whilst further instalments follow quickly on May 15,July 15, and August 15. Some time betweenFebruary and August 1922 Germany will succumbto an inevitable default. This is the maximum extentof our breathing space. 1
That is to say, in so far as she depends for payment(as in the long run she must do) on current income.If capital, non - recurrent resources become avail-able, the above conclusion will require modificationaccordingly. Germany still has an important capitalasset untouched—the property of her nationals nowsequestered in the hands of the Enemy-PropertyCustodian in the United States , of which the value israther more than 1 milliard gold marks. If thiswere to become available for Reparation, directly orindirectly, default could be delayed correspondingly. 2
1 I first published this prediction in August 1921. As this book goes topress, the German Government have notified the Reparation Commission(December 15, 1921) that, having failed in their attempt to secure a foreignloan, they cannot find, apart from deliveries in kind, more than 150 or 200million gold marks towards the instalments of January and February 1922.
1 The United States has the right to retain and liquidate all pro-perty, rights, and interests belonging to German nationals and lyingwithin the territories, colonies, and possessions of the United StateB onJanuary 10, 1920. The proceeds of such liquidation are at the disposalof the United States " in accordance with its laws and regulations," thatis to say, at the disposal of Congress within the limitations of theConstitution, and may be applied by them in any of the three followingways : (1) the assets in question may be returned to their original German owners; (2) they may be applied to the discharge of claims by UnitedStates nationals with regard to their property, rights, and interests inGerman territory, or debts owing to them by German nationals, or to thepayment of claims growing out of acts of the German Government after theUnited States entered the war, and also to the discharge of similar American claims in respect of those of Germany's Allies against whom the UnitedStates was at war ; (3) they may be turned over to the Reparation Commis-sion as a credit to Germany.