“[Consequences there shall be.] He that diggeth a pit shall fall into it; and whoso breaketh an hedge, a serpent shall bite him.” — Ecclesiastes 10,8
Foreword
I did not undertake to compose this work because an English author wrote The Economic Consequences of the Peace. This book is not a response to Keynes, as will be illustrated shortly. In introduction to what follows, I simply want to point out a singular contrast.
Following a war that brought the strength and resources of the world’s principal nations into conflict, the very idea of politics has been discredited. Perhaps it is headache-inducing? One must admit that never in history have the leaders of men, whose responsibility it is to establish peace, been presented with such vast complexity. That being the case, there is all the more reason to reflect and anticipate. Calculation can be so trying, and for lack of it, a vast swathe of the future has been abandoned to the unknown and to chance. A swathe whose bounds far exceed those that serious minds would arrive at in application to the direction of the course of great affairs.
In a century when the belief in the limitless progress of the human spirit was so widespread, Fontenelle said, “There is no doubt, and the people will come around to this fact, that in an equal measure to physics, the world of politics is regulated by the law of number, weight and measure.” Pity the people in whose name all is done and have only to endure! At what point did they come to realise that peace violated the laws of physics? Neglect of the law of number, weight and measure, however, does not go unpunished, and the people will not understand why, when the day comes, they will once again have to pay the price.
Chapter One — The Fault of Things and Men
That after a war is won, the victor, or at least one of the victors in the case of a coalition, is discontented with the peace and believes themself played for a fool, is no rare thing. In 1815, the Prussians complained that the Congress of Vienna ended “farcically” for them. In days past, we ourselves were party to a treaty from which a saying along the lines of “as foolish as the peace” arose. Mr Poincaré1, who has not been sparing in his criticism of the treaties of Versailles, Saint-Germain and sundry Parisian suburbs, was correct when he wrote that the disappointment they caused was no novelty.
Nothing is left to be said about the Treaty of Versailles’ shortcomings, about what it did not give us and the shortfall it represents. Territory, borders, money; its provisions to our benefit in all these regards are inferior to what had once generally been hoped. It has been noted that France has not re-assumed its 1814 boundaries, but those of 1815 and Waterloo that the French people so long felt as a humiliation2. To say that this treaty is of immediate benefit to England, but to France only eventually has become a commonplace by its sheer patency. Mr Millerand3, who inherited a situation not of his making, has now finally rendered his definitive judgement. When, after a few months of experience, he declared from the speaker’s platform that the Treaty of Versailles, despite its lengthy and minutieus arrangements to ensure compensation for France’s ruin and damages, was “loaded more with promises than realities.”
One could have conceived of a peace that, though not giving us all we desired, would, however, have paid us otherwise. A peace, for example, that, while allocating fewer billions to us on paper, would have left us with tangible billions, by considerably easing our military expenditure and freeing our youth from conscription. The benefit, though indirect, would have been immense. The first result in our sights should have been conditions fit to end the barbarous state of armed peace in which we kept ourselves4. In this way, we would have rapidly made up for, and more, in security, peace of mind and freedom from a terrible servitude, the sacrifices conceded elsewhere. That was the principal point of the peace, one beyond our negotiators’ comprehension. The public’s attention, set as it was on details or, worse, trifles, had not a better grasp of it.
In politics, repercussions are most often spotted once they have begun to make themselves known, namely, when it is too late. If the principle of causality occupies so small a place in the minds of individuals, it is of even less pertinence to people as a collective. There is nothing so natural as a democracy that concludes a great peace without giving thought to the repercussions. Among the various, usually unphilosophic, tales told in Arabia, there is one that gives rather good expression to this infantile fatalism. A voyager, travelling through the desert at night, innocently casts off the date stones left from his evening meal. Suddenly, a genie appears before him, saying, “As you were casting off your stones, my son happened to pass by. He received one in the eye and died as a result. That is why I shall take my revenge.” Catastrophe, or historical hindsight, is required for nations to see the consequences of past action. Nations resign themselves to living surrounded by invisible forces, similar to the genie from One Thousand and One Nights, thoughtlessly doing wrong by them until suddenly they demand a reckoning.
Hardly any attention has been given to the consequences of the peace - by which I mean the political consequences — because an English author had pretensions to demonstrate those pertaining to economics. Keynes’ is a work of great consequence. It is a pamphlet with all the appearances of a work of science and has achieved success because of the curiosity for and the outrage at the many paradoxes found therein. It has become the manual for all those who desire Germany not to pay, or pay, but as little as possible, the costs of her failed undertaking. Keynes’ thesis is well-known and has exerted a definite influence on the British government and the country’s public opinion. What is curious is that the first author to really study the outcomes of the peace from his particular, financial, point of view has been led before pessimistic conclusions. A unilateral pessimism, it is true, for Keynes’ outlook is bleak for the defeated nations, but optimistic for the victors. His evaluation of the damages suffered by France is very low indeed, and, in his estimation, she will recover from her ruin at a far lower cost than is generally arrived at. It is Germany’s fate that gives him cause for concern, and he repeats his doleful refrain that if she is not treated sparingly, if she is not returned to her former stature with the seal of approval and support of the victor nations, all Europe will fall into ruin and chaos.
In his afterword, Keynes speaks of “the unknown currents in ceaseless flow beneath the surface of political history of which none are capable of predicting the results.” In his limpid way of thinking that springs off each page of the book, these currents are determined by economic forces alone; another, though conservative, aspect of the materialist view of history. Lord Lansdowne5, a man who anticipated Keynes, though silent now, was active during the war and pessimistic even before the Treaty of Versailles. It slipped this great lord’s mind that under Edward VII, he had contributed significantly to the formation of the Triple Entente. He was consumed by the idea that the old continent’s capital was being consumed a little more each day; bankruptcy, scarcity of food and general immiseration obsessed him. He announced the coming ruin of Europe if the Allies continued in their desire to “go all the way.” Though he did a better job concealing it, this idea was a favourite of another elder gentleman, Mr Giolitti6, one of those discrete but calculating men in the Italian fashion.
The conclusion of these grim predictions that abounded from the beginning of the war was: better that Germany be granted victory or a partial victory than put the world’s industrial, commercial and financial machinery into disorder. And yet interests of an infinitely superior order were at stake, so Lord Lansdowne wasted his breath. The cannier Giolitti said nothing, content to let his demeanour show that his position had remained unchanged since the start and that, regardless, it would all end for the worst. Fallen back onto this strongly held, personal position, he just waited, hoping to live long enough to see his time come again. He foresaw disappointment in Italy’s future and was holding himself in reserve to sweep back to power on the back of this disappointment, precisely as occurred. But Giolitti has gone quiet about the past, as has Lord Lansdowne. Both were Keynes avant la lettre and both were to no effect by any measure. Regrettably, the Allies did not devise a shrewder, more insightful, and more inventive policy that would have allowed them to win the war in shorter order and better conditions, but regardless of the price paid for victory and the present hour’s miseries, no one would dare say, “It would have been preferable to conclude a paix blanche, one that does not favour any particular party, with the Germans. Better still would have been to submit as early as July 1914. In this way, the marvelous clockwork of imports and exports would not have been disturbed.”
Likewise, Europe may long be afflicted by food scarcity, ravaged by epidemics, and threatened with bankruptcy. Nevertheless, her states and nations will continue on according to their fundamental laws. The play of economic necessities cannot be doubted, and in the last analysis, it is essentially a question of securing food production. The proposition that the German people in 1914 decided on war because the land it occupied was insufficient to feed 68 million mouths, driving them to hazard a great adventure, is not without basis. But if the German Empire had not been conditioned by a particular course of events and structured in its particular manner. Or, if the European balance of power had been different, its alliances arranged otherwise. And finally, if England, instead of being held back by the Liberal Party’s hesitation, had committed right away and with decision. Then in that case, the price of meat in Berlin would not have been a sufficient motive for Germany to hazard war.
While there is reason to be pessimistic in the aftermath of the treaty, it is from a different point of view than Keynes’. The chaos that reigns in the economic sphere is profound, but that which reigns in the political sphere is even more so. Has the unspeakable misery of Bolshevik Russia prevented the Red Army from fighting? Has the deficit or discredit of its paper money prevented Poland from seeking to mark out its borders? Over vast swathes of Europe, ten nations wage war on each other despite scarcity and typhus, and in the direst conditions where man’s sole concern would rightly be his daily bread. There, besides this confused struggle of nationalities, religions and races, Germany remains. Uniquely territorially compact, homogenous, and sufficiently organised, its weight, in hanging over the vacuum of Eastern Europe, one day risks destabilising the entire continent. The considerations of economists will change nothing about the effects of this fundamental disequilibrium. Reading Thiers’ History of the French Revolution from this point of view makes a profound impression. With particular application to questions of finance, where the clarity of his mind shone, Thiers had the ability to relate all the diplomatic and military events of Europe during the time of the Revolution and the Empire. He did this without giving issues such as paper money, France’s 1797 partial bankruptcy and “bills of withdrawal” in Austria positions beyond what their status as minor episodes inconsequential to the sequence of events allowed. Judgement has already been rendered upon Keynes’ thesis for its blatant partisanship in favour of Germany; its lack of value in general is demonstrated by the above.
The political consequences of the peace are thus of far greater import than the economic consequences and, furthermore, more difficult to deduce rigorously. However, a few guiding principles derived from experience and common sense can assist in this task. No one would contend that even the greatest statesmen can foresee every eventuality or see more than one or two moves ahead in response to the arrangements of their making. There are, however, causes whose effects are so certain that one needs almost desire them in order not to see the relation of causality in advance. I have, therefore, begun this book with basic units, proceeding onto composites of many such basic units, until a point is reached where these composites start to blur into inscrutable detail. This is the methodology of this work, composed for the most part of analyses and hypotheses deduced from those elemental analyses. There will be more talk of probability, and even simply possibility, than certainty. In this field, certainty as to how events will ultimately settle is almost always foundationally unstable; certainty as to the direction of future events is already on firmer ground. When, in 1871, seeing Germany unified, the English rejoiced that a great empire now stood between France and Russia, guaranteeing peace for Europe and themselves, they were mistaken. One could have easily remarked it to them then, yet at the Congress of Berlin7, this calculation appeared the right one and a further 20 years were required for its hidden vice to be felt by those concerned. When Bismarck, after extensive meditation, opted for an alliance with Austria and loosening ties with Russia, he foresaw the risks, warning his successors that on no account should Germany run to war and expose itself to the danger of coalitions on an Austrian pretext. He demonstrated the precise obstacle upon which Kaiser William II would later stumble. These two are cases among thousands of error from lack of foresight and the limits of that very foresight.
The most remarkable predictions in the annals of history have rested upon simple, and one may even go as far as to say trivial facts that are well within reach of the most ordinary men. Thiers's prediction at the time of the battle of Sadowa8 remains a model. His reasoning arose from an idea that may have occurred to a greengrocer had roles been exchanged, and it was not Prussia’s but Felix Potin’s9 rise to dominance that was under observation. Louis XIV, who had a great deal of it, once said, “The essence of the great doctrines is common sense.” There are, therefore, some things that everyone can state with a small amount of experience: one need not have been particularly perceptive to see that these few words, “[ARRANGEMENT entre les ÉTATS-UNIS D’AMÉRIQUE, la BELGIQUE, l’EMPIRE BRITANNIQUE et la FRANCE, d’une part,] et l’ALLEMAGNE, d’autre part,”10 were the worm in the Treaty of Versailles’ apple. In witnessing the German Empire’s delegates signing this treaty, in the same Hall of Mirrors where, half a century earlier, German unity was proclaimed, any man in possession of half an education would be in a position to conclude that it would be a miracle if they upheld their commitments. What does, for example, escape definite assertion is when these inexorable events will occur and under what forms. Di Rudini11, a man who entered politics at an extremely young age and lived to be very old, was in the habit of saying, “Never say, ‘it's serious,’ I’ve heard it all too often, and above all, never give any dates.”
There is a degree of complexity that surpasses reason, and I will not contest that Europe has reached this degree in the aftermath of the war and the passage of the Treaties of Versailles, Saint-Germain, Neuilly, Trianon, and Sèvres12. Few minds possess the complete detail of these diplomatic instruments that spread over several volumes. Still rarer are those who can form an exact mental image of the extreme confusion into which the continent has fallen. I have not attempted to describe the indescribable and do not flatter myself with the ability to encompass this chaos. I have endeavoured to grasp and hold firmly to the chain of causality, whose end is most certainly anchored at Berlin.
Many questions have been left to one side in this book. What use is it to lead the reader off into the depths of the Caucasus? It is, above all, in a subject such as this that one must take care to have limits and proceed by way of exclusion to arrive at relative clarity. One risks falling into a sapping triviality if one were to begin studying, one by one, the so-called great issues, whose classification as such does not always reflect reality. The French people have long been bound to Europe and the Mediterranean basin, so my attention must necessarily concentrate on what occurs at France’s gates. Moreover, the further one goes from France’s borders, the more the happenings there become obscure, and one is reduced to vague suppositions. A simple idea that rarely leads astray and permits progress in such matters is that what occurs in France’s immediate vicinity is most important. By never losing sight of a united Germany in her contrast with a patchwork Europe, a contrast that appears in almost every chapter, the ability to prioritise a certain number of questions over others is obtained. If there are points that I expound with insistence, at the risk of repetition or the appearance of self-contradiction, it is because they import over all the rest. In this way, it is like in the mountains, where, although the tallest peaks reappear at every bend to the walker’s exasperation, they never appear quite the same.
During the last year of the war, I wrote a book that came out some short weeks before the Armistice on 11 November 1918. My intention with that book was, by means of some still fresh and bloody examples and by the history of three generations, the last of which paid for the previous two, to demonstrate the existence of certain moments. Moments when a few men’s guiding ideas, when a few decisions taken under these ideas’ influence, and when a few words written in treaties resulting from these decisions lead ineluctably and for many years afterwards to incalculable consequences. Once again, in the words of Louis XIV, “People, in their desire to obscure the merit due to right action, often imagine that the world is as if governed according to its own will, by unpredictable, natural upheavals, impossible to avoid. An opinion of great comfort to minds of a common sort because it flatters their lack of initiative and their indolence and allows them to name their faults misfortune and the industry of others good luck.” In the same way, it was not chance that decided in those days between 11 November 1918 and 28 June 1919. It is not simply “the way of things,” but the consequence of men, their character and their ideas. A thousand other combinations besides the one that was adopted were possible. This became quite clear in the course of the negotiations as, by one intervention or another, several of the treaty’s stipulations were changed for better or worse. Now, there is nothing to do but to wait and, if we may, prevent and correct the effects. The Sage of Israel, who had had quite his fill of seeing rulers repeat the same mistakes and the masses entrust them their lives and fates, said in Ecclesiastes, “Consequences there shall be.” Consequences are inevitable. They are already here.
Raymond Poincaré - President of France 1913-1920
“We lost Philippeville, Marienbourg, Bouillon […] positions that defended France’s northern border and made her more vulnerable to invasion. We lost Sarrelouis and Landau, the gap through which the Prussian army pushed into France in 1870.” History of France, Jacques Bainville.
Alexandre Millerand — President of France 1920-1924
Paix armée, in reference to the ubiquitous conscription and the pre-war arms race on continental Europe.
Henry Petty-Fitzmaurice, Marquess of Lansdowne - British Peer, statesman, and writer of the “Lansdowne letter,” an appeal for peace amid WW1
Giovanni Giolitti — Italian statesman and 5-time Prime Minister of Italy
Congress of Berlin 1878 to reach a settlement after the Russo-Turkish War. Britain wanted to prevent Russian hegemony in the Balkans, the newly united Germany played a key role in achieving this.
Battle of Sadowa between Austria and Prussia. A key step towards German unification that Thiers recognised as such.
Félix Potin – French businessman and creator of one of the first mass retail chains
“An agreement between the United States, […], and France on the one hand, and Germany on the other.” A reference to allowing Germany to remain politically unified, in spite of the crippling economic sanctions.
Antonio Starabba, Marquess di Rudini — Italian statesman and two-time Prime Minister of Italy
The treaties that established peace between the Allies and Germany, Austria, Bulgaria, Hungary and Turkey respectively.
Beautifully written with clarity that is rare these days. Thank you for sharing this.