But there are certain significant sentences used by Dr. Simons which show clearly that Germany has not yet faced her problem. He talked about the enormous sacrifices which are to be necessary for Germany to make in order to pay the annuities for the first five years. Let me give the cases of Great Britain and France. Even if High Silesia is torn entirely from the side of Germany, Germany will have a population which will be ten millions in excess of Great Britain, even if you include Ireland. This year we have about a little over one million unemployed here. That is the direct result of the war, but we have to find for paying our debt charges and for pensions and disability allowances five hundred millions sterling. If Germany carries out this year the Paris proposals she will have to find one hundred and twenty millions sterling, not for Great Britain but for all the Allies-one-fourth of what Britain alone has to find with a million unemployed for war debt charges and for pensions.

The case of France is more striking. France, in addition to her war charges and her very heavy pension list, has to find 12,000,000,000 francs for repairing her devastated area. She must find it this year somewhere or leave those provinces unrestored. Germany would have to find, therefore, this year one-ninth of what France has to find; one-ninth for the whole of the Allies of what France has to find herself for the charges of the war. And we are told that the effort Germany puts forth with her 55,000,000 as against France with 42,000,000 or 43,000,000 is a colossal sacrifice! It shows that Germany has not yet quite realized the essential facts of the situation, and that has impressed me more each time I have attended these conferences and heard these proposals being made.

I am quite prepared to make an allowance for the difficulty of paying beyond the frontiers. That is not a question of sacrifice; that is a difficulty of currency that can easily be overcome by any well-thought-out arrangement for deducting from the price of German sales to Allied countries a proportion of the purchase money.

The other very significant part of Dr. Simons's speech, in view of the character of the proposals, was his refusal to accept on behalf of Germany the responsibility for the war, which is the very basis of the Treaty of Versailles. Not only did he refuse to accept that basis, but he appealed to history for a revision of the sentence. When does history begin? When I see a proposal limited by five years it leaves an uneasy feeling in my mind that there is an inclination in Germany to consider the possibility of history beginning five years hence and an appeal for the revision of that sentence being one of the considerations to be examined at the end of this short period.

The Allies cannot possibly enter into any discussions upon that basis. The responsibility of Germany for the war is, with them, fundamental. The whole Treaty of Versailles depends upon it, and unless Germany-whatever she may think of the verdict-is prepared to act upon it, then no arrangement which is made can give confidence between the parties and restore that atmosphere of neighbourly good will which is essential to the peace of Europe. The Paris proposals represented a considerable abatement of the full claims of the Allies, but that abatement was made in order to ensure a settlement. As I have already indicated to Dr. Simons on behalf of the Allies, we are willing to discuss with Germany the length of the period of the annuities. We are willing to discuss with Germany any other method besides the 12 per cent. for adjusting the annuity to German prosperity.

But we must insist on a settlement now of two questions. The first is the amount of the payments, or the factors which should determine those amounts automatically according to the prosperity of Germany. What those factors should be we are prepared to discuss. Whether the index of German prosperity should be 12 per cent. on her exports or some other method of arriving at that essential element, that we are prepared to discuss, but we must have something that will either determine the amount or determine the index which will settle the variable amount.

The second point upon a settlement of which we must now insist is the method of payment. A mere paper agreement promising payment is unsatisfactory and insufficient. means endless disputes. We must arrange now how the money is to be paid, so that there should be no possibility of further discussions or quarrels. We have plenty of paper money in our various countries, and we do not want further to dilute our currency with paper promises. Those are the two questions which must be settled between Germany and ourselves, and settled immediately.

The proposals put forward by Dr. Simons do not carry out any of these objects. They are neither the Paris proposals nor their equivalent. I am afraid, and Dr. Simons will forgive me for saying this, he is not really in a position to negotiate. He represents and he is returning to report to a public opinion which is not ready to pay this debt. In the interests of the Allies, in the interests of Germany, in the interests of the world, we must have a settlement, we must have a definite settlement, and we must have an immediate settlement.

Proposals such as those which we have heard are not a settlement. They simply evade and postpone settlement, and very regretfully we have come to the conclusion that the sanctions must be put into operation immediately.

V

REPLY OF DR. SIMONS, MARCH 7, 1921

Mr. President and gentlemen,-I must say I regret that also to-day the purpose of our new proposals has been mistaken. For us, just as for you, the disadvantages of a provisional settlement are beyond doubt. But we have taken refuge to such a provisional settlement under pressure of your ultimatum, which ended to-day, and which forced us to come forward with definite proposals. We should have preferred to put before you a plan of a total arrangement, a plan like that which we originally started with.

Even now we should prefer to come forward with a plan for a total arrangement, but I regret to say that we had no second proposals in our pocket, and this is the reason why we had to try to find a new way, a way which we have striven to find both here in the Delegation and in Berlin in the Cabinet. I have been charged, and I have acted according to this charge, to ask you for a brief delay in order that we might get into touch with the Cabinet at Berlin. I may here state that we have been refused even this short delay. From this fact it already appears that the fear is unfounded that we should want to make use of the provisional settlement to strive towards a revision of the whole Treaty after the lapse of those five years.

On the contrary, the German nation has undertaken its obligation of making reparation, and it is ready to fulfil the whole of this obligation to the limits of possibility. We are, therefore, ready to enter upon the idea of the President of this Conference to furnish the Allies part of the means which would be required for purposes of reparation by laying hold of part of the purchasing prices of German goods delivered into the Allied countries on reparation account.

I have submitted and recommended this proposal to my

Government, and I can only say I regret that this proposal should have been discredited in the public opinion of Germany by having been placed by you among the sanctions to be taken against Germany. We agree with the President of the Conference also on this point, that it would be advisable as quickly as possible to get the fixed sums determined, and to get also determined the factors of the varied payments in the case of her economic recovery which Germany would have to make towards reparation. We further agree with your intention to set up an examination of the method of the fixed and varied payments to the different countries. Also these points in our opinion should be deliberated on by a joint committee of experts as soon as possible, and I can only state that it is a pity that when these experts are going to meet the atmosphere in which they will meet will be embittered by the sanctions which are to be put in force against us.

I feel obliged at this moment, when the sanctions are definitely going to be put into force against us, once more to enter with all due stress a protest against this your procedure.