154 THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

at the beginning of it. And if she is to dischargethe capital sum in thirty years from 1936, i.e. inforty-eight years from the Armistice, she mustpay an additional £130,000,000 annually, making£780,000,000 in all. 1

It is, in my judgment, as certain as anything canbe, for reasons which I will elaborate in a moment,that Germany cannot pay anything approachingthis sum. Until the Treaty is altered, therefore,Germany has in effect engaged herself to hand overto the Allies the whole of her surplus production inperpetuity.

6. This is not less the case because the ReparationCommission has been given discretionary powers tovary the rate of interest, and to postpone and evento cancel the capital indebtedness. In the first place,some of these powers can only be exercised if theCommission or the Governments represented on itare unanimous} But also, which is perhaps moreimportant, it will be the duty of the ReparationCommission, until there has been a unanimous andfar-reaching change of the policy which the Treaty

1 On the assumption which no one supports and even the most optimisticfear to be unplausible, that Germany can pay the full charge for interestand sinking fund from the outset, the annual payment would amount to£480,000,000.

2 Under Para. 13 of Annex II. unanimity is required (i.) for any post-ponement beyond 1930 of instalments due between 1921 and 1926, and(ii.) for any postponement for more than three years of instalments dueafter 1926. Further, under Art. 234, the Commission may not cancel anypart of the indebtedness without the specific authority of all the Govern-ments represented on the Commission.