France Succumbs
Premier Poincare of France definitely held out the olive branch to Britain. In a note to the British Government Poincare asks for cooperation in demanding that Germany end passive resistance in the Ruhr. Official circles have it that Britain will accept this proposal. Thus the beginning of a solution of the Ruhr occupation and the greater problem of reparations is definitely in sight.
The now certain participation of settlement with the Germans is due partly to the efforts of Belgium, who flatly declined to discuss with France the final terms of German reparations unless Britain were consulted. This attitude did much to influence Poincare in taking a more conciliatory attitude with regard to British participation in future deliberations.
A concerted effort is being made to induce the United States to enter the forthcoming conference. Her aid is considered invaluable by both France and Belgium, but the British contention is that they cannot afford to wait for the United States to act.
Herr Cuno, German Chancellor, made his second offer. This is a distinct advance on his last note. The offer, which was made on the advice of the British Government and which takes account of the Belgian plan (TIME, June 11) is for payment of $265,600,000 a year for a period to be settled by an international body. An international loan is preferred, but Germany is prepared to begin payment of these annuities on January 1, 1928, and in the meantime to make a total payment in kind to the value of $595,000,000. Guarantees were offered: capitalization of the Federal railway system at $2,380,000,000, gold marks, producing a bonded interest of $119,000,000; a further $2,380,000,000 to be guaranteed by a 5% mortgage on physical holdings of industry, agriculture and shipping. This will produce another $119,000,000 gold marks, making a total of $238,000,000. The remaining $27,600,000 will be met by pledging customs duties on imports other than necessities, excise on tobacco, beer, wine and sugar and receipts from the spirits monopoly. The average pre-war receipt from these sources is put at $190,400,000, but the present day value" has now fallen to one-quarter on account of the loss of territory and population and reduced consumption. With the recovery of the eco- nomic activity of Germany it will automatically increase." The note urges an oral discussion," but makes no mention of the Ruhr occupation or passive resistance. In the meantime Herr Stresemann, Chief of the People's party, is being kept in reserve. Much anxiety is being evinced in Paris over the trend of British policy in connection with reparations settlement. It is known that Premier Baldwin will base his plan on the 62-year settlement of the British war debt to the United States, that he will strongly back the moratorium demanded by Germany and that he will limit the maximum demands on Germany to about $12,000,000,000.
France views the German offer with stolid indifference, except in so far as the acceptance of a conference is concerned. It is definitely known that Poincare will demand the entire amount of France's debt to the United States from Germany and will rely upon Britain's canceling a fair percentage of her continental debt in order to balance this claim.
Italy will also be invited to the reparations conference. Premier Mussolini, speaking in the Chamber, outlined Italy's attitude to the reparations problem: 1) Germany must be made to pay a certain sum--by common consent the Allies have fixed the amount at $11,900,000,000. 2) No adjustment must be tolerated that will give any nation political, economic or military hegemony over the rest of Europe. (An intimation that the French will not be allowed to occupy, permanently the Ruhr.) 3) Italy will bear her share of necessary sacrifices in order to facilitate reconstruction of Europe. 4) The problems of interallied debts and reparations cannot be considered separately.