EUPEN-MALMEDY AFFAIR.

The districts of Eupen and Malme´dy lie just south of Aachen on the Belgian border. Part of Prussia's* western territories for a century, they were transferred to Belgium by the Versailles Treaty.* Although a majority of the area's 60,000 people retained an allegiance to Germany, and while Versailles called for ‘‘popular consultation'' in the event of a change of sovereignty, a proposed plebiscite, to be conducted by the League of Nations, was never held in the districts (the inhabitants were given six months to register their preference for Germany on public rolls). Because of Belgium's fiscal problems after the war and Germany's wartime dissemination in Belgium of ‘‘occupation marks,'' the Belgians sought an accord with Germany that would redeem the wartime marks at an advantageous value. Several such accords were negotiated between 1919 and 1922; none was ever ratified. When Germany stabilized its currency in 1923, the Belgians again sought a bilateral settlement, this time intimating that a readjustment of Eupen- Malme´dy's status might result. Although the prospect for such an exchange matured in protracted negotiations, it was jeopardized by simultaneous discussions relative to the Locarno Treaties.* As one Locarno accord appeared to preclude any alteration of Western Europe's borders, the legality of the Belgian- German talks was placed in question. But the Germans and Belgians reasoned privately that Locarno's Rhineland Pact precluded only the forceful alteration of territorial possessions. Months of dickering, shouldered largely by the states' financial experts (Hjalmar Schacht* and Leon Delacroix), were nearing conclusion when in July 1926 Raymond Poincare´ became French Premier. Hostile to treaty revision, Poincare´ told the Belgians that France opposed any territorial changes without the unanimous consent of the League's Council; France then notified Britain that it would veto any change involving Eupen-Malme´dy. By September 1926 the proposed transfer of the districts was a dead issue.