For the assessment of the Reparation Commission it was necessary to convert this claim from paper francs into gold marks. The rate to be adopted for this purpose was the subject of acute controversy. On the basis of the actual rate of exchange prevailing at that date (April 1921) the gold mark was worth about 3.25 paper francs. The French representatives claimed that this depreciation was temporary and that a permanent settlement ought not to be based on it. They asked, therefore, for a rate of about frs. 1.50 or frs. 1.75 to the gold mark.[65] The question was eventually submitted to the arbitration of Mr. Boyden, the American member of the Reparation Commission, who, like most arbitrators, took a middle course and decided that 2.20 paper francs should be deemed equivalent to 1 gold mark.[66] He would probably have found it difficult to give a reason for this decision. As regards that part of the claim which was in respect of pensions, a forecast of the gold value of the franc, however impracticable, was relevant. But as regards that part which was in respect of material damage, no such adjustment was necessary[67]; for the French claim had been drawn up on the basis of the current costs of reconstruction, the gold equivalent of which need not be expected to rise with an increase in the gold value of the franc, an improvement in the exchange being balanced sooner or later by a fall in franc prices. It might have been proper to make allowance for any premium existing, at the date of the assessment, on the internal purchasing power of the franc over that of its external exchange–equivalent in gold. But in April 1921 the franc was not far from its proper “purchasing power parity,” and I calculate that on this basis it would have been approximately accurate to have equated the gold mark with 3 paper francs. The rate of 2.20 had the effect, therefore, of inflating the French claim against Germany very materially. At this rate the claim of 127 milliard paper francs for material damage was equivalent to 57.7 milliard gold marks, of which the chief items were as follows: ──────────────────────┬───────────────┬───────────── │Francs (paper),│Marks (Gold), │ millions. │ millions. ──────────────────────┼───────────────┼───────────── Industrial damages │ 38,882 │ 17,673 Damage to houses │ 36,892 │ 16,768 Furniture and fittings│ 25,119 │ 11,417 Unbuilt-on land │ 21,671 │ 9,850 State property │ 1,958 │ 890 Public works │ 2,583 │ 1,174 ├───────────────┼───────────── Total │ 127,105 │ 57,772 ──────────────────────┴───────────────┴─────────────