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THE ECONOMIC CONSEQUENCES OF THE PEACE
by
JOHN MAYNARD KEYNES, C.B. Fellow of King's College, Cambridge
New York Harcourt, Brace and Howe
1920
PREFACE
The writer of this book was temporarily attached to the British
Treasury during the war and was their official representative at the
Paris Peace Conference up to June 7, 1919; he also sat as deputy for
the Chancellor of the Exchequer on the Supreme Economic Council. He
resigned from these positions when it became evident that hope could
no longer be entertained of substantial modification in the draft
Terms of Peace. The grounds of his objection to the Treaty, or rather
to the whole policy of the Conference towards the economic problems of
Europe, will appear in the following chapters. They are entirely of a
public character, and are based on facts known to the whole world.
J.M. Keynes. King's College, Cambridge,
November, 1919.
CONTENTS
I. INTRODUCTORY II. EUROPE BEFORE THE WAR
III. THE CONFERENCE IV. THE TREATY
V. REPARATION VI. EUROPE AFTER THE TREATY
VII. REMEDIES
THE ECONOMIC CONSEQUENCES OF THE PEACE
CHAPTER I
INTRODUCTORY
The power to become habituated to his surroundings is a marked
characteristic of mankind. Very few of us realize with conviction the
intensely unusual, unstable, complicated, unreliable, temporary nature
of the economic organization by which Western Europe has lived for the
last half century. We assume some of the most peculiar and temporary of
our late advantages as natural, permanent, and to be depended on, and we
lay our plans accordingly. On this sandy and false foundation we scheme
for social improvement and dress our political platforms, pursue our
animosities and particular ambitions, and feel ourselves with enough
margin in hand to foster, not assuage, civil conflict in the European
family. Moved by insane delusion and reckless self-regard, the German
people overturned the foundations on which we all lived and built. But
the spokesmen of the French and British peoples have run the risk of
completing the ruin, which Germany began, by a Peace which, if it is
carried into effect, must impair yet further, when it might have
restored, the delicate, complicated organization, already shaken and
broken by war, through which alone the European peoples can employ
themselves and live.
In England the outward aspect of life does not yet teach us to feel or
realize in the least that an age is over. We are busy picking up the
threads of our life where we dropped them, with this difference only,
that many of us seem a good deal richer than we were before. Where we
spent millions before the war, we have now learnt that we can spend
hundreds of millions and apparently not suffer for it. Evidently we did
not exploit to the utmost the possibilities of our economic life. We
look, therefore, not only to a return to the comforts of 1914, but to an
immense broadening and intensification of them. All classes alike thus
build their plans, the rich to spend more and save less, the poor to
spend more and work less.
But perhaps it is only in England (and America) that it is possible to
be so unconscious. In continental Europe the earth heaves and no one but
is aware of the rumblings. There it is not just a matter of extravagance
or "labor troubles"; but of life and death, of starvation and existence,
and of the fearful convulsions of a dying civilization.
For one who spent in Paris the greater part of the six months which
succeeded the Armistice an occasional visit to London was a strange
experience. England still stands outside Europe. Europe's voiceless
tremors do not reach her. Europe is apart and England is not of her
flesh and body. But Europe is solid with herself. France, Germany,
Italy, Austria and Holland, Russia and Roumania and Poland, throb
together, and their structure and civilization are essentially one. They
flourished together, they have rocked together in a war, which we, in
spite of our enormous contributions and sacrifices (like though in a
less degree than America), economically stood outside, and they may fall
together. In this lies the destructive significance of the Peace of
Paris. If the European Civil War is to end with France and Italy abusing
their momentary victorious power to destroy Germany and Austria-Hungary
now prostrate, they invite their own destruction also, being so deeply
and inextricably intertwined with their victims by hidden psychic and
economic bonds. At any rate an Englishman who took part in the
Conference of Paris and was during those months a member of the Supreme
Economic Council of the Allied Powers, was bound to become, for him a
new experience, a European in his cares and outlook. There, at the nerve
center of the European system, his British preoccupations must largely
fall away and he must be haunted by other and more dreadful specters.
Paris was a nightmare, and every one there was morbid. A sense of
impending catastrophe overhung the frivolous scene; the futility and
smallness of man before the great events confronting him; the mingled
significance and unreality of the decisions; levity, blindness,
insolence, confused cries from without,--all the elements of ancient
tragedy were there. Seated indeed amid the theatrical trappings of the
French Saloons of State, one could wonder if the extraordinary visages
of Wilson and of Clemenceau, with their fixed hue and unchanging
characterization, were really faces at all and not the tragi-comic masks
of some strange drama or puppet-show.
The proceedings of Paris all had this air of extraordinary importance
and unimportance at the same time. The decisions seemed charged with
consequences to the future of human society; yet the air whispered that
the word was not flesh, that it was futile, insignificant, of no effect,
dissociated from events; and one felt most strongly the impression,
described by Tolstoy in _War and Peace_ or by Hardy in _The Dynasts_, of
events marching on to their fated conclusion uninfluenced and unaffected
by the cerebrations of Statesmen in Council:
_Spirit of the Years_
Observe that all wide sight and self-command Deserts these throngs now driven to demonry
By the Immanent Unrecking. Nought remains But vindictiveness here amid the strong,
And there amid the weak an impotent rage.
_Spirit of the Pities_
Why prompts the Will so senseless-shaped a doing?
_Spirit of the Years_
I have told thee that It works unwittingly, As one possessed not judging.
In Paris, where those connected with the Supreme Economic Council,
received almost hourly the reports of the misery, disorder, and decaying
organization of all Central and Eastern Europe, allied and enemy alike,
and learnt from the lips of the financial representatives of Germany and
Austria unanswerable evidence, of the terrible exhaustion of their
countries, an occasional visit to the hot, dry room in the President's
house, where the Four fulfilled their destinies in empty and arid
intrigue, only added to the sense of nightmare. Yet there in Paris the
problems of Europe were terrible and clamant, and an occasional return
to the vast unconcern of London a little disconcerting. For in London
these questions were very far away, and our own lesser problems alone
troubling. London believed that Paris was making a great confusion of
its business, but remained uninterested. In this spirit the British
people received the Treaty without reading it. But it is under the
influence of Paris, not London, that this book has been written by one
who, though an Englishman, feels himself a European also, and, because
of too vivid recent experience, cannot disinterest himself from the
further unfolding of the great historic drama of these days which will
destroy great institutions, but may also create a new world.
CHAPTER II
EUROPE BEFORE THE WAR
Before 1870 different parts of the small continent of Europe had
specialized in their own products; but, taken as a whole, it was
substantially self-subsistent. And its population was adjusted to this
state of affairs.
After 1870 there was developed on a large scale an unprecedented
situation, and the economic condition of Europe became during the next
fifty years unstable and peculiar. The pressure of population on food,
which had already been balanced by the accessibility of supplies from
America, became for the first time in recorded history definitely
reversed. As numbers increased, food was actually easier to secure.
Larger proportional returns from an increasing scale of production
became true of agriculture as well as industry. With the growth of the
European population there were more emigrants on the one hand to till
the soil of the new countries, and, on the other, more workmen were
available in Europe to prepare the industrial products and capital goods
which were to maintain the emigrant populations in their new homes, and
to build the railways and ships which were to make accessible to Europe
food and raw products from distant sources. Up to about 1900 a unit of
labor applied to industry yielded year by year a purchasing power over
an increasing quantity of food. It is possible that about the year 1900
this process began to be reversed, and a diminishing yield of Nature to
man's effort was beginning to reassert itself. But the tendency of
cereals to rise in real cost was balanced by other improvements;
and--one of many novelties--the resources of tropical Africa then for
the first time came into large employ, and a great traffic in oil-seeds
began to bring to the table of Europe in a new and cheaper form one of
the essential foodstuffs of mankind. In this economic Eldorado, in this
economic Utopia, as the earlier economists would have deemed it, most of
us were brought up.
That happy age lost sight of a view of the world which filled with
deep-seated melancholy the founders of our Political Economy. Before the
eighteenth century mankind entertained no false hopes. To lay the
illusions which grew popular at that age's latter end, Malthus disclosed
a Devil. For half a century all serious economical writings held that
Devil in clear prospect. For the next half century he was chained up and
out of sight. Now perhaps we have loosed him again.
What an extraordinary episode in the economic progress of man that age
was which came to an end in August, 1914! The greater part of the
population, it is true, worked hard and lived at a low standard of
comfort, yet were, to all appearances, reasonably contented with this
lot. But escape was possible, for any man of capacity or character at
all exceeding the average, into the middle and upper classes, for whom
life offered, at a low cost and with the least trouble, conveniences,
comforts, and amenities beyond the compass of the richest and most
powerful monarchs of other ages. The inhabitant of London could order by
telephone, sipping his morning tea in bed, the various products of the
whole earth, in such quantity as he might see fit, and reasonably expect
their early delivery upon his doorstep; he could at the same moment and
by the same means adventure his wealth in the natural resources and new
enterprises of any quarter of the world, and share, without exertion or
even trouble, in their prospective fruits and advantages; or be could
decide to couple the security of his fortunes with the good faith of the
townspeople of any substantial municipality in any continent that fancy
or information might recommend. He could secure forthwith, if he wished
it, cheap and comfortable means of transit to any country or climate
without passport or other formality, could despatch his servant to the
neighboring office of a bank for such supply of the precious metals as
might seem convenient, and could then proceed abroad to foreign
quarters, without knowledge of their religion, language, or customs,
bearing coined wealth upon his person, and would consider himself
greatly aggrieved and much surprised at the least interference. But,
most important of all, he regarded this state of affairs as normal,
certain, and permanent, except in the direction of further improvement,
and any deviation from it as aberrant, scandalous, and avoidable. The
projects and politics of militarism and imperialism, of racial and
cultural rivalries, of monopolies, restrictions, and exclusion, which
were to play the serpent to this paradise, were little more than the
amusements of his daily newspaper, and appeared to exercise almost no
influence at all on the ordinary course of social and economic life, the
internationalization of which was nearly complete in practice.
It will assist us to appreciate the character and consequences of the
Peace which we have imposed on our enemies, if I elucidate a little
further some of the chief unstable elements already present when war
broke out, in the economic life of Europe.
I. _Population_
In 1870 Germany had a population of about 40,000,000. By 1892 this
figure had risen to 50,000,000, and by June 30, 1914, to about
68,000,000. In the years immediately preceding the war the annual
increase was about 850,000, of whom an insignificant proportion
emigrated.[1] This great increase was only rendered possible by a
far-reaching transformation of the economic structure of the country.
From being agricultural and mainly self-supporting, Germany transformed
herself into a vast and complicated industrial machine, dependent for
its working on the equipoise of many factors outside Germany as well as
within. Only by operating this machine, continuously and at full blast,
could she find occupation at home for her increasing population and the
means of purchasing their subsistence from abroad. The German machine
was like a top which to maintain its equilibrium must spin ever faster
and faster.
In the Austro-Hungarian Empire, which grew from about 40,000,000 in 1890
to at least 50,000,000 at the outbreak of war, the same tendency was
present in a less degree, the annual excess of births over deaths being
about half a million, out of which, however, there was an annual
emigration of some quarter of a million persons.
To understand the present situation, we must apprehend with vividness
what an extraordinary center of population the development of the
Germanic system had enabled Central Europe to become. Before the war the
population of Germany and Austria-Hungary together not only
substantially exceeded that of the United States, but was about equal to
that of the whole of North America. In these numbers, situated within a
compact territory, lay the military strength of the Central Powers. But
these same numbers--for even the war has not appreciably diminished
them[2]--if deprived of the means of life, remain a hardly less danger
to European order.
European Russia increased her population in a degree even greater than
Germany--from less than 100,000,000 in 1890 to about 150,000,000 at the
outbreak of war;[3] and in the year immediately preceding 1914 the
excess of births over deaths in Russia as a whole was at the prodigious
rate of two millions per annum. This inordinate growth in the population
of Russia, which has not been widely noticed in England, has been
nevertheless one of the most significant facts of recent years.
The great events of history are often due to secular changes in the
growth of population and other fundamental economic causes, which,
escaping by their gradual character the notice of contemporary
observers, are attributed to the follies of statesmen or the fanaticism
of atheists. Thus the extraordinary occurrences of the past two years in
Russia, that vast upheaval of Society, which has overturned what seemed
most stable--religion, the basis of property, the ownership of land, as
well as forms of government and the hierarchy of classes--may owe more
to the deep influences of expanding numbers than to Lenin or to
Nicholas; and the disruptive powers of excessive national fecundity may
have played a greater part in bursting the bonds of convention than
either the power of ideas or the errors of autocracy.
II. _Organization_
The delicate organization by which these peoples lived depended partly
on factors internal to the system.
The interference of frontiers and of tariffs was reduced to a minimum,
and not far short of three hundred millions of people lived within the
three Empires of Russia, Germany, and Austria-Hungary. The various
currencies, which were all maintained on a stable basis in relation to
gold and to one another, facilitated the easy flow of capital and of
trade to an extent the full value of which we only realize now, when we
are deprived of its advantages. Over this great area there was an almost
absolute security of property and of person.
These factors of order, security, and uniformity, which Europe had never
before enjoyed over so wide and populous a territory or for so long a
period, prepared the way for the organization of that vast mechanism of
transport, coal distribution, and foreign trade which made possible an
industrial order of life in the dense urban centers of new population.
This is too well known to require detailed substantiation with figures.
But it may be illustrated by the figures for coal, which has been the
key to the industrial growth of Central Europe hardly less than of
England; the output of German coal grew from 30,000,000 tons in 1871 to
70,000,000 tons in 1890, 110,000,000 tons in 1900, and 190,000,000 tons
in 1913.
Round Germany as a central support the rest of the European economic
system grouped itself, and on the prosperity and enterprise of Germany
the prosperity of the rest of the Continent mainly depended. The
increasing pace of Germany gave her neighbors an outlet for their
products, in exchange for which the enterprise of the German merchant
supplied them with their chief requirements at a low price.
The statistics of the economic interdependence of Germany and her
neighbors are overwhelming. Germany was the best customer of Russia,
Norway, Holland, Belgium, Switzerland, Italy, and Austria-Hungary; she
was the second best customer of Great Britain, Sweden, and Denmark; and
the third best customer of France. She was the largest source of supply
to Russia, Norway, Sweden, Denmark, Holland, Switzerland, Italy,
Austria-Hungary, Roumania, and Bulgaria; and the second largest source
of supply to Great Britain, Belgium, and France.
In our own case we sent more exports to Germany than to any other
country in the world except India, and we bought more from her than from
any other country in the world except the United States.
There was no European country except those west of Germany which did not
do more than a quarter of their total trade with her; and in the case of
Russia, Austria-Hungary, and Holland the proportion was far greater.
Germany not only furnished these countries with trade, but, in the case
of some of them, supplied a great part of the capital needed for their
own development. Of Germany's pre-war foreign investments, amounting in
all to about $6,250,000,000, not far short of $2,500,000,000 was
invested in Russia, Austria-Hungary, Bulgaria, Roumania, and Turkey.[4]
And by the system of "peaceful penetration" she gave these countries not
only capital, but, what they needed hardly less, organization. The whole
of Europe east of the Rhine thus fell into the German industrial orbit,
and its economic life was adjusted accordingly.
But these internal factors would not have been sufficient to enable the
population to support itself without the co-operation of external
factors also and of certain general dispositions common to the whole of
Europe. Many of the circumstances already treated were true of Europe as
a whole, and were not peculiar to the Central Empires. But all of what
follows was common to the whole European system.
III. _The Psychology of Society_
Europe was so organized socially and economically as to secure the
maximum accumulation of capital. While there was some continuous
improvement in the daily conditions of life of the mass of the
population, Society was so framed as to throw a great part of the
increased income into the control of the class least likely to consume
it. The new rich of the nineteenth century were not brought up to large
expenditures, and preferred the power which investment gave them to the
pleasures of immediate consumption. In fact, it was precisely the
_inequality_ of the distribution of wealth which made possible those
vast accumulations of fixed wealth and of capital improvements which
distinguished that age from all others. Herein lay, in fact, the main
justification of the Capitalist System. If the rich had spent their new
wealth on their own enjoyments, the world would long ago have found such
a régime intolerable. But like bees they saved and accumulated, not less
to the advantage of the whole community because they themselves held
narrower ends in prospect.
The immense accumulations of fixed capital which, to the great benefit
of mankind, were built up during the half century before the war, could
never have come about in a Society where wealth was divided equitably.
The railways of the world, which that age built as a monument to
posterity, were, not less than the Pyramids of Egypt, the work of labor
which was not free to consume in immediate enjoyment the full equivalent
of its efforts.
Thus this remarkable system depended for its growth on a double bluff or
deception. On the one hand the laboring classes accepted from ignorance
or powerlessness, or were compelled, persuaded, or cajoled by custom,
convention, authority, and the well-established order of Society into
accepting, a situation in which they could call their own very little of
the cake that they and Nature and the capitalists were co-operating to
produce. And on the other hand the capitalist classes were allowed to
call the best part of the cake theirs and were theoretically free to
consume it, on the tacit underlying condition that they consumed very
little of it in practice. The duty of "saving" became nine-tenths of
virtue and the growth of the cake the object of true religion. There
grew round the non-consumption of the cake all those instincts of
puritanism which in other ages has withdrawn itself from the world and
has neglected the arts of production as well as those of enjoyment. And
so the cake increased; but to what end was not clearly contemplated.
Individuals would be exhorted not so much to abstain as to defer, and to
cultivate the pleasures of security and anticipation. Saving was for old
age or for your children; but this was only in theory,--the virtue of
the cake was that it was never to be consumed, neither by you nor by
your children after you.
In writing thus I do not necessarily disparage the practices of that
generation. In the unconscious recesses of its being Society knew what
it was about. The cake was really very small in proportion to the
appetites of consumption, and no one, if it were shared all round, would
be much the better off by the cutting of it. Society was working not
for the small pleasures of to-day but for the future security and
improvement of the race,--in fact for "progress." If only the cake were
not cut but was allowed to grow in the geometrical proportion predicted
by Malthus of population, but not less true of compound interest,
perhaps a day might come when there would at last be enough to go round,
and when posterity could enter into the enjoyment of _our_ labors. In
that day overwork, overcrowding, and underfeeding would have come to an
end, and men, secure of the comforts and necessities of the body, could
proceed to the nobler exercises of their faculties. One geometrical
ratio might cancel another, and the nineteenth century was able to
forget the fertility of the species in a contemplation of the dizzy
virtues of compound interest.
There were two pitfalls in this prospect: lest, population till
outstripping accumulation, our self-denials promote not happiness but
numbers; and lest the cake be after all consumed, prematurely, in war,
the consumer of all such hopes.
But these thoughts lead too far from my present purpose. I seek only to
point out that the principle of accumulation based on inequality was a
vital part of the pre-war order of Society and of progress as we then
understood it, and to emphasize that this principle depended on unstable
psychological conditions, which it may be impossible to recreate. It
was not natural for a population, of whom so few enjoyed the comforts of
life, to accumulate so hugely. The war has disclosed the possibility of
consumption to all and the vanity of abstinence to many. Thus the bluff
is discovered; the laboring classes may be no longer willing to forego
so largely, and the capitalist classes, no longer confident of the
future, may seek to enjoy more fully their liberties of consumption so
long as they last, and thus precipitate the hour of their confiscation.
IV. _The Relation of the Old World to the New_
The accumulative habits of Europe before the war were the necessary
condition of the greatest of the external factors which maintained the
European equipoise.
Of the surplus capital goods accumulated by Europe a substantial part
was exported abroad, where its investment made possible the development
of the new resources of food, materials, and transport, and at the same
time enabled the Old World to stake out a claim in the natural wealth
and *** potentialities of the New. This last factor came to be of the
vastest importance. The Old World employed with an immense prudence the
annual tribute it was thus entitled to draw. The benefit of cheap and
abundant supplies resulting from the new developments which its surplus
capital had made possible, was, it is true, enjoyed and not postponed.
But the greater part of the money interest accruing on these foreign
investments was reinvested and allowed to accumulate, as a reserve (it
was then hoped) against the less happy day when the industrial labor of
Europe could no longer purchase on such easy terms the produce of other
continents, and when the due balance would be threatened between its
historical civilizations and the multiplying races of other climates and
environments. Thus the whole of the European races tended to benefit
alike from the development of new resources whether they pursued their
culture at home or adventured it abroad.
Even before the war, however, the equilibrium thus established between
old civilizations and new resources was being threatened. The prosperity
of Europe was based on the facts that, owing to the large exportable
surplus of foodstuffs in America, she was able to purchase food at a
cheap rate measured in terms of the labor required to produce her own
exports, and that, as a result of her previous investments of capital,
she was entitled to a substantial amount annually without any payment in
return at all. The second of these factors then seemed out of danger,
but, as a result of the growth of population overseas, chiefly in the
United States, the first was not so secure.
When first the *** soils of America came into bearing, the
proportions of the population of those continents themselves, and
consequently of their own local requirements, to those of Europe were
very small. As lately as 1890 Europe had a population three times that
of North and South America added together. But by 1914 the domestic
requirements of the United States for wheat were approaching their
production, and the date was evidently near when there would be an
exportable surplus only in years of exceptionally favorable harvest.
Indeed, the present domestic requirements of the United States are
estimated at more than ninety per cent of the average yield of the five
years 1909-1913.[5] At that time, however, the tendency towards
stringency was showing itself, not so much in a lack of abundance as in
a steady increase of real cost. That is to say, taking the world as a
whole, there was no deficiency of wheat, but in order to call forth an
adequate supply it was necessary to offer a higher real price. The most
favorable factor in the situation was to be found in the extent to which
Central and Western Europe was being fed from the exportable surplus of
Russia and Roumania.
In short, Europe's claim on the resources of the New World was becoming
precarious; the law of diminishing returns was at last reasserting
itself and was making it necessary year by year for Europe to offer a
greater quantity of other commodities to obtain the same amount of
bread; and Europe, therefore, could by no means afford the
disorganization of any of her principal sources of supply.
Much else might be said in an attempt to portray the economic
peculiarities of the Europe of 1914. I have selected for emphasis the
three or four greatest factors of instability,--the instability of an
excessive population dependent for its livelihood on a complicated and
artificial organization, the psychological instability of the laboring
and capitalist classes, and the instability of Europe's claim, coupled
with the completeness of her dependence, on the food supplies of the New
World.
The war had so shaken this system as to endanger the life of Europe
altogether. A great part of the Continent was sick and dying; its
population was greatly in excess of the numbers for which a livelihood
was available; its organization was destroyed, its transport system
ruptured, and its food supplies terribly impaired.
It was the task of the Peace Conference to honor engagements and to
satisfy justice; but not less to re-establish life and to heal wounds.
These tasks were dictated as much by prudence as by the magnanimity
which the wisdom of antiquity approved in victors. We will examine in
the following chapters the actual character of the Peace.
FOOTNOTES:
[1] In 1913 there were 25,843 emigrants from Germany, of whom
19,124 went to the United States.
[2] The net decrease of the German population at the end of
1918 by decline of births and excess of deaths as compared with the
have been converted from pounds sterling at the rate of $5 to £1.
[5] Even since 1914 the population of the United States has
increased by seven or eight millions. As their annual consumption of
wheat per head is not less than 6 bushels, the pre-war scale of
production in the United States would only show a substantial surplus
over present domestic requirements in about one year out of five. We
have been saved for the moment by the great harvests of 1918 and 1919,
which have been called forth by Mr. Hoover's guaranteed price. But the
United States can hardly be expected to continue indefinitely to raise
by a substantial figure the cost of living in its own country, in order
THE CONFERENCE
In Chapters IV. and V. I shall study in some detail the economic and
financial provisions of the Treaty of Peace with Germany. But it will be
easier to appreciate the true origin of many of these terms if we
examine here some of the personal factors which influenced their
preparation. In attempting this task, I touch, inevitably, questions of
motive, on which spectators are liable to error and are not entitled to
take on themselves the responsibilities of final judgment. Yet, if I
seem in this chapter to assume sometimes the liberties which are
habitual to historians, but which, in spite of the greater knowledge
with which we speak, we generally hesitate to assume towards
contemporaries, let the reader excuse me when he remembers how greatly,
if it is to understand its destiny, the world needs light, even if it is
partial and uncertain, on the complex struggle of human will and
purpose, not yet finished, which, concentrated in the persons of four
individuals in a manner never paralleled, made them, in the first months
of 1919, the microcosm of mankind.
In those parts of the Treaty with which I am here concerned, the lead
was taken by the French, in the sense that it was generally they who
made in the first instance the most definite and the most extreme
proposals. This was partly a matter of tactics. When the final result is
expected to be a compromise, it is often prudent to start from an
extreme position; and the French anticipated at the outset--like most
other persons--a double process of compromise, first of all to suit the
ideas of their allies and associates, and secondly in the course of the
Peace Conference proper with the Germans themselves. These tactics were
justified by the event. Clemenceau gained a reputation for moderation
with his colleagues in Council by sometimes throwing over with an air of
intellectual impartiality the more extreme proposals of his ministers;
and much went through where the American and British critics were
naturally a little ignorant of the true point at issue, or where too
persistent criticism by France's allies put them in a position which
they felt as invidious, of always appearing to take the enemy's part and
to argue his case. Where, therefore, British and American interests were
not seriously involved their criticism grew slack, and some provisions
were thus passed which the French themselves did not take very
seriously, and for which the eleventh-hour decision to allow no
discussion with the Germans removed the opportunity of remedy.
But, apart from tactics, the French had a policy. Although Clemenceau
might curtly abandon the claims of a Klotz or a Loucheur, or close his
eyes with an air of fatigue when French interests were no longer
involved in the discussion, he knew which points were vital, and these
he abated little. In so far as the main economic lines of the Treaty
represent an intellectual idea, it is the idea of France and of
Clemenceau.
Clemenceau was by far the most eminent member of the Council of Four,
and he had taken the measure of his colleagues. He alone both had an
idea and had considered it in all its consequences. His age, his
character, his wit, and his appearance joined to give him objectivity
and a, defined outline in an environment of confusion. One could not
despise Clemenceau or dislike him, but only take a different view as to
the nature of civilized man, or indulge, at least, a different hope.
The figure and bearing of Clemenceau are universally familiar. At the
Council of Four he wore a square-tailed coat of very good, thick black
broadcloth, and on his hands, which were never uncovered, gray suede
gloves; his boots were of thick black leather, very good, but of a
country style, and sometimes fastened in front, curiously, by a buckle
instead of laces. His seat in the room in the President's house, where
the regular meetings of the Council of Four were held (as distinguished
from their private and unattended conferences in a smaller chamber
below), was on a square brocaded chair in the middle of the semicircle
facing the fireplace, with Signor Orlando on his left, the President
next by the fireplace, and the Prime Minister opposite on the other side
of the fireplace on his right. He carried no papers and no portfolio,
and was unattended by any personal secretary, though several French
ministers and officials appropriate to the particular matter in hand
would be present round him. His walk, his hand, and his voice were not
lacking in vigor, but he bore nevertheless, especially after the attempt
upon him, the aspect of a very old man conserving his strength for
important occasions. He spoke seldom, leaving the initial statement of
the French case to his ministers or officials; he closed his eyes often
and sat back in his chair with an impassive face of parchment, his gray
gloved hands clasped in front of him. A short sentence, decisive or
cynical, was generally sufficient, a question, an unqualified
abandonment of his ministers, whose face would not be saved, or a
display of obstinacy reinforced by a few words in a piquantly delivered
English.[6] But speech and passion were not lacking when they were
wanted, and the sudden outburst of words, often followed by a fit of
deep coughing from the chest, produced their impression rather by force
and surprise than by persuasion.
Not infrequently Mr. Lloyd George, after delivering a speech in English,
would, during the period of its interpretation into French, cross the
hearthrug to the President to reinforce his case by some _ad hominem_
argument in private conversation, or to sound the ground for a
compromise,--and this would sometimes be the signal for a general
upheaval and disorder. The President's advisers would press round him, a
moment later the British experts would dribble across to learn the
result or see that all was well, and next the French would be there, a
little suspicious lest the others were arranging something behind them,
until all the room were on their feet and conversation was general in
both languages. My last and most vivid impression is of such a
scene--the President and the Prime Minister as the center of a surging
mob and a babel of sound, a welter of eager, impromptu compromises and
counter-compromises, all sound and fury signifying nothing, on what was
an unreal question anyhow, the great issues of the morning's meeting
forgotten and neglected; and Clemenceau silent and aloof on the
outskirts--for nothing which touched the security of France was
forward--throned, in his gray gloves, on the brocade chair, dry in soul
and empty of hope, very old and tired, but surveying the scene with a
cynical and almost impish air; and when at last silence was restored and
the company had returned to their places, it was to discover that he had
disappeared.
He felt about France what Pericles felt of Athens--unique value in her,
nothing else mattering; but his theory of politics was Bismarck's. He
had one illusion--France; and one disillusion--mankind, including
Frenchmen, and his colleagues not least. His principles for the peace
can be expressed simply. In the first place, he was a foremost believer
in the view of German psychology that the German understands and can
understand nothing but intimidation, that he is without generosity or
remorse in negotiation, that there is no advantage be will not take of
you, and no extent to which he will not demean himself for profit, that
he is without honor, pride, or mercy. Therefore you must never negotiate
with a German or conciliate him; you must dictate to him. On no other
terms will he respect you, or will you prevent him from cheating you.
But it is doubtful how far he thought these characteristics peculiar to
Germany, or whether his candid view of some other nations was
fundamentally different. His philosophy had, therefore, no place for
"sentimentality" in international relations. Nations are real things, of
whom you love one and feel for the rest indifference--or hatred. The
glory of the nation you love is a desirable end,--but generally to be
obtained at your neighbor's expense. The politics of power are
inevitable, and there is nothing very new to learn about this war or the
end it was fought for; England had destroyed, as in each preceding
century, a trade rival; a mighty chapter had been closed in the secular
struggle between the glories of Germany and of France. Prudence required
some measure of lip service to the "ideals" of foolish Americans and
hypocritical Englishmen; but it would be stupid to believe that there is
much room in the world, as it really is, for such affairs as the League
of Nations, or any sense in the principle of self-determination except
as an ingenious formula for rearranging the balance of power in one's
own interests.
These, however, are generalities. In tracing the practical details of
the Peace which he thought necessary for the power and the security of
France, we must go back to the historical causes which had operated
during his lifetime. Before the Franco-German war the populations of
France and Germany were approximately equal; but the coal and iron and
shipping of Germany were in their infancy, and the wealth of France was
greatly superior. Even after the loss of Alsace-Lorraine there was no
great discrepancy between the real resources of the two countries. But
in the intervening period the relative position had changed completely.
By 1914 the population of Germany was nearly seventy per cent in excess
of that of France; she had become one of the first manufacturing and
trading nations of the world; her technical skill and her means for the
production of future wealth were unequaled. France on the other hand had
a stationary or declining population, and, relatively to others, had
fallen seriously behind in wealth and in the power to produce it.
In spite, therefore, of France's victorious issue from the present
struggle (with the aid, this time, of England and America), her future
position remained precarious in the eyes of one who took the view that
European civil war is to be regarded as a normal, or at least a
recurrent, state of affairs for the future, and that the sort of
conflicts between organized great powers which have occupied the past
hundred years will also engage the next. According to this vision of the
future, European history is to be a perpetual prize-fight, of which
France has won this round, but of which this round is certainly not the
last. From the belief that essentially the old order does not change,
being based on human nature which is always the same, and from a
consequent skepticism of all that class of doctrine which the League of
Nations stands for, the policy of France and of Clemenceau followed
logically. For a Peace of magnanimity or of fair and equal treatment,
based on such "ideology" as the Fourteen Points of the President, could
only have the effect of shortening the interval of Germany's recovery
and hastening the day when she will once again hurl at France her
greater numbers and her superior resources and technical skill. Hence
the necessity of "guarantees"; and each guarantee that was taken, by
increasing irritation and thus the probability of a subsequent
_Revanche_ by Germany, made necessary yet further provisions to crush.
Thus, as soon as this view of the world is adopted and the other
discarded, a demand for a Carthaginian Peace is inevitable, to the full
extent of the momentary power to impose it. For Clemenceau made no
pretense of considering himself bound by the Fourteen Points and left
chiefly to others such concoctions as were necessary from time to time
to save the scruples or the face of the President.
So far as possible, therefore, it was the policy of France to set the
clock back and to undo what, since 1870, the progress of Germany had
accomplished. By loss of territory and other measures her population was
to be curtailed; but chiefly the economic system, upon which she
depended for her new strength, the vast fabric built upon iron, coal,
and transport must be destroyed. If France could seize, even in part,
what Germany was compelled to drop, the inequality of strength between
the two rivals for European hegemony might be remedied for many
generations.
Hence sprang those cumulative provisions for the destruction of highly
organized economic life which we shall examine in the next chapter.
This is the policy of an old man, whose most vivid impressions and most
lively imagination are of the past and not of the future. He sees the
issue in terms, of France and Germany not of humanity and of European
civilization struggling forwards to a new order. The war has bitten into
his consciousness somewhat differently from ours, and he neither expects
nor hopes that we are at the threshold of a new age.
It happens, however, that it is not only an ideal question that is at
issue. My purpose in this book is to show that the Carthaginian Peace is
not _practically_ right or possible. Although the school of thought from
which it springs is aware of the economic factor, it overlooks,
nevertheless, the deeper economic tendencies which are to govern the
future. The clock cannot be set back. You cannot restore Central Europe
to 1870 without setting up such strains in the European structure and
letting loose such human and spiritual forces as, pushing beyond
frontiers and races, will overwhelm not only you and your "guarantees,"
but your institutions, and the existing order of your Society.
By what legerdemain was this policy substituted for the Fourteen Points,
and how did the President come to accept it? The answer to these
questions is difficult and depends on elements of character and
psychology and on the subtle influence of surroundings, which are hard
to detect and harder still to describe. But, if ever the action of a
single individual matters, the collapse of The President has been one of
the decisive moral events of history; and I must make an attempt to
explain it. What a place the President held in the hearts and hopes of
the world when he sailed to us in the _George Washington!_ What a great
man came to Europe in those early days of our victory!
In November, 1918, the armies of Foch and the words of Wilson had
brought us sudden escape from what was swallowing up all we cared for.
The conditions seemed favorable beyond any expectation. The victory was
so complete that fear need play no part in the settlement. The enemy
had laid down his arms in reliance on a solemn compact as to the general
character of the Peace, the terms of which seemed to assure a settlement
of justice and magnanimity and a fair hope for a restoration of the
broken current of life. To make assurance certain the President was
coming himself to set the seal on his work.
When President Wilson left Washington he enjoyed a prestige and a moral
influence throughout the world unequaled in history. His bold and
measured words carried to the peoples of Europe above and beyond the
voices of their own politicians. The enemy peoples trusted him to carry
out the compact he had made with them; and the Allied peoples
acknowledged him not as a victor only but almost as a prophet. In
addition to this moral influence the realities of power were in his
hands. The American armies were at the height of their numbers,
discipline, and equipment. Europe was in complete dependence on the food
supplies of the United States; and financially she was even more
absolutely at their mercy. Europe not only already owed the United
States more than she could pay; but only a large measure of further
assistance could save her from starvation and bankruptcy. Never had a
philosopher held such weapons wherewith to bind the princes of this
world. How the crowds of the European capitals pressed about the
carriage of the President! With what curiosity, anxiety, and hope we
sought a glimpse of the features and bearing of the man of destiny who,
coming from the West, was to bring healing to the wounds of the ancient
parent of his civilization and lay for us the foundations of the future.
The disillusion was so complete, that some of those who had trusted most
hardly dared speak of it. Could it be true? they asked of those who
returned from Paris. Was the Treaty really as bad as it seemed? What had
happened to the President? What weakness or what misfortune had led to
so extraordinary, so unlooked-for a betrayal?
Yet the causes were very ordinary and human. The President was not a
hero or a prophet; he was not even a philosopher; but a generously
intentioned man, with many of the weaknesses of other human beings, and
lacking that dominating intellectual equipment which would have been
necessary to cope with the subtle and dangerous spellbinders whom a
tremendous clash of forces and personalities had brought to the top as
triumphant masters in the swift game of give and take, face to face in
Council,--a game of which he had no experience at all.
We had indeed quite a wrong idea of the President. We knew him to be
solitary and aloof, and believed him very strong-willed and obstinate.
We did not figure him as a man of detail, but the clearness with which
he had taken hold of certain main ideas would, we thought, in
combination with his tenacity, enable him to sweep through cobwebs.
Besides these qualities he would have the objectivity, the cultivation,
and the wide knowledge of the student. The great distinction of language
which had marked his famous Notes seemed to indicate a man of lofty and
powerful imagination. His portraits indicated a fine presence and a
commanding delivery. With all this he had attained and held with
increasing authority the first position in a country where the arts of
the politician are not neglected. All of which, without expecting the
impossible, seemed a fine combination of qualities for the matter in
hand.
The first impression of Mr. Wilson at close quarters was to impair some
but not all of these illusions. His head and features were finely cut
and exactly like his photographs, and the muscles of his neck and the
carriage of his head were distinguished. But, like Odysseus, the
President looked wiser when he was seated; and his hands, though capable
and fairly strong, were wanting in sensitiveness and finesse. The first
glance at the President suggested not only that, whatever else he might
be, his temperament was not primarily that of the student or the
scholar, but that he had not much even of that culture of the world
which marks M. Clemenceau and Mr. Balfour as exquisitely cultivated
gentlemen of their class and generation. But more serious than this, he
was not only insensitive to his surroundings in the external sense, he
was not sensitive to his environment at all. What chance could such a
man have against Mr. Lloyd George's unerring, almost medium-like,
sensibility to every one immediately round him? To see the British Prime
Minister watching the company, with six or seven senses not available to
ordinary men, judging character, motive, and subconscious impulse,
perceiving what each was thinking and even what each was going to say
next, and compounding with telepathic instinct the argument or appeal
best suited to the vanity, weakness, or self-interest of his immediate
auditor, was to realize that the poor President would be playing blind
man's buff in that party. Never could a man have stepped into the parlor
a more perfect and predestined victim to the finished accomplishments of
the Prime Minister. The Old World was tough in wickedness anyhow; the
Old World's heart of stone might blunt the sharpest blade of the bravest
knight-errant. But this blind and deaf Don Quixote was entering a cavern
where the swift and glittering blade was in the hands of the adversary.
But if the President was not the philosopher-king, what was he? After
all he was a man who had spent much of his life at a University. He was
by no means a business man or an ordinary party politician, but a man of
force, personality, and importance. What, then, was his temperament?
The clue once found was illuminating. The President was like a
Nonconformist minister, perhaps a Presbyterian. His thought and his
temperament wore essentially theological not intellectual, with all the
strength and the weakness of that manner of thought, feeling, and
expression. It is a type of which there are not now in England and
Scotland such magnificent specimens as formerly; but this description,
nevertheless, will give the ordinary Englishman the distinctest
impression of the President.
With this picture of him in mind, we can return to the actual course of
events. The President's program for the World, as set forth in his
speeches and his Notes, had displayed a spirit and a purpose so
admirable that the last desire of his sympathizers was to criticize
details,--the details, they felt, were quite rightly not filled in at
present, but would be in due course. It was commonly believed at the
commencement of the Paris Conference that the President had thought out,
with the aid of a large body of advisers, a comprehensive scheme not
only for the League of Nations, but for the embodiment of the Fourteen
Points in an actual Treaty of Peace. But in fact the President had
thought out nothing; when it came to practice his ideas were nebulous
and incomplete. He had no plan, no scheme, no constructive ideas
whatever for clothing with the flesh of life the commandments which he
had thundered from the White House. He could have preached a sermon on
any of them or have addressed a stately prayer to the Almighty for their
fulfilment; but he could not frame their concrete application to the
actual state of Europe.
He not only had no proposals in detail, but he was in many respects,
perhaps inevitably, ill-informed as to European conditions. And not only
was he ill-informed--that was true of Mr. Lloyd George also--but his
mind was slow and unadaptable. The President's slowness amongst the
Europeans was noteworthy. He could not, all in a minute, take in what
the rest were saying, size up the situation with a glance, frame a
reply, and meet the case by a slight change of ground; and he was
liable, therefore, to defeat by the mere swiftness, apprehension, and
agility of a Lloyd George. There can seldom have been a statesman of the
first rank more incompetent than the President in the agilities of the
council chamber. A moment often arrives when substantial victory is
yours if by some slight appearance of a concession you can save the face
of the opposition or conciliate them by a restatement of your proposal
helpful to them and not injurious to anything essential to yourself. The
President was not equipped with this simple and usual artfulness. His
mind was too slow and unresourceful to be ready with _any_ alternatives.
The President was capable of digging his toes in and refusing to budge,
as he did over Fiume. But he had no other mode of defense, and it needed
as a rule but little manoeuvering by his opponents to prevent matters
from coming to such a head until it was too late. By pleasantness and an
appearance of conciliation, the President would be manoeuvered off his
ground, would miss the moment for digging his toes in, and, before he
knew where he had been got to, it was too late. Besides, it is
impossible month after month in intimate and ostensibly friendly
converse between close associates, to be digging the toes in all the
time. Victory would only have been possible to one who had always a
sufficiently lively apprehension of the position as a whole to reserve
his fire and know for certain the rare exact moments for decisive
action. And for that the President was far too slow-minded and
bewildered.
He did not remedy these defects by seeking aid from the collective
wisdom of his lieutenants. He had gathered round him for the economic
chapters of the Treaty a very able group of business men; but they were
inexperienced in public affairs, and knew (with one or two exceptions)
as little of Europe as he did, and they were only called in irregularly
as he might need them for a particular purpose. Thus the aloofness which
had been found effective in Washington was maintained, and the abnormal
reserve of his nature did not allow near him any one who aspired to
moral equality or the continuous exercise of influence. His
fellow-plenipotentiaries were dummies; and even the trusted Colonel
House, with vastly more knowledge of men and of Europe than the
President, from whose sensitiveness the President's dullness had gained
so much, fell into the background as time went on. All this was
encouraged by his colleagues on the Council of Four, who, by the
break-up of the Council of Ten, completed the isolation which the
President's own temperament had initiated. Thus day after day and week
after week, he allowed himself to be closeted, unsupported, unadvised,
and alone, with men much sharper than himself, in situations of supreme
difficulty, where be needed for success every description of resource,
fertility, and knowledge. He allowed himself to be drugged by their
atmosphere, to discuss on the basis of their plans and of their data,
and to be led along their paths.
These and other various causes combined to produce the following
situation. The reader must remember that the processes which are here
compressed into a few pages took place slowly, gradually, insidiously,
over a period of about five months.
As the President had thought nothing out, the Council was generally
working on the basis of a French or British draft. He had to take up,
therefore, a persistent attitude of obstruction, criticism, and
negation, if the draft was to become at all in line with his own ideas
and purpose. If he was met on some points with apparent generosity (for
there was always a safe margin of quite preposterous suggestions which
no one took seriously), it was difficult for him not to yield on others.
Compromise was inevitable, and never to compromise on the essential,
very difficult. Besides, he was soon made to appear to be taking the
German part and laid himself open to the suggestion (to which he was
foolishly and unfortunately sensitive) of being "pro-German."
After a display of much principle and dignity in the early days of the
Council of Ten, he discovered that there were certain very important
points in the program of his French, British, or Italian colleague, as
the case might be, of which he was incapable of securing the surrender
by the methods of secret diplomacy. What then was he to do in the last
resort? He could let the Conference drag on an endless length by the
exercise of sheer obstinacy. He could break it up and return to America
in a rage with nothing settled. Or he could attempt an appeal to the
world over the heads of the Conference. These were wretched
alternatives, against each of which a great deal could be said. They
were also very risky,--especially for a politician. The President's
mistaken policy over the Congressional election had weakened his
personal position in his own country, and it was by no means certain
that the American public would support him in a position of
intransigeancy. It would mean a campaign in which the issues would be
clouded by every sort of personal and party consideration, and who could
say if right would triumph in a struggle which would certainly not be
decided on its merits? Besides, any open rupture with his colleagues
would certainly bring upon his head the blind passions of "anti-German"
resentment with which the public of all allied countries were still
inspired. They would not listen to his arguments. They would not be cool
enough to treat the issue as one of international morality or of the
right governance of Europe. The cry would simply be that, for various
sinister and selfish reasons, the President wished "to let the Hun off."
The almost unanimous voice of the French and British Press could be
anticipated. Thus, if he threw down the gage publicly he might be
defeated. And if he were defeated, would not the final Peace be far
worse than if he were to retain his prestige and endeavor to make it as
good as the limiting conditions of European politics would allow, him?
But above all, if he were defeated, would he not lose the League of
Nations? And was not this, after all, by far the most important issue
for the future happiness of the world? The Treaty would be altered and
softened by time. Much in it which now seemed so vital would become
trifling, and much which was impracticable would for that very reason
never happen. But the League, even in an imperfect form, was permanent;
it was the first commencement of a new principle in the government of
the world; Truth and Justice in international relations could not be
established in a few months,--they must be born in due course by the
slow gestation of the League. Clemenceau had been clever enough to let
it be seen that he would swallow the League at a price.
At the crisis of his fortunes the President was a lonely man. Caught up
in the toils of the Old World, he stood in great need of sympathy, of
moral support, of the enthusiasm of masses. But buried in the
Conference, stifled in the hot and poisoned atmosphere of Paris, no echo
reached him from the outer world, and no throb of passion, sympathy, or
encouragement from his silent constituents in all countries. He felt
that the blaze of popularity which had greeted his arrival in Europe
was already dimmed; the Paris Press jeered at him openly; his political
opponents at home were taking advantage of his absence to create an
atmosphere against him; England was cold, critical, and unresponsive. He
had so formed his _entourage_ that he did not receive through private
channels the current of faith and enthusiasm of which the public sources
seemed dammed up. He needed, but lacked, the added strength of
collective faith. The German terror still overhung us, and even the
sympathetic public was very cautious; the enemy must not be encouraged,
our friends must be supported, this was not the time for discord or
agitations, the President must be trusted to do his best. And in this
drought the flower of the President's faith withered and dried up.
Thus it came to pass that the President countermanded the _George
Washington_, which, in a moment of well-founded rage, he had ordered to
be in readiness to carry him from the treacherous halls of Paris back to
the seat of his authority, where he could have felt himself again. But
as soon, alas, as be had taken the road of compromise, the defects,
already indicated, of his temperament and of his equipment, were fatally
apparent. He could take the high line; he could practise obstinacy; he
could write Notes from Sinai or Olympus; he could remain unapproachable
in the White House or even in the Council of Ten and be safe. But if he
once stepped down to the intimate equality of the Four, the game was
evidently up.
Now it was that what I have called his theological or Presbyterian
temperament became dangerous. Having decided that some concessions were
unavoidable, he might have sought by firmness and address and the use of
the financial power of the United States to secure as much as he could
of the substance, even at some sacrifice of the letter. But the
President was not capable of so clear an understanding with himself as
this implied. He was too conscientious. Although compromises were now
necessary, he remained a man of principle and the Fourteen Points a
contract absolutely binding upon him. He would do nothing that was not
honorable; he would do nothing that was not just and right; he would do
nothing that was contrary to his great profession of faith. Thus,
without any abatement of the verbal inspiration of the Fourteen Points,
they became a document for gloss and interpretation and for all the
intellectual apparatus of self-deception, by which, I daresay, the
President's forefathers had persuaded themselves that the course they
thought it necessary to take was consistent with every syllable of the
Pentateuch.
The President's attitude to his colleagues had now become: I want to
meet you so far as I can; I see your difficulties and I should like to
be able to agree to what you propose; but I can do nothing that is not
just and right, and you must first of all show me that what you want
does really fall within the words of the pronouncements which are
binding on me. Then began the weaving of that web of sophistry and
Jesuitical exegesis that was finally to clothe with insincerity the
language and substance of the whole Treaty. The word was issued to the
witches of all Paris:
Fair is foul, and foul is fair, Hover through the fog and filthy air.
The subtlest sophisters and most hypocritical draftsmen were set to
work, and produced many ingenious exercises which might have deceived
for more than an hour a cleverer man than the President.
Thus instead of saying that German-Austria is prohibited from uniting
with Germany except by leave of France (which would be inconsistent with
the principle of self-determination), the Treaty, with delicate
draftsmanship, states that "Germany acknowledges and will respect
strictly the independence of Austria, within the frontiers which may be
fixed in a Treaty between that State and the Principal Allied and
Associated Powers; she agrees that this independence shall be
inalienable, except with the consent of the Council of the League of
Nations," which sounds, but is not, quite different. And who knows but
that the President forgot that another part of the Treaty provides that
for this purpose the Council of the League must be _unanimous_.
Instead of giving Danzig to Poland, the Treaty establishes Danzig as a
"Free" City, but includes this "Free" City within the Polish Customs
frontier, entrusts to Poland the control of the river and railway
system, and provides that "the Polish Government shall undertake the
conduct of the foreign relations of the Free City of Danzig as well as
the diplomatic protection of citizens of that city when abroad."
In placing the river system of Germany under foreign control, the Treaty
speaks of declaring international those "river systems which naturally
provide more than one State with access to the sea, with or without
transhipment from one vessel to another."
Such instances could be multiplied. The honest and intelligible purpose
of French policy, to limit the population of Germany and weaken her
economic system, is clothed, for the President's sake, in the august
language of freedom and international equality.
But perhaps the most decisive moment, in the disintegration of the
President's moral position and the clouding of his mind, was when at
last, to the dismay of his advisers, he allowed himself to be persuaded
that the expenditure of the Allied Governments on pensions and
separation allowances could be fairly regarded as "damage done to the
civilian population of the Allied and Associated Powers by German
aggression by land, by sea, and from the air," in a sense in which the
other expenses of the war could not be so regarded. It was a long
theological struggle in which, after the rejection of many different
arguments, the President finally capitulated before a masterpiece of the
sophist's art.
At last the work was finished; and the President's conscience was still
intact. In spite of everything, I believe that his temperament allowed
him to leave Paris a really sincere man; and it is probable that to this
day he is genuinely convinced that the Treaty contains practically
nothing inconsistent with his former professions.
But the work was too complete, and to this was due the last tragic
episode of the drama. The reply of Brockdorff-Rantzau inevitably took
the line that Germany had laid down her arms on the basis of certain
assurances, and that the Treaty in many particulars was not consistent
with these assurances. But this was exactly what the President could not
admit; in the sweat of solitary contemplation and with prayers to God
be had done _nothing_ that was not just and right; for the President to
admit that the German reply had force in it was to destroy his
self-respect and to disrupt the inner equipoise of his soul; and every
instinct of his stubborn nature rose in self-protection. In the language
of medical psychology, to suggest to the President that the Treaty was
an abandonment of his professions was to touch on the raw a Freudian
complex. It was a subject intolerable to discuss, and every subconscious
instinct plotted to defeat its further exploration.
Thus it was that Clemenceau brought to success, what had seemed to be, a
few months before, the extraordinary and impossible proposal that the
Germans should not be heard. If only the President had not been so
conscientious, if only he had not concealed from himself what he had
been doing, even at the last moment he was in, a position to have
recovered lost ground and to have achieved some very considerable
successes. But the President was set. His arms and legs had been spliced
by the surgeons to a certain posture, and they must be broken again
before they could be altered. To his horror, Mr. Lloyd George, desiring
at the last moment all the moderation he dared, discovered that he could
not in five days persuade the President of error in what it had taken
five months to prove to him to be just and right. After all, it was
harder to de-bamboozle this old Presbyterian than it had been to
bamboozle him; for the former involved his belief in and respect for
himself.
Thus in the last act the President stood for stubbornness and a refusal
of conciliations.
FOOTNOTES:
[6] He alone amongst the Four could speak and understand both
languages, Orlando knowing only French and the Prime Minister and
President only English; and it is of historical importance that Orlando
and the President had no direct means of communication.
CHAPTER IV
THE TREATY
The thoughts which I have expressed in the second chapter were not
present to the mind of Paris. The future life of Europe was not their
concern; its means of livelihood was not their anxiety. Their
preoccupations, good and bad alike, related to frontiers and
nationalities, to the balance of power, to imperial aggrandizements, to
the future enfeeblement of a strong and dangerous enemy, to revenge, and
to the shifting by the victors of their unbearable financial burdens on
to the shoulders of the defeated.
Two rival schemes for the future polity of the world took the
field,--the Fourteen Points of the President, and the Carthaginian Peace
of M. Clemenceau. Yet only one of these was entitled to take the field;
for the enemy had not surrendered unconditionally, but on agreed terms
as to the general character of the Peace.
This aspect of what happened cannot, unfortunately, be passed over with
a word, for in the minds of many Englishmen at least it has been a
subject of very great misapprehension. Many persons believe that the
Armistice Terms constituted the first Contract concluded between the
Allied and Associated Powers and the German Government, and that we
entered the Conference with our hands, free, except so far as these
Armistice Terms might bind us. This was not the case. To make the
position plain, it is necessary briefly to review the history, of the
negotiations which began with the German Note of October 5, 1918, and
concluded with President Wilson's Note of November 5, 1918.
On October 5, 1918, the German Government addressed a brief Note to the
President accepting the Fourteen Points and asking for Peace
negotiations. The President's reply of October 8 asked if he was to
understand definitely that the German Government accepted "the terms
laid down" in Fourteen Points and in his subsequent Addresses and "that
its object in entering into discussion would be only to agree upon the
practical details of their application." He added that the evacuation of
invaded territory must be a prior condition of an Armistice. On October
12 the German Government returned an unconditional affirmative to these
questions;-"its object in entering into discussions would be only to
agree upon practical details of the application of these terms." On
October 14, having received this affirmative answer, the President made
a further communication to make clear the points: (1) that the details
of the Armistice would have to be left to the military advisers of the
United States and the Allies, and must provide absolutely against the
possibility of Germany's resuming hostilities; (2) that submarine
warfare must cease if these conversations were to continue; and (3) that
he required further guarantees of the representative character of the
Government with which he was dealing. On October 20 Germany accepted
points (1) and (2), and pointed out, as regards (3), that she now had a
Constitution and a Government dependent for its authority on the
Reichstag. On October 23 the President announced that, "having received
the solemn and explicit assurance of the German Government that it
unreservedly accepts the terms of peace laid down in his Address to the
Congress of the United States on January 8, 1918 (the Fourteen Points),
and the principles of settlement enunciated in his subsequent Addresses,
particularly the Address of September 27, and that it is ready to
discuss the details of their application," he has communicated the above
correspondence to the Governments of the Allied Powers "with the
suggestion that, if these Governments are disposed to effect peace upon
the terms and principles indicated," they will ask their military
advisers to draw up Armistice Terms of such a character as to "ensure to
the Associated Governments the unrestricted power to safeguard and
enforce the details of the peace to which the German Government has
agreed." At the end of this Note the President hinted more openly than
in that of October 14 at the abdication of the Kaiser. This completes
the preliminary negotiations to which the President alone was a party,
adding without the Governments of the Allied Powers.
On November 5, 1918, the President transmitted to Germany the reply he
had received from the Governments associated with him, and added that
Marshal Foch had been authorized to communicate the terms of an
armistice to properly accredited representatives. In this reply the
Allied Governments, "subject to the qualifications which follow, declare
their willingness to make peace with the Government of Germany on the
terms of peace laid down in the President's Address to Congress of
January 8, 1918, and the principles of settlement enunciated in his
subsequent Addresses." The qualifications in question were two in
number. The first related to the Freedom of the Seas, as to which they
"reserved to themselves complete freedom." The second related to
Reparation and ran as follows:--"Further, in the conditions of peace
laid down in his Address to Congress on the 8th January, 1918 the
President declared that invaded territories must be restored as well as
evacuated and made free. The Allied Governments feel that no doubt
ought to be allowed to exist as to what this provision implies. By it
they understand that compensation will be made by Germany for all damage
done to the civilian population of the Allies and to their property by
the aggression of Germany by land, by sea, and from the air."[7]
The nature of the Contract between Germany and the Allies resulting from
this exchange of documents is plain and unequivocal. The terms of the
peace are to be in accordance with the Addresses of the President, and
the purpose of the Peace Conference is "to discuss the details of their
application." The circumstances of the Contract were of an unusually
solemn and binding character; for one of the conditions of it was that
Germany should agree to Armistice Terms which were to be such as would
leave her helpless. Germany having rendered herself helpless in reliance
on the Contract, the honor of the Allies was peculiarly involved in
fulfilling their part and, if there were ambiguities, in not using their
position to take advantage of them.
What, then, was the substance of this Contract to which the Allies had
bound themselves? An examination of the documents shows that, although a
large part of the Addresses is concerned with spirit, purpose, and
intention, and not with concrete solutions, and that many questions
requiring a settlement in the Peace Treaty are not touched on,
nevertheless, there are certain questions which they settle definitely.
It is true that within somewhat wide limits the Allies still had a free
hand. Further, it is difficult to apply on a contractual basis those
passages which deal with spirit, purpose, and intention;--every man must
judge for himself whether, in view of them, deception or hypocrisy has
been practised. But there remain, as will be seen below, certain
important issues on which the Contract is unequivocal.
In addition to the Fourteen Points of January 18, 1918, the Addresses of
the President which form part of the material of the Contract are four
in number,--before the Congress on February 11; at Baltimore on April 6;
at Mount Vernon on July 4; and at New York on September 27, the last of
these being specially referred to in the Contract. I venture to select
from these Addresses those engagements of substance, avoiding
repetitions, which are most relevant to the German Treaty. The parts I
omit add to, rather than detract from, those I quote; but they chiefly
relate to intention, and are perhaps too vague and general to be
interpreted contractually.[8]
_The Fourteen Points_.--(3). "The removal, so far as possible, of all
economic barriers and the establishment of an equality of trade
conditions among _all_ the nations consenting to the Peace and
associating themselves for its maintenance." (4). "Adequate guarantees
_given and taken_ that national armaments will be reduced to the lowest
point consistent with domestic safety." (5). "A free, open-minded, and
absolutely impartial adjustment of all colonial claims," regard being
had to the interests of the populations concerned. (6), (7), (8), and
(11). The evacuation and "restoration" of all invaded territory,
especially of Belgium. To this must be added the rider of the Allies,
claiming compensation for all damage done to civilians and their
property by land, by sea, and from the air (quoted in full above). (8).
The righting of "the wrong done to France by Prussia in 1871 in the
matter of Alsace-Lorraine." (13). An independent Poland, including "the
territories inhabited by indisputably Polish populations" and "assured a
free and secure access to the sea." (14). The League of Nations.
_Before the Congress, February 11_.--"There shall be no annexations, _no
contributions, no punitive damages_.... Self-determination is not a
mere phrase. It is an imperative principle of action which statesmen
will henceforth ignore at their peril.... Every territorial settlement
involved in this war must be made in the interest and for the benefit of
the populations concerned, and not as a part of any mere adjustment or
compromise of claims amongst rival States."
_New York, September 27_.--(1) "The impartial justice meted out must
involve no discrimination between those to whom we wish to be just and
those to whom we do not wish to be just." (2) "No special or separate
interest of any single nation or any group of nations can be made the
basis of any part of the settlement which is not consistent with the
common interest of all." (3) "There can be no leagues or alliances or
special covenants and understandings within the general and common
family of the League of Nations." (4) "There can be no special selfish
economic combinations within the League and no employment of any form of
economic boycott or exclusion, except as the power of economic penalty
by exclusion from the markets of the world may be vested in the League
of Nations itself as a means of discipline and control." (5) "All
international agreements and treaties of every kind must be made known
in their entirety to the rest of the world."
This wise and magnanimous program for the world had passed on November
5, 1918 beyond the region of idealism and aspiration, and had become
part of a solemn contract to which all the Great Powers of the world had
put their signature. But it was lost, nevertheless, in the morass of
Paris;--the spirit of it altogether, the letter in parts ignored and in
other parts distorted.
The German observations on the draft Treaty of Peace were largely a
comparison between the terms of this understanding, on the basis of
which the German nation had agreed to lay down its arms, and the actual
provisions of the document offered them for signature thereafter. The
German commentators had little difficulty in showing that the draft
Treaty constituted a breach of engagements and of international morality
comparable with their own offense in the invasion of Belgium.
Nevertheless, the German reply was not in all its parts a document fully
worthy of the occasion, because in spite of the justice and importance
of much of its contents, a truly broad treatment and high dignify of
outlook were a little wanting, and the general effect lacks the simple
treatment, with the dispassionate objectivity of despair which the deep
passions of the occasion might have evoked. The Allied governments gave
it, in any case, no serious consideration, and I doubt if anything which
the German delegation could have said at that stage of the proceedings
would have much influenced the result.
The commonest virtues of the individual are often lacking in the
spokesmen of nations; a statesman representing not himself but his
country may prove, without incurring excessive blame--as history often
records--vindictive, perfidious, and egotistic. These qualities are
familiar in treaties imposed by victors. But the German delegation did
not succeed in exposing in burning and prophetic words the quality which
chiefly distinguishes this transaction from all its historical
predecessors--its insincerity.
This theme, however, must be for another pen than mine. I am mainly
concerned in what follows, not with the justice of the Treaty,--neither
with the demand for penal justice against the enemy, nor with the
obligation of contractual justice on the victor,--but with its wisdom
and with its consequences.
I propose, therefore, in this chapter to set forth baldly the principal
economic provisions of the Treaty, reserving, however, for the next my
comments on the Reparation Chapter and on Germany's capacity to meet the
payments there demanded from her.
The German economic system as it existed before the war depended on
three main factors: I. Overseas commerce as represented by her
mercantile marine, her colonies, her foreign investments, her exports,
and the overseas connections of her merchants; II. The exploitation of
her coal and iron and the industries built upon them; III. Her transport
and tariff system. Of these the first, while not the least important,
was certainly the most vulnerable. The Treaty aims at the systematic
destruction of all three, but principally of the first two.
I
(1) Germany has ceded to the Allies _all_ the vessels of her mercantile
marine exceeding 1600 tons gross, half the vessels between 1000 tons and
1600 tons, and one quarter of her trawlers and other fishing boats.[9]
The cession is comprehensive, including not only vessels flying the
German flag, but also all vessels owned by Germans but flying other
flags, and all vessels under construction as well as those afloat.[10]
Further, Germany undertakes, if required, to build for the Allies such
types of ships as they may specify up to 200,000 tons[11] annually for
five years, the value of these ships being credited to Germany against
what is due from her for Reparation.[12]
Thus the German mercantile marine is swept from the seas and cannot be
restored for many years to come on a scale adequate to meet the
requirements of her own commerce. For the present, no lines will run
from Hamburg, except such as foreign nations may find it worth while to
establish out of their surplus tonnage. Germany will have to pay to
foreigners for the carriage of her trade such charges as they may be
able to exact, and will receive only such conveniences as it may suit
them to give her. The prosperity of German ports and commerce can only
revive, it would seem, in proportion as she succeeds in bringing under
her effective influence the merchant marines of Scandinavia and of
Holland.
(2) Germany has ceded to the Allies "all her rights and titles over her
oversea possessions."[13] This cession not only applies to sovereignty
but extends on unfavorable terms to Government property, all of which,
including railways, must be surrendered without payment, while, on the
other hand, the German Government remains liable for any debt which may
have been incurred for the purchase or construction of this property, or
for the development of the colonies generally.[14]
In distinction from the practice ruling in the case of most similar
cessions in recent history, the property and persons of private German
nationals, as distinct from their Government, are also injuriously
affected. The Allied Government exercising authority in any former
German colony "may make such provisions as it thinks fit with reference
to the repatriation from them of German nationals and to the conditions
upon which German subjects of European origin shall, or shall not, be
allowed to reside, hold property, trade or exercise a profession in
them."[15] All contracts and agreements in favor of German nationals for
the construction or exploitation of public works lapse to the Allied
Governments as part of the payment due for Reparation.
But these terms are unimportant compared with the more comprehensive
provision by which "the Allied and Associated Powers reserve the right
to retain and liquidate _all_ property, rights, and interests belonging
at the date of the coming into force of the present Treaty to German
nationals, or companies controlled by them," within the former German
colonies.[16] This wholesale expropriation of private property is to
take place without the Allies affording any compensation to the
individuals expropriated, and the proceeds will be employed, first, to
meet private debts due to Allied nationals from any German nationals,
and second, to meet claims due from Austrian, Hungarian, Bulgarian, or
Turkish nationals. Any balance may either be returned by the liquidating
Power direct to Germany, or retained by them. If retained, the proceeds
must be transferred to the Reparation Commission for Germany's credit in
the Reparation account.[17]
In short, not only are German sovereignty and German influence
extirpated from the whole of her former oversea possessions, but the
persons and property of her nationals resident or owning property in
those parts are deprived of legal status and legal security.
(3) The provisions just outlined in regard to the private property of
Germans in the ex-German colonies apply equally to private German
property in Alsace-Lorraine, except in so far as the French Government
may choose to grant exceptions.[18] This is of much greater practical
importance than the similar expropriation overseas because of the far
higher value of the property involved and the closer interconnection,
resulting from the great development of the mineral wealth of these
provinces since 1871, of German economic interests there with those in
Germany itself. Alsace-Lorraine has been part of the German Empire for
nearly fifty years--a considerable majority of its population is German
speaking--and it has been the scene of some of Germany's most important
economic enterprises. Nevertheless, the property of those Germans who
reside there, or who have invested in its industries, is now entirely at
the disposal of the French Government without compensation, except in so
far as the German Government itself may choose to afford it. The French
Government is entitled to expropriate without compensation the personal
property of private German citizens and German companies resident or
situated within Alsace-Lorraine, the proceeds being credited in part
satisfaction of various French claims. The severity of this provision is
only mitigated to the extent that the French Government may expressly
permit German nationals to continue to reside, in which case the above
provision is not applicable. Government, State, and Municipal property,
on the other hand, is to be ceded to France without any credit being
given for it. This includes the railway system of the two provinces,
together with its rolling-stock.[19] But while the property is taken
over, liabilities contracted in respect of it in the form of public
debts of any kind remain the liability of Germany.[20] The provinces
also return to French sovereignty free and quit of their share of German
war or pre-war dead-weight debt; nor does Germany receive a credit on
this account in respect of Reparation.
(4) The expropriation of German private property is not limited,
however, to the ex-German colonies and Alsace-Lorraine. The treatment of
such property forms, indeed, a very significant and material section of
the Treaty, which has not received as much attention as it merits,
although it was the subject of exceptionally violent objection on the
part of the German delegates at Versailles. So far as I know, there is
no precedent in any peace treaty of recent history for the treatment of
private property set forth below, and the German representatives urged
that the precedent now established strikes a dangerous and immoral blow
at the security of private property everywhere. This is an exaggeration,
and the sharp distinction, approved by custom and convention during the
past two centuries, between the property and rights of a State and the
property and rights of its nationals is an artificial one, which is
being rapidly put out of date by many other influences than the Peace
Treaty, and is inappropriate to modern socialistic conceptions of the
relations between the State and its citizens. It is true, however, that
the Treaty strikes a destructive blow at a conception which lies at the
root of much of so-called international law, as this has been expounded
hitherto.
The principal provisions relating to the expropriation of German private
property situated outside the frontiers of Germany, as these are now
determined, are overlapping in their incidence, and the more drastic
would seem in some cases to render the others unnecessary. Generally
speaking, however, the more drastic and extensive provisions are not so
precisely framed as those of more particular and limited application.
They are as follows:--
(_a_) The Allies "reserve the right to retain and liquidate all
property, rights and interests belonging at the date of the coming into
force of the present Treaty to German nationals, or companies controlled
by them, within their territories, colonies, possessions and
protectorates, including territories ceded to them by the present
Treaty."[21]
This is the extended version of the provision which has been discussed
already in the case of the colonies and of Alsace-Lorraine. The value of
the property so expropriated will be applied, in the first instance, to
the satisfaction of private debts due from Germany to the nationals of
the Allied Government within whose jurisdiction the liquidation takes
place, and, second, to the satisfaction of claims arising out of the
acts of Germany's former allies. Any balance, if the liquidating
Government elects to retain it, must be credited in the Reparation
account.[22] It is, however, a point of considerable importance that the
liquidating Government is not compelled to transfer the balance to the
Reparation Commission, but can, if it so decides, return the proceeds
direct to Germany. For this will enable the United States, if they so
wish, to utilize the very large balances, in the hands of their
enemy-property custodian, to pay for the provisioning of Germany,
without regard to the views of the Reparation Commission.
These provisions had their origin in the scheme for the mutual
settlement of enemy debts by means of a Clearing House. Under this
proposal it was hoped to avoid much trouble and litigation by making
each of the Governments lately at war responsible for the collection of
private _debts_ due from its nationals to the nationals of any of the
other Governments (the normal process of collection having been
suspended by reason of the war), and for the distribution of the funds
so collected to those of its nationals who had _claims_ against the
nationals of the other Governments, any final balance either way being
settled in cash. Such a scheme could have been completely bilateral and
reciprocal And so in part it is, the scheme being mainly reciprocal as
regards the collection of commercial debts. But the completeness of
their victory permitted the Allied Governments to introduce in their own
favor many divergencies from reciprocity, of which the following are the
chief: Whereas the property of Allied nationals within German
jurisdiction reverts under the Treaty to Allied ownership on the
conclusion of Peace, the property of Germans within Allied jurisdiction
is to be retained and liquidated as described above, with the result
that the whole of German property over a large part of the world can be
expropriated, and the large properties now within the custody of Public
Trustees and similar officials in the Allied countries may be retained
permanently. In the second place, such German assets are chargeable, not
only with the liabilities of Germans, but also, if they run to it, with
"payment of the amounts due in respect of claims by the nationals of
such Allied or Associated Power with regard to their property, rights,
and interests in the territory of other Enemy Powers," as, for example,
Turkey, Bulgaria, and Austria.[23] This is a remarkable provision,
which is naturally non-reciprocal. In the third place, any final balance
due to Germany on private account need not be paid over, but can be held
against the various liabilities of the German Government.[24] The
effective operation of these Articles is guaranteed by the delivery of
deeds, titles, and information.[25] In the fourth place, pre-war
contracts between Allied and German nationals may be canceled or revived
at the option of the former, so that all such contracts which are in
Germany's favor will be canceled, while, on the other hand, she will be
compelled to fulfil those which are to her disadvantage.
(_b_) So far we have been concerned with German property within Allied
jurisdiction. The next provision is aimed at the elimination of German
interests in the territory of her neighbors and former allies, and of
certain other countries. Under Article 260 of the Financial Clauses it
is provided that the Reparation Commission may, within one year of the
coming into force of the Treaty, demand that the German Government
expropriate its nationals and deliver to the Reparation Commission "any
rights and interests of German nationals in any public utility
undertaking or in any concession[26] operating in Russia, China, Turkey,
Austria, Hungary, and Bulgaria, or in the possessions or dependencies of
these States, or in any territory formerly belonging to Germany or her
allies, to be ceded by Germany or her allies to any Power or to be
administered by a Mandatory under the present Treaty." This is a
comprehensive description, overlapping in part the provisions dealt with
under (_a_) above, but including, it should be noted, the new States and
territories carved out of the former Russian, Austro-Hungarian, and
Turkish Empires. Thus Germany's influence is eliminated and her capital
confiscated in all those neighboring countries to which she might
naturally look for her future livelihood, and for an outlet for her
energy, enterprise, and technical skill.
The execution of this program in detail will throw on the Reparation
Commission a peculiar task, as it will become possessor of a great
number of rights and interests over a vast territory owing dubious
obedience, disordered by war, disruption, and Bolshevism. The division
of the spoils between the victors will also provide employment for a
powerful office, whose doorsteps the greedy adventurers and jealous
concession-hunters of twenty or thirty nations will crowd and defile.
Lest the Reparation Commission fail by ignorance to exercise its rights
to the full, it is further provided that the German Government shall
communicate to it within six months of the Treaty's coming into force a
list of all the rights and interests in question, "whether already
granted, contingent or not yet exercised," and any which are not so
communicated within this period will automatically lapse in favor of the
Allied Governments.[27] How far an edict of this character can be made
binding on a German national, whose person and property lie outside the
jurisdiction of his own Government, is an unsettled question; but all
the countries specified in the above list are open to pressure by the
Allied authorities, whether by the imposition of an appropriate Treaty
clause or otherwise.
(_c_) There remains a third provision more sweeping than either of the
above, neither of which affects German interests in _neutral_
countries. The Reparation Commission is empowered up to May 1, 1921, to
demand payment up to $5,000,000,000 _in such manner as they may fix_,
"whether in gold, commodities, ships, securities or otherwise."[28] This
provision has the effect of intrusting to the Reparation Commission for
the period in question dictatorial powers over all German property of
every description whatever. They can, under this Article, point to any
specific business, enterprise, or property, whether within or outside
Germany, and demand its surrender; and their authority would appear to
extend not only to property existing at the date of the Peace, but also
to any which may be created or acquired at any time in the course of the
next eighteen months. For example, they could pick out--as presumably
they will as soon as they are established--the fine and powerful German
enterprise in South America known as the _Deutsche Ueberseeische
Elektrizitätsgesellschaft_ (the D.U.E.G.), and dispose of it to Allied
interests. The clause is unequivocal and all-embracing. It is worth
while to note in passing that it introduces a quite novel principle in
the collection of indemnities. Hitherto, a sum has been fixed, and the
nation mulcted has been left free to devise and select for itself the
means of payment. But in this case the payees can (for a certain
period) not only demand a certain sum but specify the particular kind of
property in which payment is to be effected. Thus the powers of the
Reparation Commission, with which I deal more particularly in the next
chapter, can be employed to destroy Germany's commercial and economic
organization as well as to exact payment.
The cumulative effect of (_a_), (_b_), and (_c_) (as well as of certain
other minor provisions on which I have not thought it necessary to
enlarge) is to deprive Germany (or rather to empower the Allies so to
deprive her at their will--it is not yet accomplished) of everything she
possesses outside her own frontiers as laid down in the Treaty. Not only
are her oversea investments taken and her connections destroyed, but the
same process of extirpation is applied in the territories of her former
allies and of her immediate neighbors by land.
(5) Lest by some oversight the above provisions should overlook any
possible contingencies, certain other Articles appear in the Treaty,
which probably do not add very much in practical effect to those already
described, but which deserve brief mention as showing the spirit of
completeness in which the victorious Powers entered upon the economic
subjection of their defeated enemy.
First of all there is a general clause of barrer and renunciation: "In
territory outside her European frontiers as fixed by the present Treaty,
Germany renounces all rights, titles and privileges whatever in or over
territory which belonged to her or to her allies, and all rights, titles
and privileges whatever their origin which she held as against the
Allied and Associated Powers...."[29]
There follow certain more particular provisions. Germany renounces all
rights and privileges she may have acquired in China.[30] There are
similar provisions for Siam,[31] for Liberia,[32] for Morocco,[33] and
for Egypt.[34] In the case of Egypt not only are special privileges
renounced, but by Article 150 ordinary liberties are withdrawn, the
Egyptian Government being accorded "complete liberty of action in
regulating the status of German nationals and the conditions under which
they may establish themselves in Egypt."
By Article 258 Germany renounces her right to any participation in any
financial or economic organizations of an international character
"operating in any of the Allied or Associated States, or in Austria,
Hungary, Bulgaria or Turkey, or in the dependencies of these States, or
in the former Russian Empire."
Generally speaking, only those pre-war treaties and conventions are
revived which it suits the Allied Governments to revive, and those in
Germany's favor may be allowed to lapse.[35]
It is evident, however, that none of these provisions are of any real
importance, as compared with those described previously. They represent
the logical completion of Germany's outlawry and economic subjection to
the convenience of the Allies; but they do not add substantially to her
effective disabilities.
II
The provisions relating to coal and iron are more important in respect
of their ultimate consequences on Germany's internal industrial economy
than for the money value immediately involved. The German Empire has
been built more truly on coal and iron than on blood and iron. The
skilled exploitation of the great coalfields of the Ruhr, Upper Silesia,
and the Saar, alone made possible the development of the steel,
chemical, and electrical industries which established her as the first
industrial nation of continental Europe. One-third of Germany's
population lives in towns of more than 20,000 inhabitants, an industrial
concentration which is only possible on a foundation of coal and iron.
In striking, therefore, at her coal supply, the French politicians were
not mistaking their target. It is only the extreme immoderation, and
indeed technical impossibility, of the Treaty's demands which may save
the situation in the long-run.
(1) The Treaty strikes at Germany's coal supply in four ways:--
(i.) "As compensation for the destruction of the coal-mines in the north
of France, and as part payment towards the total reparation due from
Germany for the damage resulting from the war, Germany cedes to France
in full and absolute possession, with exclusive rights of exploitation,
unencumbered, and free from all debts and charges of any kind, the
coal-mines situated in the Saar Basin."[36] While the administration of
this district is vested for fifteen years in the League of Nations, it
is to be observed that the mines are ceded to France absolutely. Fifteen
years hence the population of the district will be called upon to
indicate by plebiscite their desires as to the future sovereignty of the
territory; and, in the event of their electing for union with Germany,
Germany is to be entitled to repurchase the mines at a price payable in
gold.[37]
The judgment of the world has already recognized the transaction of the
Saar as an act of spoliation and insincerity. So far as compensation for
the destruction of French coal-mines is concerned, this is provided for,
as we shall see in a moment, elsewhere in the Treaty. "There is no
industrial region in Germany," the German representatives have said
without contradiction, "the population of which is so permanent, so
homogeneous, and so little complex as that of the Saar district. Among
more than 650,000 inhabitants, there were in 1918 less than 100 French.
The Saar district has been German for more than 1,000 years. Temporary
occupation as a result of warlike operations on the part of the French
always terminated in a short time in the restoration of the country upon
the conclusion of peace. During a period of 1048 years France has
possessed the country for not quite 68 years in all. When, on the
occasion of the first Treaty of Paris in 1814, a small portion of the
territory now coveted was retained for France, the population raised the
most energetic opposition and demanded 'reunion with their German
fatherland,' to which they were 'related by language, customs, and
religion.' After an occupation of one year and a quarter, this desire
was taken into account in the second Treaty of Paris in 1815. Since then
the country has remained uninterruptedly attached to Germany, and owes
its economic development to that connection."
The French wanted the coal for the purpose of working the ironfields of
Lorraine, and in the spirit of Bismarck they have taken it. Not
precedent, but the verbal professions of the Allies, have rendered it
indefensible.[38]
(ii.) Upper Silesia, a district without large towns, in which, however,
lies one of the major coalfields of Germany with a production of about
23 per cent of the total German output of hard coal, is, subject to a
plebiscite,[39] to be ceded to Poland. Upper Silesia was never part of
historic Poland; but its population is mixed Polish, German, and
Czecho-Slovakian, the precise proportions of which are disputed.[40]
Economically it is intensely German; the industries of Eastern Germany
depend upon it for their coal; and its loss would be a destructive blow
at the economic structure of the German State.[41]
With the loss of the fields of Upper Silesia and the Saar, the coal
supplies of Germany are diminished by not far short of one-third.
(iii.) Out of the coal that remains to her, Germany is obliged to make
good year by year the estimated loss which France has incurred by the
destruction and damage of war in the coalfields of her northern
Provinces. In para. 2 of Annex V. to the Reparation Chapter, "Germany
undertakes to deliver to France annually, for a period not exceeding ten
years, an amount of coal equal to the difference between the annual
production before the war of the coal-mines of the Nord and Pas de
Calais, destroyed as a result of the war, and the production of the
mines of the same area during the year in question: such delivery not to
exceed 20,000,000 tons in any one year of the first five years, and
8,000,000 tons in any one year of the succeeding five years."
This is a reasonable provision if it stood by itself, and one which
Germany should be able to fulfil if she were left her other resources to
do it with.
(iv.) The final provision relating to coal is part of the general scheme
of the Reparation Chapter by which the sums due for Reparation are to be
partly paid in kind instead of in cash. As a part of the payment due for
Reparation, Germany is to make the following deliveries of coal or
equivalent in coke (the deliveries to France being wholly additional to
the amounts available by the cession of the Saar or in compensation for
destruction in Northern France):--
(i.) To France 7,000,000 tons annually for ten years;[42]
(ii.) To Belgium 8,000,000 tons annually for ten years;
(iii.) To Italy an annual quantity, rising by annual increments from
4,500,000 tons in 1919-1920 to 8,500,000 tons in each of the six years,
1923-1924 to 1928-1929;
(iv.) To Luxemburg, if required, a quantity of coal equal to the
pre-war annual consumption of German coal in Luxemburg.
This amounts in all to an annual average of about 25,000,000 tons.
* * * * *
These figures have to be examined in relation to Germany's probable
output. The maximum pre-war figure was reached in 1913 with a total of
191,500,000 tons. Of this, 19,000,000 tons were consumed at the mines,
and on balance (_i.e._ exports less imports) 33,500,000 tons were
exported, leaving 139,000,000 tons for domestic consumption. It is
estimated that this total was employed as follows:--
Railways 18,000,000 tons. Gas, water, and electricity 12,500,000 "
Bunkers 6,500,000 " House-fuel, small industry
and agriculture 24,000,000 " Industry 78,000,000 "
----------- 139,000,000 "
The diminution of production due to loss of territory is:--
Alsace-Lorraine 3,800,000 tons. Saar Basin 13,200,000 "
Upper Silesia 43,800,000 " -----------
60,800,000 "
There would remain, therefore, on the basis of the 1913 output,
130,700,000 tons, or, deducting consumption at the mines themselves,
(say) 118,000,000 tons. For some years there must be sent out of this
supply upwards of 20,000,000 tons to France as compensation for damage
done to French mines, and 25,000,000 tons to France, Belgium, Italy, and
Luxemburg;[43] as the former figure is a maximum, and the latter figure
is to be slightly less in the earliest years, we may take the total
export to Allied countries which Germany has undertaken to provide as
40,000,000 tons, leaving, on the above basis, 78,000,000 tons for her
own use as against a pre-war consumption of 139,000,000 tons.
This comparison, however, requires substantial modification to make it
accurate. On the one hand, it is certain that the figures of pre-war
output cannot be relied on as a basis of present output. During 1918 the
production was 161,500,000 tons as compared with 191,500,000 tons in
1913; and during the first half of 1919 it was less than 50,000,000
tons, exclusive of Alsace-Lorraine and the Saar but including Upper
Silesia, corresponding to an annual production of about 100,000,000
tons.[44] The causes of so low an output were in part temporary and
exceptional but the German authorities agree, and have not been
confuted, that some of them are bound to persist for some time to come.
In part they are the same as elsewhere; the daily shift has been
shortened from 8-1/2 to 7 hours, and it is improbable that the powers of
the Central Government will be adequate to restore them to their former
figure. But in addition, the mining plant is in bad condition (due to
the lack of certain essential materials during the blockade), the
physical efficiency of the men is greatly impaired by malnutrition
(which cannot be cured if a tithe of the reparation demands are to be
satisfied,--the standard of life will have rather to be lowered), and
the casualties of the war have diminished the numbers of efficient
miners. The analogy of English conditions is sufficient by itself to
tell us that a pre-war level of output cannot be expected in Germany.
German authorities put the loss of output at somewhat above 30 per
cent, divided about equally between the shortening of the shift and the
other economic influences. This figure appears on general grounds to be
plausible, but I have not the knowledge to endorse or to criticize it.
The pre-war figure of 118,000,000 tons net (_i.e._ after allowing for
loss of territory and consumption at the mines) is likely to fall,
therefore, at least as low as to 100,000,000[45] tons, having regard to
the above factors. If 40,000,000 tons of this are to be exported to the
Allies, there remain 60,000,000 tons for Germany herself to meet her own
domestic consumption. Demand as well as supply will be diminished by
loss of territory, but at the most extravagant estimate this could not
be put above 29,000,000 tons.[46] Our hypothetical calculations,
therefore, leave us with post-war German domestic requirements, on the
basis of a pre-war efficiency of railways and industry, of 110,000,000
tons against an output rot exceeding 100,000,000 tons, of which
40,000,000 tons are mortgaged to the Allies.
The importance of the subject has led me into a somewhat lengthy
statistical analysis. It is evident that too much significance must not
be attached to the precise figures arrived at, which are hypothetical
and dubious.[47] But the general character of the facts presents itself
irresistibly. Allowing for the loss of territory and the loss of
efficiency, Germany cannot export coal in the near future (and will even
be dependent on her Treaty rights to purchase in Upper Silesia), if she
is to continue as an industrial nation. Every million tons she is forced
to export must be at the expense of closing down an industry. With
results to be considered later this within certain limits is _possible_.
But it is evident that Germany cannot and will not furnish the Allies
with a contribution of 40,000,000 tons annually. Those Allied Ministers,
who have told their peoples that she can, have certainly deceived them
for the sake of allaying for the moment the misgivings of the European
peoples as to the path along which they are being led.
The presence of these illusory provisions (amongst others) in the
clauses of the Treaty of Peace is especially charged with danger for
the future. The more extravagant expectations as to Reparation
receipts, by which Finance Ministers have deceived their publics, will
be heard of no more when they have served their immediate purpose of
postponing the hour of taxation and retrenchment. But the coal clauses
will not be lost sight of so easily,--for the reason that it will be
absolutely vital in the interests of France and Italy that these
countries should do everything in their power to exact their bond. As a
result of the diminished output due to German destruction in France, of
the diminished output of mines in the United Kingdom and elsewhere, and
of many secondary causes, such as the breakdown of transport and of
organization and the inefficiency of new governments, the coal position
of all Europe is nearly desperate;[48] and France and Italy, entering
the scramble with certain Treaty rights, will not lightly surrender
them.
As is generally the case in real dilemmas, the French and Italian case
will possess great force, indeed unanswerable force from a certain point
of view. The position will be truly represented as a question between
German industry on the one hand and French and Italian industry on the
other. It may be admitted that the surrender of the coal will destroy
German industry, but it may be equally true that its non-surrender will
jeopardize French and Italian industry. In such a case must not the
victors with their Treaty rights prevail, especially when much of the
damage has been ultimately due to the wicked acts of those who are now
defeated? Yet if these feelings and these rights are allowed to prevail
beyond what wisdom would recommend, the reactions on the social and
economic life of Central Europe will be far too strong to be confined
within their original limits.
But this is not yet the whole problem. If France and Italy are to make
good their own deficiencies in coal from the output of Germany, then
Northern Europe, Switzerland, and Austria, which previously drew their
coal in large part from Germany's exportable surplus, must be starved of
their supplies. Before the war 13,600,000 tons of Germany's coal exports
went to Austria-Hungary. Inasmuch as nearly all the coalfields of the
former Empire lie outside what is now German-Austria, the industrial
ruin of this latter state, if she cannot obtain coal from Germany, will
be complete. The case of Germany's neutral neighbors, who were formerly
supplied in part from Great Britain but in large part from Germany,
will be hardly less serious. They will go to great lengths in the
direction of making their own supplies to Germany of materials which are
essential to her, conditional on these being paid for in coal. Indeed
they are already doing so.[49] With the breakdown of money economy the
practice of international barter is becoming prevalent. Nowadays money
in Central and South-Eastern Europe is seldom a true measure of value in
exchange, and will not necessarily buy anything, with the consequence
that one country, possessing a commodity essential to the needs of
another, sells it not for cash but only against a reciprocal engagement
on the part of the latter country to furnish in return some article not
less necessary to the former. This is an extraordinary complication as
compared with the former almost perfect simplicity of international
trade. But in the no less extraordinary conditions of to-day's industry
it is not without advantages as a means of stimulating production. The
butter-shifts of the Ruhr[50] show how far modern Europe has
retrograded in the direction of barter, and afford a picturesque
illustration of the low economic organization to which the breakdown of
currency and free exchange between individuals and nations is quickly
leading us. But they may produce the coal where other devices would
fail.[51]
Yet if Germany can find coal for the neighboring neutrals, France and
Italy may loudly claim that in this case she can and must keep her
treaty obligations. In this there will be a great show of justice, and
it will be difficult to weigh against such claims the possible facts
that, while German miners will work for butter, there is no available
means of compelling them to get coal, the sale of which will bring in
nothing, and that if Germany has no coal to send to her neighbors she
may fail to secure imports essential to her economic existence.
If the distribution of the European coal supplies is to be a scramble in
which France is satisfied first, Italy next, and every one else takes
their chance, the industrial future of Europe is black and the prospects
of revolution very good. It is a case where particular interests and
particular claims, however well founded in sentiment or in justice,
must yield to sovereign expediency. If there is any approximate truth in
Mr. Hoover's calculation that the coal output of Europe has fallen by
one-third, a situation confronts us where distribution must be effected
with even-handed impartiality in accordance with need, and no incentive
can be neglected towards increased production and economical methods of
transport. The establishment by the Supreme Council of the Allies in
August, 1919, of a European Coal Commission, consisting of delegates
from Great Britain, France, Italy, Belgium, Poland, and Czecho-Slovakia
was a wise measure which, properly employed and extended, may prove of
great assistance. But I reserve constructive proposals for Chapter VII.
Here I am only concerned with tracing the consequences, _per
impossibile_, of carrying out the Treaty _au pied de lettre_.[52]
(2) The provisions relating to iron-ore require less detailed attention,
though their effects are destructive. They require less attention,
because they are in large measure inevitable. Almost exactly 75 per cent
of the iron-ore raised in Germany in 1913 came from Alsace-Lorraine.[53]
In this the chief importance of the stolen provinces lay.
There is no question but that Germany must lose these ore-fields. The
only question is how far she is to be allowed facilities for purchasing
their produce. The German Delegation made strong efforts to secure the
inclusion of a provision by which coal and coke to be furnished by them
to France should be given in exchange for _minette_ from Lorraine. But
they secured no such stipulation, and the matter remains at France's
option.
The motives which will govern France's eventual policy are not entirely
concordant. While Lorraine comprised 75 per cent of Germany's iron-ore,
only 25 per cent of the blast furnaces lay within Lorraine and the Saar
basin together, a large proportion of the ore being carried into Germany
proper. Approximately the same proportion of Germany's iron and steel
foundries, namely 25 per cent, were situated in Alsace-Lorraine. For
the moment, therefore, the most economical and profitable course would
certainly be to export to Germany, as hitherto, a considerable part of
the output of the mines.
On the other hand, France, having recovered the deposits of Lorraine,
may be expected to aim at replacing as far as possible the industries,
which Germany had based on them, by industries situated within her own
frontiers. Much time must elapse before the plant and the skilled labor
could be developed within France, and even so she could hardly deal with
the ore unless she could rely on receiving the coal from Germany. The
uncertainty, too, as to the ultimate fate of the Saar will be disturbing
to the calculations of capitalists who contemplate the establishment of
new industries in France.
In fact, here, as elsewhere, political considerations cut disastrously
across economic. In a régime of Free Trade and free economic intercourse
it would be of little consequence that iron lay on one side of a
political frontier, and labor, coal, and blast furnaces on the other.
But as it is, men have devised ways to impoverish themselves and one
another; and prefer collective animosities to individual happiness. It
seems certain, calculating on the present passions and impulses of
European capitalistic society, that the effective iron output of Europe
will be diminished by a new political frontier (which sentiment and
historic justice require), because nationalism and private interest are
thus allowed to impose a new economic frontier along the same lines.
These latter considerations are allowed, in the present governance of
Europe, to prevail over the intense need of the Continent for the most
sustained and efficient production to repair the destructions of war,
and to satisfy the insistence of labor for a larger reward.[54]
The same influences are likely to be seen, though on a lesser scale, in
the event of the transference of Upper Silesia to Poland. While Upper
Silesia contains but little iron, the presence of coal has led to the
establishment of numerous blast furnaces. What is to be the fate of
these? If Germany is cut off from her supplies of ore on the west, will
she export beyond her frontiers on the east any part of the little which
remains to her? The efficiency and output of the industry seem certain
to diminish.
Thus the Treaty strikes at organization, and by the destruction of
organization impairs yet further the reduced wealth of the whole
community. The economic frontiers which are to be established between
the coal and the iron, upon which modern industrialism is founded, will
not only diminish the production of useful commodities, but may possibly
occupy an immense quantity of human labor in dragging iron or coal, as
the case may he, over many useless miles to satisfy the dictates of a
political treaty or because obstructions have been established to the
proper localization of industry.
III
There remain those Treaty provisions which relate to the transport and
the tariff systems of Germany. These parts of the Treaty have not nearly
the importance and the significance of those discussed hitherto. They
are pin-pricks, interferences and vexations, not so much objectionable
for their solid consequences, as dishonorable to the Allies in the light
of their professions. Let the reader consider what follows in the light
of the assurances already quoted, in reliance on which Germany laid down
her arms.
(i.) The miscellaneous Economic Clauses commence with a number of
provisions which would be in accordance with the spirit of the third of
the Fourteen Points,--if they were reciprocal. Both for imports and
exports, and as regards tariffs, regulations, and prohibitions, Germany
binds herself for five years to accord most-favored-nation treatment to
the Allied and Associated States.[55] But she is not entitled herself to
receive such treatment.
For five years Alsace-Lorraine shall be free to export into Germany,
without payment of customs duty, up to the average amount sent annually
into Germany from 1911 to 1913.[56] But there is no similar provision
for German exports into Alsace-Lorraine.
For three years Polish exports to Germany, and for five years
Luxemburg's exports to Germany, are to have a similar privilege,[57]--
but not German exports to Poland or to Luxemburg. Luxemburg also, which
for many years has enjoyed the benefits of inclusion within the German
Customs Union, is permanently excluded from it henceforward.[58]
For six months after the Treaty has come into force Germany may not
impose duties on imports from the Allied and Associated States higher
than the most favorable duties prevalent before the war and for a
further two years and a half (making three years in all) this
prohibition continues to apply to certain commodities, notably to some
of those as to which special agreements existed before the war, and also
to wine, to vegetable oils, to artificial silk, and to washed or scoured
wool.[59] This is a ridiculous and injurious provision, by which Germany
is prevented from taking those steps necessary to conserve her limited
resources for the purchase of necessaries and the discharge of
Reparation. As a result of the existing distribution of wealth in
Germany, and of financial wantonness amongst individuals, the offspring
of uncertainty, Germany is threatened with a deluge of luxuries and
semi-luxuries from abroad, of which she has been starved for years,
which would exhaust or diminish her small supplies of foreign exchange.
These provisions strike at the authority of the German Government to
ensure economy in such consumption, or to raise taxation during a
critical period. What an example of senseless greed overreaching itself,
to introduce, after taking from Germany what liquid wealth she has and
demanding impossible payments for the future, a special and
particularized injunction that she must allow as readily as in the days
of her prosperity the import of champagne and of silk!
One other Article affects the Customs Régime of Germany which, if it was
applied, would be serious and extensive in its consequences. The Allies
have reserved the right to apply a special customs régime to the
occupied area on the bank of the Rhine, "in the event of such a measure
being necessary in their opinion in order to safeguard the economic
interests of the population of these territories."[60] This provision
was probably introduced as a possibly useful adjunct to the French
policy of somehow detaching the left bank provinces from Germany during
the years of their occupation. The project of establishing an
independent Republic under French clerical auspices, which would act as
a buffer state and realize the French ambition of driving Germany proper
beyond the Rhine, has not yet been abandoned. Some believe that much may
be accomplished by a régime of threats, bribes, and cajolery extended
over a period of fifteen years or longer.[61] If this Article is acted
upon, and the economic system of the left bank of the Rhine is
effectively severed from the rest of Germany, the effect would be
far-reaching. But the dreams of designing diplomats do not always
prosper, and we must trust the future.
(ii.) The clauses relating to Railways, as originally presented to
Germany, were substantially modified in the final Treaty, and are now
limited to a provision by which goods, coming from Allied territory to
Germany, or in transit through Germany, shall receive the most favored
treatment as regards rail freight rates, etc., applied to goods of the
same kind carried on _any_ German lines "under similar conditions of
transport, for example, as regards length of route."[62] As a
non-reciprocal provision this is an act of interference in internal
arrangements which it is difficult to justify, but the practical effect
of this,[63] and of an analogous provision relating to passenger
traffic,[64] will much depend on the interpretation of the phrase,
"similar conditions of transport."[65]
For the time being Germany's transport system will be much more
seriously disordered by the provisions relating to the cession of
rolling-stock. Under paragraph 7 of the Armistice conditions Germany was
called on to surrender 5000 locomotives and 150,000 wagons, "in good
working order, with all necessary spare parts and fittings." Under the
Treaty Germany is required to confirm this surrender and to recognize
the title of the Allies to the material.[66] She is further required, in
the case of railway systems in ceded territory, to hand over these
systems complete with their full complement of rolling-stock "in a
normal state of upkeep" as shown in the last inventory before November
11, 1918.[67] That is to say, ceded railway systems are not to bear any
share in the general depletion and deterioration of the German
rolling-stock as a whole.
This is a loss which in course of time can doubtless be made good. But
lack of lubricating oils and the prodigious wear and tear of the war,
not compensated by normal repairs, had already reduced the German
railway system to a low state of efficiency. The further heavy losses
under the Treaty will confirm this state of affairs for some time to
come, and are a substantial aggravation of the difficulties of the coal
problem and of export industry generally.
(iii.) There remain the clauses relating to the river system of Germany.
These are largely unnecessary and are so little related to the supposed
aims of the Allies that their purport is generally unknown. Yet they
constitute an unprecedented interference with a country's domestic
arrangements and are capable of being so operated as to take from
Germany all effective control over her own transport system. In their
present form they are incapable of justification; but some simple
changes might transform them into a reasonable instrument.
Most of the principal rivers of Germany have their source or their
outlet in non-German territory. The Rhine, rising in Switzerland, is now
a frontier river for a part of its course, and finds the sea in Holland;
the Danube rises in Germany but flows over its greater length elsewhere;
the Elbe rises in the mountains of Bohemia, now called Czecho-Slovakia;
the Oder traverses Lower Silesia; and the Niemen now bounds the frontier
of East Prussia and has its source in Russia. Of these, the Rhine and
the Niemen are frontier rivers, the Elbe is primarily German but in its
upper reaches has much importance for Bohemia, the Danube in its German
parts appears to have little concern for any country but Germany, and
the Oder is an almost purely German river unless the result of the
plebiscite is to detach all Upper Silesia.
Rivers which, in the words of the Treaty, "naturally provide more than
one State with access to the sea," properly require some measure of
international regulation and adequate guarantees against discrimination.
This principle has long been recognized in the International Commissions
which regulate the Rhine and the Danube. But on such Commissions the
States concerned should be represented more or less in proportion to
their interests. The Treaty, however, has made the international
character of these rivers a pretext for taking the river system of
Germany out of German control.
After certain Articles which provide suitably against discrimination and
interference with freedom of transit,[68] the Treaty proceeds to hand
over the administration of the Elbe, the Oder, the Danube, and the Rhine
to International Commissions.[69] The ultimate powers of these
Commissions are to be determined by "a General Convention drawn up by
the Allied and Associated Powers, and approved by the League of
Nations."[70] In the meantime the Commissions are to draw up their own
constitutions and are apparently to enjoy powers of the most extensive
description, "particularly in regard to the execution of works of
maintenance, control, and improvement on the river system, the financial
régime, the fixing and collection of charges, and regulations for
navigation."[71]
So far there is much to be said for the Treaty. Freedom of through
transit is a not unimportant part of good international practice and
should be established everywhere. The objectionable feature of the
Commissions lies in their membership. In each case the voting is so
weighted as to place Germany in a clear minority. On the Elbe Commission
Germany has four votes out of ten; on the Oder Commission three out of
nine; on the Rhine Commission four out of nineteen; on the Danube
Commission, which is not yet definitely constituted, she will be
apparently in a small minority. On the government of all these rivers
France and Great Britain are represented; and on the Elbe for some
undiscoverable reason there are also representatives of Italy and
Belgium.
Thus the great waterways of Germany are handed over to foreign bodies
with the widest powers; and much of the local and domestic business of
Hamburg, Magdeburg, Dresden, Stettin, Frankfurt, Breslan, and Ulm will
be subject to a foreign jurisdiction. It is almost as though the Powers
of Continental Europe were to be placed in a majority on the Thames
Conservancy or the Port of London.
Certain minor provisions follow lines which in our survey of the Treaty
are now familiar. Under Annex III. of the Reparation Chapter Germany is
to cede up to 20 per cent of her inland navigation tonnage. Over and
above this she must cede such proportion of her river craft upon the
Elbe, the Oder, the Niemen, and the Danube as an American arbitrator may
determine, "due regard being had to the legitimate needs of the parties
concerned, and particularly to the shipping traffic during the five
years preceding the war," the craft so ceded to be selected from those
most recently built.[72] The same course is to be followed with German
vessels and tugs on the Rhine and with German property in the port of
Rotterdam.[73] Where the Rhine flows between France and Germany, France
is to have all the rights of utilizing the water for irrigation or for
power and Germany is to have none;[74] and all the bridges are to be
French property as to their whole length.[75] Finally the administration
of the purely German Rhine port of Kehl lying on the eastern bank of the
river is to be united to that of Strassburg for seven years and managed
by a Frenchman to be nominated by the new Rhine Commission.
Thus the Economic Clauses of the Treaty are comprehensive, and little
has been overlooked which might impoverish Germany now or obstruct her
development in future. So situated, Germany is to make payments of
money, on a scale and in a manner to be examined in the next chapter.
FOOTNOTES:
[7] The precise force of this reservation is discussed in
detail in Chapter V.
[8] I also omit those which have no special relevance to the
German Settlement. The second of the Fourteen Points, which relates to
the Freedom of the Seas, is omitted because the Allies did not accept
it. Any italics are mine.
[9] Part VIII. Annex III. (1).
[10] Part VIII. Annex III. (3).
[11] In the years before the war the average shipbuilding
output of Germany was about 350,000 tons annually, exclusive of
warships.
[12] Part VIII. Annex III. (5).
[13] Art. 119.
[14] Arts. 120 and 257.
[15] Art. 122.
[16] Arts. 121 and 297(b). The exercise or non-exercise of this
option of expropriation appears to lie, not with the Reparation
Commission, but with the particular Power in whose territory the
property has become situated by cession or mandation.
[17] Art. 297 (h) and para. 4 of Annex to Part X. Section IV.
[18] Arts. 53 and 74.
[19] In 1871 Germany granted France credit for the railways of
Alsace-Lorraine but not for State property. At that time, however, the
railways were private property. As they afterwards became the property
of the German Government, the French Government have held, in spite of
the large additional capital which Germany has sunk in them, that their
treatment must follow the precedent of State property generally.
[20] Arts. 55 and 255. This follows the precedent of 1871.
[21] Art. 297 (_b_).
[22] Part X. Sections III. and IV. and Art. 243.
[23] The interpretation of the words between inverted commas is
a little dubious. The phrase is so wide as to seem to include private
debts. But in the final draft of the Treaty private debts are not
explicitly referred to.
[24] This provision is mitigated in the case of German property
in Poland and the other new States, the proceeds of liquidation in these
areas being payable direct to the owner (Art. 92.)
[25] Part X. Section IV. Annex, para. 10: "Germany will, within
six months from the coming into force of the present Treaty, deliver to
each Allied or Associated Power all securities, certificates, deeds, or
other documents of title held by its nationals and relating to property,
rights, or interests situated in the territory of that Allied or
Associated Power.... Germany will at any time on demand of any Allied or
Associated Power furnish such information as may be required with regard
to the territory, rights, and interests of German nationals within the
territory of such Allied or Associated Power, or with regard to any
transactions concerning such property, rights, or interests effected
since July 1, 1914."
[26] "Any public utility undertaking or concession" is a vague
phrase, the precise interpretation of which is not provided for.
[27] Art. 260.
[28] Art. 235.
[29] Art. 118.
[30] Arts. 129 and 132.
[31] Arts. 135-137.
[32] Arts. 135-140.
[33] Art. 141: "Germany renounces all rights, titles and
privileges conferred on her by the General Act of Algeciras of April 7,
1906, and by the Franco-German Agreements, of Feb. 9, 1909, and Nov. 4,
1911...."
[34] Art. 148: "All treaties, agreements, arrangements and
contracts concluded by Germany with Egypt are regarded as abrogated from
Aug. 4, 1914." Art. 153: "All property and possessions in Egypt of the
German Empire and the German States pass to the Egyptian Government
without payment."
[35] Art. 289.
[36] Art. 45.
[37] Part IV. Section IV. Annex, Chap. III.
[38] "We take over the ownership of the Sarre mines, and in
order not to be inconvenienced in the exploitation of these coal
deposits, we constitute a distinct little estate for the 600,000 Germans
who inhabit this coal basin, and in fifteen years we shall endeavor by a
plebiscite to bring them to declare that they want to be French. We know
what that means. During fifteen years we are going to work on them, to
attack them from every point, till we obtain from them a declaration of
love. It is evidently a less brutal proceeding than the _coup de force_
which detached from us our Alsatians and Lorrainers. But if less brutal,
it is more hypocritical. We know quite well between ourselves that it is
an attempt to annex these 600,000 Germans. One can understand very well
the reasons of an economic nature which have led Clemenceau to wish to
give us these Sarre coal deposits, but in order to acquire them must we
give ourselves the appearance of wanting to juggle with 600,000 Germans
in order to make Frenchmen of them in fifteen years?" (M. Hervé in _La
Victorie_, May 31, 1919).
[39] This plebiscite is the most important of the concessions
accorded to Germany in the Allies' Final Note, and one for which Mr.
Lloyd George, who never approved the Allies' policy on the Eastern
frontiers of Germany, can claim the chief credit. The vote cannot take
place before the spring of 1920, and may be postponed until 1921. In the
meantime the province will be governed by an Allied Commission. The vote
will be taken by communes, and the final frontiers will be determined by
the Allies, who shall have regard, partly to the results of the vote in
each commune, and partly "to the geographical and economic conditions of
the locality." It would require great local knowledge to predict the
result. By voting Polish, a locality can escape liability for the
indemnity, and for the crushing taxation consequent on voting German, a
factor not to be neglected. On the other hand, the bankruptcy and
incompetence of the new Polish State might deter those who were disposed
to vote on economic rather than on racial grounds. It has also been
stated that the conditions of life in such matters as sanitation and
social legislation are incomparably better in Upper Silesia than in the
adjacent districts of Poland, where similar legislation is in its
infancy. The argument in the text assumes that Upper Silesia will cease
to be German. But much may happen in a year, and the assumption is not
certain. To the extent that it proves erroneous the conclusions must be
modified.
[40] German authorities claim, not without contradiction, that
to judge from the votes cast at elections, one-third of the population
would elect in the Polish interest, and two-thirds in the German.
[41] It must not be overlooked, however, that, amongst the
other concessions relating to Silesia accorded in the Allies' Final
Note, there has been included Article 90, by which "Poland undertakes to
permit for a period of fifteen years the exportation to Germany of the
products of the mines in any part of Upper Silesia transferred to Poland
in accordance with the present Treaty. Such products shall be free from
all export duties or other charges or restrictions on exportation.
Poland agrees to take such steps as may be necessary to secure that any
such products shall be available for sale to purchasers in Germany on
terms as favorable as are applicable to like products sold under similar
conditions to purchasers in Poland or in any other country." This does
not apparently amount to a right of preemption, and it is not easy to
estimate its effective practical consequences. It is evident, however,
that in so far as the mines are maintained at their former efficiency,
and in so far as Germany is in a position to purchase substantially her
former supplies from that source, the loss is limited to the effect on
her balance of trade, and is without the more serious repercussions on
her economic life which are contemplated in the text. Here is an
opportunity for the Allies to render more tolerable the actual operation
of the settlement. The Germans, it should be added, have pointed out
that the same economic argument which adds the Saar fields to France
allots Upper Silesia to Germany. For whereas the Silesian mines are
essential to the economic life of Germany, Poland does not need them. Of
Poland's pre-war annual demand of 10,500,000 tons, 6,800,000 tons were
supplied by the indisputably Polish districts adjacent to Upper Silesia.
1,500,000 tons from Upper Silesia (out of a total Upper Silesian output
of 43,500,000 tons), and the balance from what is now Czecho-Slovakia.
Even without any supply from Upper Silesia and Czecho-Slovakia, Poland
could probably meet her requirements by the fuller exploitation of her
own coalfields which are not yet scientifically developed, or from the
deposits of Western Galicia which are now to be annexed to her.
[42] France is also to receive annually for three years 35,000
tons of benzol, 60,000 tons of coal tar, and 30,000 tons of sulphate of
ammonia.
[43] The Reparation Commission is authorized under the Treaty
(Part VIII Annex V. para. 10) "to postpone or to cancel deliveries" if
they consider "that the full exercise of the foregoing options would
interfere unduly with the industrial requirements of Germany." In the
event of such postponements or cancellations "the coal to replace coal
from destroyed mines shall receive priority over other deliveries." This
concluding clause is of the greatest importance, if, as will be seen, it
is physically impossible for Germany to furnish the full 45,000,000; for
it means that France will receive 20,000,000 tons before Italy receives
anything. The Reparation Commission has no discretion to modify this.
The Italian Press has not failed to notice the significance of the
provision, and alleges that this clause was inserted during the absence
of the Italian representatives from Paris (_Corriere della Sera_, July
19, 1919).
[44] It follows that the current rate of production in Germany
has sunk to about 60 per cent of that of 1913. The effect on reserves
has naturally been disastrous, and the prospects for the coming winter
are dangerous.
[45] This assumes a loss of output of 15 per cent as compared
with the estimate of 30 per cent quoted above.
[46] This supposes a loss of 23 per cent of Germany's
industrial undertaking and a diminution of 13 per cent in her other
requirements.
[47] The reader must he reminded in particular that the above
calculations take no account of the German production of lignite, which
yielded in 1913 13,000,000 tons of rough lignite in addition to an
amount converted into 21,000,000 tons of briquette. This amount of
lignite, however, was required in Germany before the war _in addition
to_ the quantities of coal assumed above. I am not competent to speak on
the extent to which the loss of coal can be made good by the extended
use of lignite or by economies in its present employment; but some
authorities believe that Germany may obtain substantial compensation for
her loss of coal by paying more attention to her deposits of lignite.
[48] Mr. Hoover, in July, 1919, estimated that the coal output
of Europe, excluding Russia and the Balkans, had dropped from
679,500,000 tons to 443,000,000 tons,--as a result in a minor degree of
loss of material and labor, but owing chiefly to a relaxation of
physical effort after the privations and sufferings of the war, a lack
of rolling-stock and transport, and the unsettled political fate of some
of the mining districts.
[49] Numerous commercial agreements during the war ware
arranged on these lines. But in the month of June, 1919, alone, minor
agreements providing for payment in coal were made by Germany with
Denmark, Norway, and Switzerland. The amounts involved were not large,
but without them Germany could not have obtained butter from Denmark,
fats and herrings from Norway, or milk and cattle from Switzerland.
[50] "Some 60,000 Ruhr miners have agreed to work extra
shifts--so-called butter-shifts--for the purpose of furnishing coal for
export to Denmark hence butter will be exported in return. The butter
will benefit the miners in the first place, as they have worked
specially to obtain it" (_Kölnische Zeitung_, June 11, 1919).
[51] What of the prospects of whisky-shifts in England?
[52] As early as September, 1919, the Coal Commission had to
face the physical impracticability of enforcing the demands of the
Treaty, and agreed to modify them as follows:--"Germany shall in the
next six months make deliveries corresponding to an annual delivery of
20 million tons as compared with 43 millions as provided in the Peace
Treaty. If Germany's total production exceeds the present level of about
108 millions a year, 60 per cent of extra production, up to 128
millions, shall be delivered to the Entente and 50 per cent of any extra
beyond that, until the figure provided in the Peace Treaty is reached.
If the total production falls below 108 millions the Entente will
examine the situation, after hearing Germany, and take account of it."
[53] 21,136,265 tons out of a total of 28,607,903 tons. The
loss of iron-ore in respect of Upper Silesia is insignificant. The
exclusion of the iron and steel of Luxemburg from the German Customs
Union is, however, important, especially when this loss is added to that
of Alsace-Lorraine. It may be added in passing that Upper Silesia
includes 75 per cent of the zinc production of Germany.
[54] In April, 1919, the British Ministry of Munitions
despatched an expert Commission to examine the conditions of the iron
and steel works in Lorraine and the occupied areas of Germany. The
Report states that the iron and steel works in Lorraine, and to a lesser
extent in the Saar Valley, are dependent on supplies of coal and coke
from Westphalia. It is necessary to mix Westphalian coal with Saar coal
to obtain a good furnace coke. The entire dependence of all the Lorraine
iron and steel works upon Germany for fuel supplies "places them," says
the Report, "in a very unenviable position."
[55] Arts. 264, 265, 266, and 267. These provisions can only be
extended beyond five years by the Council of the League of Nations.
[56] Art. 268 (_a_).
[57] Art. 268 (_b_) and (_c_).
[58] The Grand Duchy is also deneutralized and Germany binds
herself to "accept in advance all international arrangements which may
be concluded by the Allied and Associated Powers relating to the Grand
Duchy" (Art. 40). At the end of September, 1919, a plebiscite was held
to determine whether Luxemburg should join the French or the Belgian
Customs Union, which decided by a substantial majority in favour of the
former. The third alternative of the maintenance of the union with
Germany was not left open to the electorate.
[59] Art. 269.
[60] Art. 270.
[61] The occupation provisions may be conveniently summarized
at this point. German territory situated west of the Rhine, together
with the bridge-heads, is subject to occupation for a period of fifteen
years (Art. 428). If, however, "the conditions of the present Treaty are
faithfully carried out by Germany," the Cologne district will be
evacuated after five years, and the Coblenz district after ten years
(Art. 429). It is, however, further provided that if at the expiration
of fifteen years "the guarantees against unprovoked aggression by
Germany are not considered sufficient by the Allied and Associated
Governments, the evacuation of the occupying troops may be delayed to
the extent regarded as necessary for the purpose of obtaining the
required guarantees" (Art. 429); and also that "in case either during
the occupation or after the expiration of the fifteen years, the
Reparation Commission finds that Germany refuses to observe the whole or
part of her obligations under the present Treaty with regard to
Reparation, the whole or part of the areas specified in Article 429 will
be re-occupied immediately by the Allied and Associated Powers" (Art.
430). Since it will be impossible for Germany to fulfil the whole of her
Reparation obligations, the effect of the above provisions will be in
practice that the Allies will occupy the left bank of the Rhine just so
long as they choose. They will also govern it in such manner as they may
determine (_e.g._ not only as regards customs, but such matters as the
respective authority of the local German representatives and the Allied
Governing Commission), since "all matters relating to the occupation and
not provided for by the present Treaty shall be regulated by subsequent
agreements, which Germany hereby undertakes to observe" (Art. 432). The
actual Agreement under which the occupied areas are to be administered
for the present has been published as a White Paper [Cd. 222]. The
supreme authority is to be in the hands of an Inter-Allied Rhineland
Commission, consisting of a Belgian, a French, a British, and an
American member. The articles of this Agreement are very fairly and
reasonably drawn.
[62] Art. 365. After five years this Article is subject to
revision by the Council of the League of Nations.
[63] The German Government withdrew, as from September 1, 1919,
all preferential railway tariffs for the export of iron and steel goods,
on the ground that these privileges would have been more than
counterbalanced by the corresponding privileges which, under this
Article of the Treaty, they would have been forced to give to Allied
traders.
[64] Art. 367.
[65] Questions of interpretation and application are to be
referred to the League of Nations (Art. 376).
[66] Art. 250.
[67] Art 371. This provision is even applied "to the lines of
former Russian Poland converted by Germany to the German gage, such
lines being regarded as detached from the Prussian State System."
[68] Arts. 332-337. Exception may be taken, however, to the
second paragraph of Art. 332, which allows the vessels of other nations
to trade between German towns but forbids German vessels to trade
between non-German towns except with special permission; and Art. 333,
which prohibits Germany from making use of her river system as a source
of revenue, may be injudicious.
[69] The Niemen and the Moselle are to be similarly treated at
a later date if required.
[70] Art. 338.
[71] Art. 344. This is with particular reference to the Elbe
and the Oder; the Danube and the Rhine are dealt with in relation to the
existing Commissions.
[72] Art. 339.
[73] Art. 357.
[74] Art. 358. Germany is, however, to be allowed some payment
or credit in respect of power so taken by France.
[75] Art. 66.
CHAPTER V
REPARATION
I. _Undertakings given prior to the Peace Negotiations_
The categories of damage in respect of which the Allies were entitled to
ask for Reparation are governed by the relevant passages in President
Wilson's Fourteen Points of January 8, 1918, as modified by the Allied
Governments in their qualifying Note, the text of which the President
formally communicated to the German Government as the basis of peace on
November 5, 1918. These passages have been quoted in full at the
beginning of Chapter IV. That is to say, "compensation will be made by
Germany for all damage done to the civilian population of the Allies and
to their property by the aggression of Germany by land, by sea, and from
the air." The limiting quality of this sentence is reinforced by the
passage in the President's speech before Congress on February 11, 1918
(the terms of this speech being an express part of the contract with the
enemy), that there shall be "no contributions" and "no punitive
damages."
It has sometimes been argued that the preamble to paragraph 19[76] of
the Armistice Terms, to the effect "that any future claims and demands
of the Allies and the United States of America remain unaffected," wiped
out all precedent conditions, and left the Allies free to make whatever
demands they chose. But it is not possible to maintain that this casual
protective phrase, to which no one at the time attached any particular
importance, did away with all the formal communications which passed
between the President and the German Government as to the basis of the
Terms of Peace during the days preceding the Armistice, abolished the
Fourteen Points, and converted the German acceptance of the Armistice
Terms into unconditional surrender, so far as it affects the Financial
Clauses. It is merely the usual phrase of the draftsman, who, about to
rehearse a list of certain claims, wishes to guard himself from the
implication that such list is exhaustive. In any case, this contention
is disposed of by the Allied reply to the German observations on the
first draft of the Treaty, where it is admitted that the terms of the
Reparation Chapter must be governed by the President's Note of November
5.
Assuming then that the terms of this Note are binding, we are left to
elucidate the precise force of the phrase--"all damage done to the
civilian population of the Allies and to their property by the
aggression of Germany by land, by sea, and from the air." Few sentences
in history have given so much work to the sophists and the lawyers, as
we shall see in the next section of this chapter, as this apparently
simple and unambiguous statement. Some have not scrupled to argue that
it covers the entire cost of the war; for, they point out, the entire
cost of the war has to be met by taxation, and such taxation is
"damaging to the civilian population." They admit that the phrase is
cumbrous, and that it would have been simpler to have said "all loss and
expenditure of whatever description"; and they allow that the apparent
emphasis of damage to the persons and property of _civilians_ is
unfortunate; but errors of draftsmanship should not, in their opinion,
shut off the Allies from the rights inherent in victors.
But there are not only the limitations of the phrase in its natural
meaning and the emphasis on civilian damages as distinct from military
expenditure generally; it must also be remembered that the context of
the term is in elucidation of the meaning of the term "restoration" in
the President's Fourteen Points. The Fourteen Points provide for damage
in invaded territory--Belgium, France, Roumania, Serbia, and Montenegro
(Italy being unaccountably omitted)--but they do not cover losses at sea
by submarine, bombardments from the sea (as at Scarborough), or damage
done by air raids. It was to repair these omissions, which involved
losses to the life and property of civilians not really distinguishable
in kind from those effected in occupied territory, that the Supreme
Council of the Allies in Paris proposed to President Wilson their
qualifications. At that time--the last days of October, 1918--I do not
believe that any responsible statesman had in mind the exaction from
Germany of an indemnity for the general costs of the war. They sought
only to make it clear (a point of considerable importance to Great
Britain) that reparation for damage done to non-combatants and their
property was not limited to invaded territory (as it would have been by
the Fourteen Points unqualified), but applied equally to _all_ such
damage, whether "by land, by sea, or from the air" It was only at a
later stage that a general popular demand for an indemnity, covering
the full costs of the war, made it politically desirable to practise
dishonesty and to try to discover in the written word what was not
there.
What damages, then, can be claimed from the enemy on a strict
interpretation of our engagements?[77] In the case of the United Kingdom
the bill would cover the following items:--
(a) Damage to civilian life and property by the acts of an enemy
Government including damage by air raids, naval bombardments, submarine
warfare, and mines.
(b) Compensation for improper treatment of interned civilians.
It would not include the general costs of the war, or (_e.g._) indirect
damage due to loss of trade.
The French claim would include, as well as items corresponding to the
above:--
(c) Damage done to the property and persons of civilians in the war
area, and by aerial warfare behind the enemy lines.
(d) Compensation for loot of food, raw materials, live-stock, machinery,
household effects, timber, and the like by the enemy Governments or
their nationals in territory occupied by them.
(e) Repayment of fines and requisitions levied by the enemy Governments
or their officers on French municipalities or nationals.
(f) Compensation to French nationals deported or compelled to do forced
labor.
In addition to the above there is a further item of more doubtful
character, namely--
(g) The expenses of the Relief Commission in providing necessary food
and clothing to maintain the civilian French population in the
enemy-occupied districts.
The Belgian claim would include similar items.[78] If it were argued
that in the case of Belgium something more nearly resembling an
indemnity for general war costs can be justified, this could only be on
the ground of the breach of International Law involved in the invasion
of Belgium, whereas, as we have seen, the Fourteen Points include no
special demands on this ground.[79] As the cost of Belgian Belief under
(g), as well as her general war costs, has been met already by advances
from the British, French, and United States Governments, Belgium would
presumably employ any repayment of them by Germany in part discharge of
her debt to these Governments, so that any such demands are, in effect,
an addition to the claims of the three lending Governments.
The claims of the other Allies would be compiled on similar lines. But
in their case the question arises more acutely how far Germany can be
made contingently liable for damage done, not by herself, but by her
co-belligerents, Austria-Hungary, Bulgaria, and Turkey. This is one of
the many questions to which the Fourteen Points give no clear answer; on
the one hand, they cover explicitly in Point 11 damage done to Roumania,
Serbia, and Montenegro, without qualification as to the nationality of
the troops inflicting the damage; on the other hand, the Note of the
Allies speaks of "German" aggression when it might have spoken of the
aggression of "Germany and her allies." On a strict and literal
interpretation, I doubt if claims lie against Germany for damage
done,--_e.g._ by the Turks to the Suez Canal, or by Austrian submarines
in the Adriatic. But it is a case where, if the Allies wished to strain
a point, they could impose contingent liability on Germany without
running seriously contrary to the general intention of their
engagements.
As between the Allies themselves the case is quite different. It would
be an act of gross unfairness and infidelity if France and Great Britain
were to take what Germany could pay and leave Italy and Serbia to get
what they could out of the remains of Austria-Hungary. As amongst the
Allies themselves it is clear that assets should be pooled and shared
out in proportion to aggregate claims.
In this event, and if my estimate is accepted, as given below, that
Germany's capacity to pay will be exhausted by the direct and legitimate
claims which the Allies hold against her, the question of her contingent
liability for her allies becomes academic. Prudent and honorable
statesmanship would therefore have given her the benefit of the doubt,
and claimed against her nothing but the damage she had herself caused.
What, on the above basis of claims, would the aggregate demand amount
to? No figures exist on which to base any scientific or exact estimate,
and I give my own guess for what it is worth, prefacing it with the
following observations.
The amount of the material damage done in the invaded districts has been
the subject of enormous, if natural, exaggeration A journey through the
devastated areas of France is impressive to the eye and the imagination
beyond description. During the winter of 1918-19, before Nature had
cast over the scene her ameliorating mantle, the horror and desolation
of war was made visible to sight on an extraordinary scale of blasted
grandeur. The completeness of the destruction was evident. For mile
after mile nothing was left. No building was habitable and no field fit
for the plow. The sameness was also striking. One devastated area was
exactly like another--a heap of rubble, a morass of shell-holes, and a
tangle of wire.[80] The amount of human labor which would be required to
restore such a countryside seemed incalculable; and to the returned
traveler any number of milliards of dollars was inadequate to express in
matter the destruction thus impressed upon his spirit. Some Governments
for a variety of intelligible reasons have not been ashamed to exploit
these feelings a little.
Popular sentiment is most at fault, I think, in the case of Belgium. In
any event Belgium is a small country, and in its case the actual area of
devastation is a small proportion of the whole. The first onrush of the
Germans in 1914 did some damage locally; after that the battle-line in
Belgium did not sway backwards and forwards, as in France, over a deep
belt of country. It was practically stationary, and hostilities were
confined to a small corner of the country, much of which in recent times
was backward, poor, and sleepy, and did not include the active industry
of the country. There remains some injury in the small flooded area, the
deliberate damage done by the retreating Germans to buildings, plant,
and transport, and the loot of machinery, cattle, and other movable
property. But Brussels, Antwerp, and even Ostend are substantially
intact, and the great bulk of the land, which is Belgium's chief wealth,
is nearly as well cultivated as before. The traveler by motor can pass
through and from end to end of the devastated area of Belgium almost
before he knows it; whereas the destruction in France is on a different
kind of scale altogether. Industrially, the loot has been serious and
for the moment paralyzing; but the actual money cost of replacing
machinery mounts up slowly, and a few tens of millions would have
covered the value of every machine of every possible description that
Belgium ever possessed. Besides, the cold statistician must not overlook
the fact that the Belgian people possess the instinct of individual
self-protection unusually well developed; and the great mass of German
bank-notes[81] held in the country at the date of the Armistice, shows
that certain classes of them at least found a way, in spite of all the
severities and barbarities of German rule, to profit at the expense of
the invader. Belgian claims against Germany such as I have seen,
amounting to a sum in excess of the total estimated pre-war wealth of
the whole country, are simply irresponsible.[82]
It will help to guide our ideas to quote the official survey of Belgian
wealth, published in 1913 by the Finance Ministry of Belgium, which was
as follows:
Land $1,320,000,000 Buildings 1,175,000,000
Personal wealth 2,725,000,000 Cash 85,000,000
Furniture, etc 600,000,000 --------------
$5,905,000,000
This total yields an average of $780 per inhabitant, which Dr. Stamp,
the highest authority on the subject, is disposed to consider as _prima
facie_ too low (though he does not accept certain much higher estimates
lately current), the corresponding wealth per head (to take Belgium's
immediate neighbors) being $835 for Holland, $1,220 for Germany, and
$1,515 for France.[83] A total of $7,500,000,000, giving an average of
about $1,000 per head, would, however, be fairly liberal. The official
estimate of land and buildings is likely to be more accurate than the
rest. On the other hand, allowance has to be made for the increased
costs of construction.
Having regard to all these considerations, I do not put the money value
of the actual _physical_ loss of Belgian property by destruction and
loot above $750,000,000 _as a maximum_, and while I hesitate to put yet
lower an estimate which differs so widely from those generally current,
I shall be surprised if it proves possible to substantiate claims even
to this amount. Claims in respect of levies, fines, requisitions, and so
forth might possibly amount to a further $500,000,000. If the sums
advanced to Belgium by her allies for the general costs of the war are
to be included, a sum of about $1,250,000,000 has to be added (which
includes the cost of relief), bringing the total to $2,500,000,000.
The destruction in France was on an altogether more significant scale,
not only as regards the length of the battle line, but also on account
of the immensely deeper area of country over which the battle swayed
from time to time. It is a popular delusion to think of Belgium as the
principal victim of the war; it will turn out, I believe, that taking
account of casualties, loss of property and burden of future debt,
Belgium has made the least relative sacrifice of all the belligerents
except the United States. Of the Allies, Serbia's sufferings and loss
have been proportionately the greatest, and after Serbia, France. France
in all essentials was just as much the victim of German ambition as was
Belgium, and France's entry into the war was just as unavoidable.
France, in my judgment, in spite of her policy at the Peace Conference,
a policy largely traceable to her sufferings, has the greatest claims on
our generosity.
The special position occupied by Belgium in the popular mind is due, of
course, to the fact that in 1914 her sacrifice was by far the greatest
of any of the Allies. But after 1914 she played a minor rôle.
Consequently, by the end of 1918, her relative sacrifices, apart from
those sufferings from invasion which cannot be measured in money, had
fallen behind, and in some respects they were not even as great, for
example, as Australia's. I say this with no wish to evade the
obligations towards Belgium under which the pronouncements of our
responsible statesmen at many different dates have certainly laid us.
Great Britain ought not to seek any payment at all from Germany for
herself until the just claims of Belgium have been fully satisfied. But
this is no reason why we or they should not tell the truth about the
amount.
While the French claims are immensely greater, here too there has been
excessive exaggeration, as responsible French statisticians have
themselves pointed out. Not above 10 per cent of the area of France was
effectively occupied by the enemy, and not above 4 per cent lay within
the area of substantial devastation. Of the sixty French towns having a
population exceeding 35,000, only two were destroyed--Reims (115,178)
and St. Quentin (55,571); three others were occupied--Lille, Roubaix,
and Douai--and suffered from loot of machinery and other property, but
were not substantially injured otherwise. Amiens, Calais, Dunkerque, and
Boulogne suffered secondary damage by bombardment and from the air; but
the value of Calais and Boulogne must have been increased by the new
works of various kinds erected for the use of the British Army.
The _Annuaire Statistique de la France, 1917_, values the entire house
property of France at $11,900,000,000 (59.5 milliard francs).[84] An
estimate current in France of $4,000,000,000 (20 milliard francs) for
the destruction of house property alone is, therefore, obviously wide of
the mark.[85] $600,000,000 at pre-war prices, or say $1,250,000,000 at
the present time, is much nearer the right figure. Estimates of the
value of the land of France (apart from buildings) vary from
$12,400,000,000 to $15,580,000,000, so that it would be extravagant to
put the damage on this head as high as $500,000,000. Farm Capital for
the whole of France has not been put by responsible authorities above
$2,100,000,000.[86] There remain the loss of furniture and machinery,
the damage to the coal-mines and the transport system, and many other
minor items. But these losses, however serious, cannot be reckoned in
value by hundreds of millions of dollars in respect of so small a part
of France. In short, it will be difficult to establish a bill exceeding
$2,500,000,000 for _physical and material_ damage in the occupied and
devastated areas of Northern France.[87] I am confirmed in this estimate
by the opinion of M. René Pupin, the author of the most comprehensive
and scientific estimate of the pre-war wealth of France,[88] which I did
not come across until after my own figure had been arrived at. This
authority estimates the material losses of the invaded regions at from
$2,000,000,000 to $3,000,000,000 (10 to 15 milliards),[89] between which
my own figure falls half-way.
Nevertheless, M. Dubois, speaking on behalf of the Budget Commission of
the Chamber, has given the figure of $13,000,000,000 (65 milliard
francs) "as a minimum" without counting "war levies, losses at sea, the
roads, or the loss of public monuments." And M. Loucheur, the Minister
of Industrial Reconstruction, stated before the Senate on the 17th
February, 1919, that the reconstitution of the devastated regions would
involve an expenditure of $15,000,000,000 (75 milliard francs),--more
than double M. Pupin's estimate of the entire wealth of their
inhabitants. But then at that time M. Loucheur was taking a prominent
part in advocating the claims of France before the Peace Conference,
and, like others, may have found strict veracity inconsistent with the
demands of patriotism.[90]
The figure discussed so far is not, however, the totality of the French
claims. There remain, in particular, levies and requisitions on the
occupied areas and the losses of the French mercantile marine at sea
from the attacks of German cruisers and submarines. Probably
$1,000,000,000 would be ample to cover all such claims; but to be on the
safe side, we will, somewhat arbitrarily, make an addition to the French
claim of $1,500,000,000 on all heads, bringing it to $4,000,000,000 in
all.
The statements of M. Dubois and M. Loucheur were made in the early
spring of 1919. A speech delivered by M. Klotz before the French Chamber
six months later (Sept. 5, 1919) was less excusable. In this speech the
French Minister of Finance estimated the total French claims for damage
to property (presumably inclusive of losses at sea, etc., but apart from
pensions and allowances) at $26,800,000,000 (134 milliard francs), or
more than six times my estimate. Even if my figure prove erroneous, M.
Klotz's can never have been justified. So grave has been the deception
practised on the French people by their Ministers that when the
inevitable enlightenment comes, as it soon must (both as to their own
claims and as to Germany's capacity to meet them), the repercussions
will strike at more than M. Klotz, and may even involve the order of
Government and Society for which he stands.
British claims on the present basis would be practically limited to
losses by sea--losses of hulls and losses of cargoes. Claims would lie,
of course, for damage to civilian property in air raids and by
bombardment from the sea, but in relation to such figures as we are now
dealing with, the money value involved is insignificant,--$25,000,000
might cover them all, and $50,000,000 would certainly do so.
The British mercantile vessels lost by enemy action, excluding fishing
vessels, numbered 2479, with an aggregate of 7,759,090 tons gross.[91]
There is room for considerable divergence of opinion as to the proper
rate to take for replacement cost; at the figure of $150 per gross ton,
which with the rapid growth of shipbuilding may soon be too high but can
be replaced by any other which better authorities[92] may prefer, the
aggregate claim is $1,150,000,000. To this must be added the loss of
cargoes, the value of which is almost entirely a matter of guesswork. An
estimate of $200 per ton of shipping lost may be as good an
approximation as is possible, that is to say $1,550,000,000, making
$2,700,000,000 altogether.
An addition to this of $150,000,000, to cover air raids, bombardments,
claims of interned civilians, and miscellaneous items of every
description, should be more than sufficient,--making a total claim for
Great Britain of $2,850,000,000. It is surprising, perhaps, that the
money value of Great Britain's claim should be so little short of that
of France and actually in excess of that of Belgium. But, measured
either by pecuniary loss or real loss to the economic power of the
country, the injury to her mercantile marine was enormous.
There remain the claims of Italy, Serbia, and Roumania for damage by
invasion and of these and other countries, as for example Greece,[93]
for losses at sea. I will assume for the present argument that these
claims rank against Germany, even when they were directly caused not by
her but by her allies; but that it is not proposed to enter any such
claims on behalf of Russia.[94] Italy's losses by invasion and at sea
cannot be very heavy, and a figure of from $250,000,000 to $500,000,000
would be fully adequate to cover them. The losses of Serbia, although
from a human point of view her sufferings were the greatest of all,[95]
are not measured _pecuniarily_ by very great figures, on account of her
low economic development. Dr. Stamp (_loc. cit._) quotes an estimate by
the Italian statistician Maroi, which puts the national wealth of Serbia
at $2,400,000,000 or $525 per head,[96] and the greater part of this
would be represented by land which has sustained no permanent
damage.[97] In view of the very inadequate data for guessing at more
than the _general magnitude_ of the legitimate claims of this group of
countries, I prefer to make one guess rather than several and to put the
figure for the whole group at the round sum of $1,250,000,000.
We are finally left with the following--
Belgium $ 2,500,000,000[98] France 4,000,000,000
Great Britain 2,850,000,000 Other Allies 1,250,000,000
--------------- Total $10,600,000,000
I need not impress on the reader that there is much guesswork in the
above, and the figure for France in particular is likely to be
criticized. But I feel some confidence that the _general magnitude_, as
distinct from the precise figures, is not hopelessly erroneous; and this
may be expressed by the statement that a claim against Germany, based on
the interpretation of the pre-Armistice engagements of the Allied
Powers which is adopted above, would assuredly be found to exceed
$8,000,000,000 and to fall short of $15,000,000,000.
**THE END**