The settlement of reparations communicated to Germany by the Allied Powers on 5 May 1921, and accepted a few days later, constitutes the definitive scheme under the Treaty according to which Germany for the next two generations is to discharge her liabilities. It will not endure. But it is the fait accompli of the hour and, therefore, deserves examination.

The settlement falls into three parts, comprising (1) provisions for the delivery of bonds; (2) provisions for setting up in Berlin an Allied Committee of Guarantees; (3) provisions for actual payment in cash and kind.

1. The delivery of bonds. These provisions are the latest variant of similar provisions in the Treaty itself. Allied finance ministers have encouraged themselves (or their constituents) with the hope that some part of the capital sum of Germany's liabilities might be anticipated by the sale to private investors of bonds secured on future reparation payments. For this purpose it was necessary that Germany should deliver negotiable bonds. These bonds do not constitute any additional burden on Germany. They are simply documents constituting a title to the sums which, under other clauses, Germany is to pay over annually to the Reparation Commission.

The advantages to the Allies of marketing such bonds are obvious. If they could get rid of the bonds they would have thrown the risk of Germany's default on to others; they would have interested a great number of people all over the world in Germany's not defaulting; and they would have secured the actual cash which the exigencies of their budgets demand.