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.

2. To obtain powers from their respective Parliaments requiring their nationals to pay a certain proportion of all payments due to Germany on German goods to their several Governments, such proportion to be retained on account of reparations.

3.

That is in respect of goods purchased either in this country or in any other Allied country from Germany.

(a) The amount of the duties collected by the German Custom houses on the external frontiers of the occupied territories to be paid to the Reparations Commission.

(b) These duties to continue to be levied in accordance with the German tariff.

(c) A line of Custom houses to be temporarily established on the Rhine and at the boundary of the têtes des ponts occupied by the Allied troops; the tariff to be levied on this line, both on the entry and export of goods, to be determined by the Allied High Commission of the Rhine territory in conformity with the instructions of the Allied Governments.

II

REPLY OF DR. WALTER SIMONS, HEAD OF THE GERMAN DELEGATION TO THE REPARA

TIONS CONFERENCE, LONDON,

MARCH 3, 1921

Mr. President and gentlemen,-The German Delegation is going to examine the speech of Mr. Lloyd George and the documents he has transmitted to us and has promised to transmit with the care due to their extent and their importance. We undertake to state our answer before Monday noon, but here I may already be permitted to state that the British Prime Minister seems to mistake the intentions of the German Government, and in our opinion no occasion would arise for the sanctions stated by the Allied Powers.

III

ADDRESS BY DR. SIMONS TO THE REPARATIONS CONFERENCE, LONDON, MARCH 7, 1921

Mr. President and gentlemen,-The British Prime Minister, at the close of his speech on Thursday last, declared in the name of the Allied Governments that from to-day certain sanctions would be resorted to against Germany if she did not make a declaration that she was ready either to accept the Paris Agreement or to submit proposals which would in another, but equally satisfactory, way fulfil her obligations arising from the Treaty of Versailles.

Permit me first to sum up the present situation. Our counter-proposals of March I have been rejected and have not been found worthy to form the starting point of further discussions. On the other hand, for the reasons explained to you, we are not in a position to accept the Paris proposals of January 29. On account of the far-reaching differences of opinion of both parties at this moment, and the grave difficulties in the way of a perfect solution of the reparation problem, we are under the necessity of abandoning the idea of presenting to you a new plan to-day for the total reparation.

Thus, in spite of serious objections, we have decided to revert to the idea of a provisional arrangement. I may draw attention to the fact that Allied experts have unanimously recommended their Governments to provide in the Paris Conference for German reparation demands only over a period of five years, because after long and thorough investigation they are convinced that that enormous problem could not be solved in such a short time. I further may remind the Conference that even some of the Allied Governments just before the decision of Paris had emphatically denied the possibility of at once determining the total indebt

edness of Germany, and had, therefore, asked for a provisional arrangement covering from three to five years.

All these considerations have induced us to consider the definite settlement for the next five years in order to prove that we want to satisfy the Paris demands of the Allies as far as possible. We should be prepared to pay the fixed annuities provided for for the first five years, and in addition to give full equivalent for the levy of 12 per cent. on our exports which has been demanded from us, but which we do not think to be practical. We know very well that such tremendous payments are only possible if a large part of them can be financed by way of a loan. We are, however, led to make such a proposal only if there were a chance of its being taken into consideration by the Allied Governments; but we can make the proposal only on the understanding that Upper Silesia, by virtue of the plebiscite, will remain with Germany, and that the restrictions which are imposed upon us in the commerce of the world shall be abolished. Both would be necessary to enable Germany to promise such high payments in an honourable way.

Whether we shall present to you to-day a proposal of that kind is entirely for you to decide. If you should agree to it we would do our best to cooperate with your experts to discuss the details of the proposal and then to establish as soon as possible a comprehensive plan of reparation for the period of thirty years. If, however, in spite of what I have said, you should insist upon the demand that we immediately have to make to you a fixed offer, a fixed total offer, it will be necessary for me to ask for a delay of about a week in order to consult personally in the matter with the Cabinet at Berlin.

And now I beg leave to make a few remarks in reply to the reflections upon which the President of the Conference has based the resolution of the Allied Governments, because I think it immensely important in these decisive hours that no mistake may stand between the Allied Governments and the German Government.