104 A REVISION OF THE TREATY chap.

eventually submitted to the arbitration of Mr. Boyden,the American member of the Reparation Commis-sion, who, like most arbitrators, took a middle courseand decided that 2-20 paper francs should be deemedequivalent to 1 gold mark. 1 He would probablyhave found it difficult to give a reason for this decision.As regards that part of the claim which was in respectof pensions, a forecast of the gold value of the franc,however impracticable, was relevant. But as regardsthat part which was in respect of material damage,no such adjustment was necessary ; 2 for the Frenchclaim had been drawn up on the basis of the currentcosts of reconstruction, the gold equivalent of whichneed not be expected to rise with an increase in thegold value of the franc, an improvement in theexchange being balanced sooner or later by a fall infranc prices. It might have been proper to makeallowance for any premium existing at the date of theassessment, on the internal purchasing power of thefranc over that of its external exchange-equivalent ingold. But in April 1921 the franc was not far fromits proper " purchasing power parity," and I calculatethat on this basis it would have been approximatelyaccurate to have equated the gold mark with 3 paperfrancs. The rate of 2-20 had the effect, therefore, of

1 For this rate to be justified the exchange value of the franc in NewYork must rise to about 11 cents.

2 M. Loucheur's statement to the French Chamber implied that this rateof conversion was applicable to material damage as well as to pensions, and Ihave assumed this in what follows; but precise official information is lacking.