So far, President Harding's attitude was analytical and largely negative. In the very next portion of his address he states the principles of coöperation: "International association for permanent peace must be conceived solely as an instrumentality of justice, unassociated with the passions of yesterday." Upon this foundation he proceeds to build :

The American aspiration, indeed, the world aspiration, was an association of nations, based upon the application of justice and right, binding us in conference and coöperation for the prevention of war and pointing the way to a higher civilization and international fraternity in which all the world might share. In rejecting the league covenant and uttering that rejection to our own people, and to the world, we make no surrender of our hope and aim for an association to promote peace in which we would most heartily join. We wish it to be conceived in peace and dedicated to peace, and will relinquish no effort to bring the nations of the world into such fellowship, not in the surrender of national sovereignty but rejoicing in a nobler exercise of it in the advancement of human activities, amid the compensations of peaceful achievement.

President Harding had, in an earlier portion of his address, called attention to the fact that two years and a half after the armistice we find ourselves technically in a state of war. This state of things should be, in his opinion, ended, and he expressed himself willing to sign a resolution of the Congress "to establish the state of technical peace without further delay." He recognized, however, that such a declaration would merely end the war with Germany, with Austria and with Hungary, to which the United States was a party, and that it would be necessary to negotiate treaties and conventions in order to determine our future relations with those countries. In doing so, he was mindful to point out that we should not forget, indeed that we could not forget, the countries with which we were associated in the war. What will be the content of these various treaties and conventions we do not as yet know. Undoubtedly, the purpose of the Administration is to end the war and then to define its relationship with associates and enemies. After which, the question of association with friendly nations, for all will then be in a state of peace, will be taken up. Thus he said:

With the supergoverning League definitely rejected and with the world so informed, and with the status of peace proclaimed at home, we may proceed to negotiate the covenanted relationship so essential to the recognition of all the rights everywhere of our own Nation and play our full part in joining the peoples of the world in the pursuits of peace once more. Our obligations in effecting European tranquillity, because of war's involvements, are not less impelling than our part in the war itself. This restoration must be wrought before the human procession can go onward again. We can be helpful because we are moved by no hatreds and harbor no fears. Helpfulness does not mean entanglement, and participation in economic adjustments does not mean sponsorship for treaty commitments which do not concern us, and in which we will have no part.

The address which President Harding delivered to the Congress was before its delivery submitted to the members of the Foreign Relations

Committee of the Senate. It met with their approval. Greater evidence of his desire to coöperate with his colleagues of the Senate could not have been given, and it augurs well for coöperation in the future. But coöperation does not mean surrender. President Harding has, on more than one occasion, manifested his intention to perform the duties and to exercise the prerogatives of the office of President. He will, of course, as chief executive, conduct the foreign relations of the government in conjunction with Secretary of State Hughes, or, rather, Mr. Hughes will negotiate in conjunction with the President, inasmuch as Mr. Harding has stated that Mr. Hughes is to be Secretary of State in fact as well as in name. President Harding, however, will doubtless, as a prudent man, sound the Senate in advance as to what that branch of the treaty-making power will accept and, through coöperation, avoid the risk of having this country's commitments to its associates in the late war repudiated. This is not conjecture. As he himself says, "I shall invite in the most practical way the advice of the Senate, after acquainting it with all the conditions to be met and obligations to be discharged, along with our own rights to be safeguarded."

President Harding wants "normalcy" in our foreign affairs, and he is set on restoring it in our domestic affairs. "We can render no effective service to humanity," he says, "until we prove anew our own capacity for coöperation in the coördination of powers contemplated in the Constitution, and no covenants which ignore our associations in the war can be made for the future."

That President Harding and Secretary Hughes, on the one hand, and the Senate of the United States, on the other, may be successful in their joint efforts, must be the hope of those who would see Europe restored and prosperous and the prestige of the United States rehabilitated. JAMES BROWN SCOTT.

GERMAN REPARATIONS

Another critical stage has been passed in the long and tedious controversy regarding the German reparations due the allies for "damage done to their civilian populations and property" during the World War. Apparently wearied and almost worn out by the repeated disagreements and failures attending previous efforts to secure a settlement, the Allies, on May 5th of this year, finally presented to Germany the following ultimatum:

The Allied Powers, taking note of the fact that despite the successive concessions made by the Allies since the signature of the Treaty of Versailles, and despite the warnings and sanctions agreed upon at Spa and Paris, as well as of the sanctions announced at London and since applied, the German Government is still in default in

fulfillment of the obligations incumbent upon it under the terms of the Treaty of Versailles as regards:

First, disarmament.

Second, the payment due, May 1, 1921, under Article 235 of the treaty, which the Reparations Commission already has called upon it to make at this date.

Third, the trial of war criminals as further provided for by the Allied notes of February 13 and May 7, 1920, and

Fourth, certain other important respects, notably those which arise under Articles 264 to 267, 269, 273, 321, 322 and 327 of the treaty, decide:

A-To proceed from today with all necessary preliminary measures for the occupation of the Ruhr valley by Allied troops on the Rhine under the conditions laid down. B-In accordance with Article 235 of the Versailles Treaty, to invite the Allied Reparations Commission to notify the German Government without delay of the time and methods for the discharge by Germany of her debt, and to announce its decision on this point to the German Government by May 6, at the latest.

C-To summon the German Government to declare categorically within six days after receiving the above decision its determination: (1) To execute without reservation or condition its obligations as defined by the Reparations Commission; (2) To accept and realize without reservation or condition in regard to its obligations the guarantees prescribed by the Reparations Commission; (3) To execute without reservation or delay measures concerning military, naval and aërial disarmament of which Germany was notified by the Allied nations in their note of January 29; those measures in the execution of which they have so far failed to comply with are to be completed immediately and the remainder on a date still to be fixed; (4) To proceed without reservation or delay to the trial of war criminals, and also with other parts of the Versailles Treaty which have not as yet been fulfilled.

D-To proceed on May 12 with the occupation of the Ruhr valley, and to undertake all other military and naval measures, should the German Government fail to comply with the foregoing conditions. This occupation will last as long as Germany continues her failure to fulfill the conditions laid down.

On the night of the same date (May 5, 1921), the Reparation Commission handed to the German War Burdens Commission the following Protocol:

Germany will perform in the manner laid down in this schedule her obligations to pay the total fixed in accordance with Articles 231, 232 and 233 of the Treaty of Versailles, 132,000,000,000 gold marks, less: (a) the amount already paid on account of reparations; (b) sums which may, from time to time, be credited to Germany in respect of state properties in ceded territory, etc.; (c) any sums received from other enemy or former enemy Powers, in respect to which the commission may decide credits should be given to Germany, plus the amount of the Belgian debt to the Allies, the amounts of these reductions to be determined later by the commission.

The Protocol then provides for the issue of bonds secured by the entire assets of the German Empire and the German States. The first series of bonds for the amount of 12,000,000,000 gold marks, says the Protocol, shall be delivered by July 1, 1921, but the interest of five per cent, plus one per cent for a sinking fund, shall be payable half-yearly from May 1st. The second series for 38,000,000,000 gold marks shall be issued on November 1, 1921. The third series for 82,000,000,000 gold marks shall be

delivered not later than November 1st to the Reparation Commission without coupons attached, and will be issued by the Commission at its discretion when it is satisfied that the payments undertaken by Germany in pursuance of this agreement are sufficient to provide for the payment of interest and the sinking fund on such bonds. The sinking fund shall be used for redemption of the bonds by annual drawings at par.

The bonds will be German Government bearer bonds, in such denomination as the Reparation Commission shall prescribe for the purpose of rendering them marketable, and shall be free from German taxes and charges of every description. Until the redemption of the bonds, Germany will be required to pay annually 2,000,000,000 gold marks and 26 per cent of the value of her exports as from May 1st, or, alternatively, an equivalent amount as fixed in accordance with any other index proposed by Germany and accepted by the Reparation Commission.

"It is provided," continues the Protocol, "that when Germany shall have discharged all her obligations under this schedule, other than her liability with respect to outstanding bonds, the amount payable each year under this paragraph shall be reduced to the amount required in that year to meet the interest and sinking fund on the bonds outstanding."

Germany is required to pay within twenty-five days 1,000,000,000 marks in gold, approved foreign bills or drafts at three months on the German treasury, indorsed by approved German banks in London, Paris, New York, or other place designated by the Reparation Commission. These payments will be treated as the first two quarterly instalments of the amounts due on Germany's liability to pay 2,000,000,000 marks yearly and 26 per cent of the amount of her exports.

Within twenty days the Reparation Commission shall establish a subcommission to be called the Committee on Guarantees, to consist of representatives of the Allied Powers, including a representative of the United States, in the event of that government desiring to make an appointment. This committee shall comprise not more than three representatives from the nationals of other Powers when it shall appear that a sufficient portion of the bonds are held by nationals of such Powers as to justify their representation. This committee will supervise the application to the bonds service of the funds assigned as security for payment, such as German maritime and land customs duties, and in particular all import and export duties, the levy of 26 per cent on the German exports and the proceeds of such direct and indirect taxes or any other funds as may be proposed by the German Government and accepted by the committee in substitution therefor. The twenty-six per cent levy on exports, less one per cent for sinking fund, shall be paid by the German Government to the exporter. It should be particularly noted that the Committee on Guarantees is not authorized to interfere with the German administration.

Germany, it is stipulated, shall, subject to the prior approval of the

Commission, provide such material and labor as any Allied Power may require toward the restoration of the devastated areas of that Power, or to enable any Allied Power to proceed with the restoration and development of its industrial and economic life. The value of such material and labor shall be determined by German and Allied valuators. The receipts from the fifty per cent levy on German exports, decided upon at the previous London conference, will be credited to Germany under the present arrangement. Any surplus receipts from the interest and sinking fund payments and the export tax shall be applied, as the Commission thinks fit, to paying simple interest not exceeding 22 per cent from May 1, 1921, to May 1, 1926, on the balance of the debt not covered by the bonds then issued. No interest on this balance shall be payable otherwise.1

In a valuable dispatch from Paris to the New York Times, dated May 7, 1921, Mr. Charles H. Grasty thus comments upon certain provisions contained in the above ultimatum and protocol:

annum.

The ultimatum provides that there shall be a fixed payment of $500,000,000 per This applies to Categories A, B, and C, with priority according to the letters. After the interest on Categories A and B, whatever is left goes to bonds of Category C. Taking last year as a basis, 26 per cent on exports which in dollars aggregated $1,250,000,000, there would be a yield of something more than $812,000,000. This would be disposed of by applying $750,000,000 to interest and sinking funds on $12,500,000,000 bonds of the first two categories, leaving a balance of $62,000,000. It will then be within the discretion of the Reparation Commission to decide what amount of C bonds should be issued with coupons attached in view of the $62,000,000 of surplus. Until this happens none of the $20,500,000,000 bonds of C Category will carry interest. That is a real safeguard against loading Germany with obligations she will find unfillable. The Reparation Commission considered that if Germany started with $33,000,000,000 of interest bearing debts the burden might be more than she could carry. The security for these obligations as shown in these ultimatum terms includes practically all Germany's income and resources.

The German Reichstag having yielded to the demand of the Allies by a vote of 221 to 171 and a new Coalition (L) Government having been formed, Germany finally accepted the Allied ultimatum without conditions or reservations on May 10th.

In view of the importance of the reparations issue as a factor in the continued "unsettlement" of Europe since the armistice, it may not be amiss to sketch the main stages in the history of this complicated controversy after the signing of the Treaty of Versailles on June 28, 1919. Inasmuch as the matter has been very fully discussed (if not altogether without partisan bias) by such authorities as Keynes and Baruch, we do not feel called upon to touch upon the differences and difficulties regarding reparations at the Paris Peace Conference. Suffice it to say that Articles 231-233 of the Treaty of Versailles state:

The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the 1 The above summary is based upon an Associated Press dispatch.