v REPARA TION 207

The credits to be deducted under (a), (&), (c), and(d) might be in excess of those allowed in the actualTreaty , according to a rough estimate, by a sumof as much as £2000 million, although the sum to beallowed under (d) can hardly be calculated.

If, therefore, we are to estimate the real value ofthe German offer of £5000 million on the basis laiddown by the Treaty , we must first of all deduct£2000 million claimed for offsets which the Treaty does not allow, and then halve the remainder in orderto obtain the present value of a deferred payment onwhich interest is not chargeable. This reduces theoffer to £1500 million, as compared with the £8000million which, according to my rough estimate, theTreaty demands of her.

This in itself was a very substantial offer—indeedit evoked widespread criticism in Germany —though,in view of the fact that it was conditional on theabandonment of the greater part of the rest of theTreaty , it could hardly be regarded as a serious one. 1But the German Delegation might have done betterif they had stated in less equivocal language how farthey felt able to go.

In the final reply of the Allies to this counter-proposal there is one important provision, whichI have not attended to hitherto, but which can be

1 For this reason it is not strictly comparable with my estimate ofGermany' s capacity in an earlier section of this chapter, which estimate ison the basis of Germany's^condition as it will be when the rest of the Treaty has come into effect.