(3) The gold bonds transmitted to the Reparation Commission would be guaranteed by the receipts of the Customs, and would rank before all the obligations of Germany resulting from the Treaty.

When this Note was placed before the conference of Prime Ministers, M. Poincaré expressed the view that it was not worth discussing, and that Germany could only be induced to move by occupation of the Ruhr or some similar measure. No conclusion was reached, and when the conference met again on December 11 it decided to adjourn the discussions till January 2, 1923, when they would be resumed in Paris. An official communiqué stated that a plan for an interim arrangement in regard to reparations submitted by the German Chancellor had been considered, but had been unanimously found to be unsatisfactory. It had not been possible, in the time available, for the Allied Prime Ministers to arrive at definite conclusions on the momentous issues involved.

On December 12 the Prime Minister made a statement on the matter in the House of Commons. He said that he had declared to the conference that it would not be right that the settlement should be fixed in such a way that we alone of all the Allied countries would be virtually paying an indemnity. He thought that it was fair to consider the whole amount to be obtained from Germany, and since this was not all that had been expected the claims of all the Allies must be reduced.

On December 13 a debate was initiated in the House of Lords by Lord Birkenhead, who endorsed the policy enunciated by the Prime Minister, and expressed his satisfaction that it had been made clear that, while prepared to make concessions, the Government had no intention of surrendering everything which this country was entitled to claim. He pointed out that the position was that Germany could not at the present time pay the amount that was due under the Reparation Agreement. If she could not pay, it was obvious that there must be a moratorium. He viewed the French proposals for enforcing sanctions with alarm, and he scouted as alarmist the reports that Germany was making secret military preparations.

Lord Grey, who spoke afterwards, said that if the January conference failed, it might mean that Europe took a further step towards collapse, and that our relations with France would be imperilled. The policy of saying that as long as we paid our debts to the United States we could not remit debts owing to us by European Allies was very obvious, but he was not so sure that it was so logical as it appeared on the surface. The objection to it was that it was a policy which, though obvious and superficially logical, was perfectly sterile, and one on which no progress could be made. It did not bring us any nearer the prospect of recovering money from our Allies. He asserted that we had more interest in seeing political security and economic recovery in Europe than we had in getting cash.

payments of debts owing to us. If by remitting, not indeed cash payments, but the prospect of getting some day or other cash payments, we could do anything substantial to promote security and economic recovery of those countries in Europe which were our customers, we should be immensely the gainers. If the Government were to remit the debts without doing something to promote recovery, he admitted that they would be exposed to a criticism which would be difficult to meet. What he urged upon the Government, therefore, was that they should retain a free hand with regard to the remission of debts owing to us. There could be no economic recovery unless there was political security, and he regarded the League of Nations as the best means of restoring political security. Unless the League became more comprehensive Europe would again drift into two armed camps. When the reparations question was settled Germany should declare herself willing to enter, and the other Powers should declare themselves willing to admit her, into the League of Nations. He did not believe that security in Europe could be obtained by making exclusive agreements with particular Powers. Lord Grey then dwelt upon French fears for future security. If France was difficult to deal with on the question of reparations, it was not so much because they were anxious to get cash from Germany as because they desired to get that security which they now believed that they had lost. He did not believe that the strong measures advocated by France would produce cash. They were more likely to produce the collapse of Germany, which would be a disaster for the world.

Lord Salisbury, on behalf of the Government, said that he hoped that when French statesmen read what Lord Grey had said, and recognised that it came from a friend, they would weigh the advice which he had given in so friendly a spirit. The Government desired to work on parallel lines, and in conformity with France, though without subordinating their views to those of the French. He thought that when the conference reassembled in January they would be able to arrive at some proposals which would command the assent of the French Government.

The Prime Minister delivered an important speech on the question of reparations in the House of Commons on December 14. He first presented the point of view of France. The French had had great hopes in regard to the amount of money they would get from Germany. They had built on those hopes to the extent that the financial system of France was based on receiving a very large sum from Germany. Germany had undertaken to pay a large amount, of which almost nothing had been paid. The French pointed to the fact that conference after conference had been held, and the result had been that in one form or another Germany had received what was practically a moratorium. At the end of that time the French said that

they were in a worse position for getting anything out of Germany than they were before. In the view of France this result was largely due to the deliberate action of Germany.

It was

Mr. Bonar Law could not himself take this view. quite true, he said, that by a method of passive resistance they could avoid for ever paying any indemnity, but only by means of what was very likely suicide for Germany. The British view was that any concession we might make on the subject of interAllied debts and reparations must be bound up with the probability that there would be a final settlement which would not be reopened. It followed that nothing should be done to make a final settlement impossible. He swept aside the suggestion that this country had no interest in reparations. He was convinced that payment without receiving anything from outside sources would reduce the standard of living in this country for a generation, and could not be done. Our central financial organisation was strong because we had made the taxpayers poor. He pointed to the money paid to the unemployed, and to the effect of unemployment on the people. Unless there was a distinct improvement in trade, he said, in a reasonable time we should reach a position which, in his opinion, would be worse almost than that of any of the Allied countries.

He then outlined British policy in regard to reparations. The question was simply, what was the best method of getting the amount Germany ought to pay? If Germany ever did recover she would be in a far better position to pay the indemnities than we should be to pay our debts, but the condition of Germany awakened the apprehensions of the Prime Minister. All the information he had received was that Germany was very near a complete collapse. The tragedy of that was, that while there could be no improvement in Germany until the mark had been stabilised, the very effort to stabilise the mark would itself bring about that collapse of industry from which we were suffering. There was no hope of a solution of the European problem unless France and Great Britain acted together. The difference likely to arise, he said, was a difference between the public opinion of the two countries. That made it more dangerous than if it were only a question of difference of opinion between individuals and Governments. For that reason he trusted that we at home, and the French Government, would utilise the time that still remained to try to find some common method by which we could deal with the problem.

Mr. Ramsay Macdonald urged that there should be time for Germany to pay her reparations from her trade developments. Both France and England, he thought, would have to lower their expectations of what they were going to get. He warned the French Government that, in the minds of the vast majority of the people of this country there was the strongest opposition to the proposal that the military occupation of the Ruhr should

follow immediate delinquency on the part of Germany. We wanted more than a mere cessation of hostilities; we wanted peace.

Lord Eustace Percy suggested that unless we offered France unconditionally a guarantee of military assistance in case of German aggression, we should never get a feeling of security in France sufficient to induce her to come to an agreement with us or Germany about reparations.

Major-General Sir Robert Hutchison, who had been stationed in Germany, expressed his view that French policy was directed towards breaking Germany into small states, the first step being to divide the Rhineland from the rest of Germany.

During the sitting of the House of Commons on December 12 it became known that the Labour Party had organised a scheme to keep the House sitting until noon of December 14. Their object was to make a demonstration on a number of supplementary estimates in order to express their zeal for economy, and their dissatisfaction with the measures taken by the Government for the alleviation of unemployment. A number of Labour members were primed on particular subjects in order to keep the debate going. In this scheme, however, they were defeated by the application of the closure in the morning of December 13. When the House met later in the day an outbreak of disorder took place, expressing the disappointment of the Labour Party at the failure of their plan. The Speaker endeavoured to restore order, but succeeded in doing so only with difficulty.

Parliament was prorogued on December 15, and after the scene already referred to the protests of the Labour Party were more peaceable than had been anticipated. Mr. Lansbury expressed anxiety that Parliament should not be prorogued until something more effective had been done to deal with the urgent problem of unemployment. The Speaker pointed out, however, that the prorogation and summoning of Parliament were matters for the Crown. Parliament was prorogued accordingly until February 13. The King's Speech was read in the House of Lords by the Lord Chancellor. It stated that a discussion. of the problems affecting the peace of the Near East was proceeding at Lausanne. The task of restoring conditions favourable to economic stability in Europe continued to give deep The difficulties were great and complex, and could only be overcome by patient and sincere co-operation between the nations primarily affected.

concern.

The Bills to which the royal assent was given during this session included those for the Constitution of the Irish Free State, and for the consequential necessary provisions; the Trade Facilities Bill, and the Importation of Animals Bill.

The problem of unemployment became very prominent towards the end of the year, notwithstanding the measures which had been taken by the Government to deal with it. As

a result of these measures more than 100,000 men were employed on work which had been put in hand specially to meet the existing emergency. The placing of contracts for the two new battleships would also find employment for a large number of men. Employment was further provided by a plan for accelerating the repair of dockyard machinery, the repair of buildings, the reconditioning of guns, and the expediting of contracts for clothing. About a half of the 100,000 men provided with work were engaged on arterial roads, road maintenance and repairs, and sundry improvements. 35,000 were employed on schemes controlled by local authorities and sanctioned by the Unemployment Grants Committee. The work included roads, sewerage, sewage disposal, waterworks, tramways, and other miscellaneous undertakings.

A demonstration organised by the National Unemployed Workers' Committee was held on December 17 in Trafalgar Square. During the progress of the meeting the Council proceeded to Buckingham Palace with the object of presenting a petition to the King, asking for the early reassembly of Parliament. When the deputation reached the Palace gates the members were informed that they could not be received by the King, and that the petition should be presented through the Home Secretary. There were still in London 1,500 unemployed men who had marched from distant parts of the country. The Unemployed Workers' Committee later attended a meeting of the General Council of the Trades Union Congress, and made a statement to the effect that if the Parliamentary machine were incapable of dealing with the problem of unemployment, and organised labour found itself unable to bring about a larger measure of relief, the unemployed would face the winter in a spirit of revolt. The General Council thereupon decided to ask the Prime Minister to receive a Trades Union Congress deputation, which would put the case for calling Parliament together again at an earlier date than was fixed at the prorogation. The Prime Minister replied that he would receive a deputation in Glasgow on December 23. When this deputation had set forth its views, Mr. Bonar Law made a speech in reply. He said that the Government could not deal with the unemployed problem by borrowing money; that would only end in industrial crash. There was no big pool of profits from which higher wages could come. The deputation had suggested that interest on the National Debt should be reduced by one-half, but the Prime Minister described this suggestion as foolish and unjust, and calculated to destroy any possibility of credit in this country. He said that the unemployment figures had improved. They were less by half a million than they had been at their worst, and he did not think that they would become so bad again as they had been. The Cabinet Committee on Housing was expected to report shortly, and would very likely recommend the continuance of the State housing scheme, but