Deadlocks Reached

"If the Reparations Commission shall find that Germany has made default, the Governments interested . . . will confer at once on the nature of the sanctions to be applied . . ." These words upset the apple cart in the Premiers' Conference.* They formed part of the recommendations of Committee No. 1 appointed by the Conference (TIME, July 28), to settle a method of determining possible German default under the Experts' Plan and to recommend what measures should be taken against Germany in case of default.

U. S. and British bankers balked. They asserted that there was no security for the proposed loan of $200,000,000 to aid Germany stabilize her finances, if sanctions, which might be disastrous, could be put into operation by the Reparations Commission.

Belgian Premier Theunis then advocated the appointment of a committee of four, to be chosen from the members of the Committee of Experts headed by General Dawes, with right of representation on the Reparations Commission.

U. S. Ambassador Frank B. Kellogg suggested that, in the event of sanctions being necessary, the Powers concerned should seek the advice of experts as to the probable economic effect of the contemplated measures against Germany before putting them into operation, in order not to interfere with the Experts' scheme. Neither the Theunis proposal nor the Kellogg pro- posal met with any success.

Next day U. S. Secretary of the Treasury Andrew W. Mellon breakfasted with Premier MacDonald at No. 10 Downing Street. It was a matter of conjecture as to what passed between the breakfast eaters, but it was thought that Andrew Mellon had made valued suggestions.

The time came along for a plenary session of the Conference. During one hour and 47 minutes, more of the main problems were broached. A committee of two (one British, one French) was appointed to:

1) Discover if the operation of the Experts' Plan required a special agreement with Germany.

2) Settle, if necessary, the method of reaching such an agreement without running counter to the terms of the Treaty of Versailles.

The Conference broke up over the week-end with nothing to show except an impasse on the loan security question, which is really a blow aimed at France, who vigorously maintained her right under the Treaty of Versailles to take separate action, if necessary, against Germany.*

Monday morning, Colonel James A. Logan, the American observer, lessened the tension somewhat by announcing that the U. S. would approve of an American sitting on the Reparations Commission on Aug. 15. He also took occasion to deprecate the emphasis placed by the French press upon the attitude of American bankers towards security for the German loan. The deadlock on this point, however, remained tight as ever. The conferees adjourned for 24 hours.

The main obstacle to the smooth running of the Conference was Premier Herriot of France. With a vigilent Poincare and an eagle-eyed Briand watching his every step from Paris, ready to pounce upon him should he make one move that could be construed as weakening the position of France, the Premier was not exactly a free agent. Moreover the French press raved against the U. S., declared that the bankers had exceeded their right in barring sanctions, counselled Premier Herriot to return home and leave the Conference to itself. He, perforce, remained hostile to any attempt at depriving the Reparations Commission of its power to decide on sanctions.

Another difficulty to be adjusted was that both France and Belgium insisted upon maintaining a nucleus of railway workers in the Ruhr area to operate lines in case of an emergency. This means the maintenance of troops to guard them. Italy and Britain were of the opinion that the Ruhr ought to be restored to the economic and political position it was in before the French and Belgians occupied it. Thus was another deadlock reached.

Notwithstanding these difficulties, which were considered not insuperable, optimism was the keynote of the Con- ference and it was evident that the embarrassed Herriot was doing everything possible to reach a compromise, even to defying Poincare. It continued to be averred that the Conference would succeed "because it has got to succeed in order to save the world entering through the black portals of a new and tearful era of greater economic depression."

*Called Premiers' Conference to denote that its inception was due to Premiers MacDonald and Herriot.

* Britain has always declared that France and Belgium acted contrary to the terms of the Treaty in entering the Ruhr, and that that act was therefore illegal.