about 1,700,000. I have not by me the figures for Italy and Belgium. These casualties represent not merely a loss to the country of real strength and capacity for wealth production, but a heavy annual burden upon the resources of the country to maintain dependents and the crippled and the maimed who cannot earn a living for themselves.

France alone and Great Britain alone in this respect each bears an annual burden which is almost three times the amount of the whole annual payment now offered by Germany to meet the claim of reparation for damages of all kinds. Germany no doubt has suffered from the war, but in loss of life it is not comparable in proportion to the population with that sustained by France, and as to the material damage, the devastation in East Prussia is trivial compared with that which has been inflicted on France.

With all this gigantic injury, what is now offered to France, staggering under the load of expenditure cast upon her by her war debt, and by this wanton destruction which made of her richest provinces a hideous wilderness of ruin and despair, with the urgent need that she should rebuild shattered homes, restore factories which are the sole means of livelihood for the poor people who had endured for five years the horrors of war in their devastated provinces, and with her enormous pension liabilities added on to the rest? What is offered to Britain, with her gigantic debt and a pension list incurred in enforcing a treaty which her King signed with the King of Prussia, but which was broken by the latter's descendants? What is offered to Italy and to Belgium, to relieve their burdens? What is offered? Not one-fourth of the sum required to repair the damage, and that only on condition that those who need it most find it out of their own pockets first on highly privileged terms, when they can with difficulty raise money in their own markets to carry on the essential work of government.

That is the offer. I cannot understand the psychology which permits the representatives of a country whose Government was responsible for the most devastating war the world

has ever seen to come solemnly with such terms to a conference with the representatives of the countries that have been the victims of that devastation.

Had the German Government come here with some proposal which indicated a sincere desire to discharge their obligations we should have given it the fairest and most patient consideration. If they had said, "Forty-two years is too lengthy a period," if they had said, "A levy of 12 per cent. upon our exports is not the best method of meeting our liabilities or of ascertaining the amount Germany is at a given moment capable of paying; we have other ways which, while they suit us better, will equally meet the case," then we should have sat down at these conference tables with the German Delegation to examine in perfect good faith their counter-proposals with a view to arriving at a reasonable accord. These differences perpetuate an atmosphere of disaccord and distrust, and that is fatal to the peace which is so essential to enable the world to renew its normal tasks. We know that we were prepared to make allowances for that we were prepared to make all legitimate allowances for the real difficulties under which the German and all other peoples labour as a result of the war, but these proposals are frankly an offence and an exasperation, and, as one who is anxious that real peace should be restored in Europe between all its peoples, I deeply deplore that such proposals should ever have been put forward, for they indicate a desire not to perform, but to evade obligations which Germany has incurred, obligations which are far short of those which, according to the precedent she herself set in 1871, we might have imposed.

Had the German Government imposed taxation on their people comparable with the taxes laid by the Allied countries on their citizens, they would be in a better position to confront us at the conference table. But here again the vanquished insist upon being let off more lightly than the victor.

The German debt, nominally high, is not even nominally as heavy in percentage to the population as that of Great

Britain. Britain during the war raised £3,000,000,000 sterling in taxation towards the cost of carrying on the war. Germany made no such effort. To-day her apparently gigantic debt has been reduced almost to the amount of her pre-war liabilities by a process of depreciating her currency. She has nominally imposed very heavy direct taxes on wealth, but every one knows that they are not fully collected. Her indirect taxes, which are the taxes which affect the bulk of the population, are ridiculously low compared with Great Britain.

Let me give a few examples. For the purpose of this computation, I have taken 10 paper marks, four paper francs, and Is. 6d. sterling as the equivalent to one gold mark. I do not think, having regard to the relative value of these coins, that this standard is an unfair one, but I am prepared to test the comparative taxation,of British and German citizens by any standard of value which Dr. Simons would accept for the coins in which the taxation is paid in these respective countries.

The German budget provides for a subsidy of 20,000,000,000 of marks for the railways and the post; and for food subsidies 10,000,000,000. In this country we have abolished

both these subsidies and imposed upon the traveling and consuming public the full cost, in the one case of running the railways, the post, and the telephones; and in the other case, of the food supplies.

Those subsidies are a reduction, are an abatement of taxes in Germany, and constitute a subsidy to her industries. Her failure to bring up her taxation to the level of the taxes in the Allied countries constitutes in itself an infringement of the Treaty of Versailles, and until she imposes at least equal taxation, she is not in a position to plead that she is unable to meet the demands of the Paris proposals.

Now I come to the conclusion of this statement. As I indicated in the short statement I made on Tuesday, as President of the Conference, the counter-proposals do not even afford a basis for examination or discussion. They are simply provocative. Further reflection confirms our first impression. It would therefore be a sheer waste of time to devote any sittings to their consideration.

The Allies have been conferring upon the whole position, and I am now authorized to make this declaration on their behalf:

The Treaty of Versailles was signed less than two years ago. The German Government have already defaulted in respect of some of its most important provisions: the delivery for trial of the criminals who have offended against the laws of war, disarmament, the payment in cash or in kind of 20,000,000,000 of gold marks [£1,000,000,000]. These are some of the provisions. The Allies have displayed no harsh insistence upon the letter of their bond. They have extended time, they have even modified the character of their demands; but each time the German Government failed them.

In spite of the Treaty and of the honourable undertaking given at Spa, the criminals have not yet been tried, let alone punished, although the evidence has been in the hands of the German Government for months. Military organizations, some of them open, some clandestine, have been allowed to spring up all over the country, equipped with arms that

ought to have been surrendered. If the German Government had shown in respect of reparations a sincere desire to help the Allies to repair the terrible losses inflicted upon them by the act of aggression of which the German Imperialist Government was guilty, we should still have been ready as before to make all allowances for the legitimate difficulties of Germany. But the proposals put forward have reluctantly convinced the Allies either that the German Government does not intend to carry out its Treaty obligations, or that it has not the strength to insist, in the face of selfish and shortsighted opposition, upon the necessary sacrifices being made.

If that is due to the fact that German opinion will not permit it, that makes the situation still more serious, and renders it all the more necessary that the Allies should bring the leaders of public opinion once more face to face with facts. The first essential fact for them to realize is thisthat the Allies, whilst prepared to listen to every reasonable plea arising out of Germany's difficulties, cannot allow any further paltering with the Treaty.

We have therefore decided-having regard to the infractions already committed, to the determination indicated in these proposals that Germany means still further to defy and explain away the Treaty, and to the challenge issued not merely in these proposals but in official statements made in Germany by the German Government-that we must act upon the assumption that the German Government are not merely in default, but deliberately in default; and unless we hear by Monday that Germany is either prepared to accept the Paris decisions or to submit proposals which will in other ways be an equally satisfactory discharge of her obligations under the Treaty of Versailles (subject to the concessions made in the Paris proposals), we shall, as from that date, take the following course under the Treaty of Versailles.

The Allies are agreed:

1. To occupy the towns of Duisburg, Ruhrort, and Düsseldorf, on the right bank of the Rhine.