The Rise Of Australasia

Chapter 607 - 465: Compensation to Repay the Loan, Britain and Australia Renew the Alliance

Although the Treaty of Versailles was successfully signed, the diplomatic actions of Australasia were just beginning.

Australasia could get as much as 1.7 billion pounds in compensation from Germany alone, but no one was clear about how much of this compensation would ultimately be received.

Currently, the government already has 2 billion US dollars in loans from the United States, so Arthur was not overly concerned about the 1.7 billion pounds in compensation which he was not sure when it would be received.

It would be better to put this compensation to use sooner rather than later, even if it meant taking a little loss in return for more useful things.

The first stop of Australasia’s diplomacy was negotiating with President Wilson of the United States.

The 2 billion US dollars in aid given to the Five Great Powers of the Allies by the United States was received in the last six months of the war, and even countries like Britain and France that had consumed a lot did not have time to use the 2 billion dollars in loans, let alone Australasia.

In such circumstances, returning the loans untouched would undoubtedly greatly reduce the government’s financial pressure.

Both Australasia and the United States had no intention of immediately repaying or clearing this loan.

The United States needed to control part of the Allies’ economy through loans and attract emerging countries like Australasia.

Australasia, on the other hand, needed this loan to develop the country, as it was more than four times the annual income of Australasia.

For Arthur, it would be great news if the German reparations could be used to repay American debt in advance.

In this situation, the negotiation between Prime Minister Kent and President Wilson of the United States proceeded as scheduled.

Prime Minister Kent got straight to the point, and after seeing President Wilson, immediately proposed Arthur’s request, which was to repay the 2.2 billion US dollars of interest-free loans from the United States with 500 million pounds of German reparations.

If the Americans agreed, 500 million pounds of the 1.7 billion pounds in German reparations would be transferred to the United States, but the debts between the United States and Australasia would also be offset.

At the current exchange rate, the 2.2 billion dollars were roughly equivalent to 440 million pounds, so it didn’t seem too bad for the Americans to use 500 million in German reparations to clear the debt.

After all, this was originally an interest-free loan, and by using the German reparations to repay it, the Americans would make an extra 60 million pounds in interest, creating a large sum of income.

However, the Americans were clearly not easy to deceive, and after hearing Prime Minister Kent’s request, President Wilson shook his head repeatedly and laughed, saying, "Prime Minister Kent, you are shifting the risk of the reparations to the United States.

I admit that the 500 million in reparations is tempting to us, but who can guarantee that the German government has the financial resources to repay these loans? The German government’s debt totals 20 billion pounds, which cannot be repaid in 80 years."

For the sake of joining World War I, the United States had prepared a 2 billion dollar, or 4 billion pound, interest-free loan for each of the Five Great Powers of the Allies.

This capital amounted to 20 billion pounds, causing some strain even on the unscathed American economy, even affecting the development of some industries and the economy.

President Wilson did not believe that Germany, severely affected by the war, could pay 20 billion pounds in reparations after the war, even if it took 80 years.

Upon closer inspection, it was uncertain whether even half of Australasia’s 500 million pounds in reparations could eventually be recovered, so why would the Americans be willing to exchange their 2 billion US dollars with it?

"Your concerns are completely unfounded, President Wilson. As you know, the French will certainly not give up their reparations, and neither will the British. With the guarantee of the British and French, the Germans will have to repay this compensation.

How about this, on behalf of His Majesty Arthur and the government, I assure you that the German reparations will be prioritized for you, ensuring that you receive the compensation as agreed," said Butler Kent with a smile.

Although the Americans were displeased with the attitudes of the British, French and the Four Great Powers of the Allies in dominating the peace talks, the proud Americans had to admit that the combined strength of Britain and France at this time was the strongest, and the Germans had no choice but to pay the reparations.

"That being said, Prime Minister Kent, the United States still has to bear high risks. If your country is willing to exchange with 650 million pounds of compensation, I am willing to promote this negotiation," said President Wilson after some consideration. His view was to increase the amount.

With the British and French as guarantees, the disgruntled Germans would still have to repay at least 80% of the compensation.

President Wilson estimated that if the 650 million pounds in reparations could be used to repay the debt, the United States would at least get more than 500 million pounds in final reparations, which would be a truly risk-free deal.

"That’s too much, Mr. Wilson. Using 650 million pounds of reparations to repay a debt of 440 million pounds is absurd. We can accept a maximum of 550 million pounds in exchange for the reparations, and that’s His Majesty Arthur’s bottom line," Prime Minister Kent pretended to be shocked and shook his head, firmly refusing.

In the negotiations of monarchial countries, the powerful monarch is the best excuse. President Wilson did not doubt Prime Minister Kent’s words since Arthur’s reputation and power in Australasia were rare among monarchies.