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Germany which might have expressed itself in an outburst of violence. There was an international uproar about the misguided attempts of local officers and officials to foster a Separatist Movement in Rhineland and in the Palatinate, and M. Poincaré refrained from any condemnation of these blunders.

The relations between France and England were as bad as they could be. The Baldwin Government, in which Lord Curzon was Foreign Secretary, had exchanged a voluminous correspondence with the Poincaré Government, and this correspondence had in the end assumed a somewhat acrimonious character. But at the beginning of 1924 the Baldwin Government was about to resign. It had been beaten in the elections and was only awaiting the assembling of Parliament to give way to its successor.

It may be taken, in the light of subsequent events, to be a most fortunate fact that the Conservative Party was for several months in 1924 out of office in England. Without any reference to party prejudices, one is bound to say that the unpleasant relations between M. Poincaré and Lord Curzon had resulted in a diplomatic deadlock. The coming of the Labour Government relieved the situation. The tension was broken and it was possible to begin to reknit the Franco-British Entente. Poincaré immediately received from Mr. Ramsay MacDonald, who succeeded Mr. Baldwin and who became his own Foreign Secretary, assurances of friendship, and M. Poincaré replied in a guarded but friendly manner. It was clear that the two men could work together.

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At the same time, Mr. MacDonald was counselled by the French Socialists to proceed slowly and cautiously, and to await the French Elections, which were due in May, before pressing for a settlement of the vexed reparations problem which, after being discussed in conference after conference, after being the subject of innumerable diplomatic communications, seemed as far from even a provisional solution as ever. Mr. MacDonald took this advice and, broadly speaking, confined his diplomatic action to the improvement of relations between France and England.

It had been agreed during the latter part of 1923 to refer the "eternal question" to an international group of experts, and on January 14 the Commission met. This date is undoubtedly one of the most important of the year. The Commission worked uninterruptedly until April 9 at the headquarters of the Reparations Commission in Paris. Its main Report is signed by two representatives of each of the following countries: America: General Charles G. Dawes and Mr. Owen D. Young; England: Sir Robert M. Kindersley and Sir Josiah C. Stamp; France: M. J. Parmentier and M. Edgard Allix; Italy: Signor Alberto Pirelli and Signor Frederico Flora; and Belgium: M. E. Francqui and M. Maurice Houtart.

The main committee was known as the Dawes Committee

and the report as the Dawes Report, although in point of fact, if any one man should have given his name to it it was the English representative Sir Josiah Stamp.

A second Committee of Experts met at the same time to consider the means of estimating the amount of Germany's exported capital and of bringing it back to Germany. This Committee was composed of Mr. Reginald MacKenna (English), Mr. Henry N. Robinson (American), M. André LaurentAtthalin (French), Signor Mario Alberti (Italian), and M. Albert E. Janssen (Belgian).

The Dawes Plan, as it was called, may be summarised as follows: Its purpose was to provide for reparation payments and, at the same time, to balance the German Budget and stabilise German currency. The method was to be co-operation between the Allies and Germany based on mutual interest. The Plan provided for an International Loan of 800,000,000 gold marks, to establish a new Bank of Issue in Germany, to stabilise the German currency, and to enable Germany to meet the first year's reparation payments. The Bank of Issue was to be established with a capital of 400,000,000 gold marks in shares of 100 marks each, one million shares to represent assets of the Reichsbank and three million shares to be subscribed in Germany and abroad. The Bank was to be the fiscal agent and depository of the German Government but to be free of Government control. Its administration was to be undertaken by a German President and Managing Board, but it was to be supervised in matters affecting the creditor nations by a General Board of seven Germans and seven foreigners, one of the foreigners being the Bank Commissioner. The Bank was to have the exclusive right to issue and circulate Bank notes in Germany during the period of its charter, namely, fifty years. Neither the German Government nor any German State Bank was to have the power to issue paper money with the exception, to a limited extent, of the Banks of Baden, Bavaria, Saxony, and Würtemberg. The gold reserve of 333 per cent. was to be maintained.

As for reparation payments, they were under the Dawes Plan to be made through the Bank of Issue. The sources of revenue for these payments were to be: (1) In part the International Loan; (2) a mortgage on German railways; (3) a mortgage on German industries; (4) a transport tax and revenues from the General Budget guaranteed by certain "controlled revenues." The experts estimated that the Plan should produce for reparation payments one milliard marks the first year, and 220,000,000 marks more the second year. In the third year 1,200,000,000 marks should be forthcoming, and in the fourth 1,750,000,000 marks. In the fifth year a maximum annual payment of 2,500,000,000 marks should be obtained. Thereafter payments were to be on a sliding scale and subject to addition or reduction in certain contingencies.

In order to prevent these payments from affecting Germany's financial stability adversely, an index of prosperity was fixed. The Plan differentiated between the amount that could be raised in Germany and the amount that could be transferred abroad. It provided that Germany's payments abroad should not exceed its earnings abroad. Payments for the account of reparations were to be deposited to the credit of the Agent General for Reparation Payments. The Agent-General (at first Mr. Owen Young and afterwards Mr. Parker Gilbert, both Americans, acted in this capacity) and five experts in foreign exchange and finance, were to control the use and withdrawal of these deposits in Germany. Deliveries in kind were to be regulated by the experts. The principal purpose was to control the transference in such manner as to keep the currencies steady. If it should subsequently be discovered that reparation payments by Germany exceeded the sums that could be transferred without creating difficulties, the excess payments were to be allowed to accumulate in the Bank of Issue, but these accumulations were not to exceed two milliard gold marks. When they passed that figure, they were to be used in bonds and loans in Germany. The total accumulation in Germany was not, said the experts, to exceed five milliard gold marks. If this figure was reached, further reparation payments by Germany ceased until the transfer of the accumulated fund became possible.

It is obviously this problem of transference which, remaining unsolved, constitutes the weakest point of the Dawes Plan. The "controlled revenues" to which reference has been made are the revenues from the Customs, alcohol, tobacco, beer, and sugar, which are put under the control of Germany's creditors and are to guarantee the reparation payments from the Budget after 1925-26.

For its execution the Plan provided for a Commissioner of the Bank of Issue, a Commissioner of Railways, a Commissioner of Industrial Debentures, an Agent-General for Reparation Payments, a Controller of Revenues, and a Trustee to receive and administer the railway and industrial bonds.

The second Committee of Experts had a much lighter task, though it could hardly arrive at precise figures. Its general estimate was that German capital abroad at the end of 1923 amounted to nearly seven milliard marks. Both these Reports were drawn up in Paris after many meetings. Eminent technical advisers were called into consultation. A fortnight was spent in Germany.

In the meantime, however, M. Poincaré was encountering serious difficulties on account of the tendency of the franc to fall. The fiduciary circulation was increased. Something like a panic sprang up in France, and M. Poincaré was obliged instantly to propose the most drastic measures in the Chamber and Senate. Budgetary laws had been consistently broken.

Since the war there had been no budgetary unity, and M. Poincaré had even allowed his Finance Minister to break the law which demands an annual Budget. The previous year's Budget was to do duty once more. But in view of the threatened crash, measures of defence were hastily taken. New finance bills were proposed which would have the effect of increasing taxation all round by two-tenths-that is to say, to employ the French expression, the "double-décime" was to be imposed. There was, for a moment, some relaxation of the pressure on the franc when it was seen, in February, that Mr. MacDonald intended to take a conciliatory attitude towards France. But towards the end of the month the money market, and indeed the commercial market, was paralysed by the rapid fluctuations of the franc. Not until the pound sterling was almost worth 130 francs and the dollar worth nearly 30 francs, were suitable means discovered to prevent an entire collapse. Happily the Morgan Bank of New York came to the rescue and put at the disposal of the French a "masse de manoeuvre"-credits to the extent of a hundred million dollars. British support was also obtained.

From the middle of March the effect of this intervention began to be felt, and eventually the franc was raised to such a point that the pound could be bought for less than 64 francs. These enormous differences in the space of a single month, although satisfactory to some extent, brought their own perturbations, and the French once more realised the necessity of endeavouring to stabilise their currency. It is of little importance-except, of course, to rentiers-at what price the franc is fixed, but that it should be fixed is now agreed on all hands. Nothing, however, has yet been done in this direction, and at the end of the year the franc stands at well over 87 to the pound.

M. Poincaré encountered the utmost opposition, especially in the Senate, when, at the eleventh hour before the French elections, he raised taxation, and undoubtedly this unpopular measure, which he courageously pushed through, was largely responsible for the defeat of the Bloc National. It was represented also that he had made various promises to the Morgan Bank in order to obtain the necessary credits, and that in wringing these promises from him the American Bank had seriously intervened in French internal affairs.

The Radicals also accused the Poincaré Government of bringing up the franc to an unjustifiable level for electoral purposes, and unofficially talked of instituting an inquiry into the whole circumstances.

Another demand of M. Poincaré which encountered the most strenuous opposition and lost him many friends, was his demand to be given power to issue what were called "decree laws." He proposed to use these decree laws in order to cut down the civil service. The number of officials of one kind and

another in France has been estimated at 600,000 to 700,000, and with this menace hanging over them it was certain that the functionaries would throw their weight on the side of the Radicals in the elections.

Before these elections took place, M. Poincaré had made it clear that he accepted the conclusions of the experts. He made some reservations, and probably would have sold his final consent as dearly as possible; but in principle at any rate he was in accord with Mr. MacDonald, and this was definitely affirmed on May 7 and on May 16. The path of his successor was thus made easier.

It was on May 11 that the French elections were held. For the purpose of the elections there had been formed between the Radicals and the Socialists a Cartel des Gauches. It was understood that this alliance was not permanent but was intended to meet the conditions created by the peculiar French Electoral Laws. Instead of proceeding to nominate deputies in single member constituencies, wider areas known as "departements" were taken, and candidates presented themselves on a list. A system which purports to be Proportional Representation but which, in reality, has nothing to do with Proportional Representation operates. There may be any number of lists in presence. Every candidate who receives an incontestable majority, that is to say, more than half of the suffrages, is declared elected without more ado. Thus, if six candidates of one group obtain the narrowest absolute majority, they are proclaimed elected. Generally, as there are several lists, the votes will be so divided that the absolute majority will not be obtained. Then commences the complicated arithmetical business of awarding the seats. First, what is called the electoral quotient has to be determined. The quotient is arrived at by dividing the number of voters by the number of deputies to be elected: thus, if there are 100,000 voters and 5 seats, the quotient is 20,000. Then each list is taken and the average number of votes for the candidate of that list is ascertained. The quotient is then compared with the average of each list. If the average of a particular list is double the quotient, two seats go to that list. If the average falls short of the quotient by a single voice, then the list receives no seats. Naturally the seats are allotted to the leaders of the list. It may well be that after these operations, the whole of the seats are not filled; the quotient may just fail to go into the various averages a sufficient number of times. If there should be a seat left over it is attributed to the list which has the strongest average. Thus everything is in favour of the leading list.

Now, in 1919 the Bloc National, which was to all intents and purposes a homogeneous party, had greatly benefited by the division of its adversaries. The Radicals and the Socialists in 1924 believed that by joining forces and, in some cases, appearing together on the same list instead of fighting each other, and

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