It will be noted first that Paragraph 18 refers to sanctions in case of "voluntary default" by Germany, while Section III refers to them in case of "flagrant failure" to fulfill accepted conditions. This difference of terminology was the subject of discussion in the British Parliament on August 5, 1924, and Prime Minister MacDonald there gave an interpretation of the word "flagrant," which, it is reported,12 was accepted by the "Council of Fourteen" (Allied Premiers and Ministers) at London on August 7, but the interpretation does not appear in the published documents. Mr. MacDonald's definition, given to the House of Commons on August 5, was as follows:

The default which is a serious one, and which comes before the Reparation Commission, is a large general default, a default which cannot be judged to be a mechanical default, a default which it can be alleged and about which evidence can be presented,-"This could not have taken place unless there was a conspiracy in high places to throw off obligations undertaken in August, 1924, by the German Government to put this report into operation."

713

The London Agreement then provides, in case a default has been declared in accordance with the conditions previously specified, that

The signatory Governments, acting with the consciousness of joint trusteeship for the financial interests of themselves and of the persons who advance money upon the lines of the said plan, will confer at once on the nature of the sanctions to be applied and on the method of their rapid and effective application.

It will now be observed that while this article follows generally the wording of the last half of the third paragraph of Section III of the Dawes report, it contains a very material and important modification. Section III seems to contemplate that any sanctions to be imposed upon Germany will be determined by the creditor governments

12 London Times, Aug. 9, p. 10.

This wording, which appears in the London Times of Aug. 9, p. 10, is slightly different from the report of Mr. MacDonald's statement in the House of Commons published in the Times of Aug. 6, p. 6, column 4.

acting jointly, but the London agreement changes this provision to read so that the creditor governments are obligated only to confer as to the nature of the sanctions.

In the Inter-Allied stage of the London Conference the possible effect upon the loan to Germany, recommended by the Dawes report, of a declaration of default by the Reparation Commission was used as an argument for taking the power of declaring defaults out of the hands of the Commission. The situation was thus stated by Mr. MacDonald in the House of Commons on August 4: "On the British and American markets confidence in the Reparation Commission as a judicial body for declaring default has been completely forfeited, and we were informed that so long as it could destroy the economy and credit of Germany by a declaration of default which, as a matter of fact, might not exist, the security for the loan would be of so little value that the loan would not be subscribed.""

When the possibilities of this buga-boo as a political lever had been exhausted1 it was a simple matter for the Allied Governments to agree, as they did in the agreement under analysis, that in case sanctions are imposed, priority would be given to the service of the loan, not only as regards the resources pledged to its service, but as to resources which may arise from the imposition of sanctions, and that any dispute arising under the agreement between the signatories regarding the imposition of sanctions and the security for the loan are to be submitted to the Permanent Court of International Justice.

The Agreement finally reserves to the signatory Governments all of their existing rights under the Treaty of Versailles, unless otherwise stipulated.

14 London Times, Aug. 5, 1924, p. 4.

15 The alleged interference in the negotiations of the so-called "international bankers," was greatly resented in France, and Mr. MacDonald in this connection made the following statement on the occasion above referred to: "I may take this opportunity of expressing my regret that it has been so often stated that the difficulties we encountered in this part of our work were created by bankers and financiers. They confined themselves to advising as to the state of mind of the investing public, and guided us against coming to agreements that would fail to produce the loan required. We are all much indebted to them for the information and help they gave us.'

The military, as distinct from the economic and fiscal, evacuation of the Ruhr was considered by the Allies to be outside the scope of the London Conference, but the German delegates placed this question at the head of their agenda for discussion. It was taken up in separate negotiations between the French, Belgian and German plenipotentiaries, and the result embodied in an exchange of notes on August 16 in which France and Belgium agreed, if the London Agreements are carried out in good faith by Germany, to proceed to the military evacuation of the Ruhr within a maximum period of one year from the date of the Agreements. As an earnest of their intention to hasten the evacuation France and Belgium decided that the day after the London Agreements were signed the military should evacuate the zone between Dortmund and Horde in the Ruhr and territories outside the Ruhr occupied since January 11, 1923. In these notes the German Chancellor maintained the view "that the occupation of German territories beyond the German frontiers fixed by Article 428 of the Treaty of Versailles cannot be recognized as lawful." The British Prime Minister also wrote a letter to the French and Belgian Premiers in which he took note of the agreement with Germany, reiterated the position of the British Government as to the illegality of the occupation of the Ruhr under the Treaty of Versailles, and urged that the evacuation be hastened as much as possible "as, in the opinion of the British Government, the continued occupation may prejudice the working of the Dawes plan, and jeopardize the arrangements agreed to at the London Conference."'16

The principle of arbitration, so generously drawn upon by the conference to reach agreement when other suggestions of settlement failed, was the keynote of the closing speeches of the principal delegates.

"I should like to impress upon the German people,"

16 The notes exchanged are printed in the London Times, Aug. 18, 1924. p. 16, and Mr. MacDonald's letter in the Times of Aug. 19, p. 10.

said the British Prime Minister, "that as the result of this conference we have created a system of arbitration, of examination, of revision, which will enable both them and us to observe the working of the Dawes plan; to watch projects that may be doubtful in their effects and to come together in a sincere desire to rectify mistakes so soon as those mistakes are discovered."

In his reply the French Premier said: "France is happy in seeing that you have accepted to write on the front of the London document this idea of arbitration which we all hope will be generalized in order to substitute for the atrocious rule of war a régime of conventions based upon right and legality."

The American Ambassador concurred with the following statement: "There is one feature of this settlement which I wish to emphasize, and that is the recognition and furtherance of the principles of arbitration for settlement of international disputes. In my opinion, the greatest hope for the peace of the world lies in arbitration and judicial settlement between nations, and I am very glad this conference has contributed so much to forward this plan."

The conference closed with an expression of hope on the part of the German Chancellor that "the principle of arbitration, to which other speakers have referred, may evermore be applied in regulating the relations of the different peoples to each other, and thus help to establish a better adjustment of affairs."

Postscriptum

The contract for the loan of 800,000,000 gold marks to Germany under the Dawes plan was signed at London on October 10, 1924 (New York Times, October 11, 1924). On October 13, 1924, the Reparation Commission approved a series of decisions to give effect to the terms of the loan and declaring that all conditions attached to the Dawes plan had been complied with and that the plan is now legally binding on Germany (New York Times, October 14, 1924). Subscriptions to the loan were opened on October 14 and it was at once oversubscribed (New York Times, October 15, 1924).

LIST OF PUBLICATIONS

International Conciliation appeared under the imprint of the American Association for International Conciliation, No. 1, April, 1907 to No. 199, June, 1924. These documents present the views of distinguished leaders of opinion of many countries on vital international problems and reproduce the texts of official treaties, diplomatic correspondence and draft plans for international projects such as the Permanent Court of International Justice. The most recent publications are listed below. A complete list will be sent upon application to International Conciliation, 407 West 117th Street, New York City. Series No. 193. Documents regarding the European Economic Situation.

III: Correspondence between Germany, the Allied Powers and the United States, relating to Reparations. Speech of General Smuts in London, October 23, 1923.

December, 1923.

194. The Centenary of the Monroe Doctrine, by Charles Evans Hughes. An address delivered before the American Academy of Political and Social Science at Philadelphia, November 30, 1923; American Cooperation for World Peace, by David Jayne Hill.

January, 1924.

195. The Winning Plan selected by the Jury of the American Peace Award. February, 1924.

196. Report upon Health, Sickness and Hunger among German Children, by Haven Emerson, M.D., Professor of Public Health Administration, Columbia University.

March, 1924.

197. The Permanent Court of International Justice, by John Bassett Moore. The United States and the Court. Information regarding the Court. April, 1924.

198. Maps showing Territorial Changes since the World War, the Transfer of the German Cables and the League of Nations in 1923, compiled by Lawrence Martin, Washington, D. C.

May, 1924.

199. Summary of Part I of the Report of the First (Dawes) Committee of Experts. Questions resulting from the Corfu Incident Submitted September 28, 1923, by the Council of the League of Nations to the Special Commission of Jurists and the Replies of that Commission: Lord Parmoor's Comments.

June, 1924.

200. The Carnegie Endowment for International Peace: Organization and Work, compiled by Amy Heminway Jones, Division Assistant.

July, 1924.

201. A Practical Plan for Disarmament: Draft Treaty of Disarmament and Security, Submitted to the League of Nations by an American Group; with Introduction and Commentary by James Thomson Shotwell. August, 1924.

202. An Analysis of the American Immigration Act of 1924, by John B. Trevor, M.A., formerly Captain Military Intelligence Division, U.S.A., Chevalier de la Légion d'Honneur.

September, 1924.

203. America's Part in Advancing the Administration of International Justice, by Edwin B. Parker, Umpire, Mixed Claims Commission, United States and Germany.

October, 1924.

204. The Dawes Report on German Reparation Payments, by George A. Finch. The London Conference on the Application of the Dawes Plan, by George A. Finch.

November, 1924.