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THE DAWES PLAN AND THE EUROPEAN
PROBLEM
BY GUY GREER
II
import more goods than they export, paying for the difference
by means of so-called invisible exports?interest on foreign
securities (usually owned in countries with a favorable balance
of visible trade), earnings from shipping, banking and insurance,
and the like. The United States, up to the time of the war, has
long been a typical example of the first class, and Great Britain
of the second. Germany also, both before and since the war, has
been typical of the second class: she has consistently imported
more goods than she has exported.
Germany's imports of food in 1913, exclusive of all luxuries such
as wines, liqueurs, and even tea, coffee and tobacco, amounted
to 2,274 million gold marks.1 Her present agricultural produc
tion is much lower than before the war. She has lost through
the peace settlement some seven per cent, of her population, but
she has lost the territory with the people, and the lost territory
produced in the aggregate more food than its inhabitants con
sumed. It is therefore safe to assert that in order to maintain the
mere human efficiency of her labor power Germany must now
import at least as much food as before the war.
Imports of raw materials and semi-finished products amounted
1German official (pre-war) statistics.
774 THE NORTH AMERICAN REVIEW
in 1913 to 6,242 million gold marks.1 But Germany has lost as
a result of the war nearly all her iron ore and a considerable part
of her coal production. In order to regain her pre-war produc
tive capacity she will be obliged now to import not only the same
amount of raw materials as before the war but more, to make up
for her loss of iron ore and coal. Moulton and McGuire have
estimated, in the study above referred to, that the increased im
prices to 900 million gold marks in the case of coal and to 220
millions in the case of iron ore. Germany imported in 1913 in
addition 1,479 million gold marks' worth of manufactured com
modities, exclusive of all luxuries, and 290 million gold marks'
worth of live animals. Certainly she will be obliged to import
some manufactured goods in the future, for the reason that she
is not equipped to produce for herself many necessary articles.
Moreover, the Allied countries may be expected to insist, as they
already have in the post-war years, upon selling manufactured
Ill
If the foregoing analysis is even approximately correct, the con
clusion is inescapable that Germany, if she is to regain her pro
ductive capacity, must export goods amounting to more than
1Post-war from German at
foreign trade figures taken official statistics checked and revised
the instance of the experts of the Reparation Commission.
776 THE NORTH AMERICAN REVIEW
15,000 million gold marks a year in order merely to pay for her
indispensable imports. We have seen that her foreign invest
ments have practically disappeared, and her shipping and other
invisible items are not likely to bring in any considerable revenue.
Germany is probably paying more abroad for banking and in
surance than she is earning, and the business is not
shipping
making money for anybody. But if transfers are to be made of
the funds deposited to the credit of the Reparation Commission
in the Bank of Issue, Germany will have to export still more goods
than she imports.
This leads directly to the heart of the reparation problem.
Who is going to buy from Germany every year more than
15,000 million gold marks' worth of goods? She has been ex
porting since the war little more than a quarter of this amount,
and yet her principal customers?Great Britain, France, the
United States, and so on?have considered it necessary to build
tariff walls against her and to take energetic measures to limit
her alleged dumping. All of Germany's potential customers seem
determined to reduce rather than increase their imports of foreign
goods. Russia will perhaps eventually become an important
market, but most competent observers agree that it will be many
years before that country can buy even as much as before the
war. It should be remembered, moreover, that Great Britain and
other countries dependent on imported food are going to offer
keen competition for the Russian market.
In the last analysis the whole reparation problem may be re
duced to a formula: Either the Allies and the rest of the world
will have to buy enormously greater quantities of German goods
than at any time since the war, or they must renounce all hope
of receiving, apart from deliveries in kind, any effective payments
from Germany.
IV
V
Until Germany has enormously increased both her productive
capacity and her ability to sell goods abroad, not only will it be
impossible to transfer funds to the Allies, but the possibility of
raising revenue even in Germany will be strictly limited. In
creased productive capacity inevitably will mean greatly in
creased imports of food and raw materials, which will have to be
paid for by means of exports before any funds are available for
transfer. The conclusion is inescapable that France, unless she
tage of the Dawes plan lies in the precision with which the func
tions of the new are defined. However, a word of
organization
warning against undue optimism seems necessary. The Repara
tion Commission, in spite of its theoretical power, has been in
practice subject to the will of the Governments upon which it
depends; and these in turn have been at the mercy of the public
opinion which they themselves have fostered. The Transfer
Committee will inevitably be in somewhat the same predica
ment; the best that can be hoped is that the Allied public will
learn from time and experience something of the true possibility
of effective payments.
VI
keep a strong army, and mobilize and arm as many allies as she
can, against the day of German aggression. If we keep inmind
these facts and this logic, which are beyond dispute so long as
the French nation is convinced that it cannot trust the promises
of Germany, it will be difficult to quarrel with the foreign policy
of France. The maintenance of a great armed force; the arming
and training of black troops in Africa; the loaning of huge sums
of money (which are in reality merely credits permitting the
purchase of French goods) to Poland, Rumania, and Yugoslavia
for the purpose of strengthening their military establishments,
even when no effort ismade to pay the war debts to the United
States?these are the necessary consequences of the French state
of mind.
VII
The feeling of the German people is unfortunately not such
as to facilitate a solution of the European problem. They be
lieve that they have been persecuted and betrayed by the Allies.
They are convinced, moreover, that have not been
they given
adequate credit for the reparation payments they have actually
made?payments which have dissipated a very large part of their
capital assets, whatever their value to the Allies.
But the most serious as well as the most dangerous element
in the German state of mind is the belief that France has system
atically made it impossible for Germany to meet her obligations;
that France has never really meant to collect reparations at all,
but that her intention has been from the beginning to destroy
782 THE NORTH AMERICAN REVIEW
the German nation. It is argued by all classes of people in Ger
many that they are ready to undertake the restoration of the
devastated regions, but that France has always refused their
offers, even when the inhabitants of the war-torn districts have