A REPARATION PLAN
By C. G. LYNAM The Allies, unfortunately, never seemed to be quite clear whether Reparations were meant as a punishment to the aggressor, a help to the victims, or an insurance against another war. Reparations were hastily fixed in money, without consideration of the catastrophic effect on exchange-rates of the transfer of these astronomical sums. The suggestion of more reparations in kind met the reply that it would increase unemployment in the victorious nations. Yet if these reparations in kind had been supplied free to the inhabitants of Patagonia or Outer Mongolia—none of whom could afford to buy from us—the process might have raised the standard of living in those countries to a point where they would become our very good customers. Again, it seemed reasonable that German industry should be helped to become efficient enough to support the burden of Reparations ; and so the Allies advanced it a very large amount of money. It is easy to see these errors twenty years after the event, but there was one further error and a fundamental one. The re- sponsibility for collecting Reparations was entrusted to the German Government, which, no matter what the temporary colour of its shirt, was unalterably determined never to pay one penny. The only way to overcome this passive opposition would have been to start another war ; and that was a prospect from which a war-torn world shrank aghast. So Germany won the Peace and a good start for the second World War.
The main, and certainly the most easily controlled, source of
wealth in Germany is her industry. The inflation engineered by Hugo Stinnes wiped out its internal indebtedness, and the Allied loans enabled it to modernise all its tooling and equipment to a pitch where—if it had neglected rearmament—it might have become the greatest single factor in the manufacturing world. It is organised in very large units—Krupps, for instance, controls some 30 per cent. of heavy industry, and the great German chemical industry Ss practically synonymous with the I.G. Farben Industrie. The. control of some forty or fifty firms of the type of ICrupps, I.G. Farben Industrie, Zeiss, Blolun and Voss, and the Deutsche Bank would give direct control of the vast bulk of Germany's industrial wealth and production.
The first clause of the Armistice terms, or the Peace Treaty, should provide for the surrender to the Allied Nations of the whole share and loan capital of these combines, for whom the Allies would nominate new directors and managers. Nothing but good could flow from such an action. Instead of trying to extract the profits of industry at fourth hand from a recalcitrant Government, the Allied nations—through their representative boards—would be the first and only collectors of profits. The burden on Germany would be strictly proportioned to her capacity to pay, as profits would vary directly with trade. Fixed sums of Reparations are either absurd In a boom or crushing in a slump ; and subsequent negotiations on capacity to pay only lead to endless and futile wrangling. There would be no direct burden on the mass of the German people ; for the confiscation of the profits of a few large firms would not affect wages or salaries, or the profits of smaller firms. It is true that Germany might like to spread the cost evenly over the population ; but the method she would employ to compensate Herr Krupp von Bohlen und Halbach would be a domestic matter of no interest to the Allied nations. German disarmament would at last be real. The German radio has lately boasted that rearmament started in 1920, in spite of the presence of large and costly Disarmament Com- missions. With Allied nationals as directors and manager? of her firms, no attempt at rearmament could be hidden. The danger of Fifth Columns would be largely eliminated. These were mainly originated, organised, and financed through German Overseas Sales Agencies ; and the Allied directors of the factories would choose more reputable persons to handle their business. The economic penetration by which Germany was getting a strangle-hold on world trade would be ended. Foreign subsidiaries, or holdings in foreign companies, would be sold by the parent firm to the local inhabitants, and restrictive agreements denounced.
Germany has many great technical achievements to her credit ; but her published patents are often only meant to block or mislead foreign competitors, while the actual processes involved are kept strictly secret. If the Allied nations took over the factories, these secret processes and the "know how "—the practical knowledge which makes the difference between success and failure—would be revealed to everyone, to the lasting advantage of the whole world. In certain German industries, such as optical glass, there are secrets of craftsmanship which have been jealously guarded for generations. The new management would welcome craftsmen from the Allied nations, who could learn these methods and bring the rest of the world up to Germany's level.
All wealth springs from production, and Germany must produce for the sake of the world as well as of herself. Tne new manage- ment would direct production to meet the shortages of the Allied nations—not to compete with them. Surplus" production could be supplied at a loss, or even free, to backward countries, even though it meant temporary sacrifice of profits. Raising the standard of living in these territories would eventually -turn them into new markets for the whole world, including the new Germany. It would be the duty of the new management in the interest of Reparations to obtain as large a volume as possible of production in Germany at a reasonable profit, and in the interests of their own countries to ensure that this production was complementary to, and not com- petitive with, that of the rest of the world. In due course, when the German people had advanced far enough along the road to civilisation, they would be given an opportunity of buying back these factories, and would then take that place in the world to which their intellectual ardour and capacity for hard work have long made them aspire, and to which. their character would then entitle them.
What has been said about Germany applies with even greater force to Japan ; for there a dozen families control nearly all the production, distribution and finance of the country. Moreover, there is a great educational task to be done there, for labour in Japanese factories lives in a state not far from slavery. After one or two decades of enlightened management, with reasonable wages, industrial freedom and the daily example of democracy, a new genera- tion of Japanese might arise who would realise that there was some- thing better in the world than Japanese militarism. Industry is on a much smaller scale in the other Axis countries, but in each country there are some few factories whose acquisition by the Allies would definitely prevent rearmament.
The other easily controlled source of wealth is the great landed estate, which is a marked feature of the Axis countries. The agri- cultural efficiency of these estates varies from reasonably good in parts of Germany to utterly deplorable in the Sicilian latifundia and many parts of the Balkans ; and in most of them the peasantry are practically serfs. These rural slums are always the foci of trouble, for the castle produces Junkers and Rightist intrigue, and the hovel is a fertile breeding-ground of Leftist intrigue. The Allied nations must take over these estates, divide them up into reasonably sized farms, and sell them to the peasantry on a system of annuities. Thisresettlement would practically eliminate the need for an occupying force in those areas, for a landless peasant who is sud- denly given his own farm will defend it as a lioness does her cubs, and any movement which threatened his ownership would receive short shrift. The standard of agriculture is bound to rise as soon as the peasants work their own land, and this would result in an increase of food supplies in Europe, and solve one of our main
problems. As the new farmers produced more, they would be able to buy more, and the trade of the world would increase corre- spondingly.
The action advocated would be a more certain preventive of rearmament than many large armies of occupation. It would enable the victims of aggression to obtain some reparations from the aggressor without crushing the Axis countries. Its administra- tion would be cheap and simple, and would make little demand on Allied man-power, most of which will be required for reconstruction at home. An Allied declaration of this intention would rescue the bulk of the Axis populations from the despair which now nerves them to fight on ; would open undreamt of vistas of security to a large proportion of them ; and would be the first proof that the interests of the populations are diametrically opposed to those of their Dictator Governments.
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