this business. On the contrary, I think we were represented by one of the ablest economists in the world, but there he was in a position of isolation, largely due to the fact that a very able colleague of his had been stricken down in the middle of the negotiations. Our representative was pressed by other Powers, and most of them benefited by the sacrifices which we were called upon to make. Our representative seemed to be in the position of the juryman who after holding out against the opinion of his fellow jurymen for hours, days, and perhaps weeks, in the end had to accept the responsibility of being the one and only dissentient. The responsibility cannot be placed on our representative. The responsibility, in the first instance, rests with the Government and undoubtedly with this House. I want to say here and now that I earnestly trust the Chancellor of the Exchequer will use his great authority and influence to secure very substantial modifications in the scheme adopted by the Young experts before it is adopted by this House.

2.0 p.m.

I will give my reasons for that course. I do not object to a reduction in German payments; on the contrary, when the Dawes Report was before this House five years ago I said the figures were too high, and that I had no doubt a further reduction would have to be effected in due course. I do not think we have seen the last reduction, because every revision which has taken place up to the present has ended in a reduction, and I do not believe that this is the last. I am not objecting to the Young Report on the ground that it has reduced the contribution of Germany Germany's contribution is still a very heavy one. We shall find it difficult to raise a sum running up to £34,000,000 which we have to pay to America, and we are in a much better position that Germany. I think the Young contribution is very stern and severe.

My objection is that the whole of the sacrifices have been made practically at our expense, and, if there is to be any abatement in the German annuity, it should be distributed fairly. That is not the case; practically we have been called upon to foot the bill. The Chancellor of the Exchequer has already said that we cannot continue to pursue a policy of making sacrifices at the expense of our own people, or of bearing further financial burdens in order to help those who are better able to bear their own burdens. That is the statement which has been made by the Chancellor of the Exchequer in reference to reparations. I hope the right hon. Gentlemen will impress that view upon the Conference, and that he will be able to secure a very substantial improvement in the Young terms as far as we are concerned.

Let me summarise the alterations which have been effected in our position and to our detriment by the Young report. First of all, there is the reduction in the Spa percentages. I cannot give the exact figures, but perhaps the Chanceller of the Exchequer will inform us. It looks as though what is now proposed will mean a reduction of about £2,000,000. That is a reduction of £2,000,000 a year in our share which was fixed at the Conference at Spa between the Allies and Germany, and that was the proportion of German reparations allocated to us. My recollection is that it means a reduction of about 22 to 20 per cent.

Why should there be any reduction? On what ground has a reduction taken place? Were we receiving too much under the Spa agreement in proportion to the sacrifices which we made in the war? Under the Spa agreement, France was to receive 52 per cent. of the whole, and we were to receive 22 per cent. That means that France was to receive 2⅓ times as much as we were to receive, and I think that was an extremely generous settlement as far as France was concerned. I am not minimising the sacrifices France made in the War, but as a matter of fact neither in lives nor money were the sacrifices of France two and a half times more than our own. When you come to the question of devastation, our devastated areas are of a different character. Our devastation has been in our trade, and especially in our international trade. We have not yet recovered more than 80 per cent. of our great international trade at the present time. We ought to be, not merely 100 per cent. of what we were before the War, but about 120 per cent., taking the populations into account, and certainly we have not recovered more than 80 per cent. That means that since the War we have lost, at the very least, £3,000,000,000, of trade directly owing to the devastation of the War. We are repaying £34,000,000 a year, which will run up, I think, to £38,000,000, to America in respect of a War debt which we incurred really to finance the Allies. Had it not been for the obligations we incurred to finance the Allies in respect of food and munitions, it would have been quite unnecessary for us to have borrowed that £800,000,000, or whatever it was, from America, which, with arrears, has run up to about £1,000,000,000. I cannot see on what ground we can be called upon to assent to a decrease of the proportions which were laid down by agreement after a good deal of conference and consultation and examination by experts in the year 1920; but we are now invited to agree to a proportion that will reduce the sum of money which we shall receive in respect of reparations by £2,000,000 a year.

A much more serious thing, in my opinion, is what has happened about the division of the German annuity. For the first time the German annuity is to be divided into two categories, the conditional and the unconditional. The unconditional is to be paid whatever the state of trade may be in Germany. The conditional can be postponed for two years if the trade conditions in Germany are of such a character, or if her currency difficulties are of such a kind, that she cannot secure a sufficient number of foreign securities to enable her to pay the whole of her annuities. She is entitled to give 90 days' notice. She must pay the whole into the Reichsbank, but there is to be a postponement of the transfer. In the second year, she can even suspend payment to the Reichsbank to the extent of 50 per cent. In the third year a committee is to be set up to consider what is to be done with the arrears. It is of no use to us that our share has been paid into the Reichsbank; the whole question is, how we are to secure that share by means of the transfer. When the third year comes, Germany will be confronted with the payment of the whole of her annuity for that year, and something like £140,000,000 of arrears. Does anyone imagine that she can do that? She has just recovered—that is the hypothesis—from two years of severe trade depression, and the first year that she recovers she is called upon to pay, not merely the whole of her annuity, but the two years' arrears as well.

What is to be done with the unconditional payment? The unconditional payment is a payment of 660,000,000 gold marks, that is to say, £33,000,000. Germany must pay that whatever her trade conditions may be. The rest of the annuity, which comes to something like 1,400,000,000 gold marks, or roughly about £70,000,000, is conditional. Practically, we receive nothing of the unconditional payment. £25,000,000 goes straight to France. France has the first charge of £25,000,000 out of that £33,000,000. Italy has 42,000,000 gold marks; Italy has a guarantee of over £2,000,000. That leaves £6,000,000. Then you have the service of the Dawes Loan; so that practically nothing will come to us out of the uncondidional payment. If there is any depression in Germany, if Germany cannot purchase the necessary foreign securities in order to pay the unconditional part of the annuity, we shall be left out. We have to pay our £34,000,000 to America, and £38,000,000 later on. We made arrangements by which we are to receive from France and Italy and Germany seven payments which will make up that £34,000,000 or £38,000,000, but for two years that may be suspended, and, at the end of the two years, it is to be left to a Committee, on which we shall be one out of seven, to decide whether we are going to recover those arrears or not.

It is incredible to me how anybody could have signed this report. Not merely are we to be left for two years with nothing, but we may have such a revision at the end of two years that even then there will be a reduction. The £25,000,000 paid to France is about the best security in the world. We have absolutely none. Our payment will be precarious, doubtful; I have no doubt that the bulk of it will vanish. Why do I say that? Germany has only been enabled to pay her Dawes contributions by borrowing on a large scale and by keeping down her wages. Those two processes cannot be continued indefinitely, and the result will be that Germany sooner or later will be confronted with the aggregation of those huge borrowings for the purpose of paying these annuities, and there will be another revision; but when that comes France will be secure, and Italy will be secure as to her proportion of £2,000,000, or 42,000,000 gold marks. We shall be left the rest, which is precarious and vanishing; we shall be left with nothing but a £34,000,000 payment to America, which is secure enough. I do not think that in these circumstances our Government ought to append its signature to a report which is not merely a set-back to us, but a humiliation to us. I think it is one which no Government, in the interests of the taxpayers of this country and in the interests of fairness, ought to be called upon to sign. We used our credit with great generosity for the benefit of the whole of our Allies during the War. Agreements were made in which we were put down last. I cannot trust myself to say what I think of the way in which we have been treated in the whole of these arrangements, and I would rather not; I would rather state the facts as they are. But that is not all. There are certain safeguards, but I believe they will vanish. There is something to the effect that for the first deficiency France is to pay 500,000,000 too, but that is only for the first deficiency. I am hoping that at any rate the 20 per cent. will be safeguarded. In the main, however, we are left with nothing.

I am sorry that there is a third thing which is, I will not say more serious, but just as serious, and that is in regard to payments in kind. Under the Treaty of Versailles, which I had a hand in negotiating, there were payments in kind in respect of coal, and also in respect of some other things for about four or five years. I forget what the other things were at the moment—dyes, potash, and a few things of that kind. There were payments in kind in respect of coal for 10 years, because of the devastation of the Belgian and the French coalfields. I thought at the time that ten years was a very liberal limit. As a matter of fact, the French coal fields were not only restored but improved in less time than that. Under the Treaty of Versailles, payments in kind would have come to an end this year. Unfortunately, under the Dawes Report the ten year limit was taken away. I have been condemned, especially in the coalfields, for my share of the responsibility, but mine was a ten year limit. It would have come to an end this year and there would have been no payments in kind at all. I must remind hon. Members opposite that it was in 1924 that that limit was taken away. That is never stated in the coalfields. It is one of many things that I shall one day have to tell my friends the miners—the sort of things I have been blamed for, for which I had not the slightest responsibility.

However, that is another matter. I did not raise it for that purpose. I raised it for the purpose of seeing the effect of the Young Report. On the face of it, the Young Report is a limitation. It extends for ten years. There will be deliveries in kind for another ten years. The most serious thing there is that provision is made in the new regulations to permit the several Powers to dispose of some of their quota outside their own territory under suitable restrictions. That means that France and Italy can now get their quota of coal from Germany under reparations—not under the Treaty of Versailles but under the new regulations which have been made since. They need not consume it in their own territory. They can sell it outside for any price. There is no regulation at all in regard to that. In the Treaty of Versailles we had careful safeguards to prevent that coal from competing with British coal. As far as I can see, there is no restriction at all as to the price which these countries can charge when they are selling their surplus coal, which they get from Germany, in the markets of the world. What they want is the cash now. Italy does not need the coal to the same extent as formerly, because of her gigantic development of water power. Even her railways are independent of coal. The coal is to be sent to the Governments. The Governments do not require it, and they can sell it outside, as far as I can see from these provisions, without any restrictions. I hope the right hon. Gentleman will take very careful note of that.

Here is another point. When Germany postpones her transfers, as I read this report, she can make arrangements for liquidating the arrears and for further deliveries in kind. That is very serious for a country like ours which is an importing country. See what it means. The suspension of payments in kind is an act by Germany. She can give 90 days notice and can claim suspension for two years. She is passing through a period of depression. She has a surplus of goods. She can dispose of that surplus by way of reparations. She can pay her reparations, and liquidate her arrears, by getting rid of goods which she could not dispose of otherwise. That is a very serious thing that ought to be examined. I think it is quite capable of being manipulated in a way that would be disastrous for an exporting country like ours. I hope the Chancellor of the Exchequer will take very great care that a provision of that kind is not inserted. We seem by this Young Report to be hit all round. First of all the contribution we receive is to be reduced from 22 to 20 per cent., which means £2,000,000 a year. In the next place, the annuity of Germany is to be divided into two, one the unconditional one—where we receive nothing—and a conditional one which may be suspeuded for two years if Germany is in a had way, and there will be no guarantee that at the end of two years you will receive anything. We are hit hard there. Then come these provisions with regard to payments in kind which are the most injurious of all. Although there was an American Representative there, and for the first time there was a kind of linking up of debts with reparations, in the arrangements that were made I did not observe that, during the two years in which we were not to receive our share of reparations, there is any provision that America is not to receive her annual payment in respect of debt. America is represented on this body, which can at the end of seven years wipe out those arrears and leave her short of nothing. That consultative body cannot even consider the question of the repayment of the American debt.

This seems to be a very one-sided transaction. The thing has been weighted against us in every direction and in every particular. I am not against reduction. On the contrary, in every conference I have attended my plea was always for a reduction of Germany's payments. I never believed that the great demand that has been made on Germany could be sustained, but as the right hon. Gentleman knows, when you go into a conference you have to give way here and there and you feel that you have carried the thing as far as you possibly can at a particular stage, but another conference will come later on when there will be a revision. That is all you can do in an international conference. Many a time have I communicated with the United States to beg them to bring the debts into a sort of ambit of the discussion about reparations. I made the appeal to President Wilson. I have here the letters that passed between us, but I do not think I will detain the House by reading some of the passages: I found the Americans very gentle, taking a very broad and munificent view on questions of reparations, but whenever you came to questions of debt you found them exceedingly hard, unyielding and unbending. In our proposals in 1922 we proposed to abandon every claim we had against any country in respect of debt owing to us. We offered to abandon, as the right hon. Gentleman knows, our claim to every penny of German reparations provided America was prepared to abandon her claim against us. It is a grave misfortune that a proposal of that kind was not carried. It would have meant wiping the slate, and it would have meant getting rid of all these burdens which are crippling industry and depressing wages throughout the whole of the year. As long as these huge claims for reparations and debts are on the shoulders and on the chest of Europe, you are bound to have harsh industrial conditions. Therefore, in 1922, we made that offer, that we were prepared to clean the whole slate. We had £3,000,000,000 due to us. [Interruption.] There was a war on in 1918. I had not forgotten that. The hon. Member means 1918.


The 1919 election.


I made it in correspondence which passed between ma and the President of the American Republic at that date, and I am quite prepared to publish that correspondence. I said "If we are to have a sort of abatement, let us have abatement all round." We were prepared in 1919 to have debts brought into account and to have a settlement which would have had the effect of wiping out all these obligations. I do not mean to say to relieve Germany altogether; certainly not. I have never taken that line. It was due that she should pay a very considerable sum of money in respect of the devastation which she caused by the War, and for which she was responsible. The proposal was made in 1922. That is seven years ago. [Interruption]. If the hon. Gentleman had been in the House he would, possibly, have made it before—and perhaps not. If he knew a little more about the subject he would realise things which he is incapable of comprehending at the present moment. I am not in the least urging any objection to reductions in the obligations of Germany. On the contrary, I say that these things can possibly be accomplished. I earnestly entreat the right hon. Gentleman—I am not sure that it is necessary to press him very hard upon it, because I have read the speech which he delivered in the City of London and which gave me great gratification—that he will consider once, and consider twice, before appending the signature of the Government to a document which would be so disastrous to this country.

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden)

I do not in the least complain that the right hon. Gentleman has raised this question. On the contrary, I think that it will be of service to those who have to conduct in what must in any case be very difficult circumstances, the consideration of this Report on behalf of this country. For a very great deal of what the right hon. Gentleman has said he has had no more sympathetic listener in the House of Commons than myself, but I am sure that hon. Members will realise that in speaking upon this subject today I am in a somewhat delicate and difficult position. Indeed, I feel a certain amount of hesitation in dealing with the matter, and I envy the right hon. Gentleman his position of greater freedom and less responsibility. The right hon. Gentleman has given such a very clear and full account of the main provisions of the Young Report that it is not necessary that I should follow that ground beyond, perhaps, illustrating one or two points by figures which are in my possession and to which the right hon Gentleman perhaps had not access.

I would like at the outset to make it clear that the Government are not in any way committed to the acceptance of the recommendations of that Report. Hon. Members will remember that this Committee had its genesis in conversations which took place at Geneva last September between certain foreign Ministers. The German Foreign Minister raised the question of the evacuation of the Rhineland, and in the conversations which followed, I understand some other Foreign Ministers tried to link that up with the question of Reparations. I believe that it had been the policy of the British Government up to that time not to admit, or not to accept, any direct relation between the evacuation of the Rhineland and the payment of Reparations.

However, as a result of the agreement which was reached at Geneva, and at which I think it ought to be mentioned no Finance Ministers were present, this Exports' Committee was set up. It is quite true that the members of that committee were appointed by the respective Governments, but in the case of Great Britain at any rate, they were not there directly as representatives of the Government. They were there as independent financial experts. My predecessor in office stated a few weeks ago quite firmly, and, I think, quite properly, that the Government did not regard themselves as bound to accept whatever conclusions the Experts' Committee might recommend. I am not aware that up to the present any of the Governments affected by this Report have formally accepted the Report, or rather I ought to say, any of the creditor Powers. I believe that the German Foreign Minister has stated that the German Government accepted it as a basis of a conference, but it is not within my knowledge that any of the creditor Powers have accepted the Report. On the contrary, I think that they all regard the proposals of the Report as being open to consideration and negotiation by that conference. We cannot assume, and it would be ridiculous to assume, that every Government is committed to accepting everything that a committee, constituted like this expert committee, might choose to recommend. There would be no need to have any conference if the Governments were compelled to accept the Report as it stands. All that would be necessary would be that post-cards would be exchanged between the different Governments notifying their acceptance, and then for certain technical experts to set to work and prepare the machinery for carrying it into effect. Having said so much about the genesis of the Experts' Committee, I will pass on to deal with other matters.

May I carry back the memories of hon. Members to an incident which happened during the sittings of this Committee about the beginning of May. The American Chairman of the Committee put forward a proposal before the Committee that the German annuities should be fixed at £110,000,000 a year for a period of 37 years, and with debt cover only for 22 years more, but we were expected to find the Dominions share of reparation. Hon. Members will not forget the indignation that the proposal aroused in this country. My right hon. Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) put a question to the then Chancellor of the Exchequer. The right hon. Gentleman said very boldly and firmly that the Government would not accept such a proposal, if it were finally embodied in the Report of the Experts Committee. There are degrees in everything and the difference between the proposal that was made then and rejected, and the proposals which finally appear in the experts report are differences of degree only.

As there may be Members of the House who did not hear the very clear analysis of the amount of the annuities and their distribution by the right hon. Gentleman the Member for Carnarvon Boroughs, may I in a word or two recapitulate what he said. I may preface my remarks under that head by saying that the Government are willing to agree to the amounts which have been proposed for the German annuities. We have no desire to increase the amount of the claims which Germany may be called upon to pay. That is the one point in the report on which I think there will be very general agreement. The scheme is that there shall be 36 annuities, starting at £85,000,000 and rising to £120,000,000, an average of £99,500,000, but outside that, or rather beyond that, there is war debt cover for the next 22 years between 1966 and 1988 and there the amounts begin at £85,000,000 and gradually fall to £45,000,000. As the right hon. Gentleman pointed out, of this average annuity of about £100,000,000, £33,000,000 is unconditional. That is to say, it is to be paid, I suppose, in any circumstances other than the complete bankruptcy of Germany, a thing which we do not anticipate. Therefore £33,000,000 out of the £100,000,000 is unconditional and the rest is postponable. I need add nothing to what the right hon. Gentleman has said in explanation of that. His explanation was accurate and clear. I may have a word or two to say later as to what the views of the Government are on the distinction between conditional and unconditional annuities. As the right hon. Gentleman says, France is allocated a large share of the unconditional annuities but has to provide a guarantee fund of £25,000,000, in case of the operation of the postponement provisions of the report. We are given no appreciable share of these unconditional payments but five-sixths of the free amount go to France and most of the rest to Italy. Our share of the annuity might be compared to the ordinary shares of a perhaps not very sound concern, whereas the unconditional payments might be regarded as first-class debentures. That is roughly the distinction between the two parts of the annuities. France, as the right hon. Gentleman said, gets five-sixths of these unconditional annuities and the reason, I understand, for this, was the desire of France to have first-class securities which they could commercialise or mobilise.

I come to that part which perhaps stirred the right hon. Gentleman to the greatest depths of fury—that is the distribution. The right hon. Gentleman said he wondered why these changes had been made in the percentage of distribution. If he will search—and I gather he has examined the report of the Experts Committee—he will find that there is no word of explanation and, as far as I know, none has ever been given. But, of course, nobody is better able to imagine what is the explanation than the right hon. Gentleman with his unique knowledge of international conferences. At Spa it was agreed that German reparations should be divided in accordance with certain percentages. That, I think, was in 1920. Since that time a large number of other conferences have been held for the consideration of this question, and I am not aware that the percentages which were fixed at Spa have ever been seriously called in question before. At the time when these percentages were fixed, Lord Bradbury said they represented a considerable sacrifice on the part of Great Britain for the benefit of the other creditor Powers. When we consider the revised distribution under the Experts' plan we ought to bear these facts in mind—that no explanation and no attempt at justification has been given for revising our percentages; that for eight or nine years all the creditor Powers have, without question, accepted the percentages agreed to at Spa as governing the distribution of any revised scheme of reparations or annuities. Perhaps the House would like me to work out what the reduction of our percentage means to this country. The right hon. Gentleman put it at £2,000,000. It is more than that. It works out at an average of £2,415,000 a year practically all of which goes to Italy and France but mainly to Italy. Of the £2,400,000 Italy gets £1,840,000. In regard to the distribution of the actual sum between the various creditor Powers, the right hon. Gentleman worked it out in percentages—


The loss is far greater if the conditional annuities are not paid?


I will come to that point later on. The right hon. Gentleman worked out the percentage and went on to refer to the difference between our share and the share of some other countries. But the difference will appear to be more striking if expressed in actual figures. If the full annuities are paid we shall get on average £17,300,000 a year or say something under £l8,000,000 a year. The Dominions, whose shares are not altered, get £2,660,000 on average. France gets £52,500,000 and Italy just under £11,000,000. As I said before, the sacrifice which Great Britain is called upon to make by the acceptance of this Report reduces our share of the annuities by just under £2,500,000 a year. This is another demand for a sacrifice on the part of this country.

What is our position? We are supposed to get from the conditional annuities and the debt payments of our former allies just enough to meet our future payments to America. Let us examine that. If we get all that we can expect under the proposals of this Report we shall get with the payments from our European debtors just enough to pay our future annual payments to America. There is no surplus for Great Britain. In the case of France there will be a surplus of £21,000,000 a year on an average after her debt payments have been met. All the other principal creditor Powers too will all have surpluses beyond their outgoings. Suppose we assume that the payments are regularly made and that thereby we are covered in our future payments to America. That does not give us the conditions laid down in the Balfour Note because there is already about £200,000,000 difference between what we have paid to America and what we have received from our Continental debtors, including Germany, in the way of payment in respect of war debts and reparations. If, therefore, the recommendations of this Committee were accepted, we should have to sacrifice £2,500,000 a year as a result of the changed distribution, and we should have to abandon all hope of ever getting anything towards that £200,000,000 of arrears to which I have just referred. If we could get our full Spa percentage it would go a little way to meeting that deficit of £200,000,000. We calculate that that £2,500,000 a year would be worth about £37,000,000 in capital value.

There is another point of considerable interest in the Report to which the right hon. Member did not refer, and it is this—that if the creditor Powers receive any relief in respect of their war debt liabilities to America, Germany gets two-thirds of it and the creditor Powers get one-quarter of it. The difference between two-thirds and one-quarter is to be invested and accumulated to help the payments during the last 22 years of the German annuities. I now come to what he said about deliveries in kind. May I offer one word of observation about what he said about the imposition of deliveries in kind in the Dawes scheme. The right hon. Gentleman has had a long experience of these matters and just after his reference to the deliveries in kind in the Dawes Report, he gave the explanation why from the British point of view that was incorporated in the Dawes scheme. He said that at these conferences you fight for days and weeks to get your point. You cannot get everything you like. You have to get a settlement, and when the scheme is finally evolved you accept it in every detail and you try to make the best of it. That is my answer. I do not know if I am making any breach of confidence after all these years if I say that we had a very big struggle in the Conference on the Dawes Report on that matter. We fought for a very long time to try to get out of deliveries in kind. For some reason or another we did not get the assistance from certain members of the delegations which we had expected. I do not mean British delegates. We realise, as the right hon. Member does, the seriousness of these questions for an exporting country like our own, and I can assure not only him but the House of Commons that what he said will not be lost sight of in the forthcoming deliberations, and anything we can do to ease the situation will certainly be done.

There are, it seems to me, three main points in this Report which have very serious interest to us. The right hon. Gentleman dealt with all of them. I will put it like this. The British Government will raise no protest against, but will accept the scale of German annuities. On that we are all agreed. Now as to the question of distribution. It is very difficult indeed to choose one's words, but I might perhaps get out of my difficulty by saying that I am in agreement with what the right hon. Gentleman has said. In regard to deliveries in kind we could not agree, unless of course we were finally compelled to do so, to accept the proposals with regard to deliveries in kind which are embodied in the Report. We will, of course, have something to say in the Conference upon the distinction which has been made between the postponable and the unconditional annuities. That is a matter of the greatest importance.


And the fact that we have no share at all in the unconditional annuities.


That is a matter on which we shall certainly take into account the position described by the right hon. Gentleman. I am sure that the House will realise the very difficult position I am in, in dealing with these matters. The proposals do constitute a new demand for further sacrifices from this country. From the point of view of national finance our position is sufficiently serious already, and therefore we should maintain such rights as we have. Of course we are starting now a long way from the beginning. The mischief began, I think, with the issue of the Balfour Note, and it has been aggravated by the settlement with the United States, and by each subsequent war debt settlement which has taken place since. I am expressing my own view, and I think the view of the Government, when I say that the limit of concessions by this country has been reached.

On a previous occasion, I believe I used the word "quixotic" in a speech to which the right hon. Gentleman has referred. Our past sacrifices have been magnanimous, generous and quixotic. They have imposed a burden of £60,000,000 a year on our own people, which will remain even if we are able to get our payments to America covered by our share of the German annuities and the receipts from our continental debtors. France owed us £600,000,000, and yet she is to get £25,000,000 a year out of the unconditional annuities from Germany, and in the near future she will be getting altogether a surplus of £35,000,000 a year over her outgoings, while we are asked to take what is at any rate a risky cover for our debt payments. Italy owed us £560,000,000. Our settlement with her reduced this in effect to a present value of £78,000,000, and now by the transfer of part of our just share in the distribution of reparations it is proposed that her debt of £560,000,000 to this country should be effectively reduced to £48,000,000.

I think I am justified in the remarks that I made just now, that our generosity has reached its limit. I realise what a difficult task I have in approaching the problem. I can only say that I shall do my best to maintain the interests of this country in this matter. I have indicated to the House what our line will be. I do not know to what extent we shall succeed, but whatever the result of the conference may be, I can assure the House that there will be no further sacrifice or British interests which a determined man can prevent.

3.0 p.m.


In the last Parliament, when the first proposals of the Young scheme were put forward, the right hon. Gentleman opposite indicated quite clearly that the proposals would not be accepted by the then Government. The final proposal of the Young Committee is even worse, so far as this country is concerned, than the proposal put forward some four months ago. It is not necessary for me to go into these proposals. They have been explained to this House clearly by both the right hon. Gentlemen who have just spoken. I can only add that, having gone through that Report, I would prefer the original proposal of the Young Committee to the one in which our reparations are classed among the conditional ones, while the Italians and the French secure their reparations unconditionally. That is a very dangerous position. The Chancellor of the Exchequer has been put in an exceptionally difficult position in this matter by his predecessors. He has told us that the Young Committee was originally set up on account of conversations at Geneva in regard to the evacuation of the Rhineland.

The terms of reference to the Young Committee were read out in this House. They dealt only with the limitations of the reparations to be paid by Germany. There was not a word about varying the distribution of these reparations once they were paid by Germany. Those were the terms of reference. We made it quite clear that our experts appointed on that Committee were independent experts, uninfluenced and undirected by the Treasury or the Government of this country. That policy, unfortunately, was not followed by the other countries that appointed experts on that Committee. The French, Italian and German experts were in constant touch with their Treasuries and Governments. Our Government ostentatiously denied, amidst cheers in this House, that they would use the slightest influence upon our experts sitting on that Committee. Unfortunately one of the experts changed during the process of the Committee, and Sir Josiah Stamp must now take nearly all the responsibility for the work on the Young Committee.

But the original mistake was made when our Government, washing their hands entirely of what was going on on that Committee, allowed the question of the distribution of the reparations to be opened up. Sir Josiah Stamp made a protest at the time, but he was not backed up from home, and the protest was overruled, and for the first time the question arose as to whether the Spa percentages of 1922 should be varied and varied against the interests of this country. Directly that was accepted you got the proposal that was put forward four months ago, which the Government of the day frankly told the Committee would not be accepted by this House if it were the report of the Committee.

Then came the final report of the Young Committee, which to my mind is worse financially, from the point of view of this country, than the report which was going to be made and which would have been made if the ex-Chancellor of the Exchequer had not said that it could not possibly be accepted. We have had from the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) and the Chancellor of the Exchequer descriptions of the Report, which must make it obvious to every Member of this House that it would be fatal for the British people to accept the Report in its present shape. The Chancellor of the Exchequer has laid it down that he will not make any further concession; but it is not clear from what he says whether he means that he will not make any further concessions than those embodied in the Report, or whether he means that he will not make any further concession from what the position was before that Report was presented. I hope he means that he will not allow the Report of the Young Commission to involve this country in making further concessions. He admitted that he was going into this conference to do his best. He can only do his best if he is prepared to face the issue of not accepting the Young Report.

What we ought to consider to-day is whether it is not our duty to say we would sooner have no Report than the Young Report. What would be the disaster to this country and to Germany if there was no agreement on the Young Report, and if the conference failed? I hope that everyone will agree that unless we are able to go into the conference saying: "We will not accept this Report at all," we are almost bound to accept a compromise which would injure the interests of this country. Suppose there is no Young Report, what happens? The Dawes scheme goes on, and the connection between the payment of reparations and the occupation of the Rhineland ceases to be binding. There is nothing to prevent this country evacuating the Rhineland, although the Dawes scheme continues. The evacuation of the Rhineland can go on whether the Young scheme for the distribution of reparations is accepted or not.

Everybody knows that the Dawes Scheme cannot go on indefinitely. A time must come when, if the Young Report is not accepted, the Dawes Scheme will break down or become impossible to work, and some other Committee has to be appointed to consider scaling down and rendering definite the obligations of Germany. When that comes about, I think we shall be in a stronger position if we no longer have troops in the Rhineland, to be used as a pawn for the coercion of Germany. The British taxpayers are likely to come out much better from some report in the future by a future expert committee if our experts on that committee have the advantage, which was enjoyed by the experts of every nation on the Young Committee, of constant communication with and co-operation from the Treasury and Government of this country. On the Young Committee our representatives have been hobbled all the time. They have been acting as independent experts, while all the other experts have been the agents of their Governments, fully advised of the intentions of their Governments, and fully coached in every way. When a new Experts Committee is appointed, which I hope to see a year or so hence, and it brings forward something in the nature of a revised new scheme, our agents on that committee will be in the best possible position to get the best terms for the taxpayers of this country, and will not be hampered as they have been in the past.

This is the only opportunity that this House can have of discussing something that may cost this country not £2,500,000 a year but anything up to £12,000,000 a year, with additional taxation for 60 years. This is the only opportunity we have to discuss it, and, whether or not we shall save that money, depends entirely on whether the Chancellor of the Exchequer goes into these proposed negotiations that commence on the 6th August able to say, "Sooner than sacrifice the interests of the British taxpayer, we will not have this Report at all." Unless he can do that, he is in a hopeless position to bargain for slight variations of the terms of that Report.


As one who has not hitherto addressed this House, may I crave the indulgence which is ever generously accorded to one in that position. It might be' thought, after the speech Of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), accepted, as I gather, by the Chancellor of the Exchequer and elaborated by him, that there would be little more to be said upon the question of this Young Report and the disadvantages which it foreshadows for the British taxpayer, but I rather gather that the Chancellor of the Exchequer himself welcomes this discussion, and that he feels, as was suggested by the right hon. and gallant Member for (Newcastle-under-Lyme (Colonel Wedgwood), that he will go into this Conference better armed as a result of the discussion here to-day and of the arguments that have been put at his disposal as a consequence. I want, as a humble student of foreign affairs, to detain the House for a very few moments with some reflections upon this reparations position. We have heard, and rightly, criticisms and comments upon this Young Report, which are of great value, and it is only right to infer that the whole reparations problem has been one of those features bequeathed to us by the cessation of hostilities, which has perhaps given rise to more problems than it has solved, and that any attempt to deal with a serious international position by a conference of experts meeting round a table is bound to be of advantage.

Although we find this Report distasteful, although unquestionably it suggests that we should accept sacrifices which the country is not minded to accept, we should treat it as a step forward in the sense that it is another indication by the creditor Powers of Germany that in dealing with an international problem, financial or otherwise, they are prepared to pool their experts' brains, to meet round a table, to settle their differences, and to find a way out. It is no blame to the experts if a problem at once political and financial should not be found immediately capable of solution. No one with experience of big business of an international character would imagine that there is anything simple in the settlement of such a problem as this of reparations. Has it not been proved that in the economic as well as in the moral world it is very often more blessed to give than to receive? Is not the whole argument centring round reparations in kind a long convincing proof of the truth of that old adage?

I wish, on behalf of those who sit on these benches, to express our wholehearted satisfaction with the statement that has been made this afternoon by the Chancellor of the Exchequer. We feel particularly grateful for those assurances that this House and the Government are in no way committed by this Report of the experts. We had no fear that it could have been otherwise, but such a very emphatic declaration gives us all a feeling of confidence that, we shall have all the different views represented in this forthcoming Conference and that nothing but good can result from the discussion. We then welcome the analysis that has been made across the Floor of this House of what is a complex and intricate argument, dealing in millions of figures of such a size that it is hard for the ordinary Member to follow their entire implications. The analysis that was made by the right hon. Member for Carnarvon Boroughs appeared to be so adequate in its character that the Chancellor of the Exchequer desired only to add to it some examples by way of figures, which indeed showed it to be under-stated rather than exaggerated in any form.

In one sense also the Young Report is an advance. The Dawes scheme was in fact a national receivership of Germany. It was perhaps the largest operation of a receivership as applied to another nation ever carried out. That scheme was breaking down. It had one inherent difficulty attached to it: there was never any incentive to Germany to pay her debt. As her prosperity increased, so her annuities were more heavily weighted, and there was no spur which would induce Germany to so put her house in order as to be able to face the future. I think that history will show that the restoration of Germany's credit and industry is one of the wonders of the world; and, in this regard, I was glad to hear the Chancellor of the Exchequer make reference to the fact that such progress as Germany has made has been largely on borrowed money. For every dollar that Germany has paid anyone, she has borrowed two. The figures are almost mathematically exact. That was a situation and a state of affairs that was not the concern of Germany alone, nor of any one country.

Perhaps the only excuse for a new Member intervening in such a Debate is that reparations is a matter that concerns the taxpayer of every country in the world, and none more than those living on the border line, not having surplus wealth, and being virtually concerned with the price of any article of which taxation forms a part. If the Young Report is a sign of an international attempt to deal with an international problem by conference and reason; if it means that by discussion in the Parliaments of the world terms are improved, then the experts will be the first to desire that improvement. Men of such character as Sir Josiah Stamp are only anxious for the best results from a difficult problem, and I feel confident that if as a result of the discussion this afternoon it is found that any country has unfairly suffered the experts will be glad to have it put right. I am struck by one, the difference in character of the unconditional and postponable annuities that has been brought out. If further comments as to the nature of the difference between those two classes of annuities were needed it would be only necessary to point to the fact that France receives five-sixths of one to show that she regards that annuity as of a different character to the other. I conclude by saying that if in any of these international matters we can get one step nearer the stage at which in regard to any of the penal clauses of the Versailles Treaty, we can, in the words of General Smuts, pass the sponge of oblivion over that aspect of the matter, then we will have reached one stage nearer the establishment of peace in Europe.

Question, "That this House do now adjourn," put, and agreed to.

Adjourned accordingly at Twenty minutes after Three o'clock until Tuesday, 29th October, pursuant to the Resolution of the House of this day.