The difficulties in the way of any immediate settlement now are so
obvious that one might wonder why any one should be in favour of the
attempt. The explanation lies in that popular illusion, with which it
now pleases the world to deceive itself--the International Loan. It is
thought that if Germany's liability can now be settled once and for all,
the "bankers" will then lend her a huge sum of money by which she can
anticipate her liabilities and satisfy the requirements of France.
In my opinion the International Loan on a great scale is just as big an
illusion as Reparations on a great scale. It will not happen. It cannot
happen. And it would make a most disastrous disturbance if it did
happen. The idea that the rest of the world is going to lend to
Germany, for her to hand over to France, about 100 per cent. of their
liquid savings--for that is what it amounts to--is utterly preposterous.
And the sooner we get that into our heads the better. I am not quite
clear for what sort of an amount the public imagine that the loan would
be, but I think the sums generally mentioned vary from £250,000,000 up
to £500,000,000. The idea that any Government in the world, or all of
the Governments in the world in combination, let alone bankrupt Germany,
could at the present time raise this amount of new money (that is to
say, for other purposes than the funding or redemption of existing
obligations) from investors in the world's Stock Exchanges is
ridiculous.
The highest figure which I have heard mentioned by a reliable authority
is £100,000,000. Personally, I think even this much too high. It could
only be realised if subscriptions from special quarters, as, for
example, German hoards abroad, and German-Americans, were to provide the
greater part of it, which would only be the case if it were part of a
settlement which was of great and obvious advantage to Germany. A loan
to Germany, on Germany's own credit, yielding, say, 8 to 10 per cent.,
would not in my opinion be an investor's proposition in any part of the
world, except on a most trifling scale. I do not mean that a larger
anticipatory loan of a different character--issued, for example, in
Allied countries with the guarantees of the Allied Government, the
proceeds in each such country being handed over to the guaranteeing
Government, so that no new money would pass--might not be possible. But
a loan of this kind is not at present in question.
Yet a loan of from £50,000,000 to £100,000,000--and I repeat that even
this figure is very optimistic except as the result of a settlement of a
kind which engaged the active goodwill of individual Germans with
foreign resources and of foreigners of German origin and
sympathies--would only cover Germany's liabilities under the London
Schedule for four to six months, and the temporarily reduced payments of
last March for little more than a year. And from such a loan, after
meeting Belgian priorities and Army of Occupation costs, there would not
be left any important sum for France.
I see no possibility, therefore, of any final settlement with M.
Poincaré in the immediate future. He has now reached the point of saying
that he is prepared to talk sense in return for an enormous bribe, and
that is some progress. But as no one is in a position to offer him the
bribe, it is not much progress, and as the force of events will compel
him to talk sense sooner or later, even without a bribe, his bargaining
position is not strong. In the meantime he may make trouble. If so, it
can't be helped. But it will do him no good, and may even help to bring
nearer the inevitable day of disillusion. I may add that for France to
agree to a short moratorium is not a great sacrifice since, on account
of the Belgian priority and other items, the amount of cash to which
France will be entitled in the near future, even if the payments fixed
last March were to be paid in full, is quite trifling.