Drafting

Last week the Reparations Commission Sub-Committee of Experts deputed a Drafting Committee to begin the tedious work of reducing to concrete English and French texts the broad principles upon which the American, British and French experts had already agreed.

Drafting Committee: The Committee consists of Owen D. Young (U. S.), Sir Josiah Stamp (Great Britain), M. Jean Parmentier (France), Andrew Mac Fadyean, General Secretary of the Reparations Commission.

With Berlin committed to the plan, through the adoption of Dr. Hjalmar Schacht's Gold Discount Bank Bill by the Reichstag just before its dissolution*, and Poincare's Government somewhat unwillingly pledged to accept the plan, not only "in principle" but in effect, by the conditions of Morgan's $100,000,000 loan/-, the main obstacles to the work of the Drafting Committee were removed.

It was announced that the concrete plan would not be in the hands of the Reparations Commission before the end of the month. The actual problem of drafting is giving more difficulty than was expected. In spite of official denials by the chairmen of all three delegations, there is suspicion of dissension between the British and American delegates on one hand and the French on the other.

The Plan. Until the work of the drafting committee is complete, details of the so-called "Dawes plan" must remain unknown. The main features of the plan have been indicated in communiques and in Associated Press reports and show it to be surprisingly non-political in its proposed method of operation.

The Associated Press states that the plan calls for the collection from Germany of progressively mounting sums over a five-year period. The plan fixes an annual minimum (amount unspecified) and provides means for its collection from: 1) Excise taxes on monopolies, such as matches, spirits, tobacco. There is to be no Allied supervision of collection of these taxes. Evidently it is felt that the Germans cannot ignore the easiest method of taxation that lies at any Government's hand. The Allies will only take a portion, so that the incentive to collect will be left untouched.

2) Interest from bonds issued by the German railways to approximately one-half of their estimated valuation.

3) Dividends from stock in the new gold issue bank.

These three sources of income-- excise, railway bonds, bank stock-- would be divided among the Allies according to the ratios arrived at in the Spa Conference of 1920. Each Ally would get a definite sum of cash each year from the excise taxes, and income from the railway bonds and bank stock. Each Ally would have only shareholders' rights over the latter sources of reparations. Reparations in kind would be obtained by means of orders in Germany, conducted in the usual commercial manner through the gold issue bank from the funds made available to che individual nations from the income from these sources. Should France want coal from the Ruhr, she could pay pithead prices to the owners of the Ruhr mines by drafts on her credits deposited in the gold issue bank. Thus military occupation and accusations of bad faith would be obviated.

Moratorium. The chief difficulty in putting this plan into execution is the problem of financing the German industrialists between the time of acceptance and the full operation of the scheme. More than $20,000,000 a month will be needed. The Committee hopes to avoid a moratorium, much desired by Germany, but is expected to recommend a $300,000,000 loan to Germany. Such a loan, it is stated, will be made by American and British bankers, and will be floated in the U. S. by J. P. Morgan & Co., whose $100,000,000 loan to France is credited with having assured the acceptance of the Dawes plan, looking to this larger loan.

German Annoyance. German bankers and industrialists declare opposition to any Allied financial control. Herr Franz Urgib, General Director of the Disconto Gesellschaft, said in an interview: "We want no international bank to control our financial life. There is no reason for control of the issue of notes. We have plenty of good bankers of our own." Herr Urgib urged an immediate reparation payment of 50,000,000 gold marks, a three-year moratorium, eco-nomic control of the Ruhr. "With that," he urged, "Germany could solve her problems alone 1"

* For an account of the dissolution of the Reichstag, see Page 10.

/- For an account of the Morgan loan to France, see Page 9.