6o

A REVISION OF THE TREATY

CHAP.

New York market. As the proposed German Bonds will carry 5 per cent interest and 1 per centsinking fund, it would be necessary to reduce theirprice to 57 before they would yield 10 per centincluding redemption. It would be very optimistic,therefore, to expect to market them at above halftheir par value. Even so, the world is not likelyto invest in them any large proportion of its currentsavings, so that the whole amount even of theA Bonds , specified below, could not be marketedat this price. Moreover, in so far as the serviceof the Bonds marketed is within the minimumexpectation of Germany 's capacity to pay (as itwould have to be), the financial effect on the Allywhich markets the Bonds is nearly the same as thoughthey were to borrow themselves at the rate in question.Except, therefore, in the case of those Allies whosecredit is inferior to Germany 's, the advantage com-pared with borrowing on their own credit would notbe very material. 1

The details relating to the Bonds are not likely,therefore, to be operative, and need not be taken veryseriously. They are really a relic of the pretences ofthe Peace Conference days. Briefly, the arrangementsare as follows:

1 It is not competent for a single Ally (e.g. Portugal) to claim its share ofthe Bonds and market them at the best price obtainable. Under the Treatyof Versailles, Part VIII. Annex II. 13 (6), questions relating to the marketingof these Bonds can only be settled by unanimous decision of the ReparationCommission.