Italy, with great difficulty of production and less concord inside the country, has a more true vision, and does not reckon any income which is not derived from her own resources. Her circulation does not pa.s.s eighteen milliards, and her debt exceeds by a little one hundred milliards.
With prudence and firmness France and Italy will be able to balance their accounts.
But the financial situation and the exchanges of the conquered countries, even that of Germany, may be called desperate.
If expressed in percentages, the German mark is worth 5.11 per cent.
in comparison with the pound sterling and 3.98 per cent. of the dollar. What possibility is there of systematizing the exchange?
Germany was compelled this year to carry her expenses to 130 milliards of marks. As her circulation has exceeded eighty-eight milliards, how can she straighten out her money?
As for the Austrian and Hungarian crowns, the Jugo-Slav crowns, the Rumanian lei, and all the other depreciated moneys, their fate is not doubtful. As their value is always descending, and the gold equivalent becomes almost indeterminable, they will have a common fate. As for the Polish mark, it can be said that before long it will not be worth the paper on which it is printed.
There is, then, the fantastic position of the public debts! They have reached now such figures that no imagination could have forecasted.
France alone has a debt which of itself exceeds by a great deal all the debts of all the European States previous to the War: 265 milliards of francs. And Germany, the conquered country, has in her turn a debt which exceeds 320 milliards of marks, and which is rapidly approaching 400 milliards. The debts of many countries are only recorded by feats of memory, because there is no practical interest in knowing whether Austria, Hungary, and especially Poland, has one debt or another, since the situation of the creditors is not a situation of reality.
The whole debt of the United States of America is, after so much war, only 23,982,000,000 dollars; but the United States are creditors of the Entente for 9,500,000,000 dollars. Also England, against a debt of 9,240,000,000 sterling, has a credit of 1,778,000,000.
These serious figures, whilst they increase the condition of discomfort rendered even more serious by the scarcity of commercial exchanges, indicate also what necessity may be superior to all in every country to preserve internal peace: produce more, consume less, put the finances in order, and reconquer the credits.
Instead, the conquered countries are going downwards every day and the conquering countries are maintaining very big armies, exhausting their resources, whilst they are spreading the conviction that the indemnity from the enemy will compensate sufficiently, or at least partially, for the work of restoration.
In fact, the causes of discontent and diffidence are augmenting.
Nothing is more significant than the lack of conscience with which programmes of violence and of ruin are lightly accepted; nothing is more deplorable than the thoughtlessness with which the germs of new wars are cultivated. Germany has disarmed with a swiftness which has even astonished the military circles of the Entente; but the bitter results of the struggle are not only not finished against Germany, not even to-day does she form part of the League of Nations (which is rather a sign of a state of mind than an advantage), but the att.i.tude towards her is even more hostile.
Two years after the end of the war R. Poincare wrote that the League of Nations would lose its best possibility of lasting if, _un jour_, it did not reunite all the nations of Europe. But he added that of all the conquered nations--Austria, Hungary, Bulgaria, Turkey and Germany--the last-mentioned, by her conduct during the War and after the peace, justified least a near right of entry. It would be _incontestablement plus naturel_ (of how many things does nature occupy herself!) to let Austria enter first if she will disavow the policy of reattachment--that is, being purely German, renounce against the principle of nationality, in spite of the principle of auto-decision, when she cannot live alone, to unite herself to Germany; Bulgaria and Turkey as long as they had a loyal and courteous att.i.tude towards Greece, Rumania and Serbia. The turn of Germany will come, but only after Turkey, when she will have given proof of executing the treaty, which no reasonable and honest person considers any more executable in its integrity.
The most characteristic facts of this peace which continues the War can be recapitulated as follows:
1. Europe on the whole has more men under arms than before the War.
The conquered States are forced to disarm, but the conquering States have increased the armaments; the new States and the countries which have come through the War have increased their armaments.
2. Production is very tardily being taken up again because there is everywhere, if in a different degree, a lesser desire for work on the part of the working cla.s.ses joined with a need for higher remuneration.
3. The difficulties of trade, instead of decreasing in many countries of Europe are increasing, and international commerce is very slowly recovering. Between the States of Europe there is not a real commerce which can compare with that under normal conditions. Considering actual values with values before the War, the products which now form the substance of trade between European countries do not represent even the half of that before the War.
As the desire for consumption, if not the capacity for consumption, has greatly increased, and the production is greatly decreased, all the States have increased their functions. So the discredit of the paper money and the Treasury bills which permit these heavy expenses is in all the countries of Europe, even if in different degrees, very great.
The conquering countries, from the moment that they had obtained in the treaties of peace the acknowledgment of the conquered that the War was caused by them, held it to be legitimate that they should lose all their disposable goods, their colonies, their ships, their credits and their commercial organization abroad, but that the conquered should also pay all the damages of the War. The War, therefore, should be paid for by the conquered, who recognized (even if against their will) that they were alone responsible. That forms henceforth a certain canon of foreign politics, the less a thing appears true the more it is repeated.
Although the treaties oblige Austria, Hungary, Bulgaria and Turkey to pay the damages of the War, it is, however, certain that they are not able to pay anything and not even the expenses of the victors on their territory. "_Cantabit vacuus coram latrone viator_," said Juvenal ("Who has nothing can give nothing"), and Austria, for her part, instead of giving is imploring food succour.
So the problem remains limited to Germany. Can she pay the indemnity indicated in the treaty? Can she pay for the damages and indemnify the victors? After having given up her colonies, her ships, her railway material, all her disposable credits abroad, in what form can she pay?
The fundamental controversy reduces itself henceforth only to this point, which we shall try if possible to make clear, since we desire that this matter shall be presented in the clearest and most evident form.
From now on it is not the chancelleries which must impose the solutions of great problems; but it is the ma.s.s of the public in Europe and America.
V
THE ANXIETIES OF THE VICTORS
We have seen the process by which the idea of the indemnity for damages, which was not contained either in the peace declaration of the Entente, nor in the manifestations of the various parliaments, nor in the first armistice proposals, nor in the armistice between Italy and Austria, was introduced in the armistice with Germany, out of pure regard for France, without taking heed of the consequences. Three words, said Clemenceau, only three words need be added, words which compromise nothing and are an act of deference to France. The entire construction of the treaties, after all, is based on those three words.
And how fantastic the demands for compensation have become!
An old Italian proverb says, "In time of war there are more lies than earth." Ancient and modern pottery reproduce the motto, which is widespread, and whose truth was not understood until some years ago. So many foolish things were said about the almost mysterious manoeuvres of Germany, about her vast expansion, her great resources and acc.u.mulated capital, that the reality tended to become lost to sight.
These absurd legends, formed during the War, were not forgotten, and there are even now many who believe in good faith that Germany can pay, if not twenty or twenty-five milliards a year, at least eight or nine without any difficulty.
France"s shrewdest politicians, however, well knew that the demand for an enormous and unlimited indemnity was only a means of putting Germany under control and depressing her to the point of exhaustion.
But the others maintained this proposal more out of rancour and hatred than from any actual political concept. It may be said that the problem of the indemnity has never been seriously studied and that the calculations, the valuations, the procedures, have all formed a series of impulsive acts co-ordinated by a single error, the error of the French politicians who had the one aim of holding Germany down.
The procedure was simple.
In the first phase the indemnities came into being from three words inserted almost by chance into the armistice treaty on November 2, 1918, _reparation des dommages_. It was merely a matter of a simple expression to content public feeling: _Je supplie le conseil de se mettre dans l"esprit de la population francaise_.... It was a moral concession, a moral satisfaction.
But afterwards, as things went on, all was altered when it came to preparing the treaties.
For a while the idea, not only of a reparation of damages, but of the payment of the cost of the War was entertained. It was maintained that the practice of making the vanquished reimburse the cost of the War was permitted by international law. Since Germany had provoked the War and lost it, she must not only furnish an indemnity for the losses, but also pay the cost.
The cost was calculated roughly at seven hundred milliards of francs at par. Further, there was the damage to a.s.sess. In the aggregate, war costs, damage to property, damage to persons, came to at least one thousand milliards. But since it was impossible to demand immediate payment and was necessary to spread the sum over fifty years, taking into consideration sinking funds and interest the total came to three thousand milliards. The amount was published by the ill.u.s.trated papers with the usual diagrams, drawings of golden globes, length of paper money if stretched out, height of metal if all piled up together, etc.
etc.
These figures were discussed for the first few months by a public accustomed to be surprised at nothing. They merely helped to demonstrate that an indemnity of 350 milliards was a real sacrifice for the Allies.
Thus a whole series of principles came to be established which were a contradiction of reality.
A great share in the responsibility in this matter lies with Great Britain, who not only followed France"s error, but in certain ways made it worse by a number of intemperate requests. Italy had no influence on the proceedings owing to her indecisive policy. Only the United States, notwithstanding the ba.n.a.lity of some of her experts (_lucus a non lucendo_), spoke an occasional word of reason.
When Lloyd George understood the mistake committed in the matter of the indemnity it was too late.
The English public found itself face to face with the elections almost the day after the conclusion of the War. In the existing state of exaltation and hatred the candidates found a convenient "plank" in promising the extermination of Germany, the trial of the Kaiser, as well as of thousands of German officers accused of cruelty, and last, but not least, the end of German compet.i.tion.
The Prime Minister of Australia, William Morris Hughes, a small-minded, insensitive, violent man, directed a furious campaign in favour of a huge indemnity. Lord Northcliffe lent the aid of his numerous papers to this campaign, which stirred up the electors.
Lloyd George, with his admirable intelligence, perceived the situation clearly. He did not believe in the usefulness or even in the possibility of trying the Kaiser and the German officers. He did not believe in the possibility of an enormous indemnity or even a very large one.
His first statements, like those of Bonar Law, a serious, honest, well-balanced man, an idealist with the appearance of a practical person, revealed nothing. On the eve of the dissolution of Parliament, Lloyd George, speaking at Wolverhampton, November 24, 1918, did not even hint at the question of the reparations or indemnity. He was impelled along that track by the movement coming from France, by the behaviour of the candidates, by Hughes"s att.i.tude, and by the Press generally, especially that of Northcliffe.
A most vulgar spectacle was offered by many of the English candidates, among whom were several members of the War Cabinet, who used language worthy of raving dervishes before crowds hypnotized by promises of the most impossible things.
To promise the electors that Germany should pay the cost of the War, to announce to those who had lost their senses that the Kaiser was to be hanged, to promise the arrest and punishment of the most guilty German officers, to prophesy the reduction to slavery of a Germany competing on sea and land, was certainly the easiest kind of electoral programme. The numerous war-mutilated accepted it with much enthusiasm, and the people listened, open-mouthed, to the endless series of promises.
Hughes, who was at bottom in good faith, developed the thesis which he afterwards upheld at Paris with logical precision. It was Germany"s duty to reimburse, without any limitation, the entire cost of the War: damage to property, damage to persons, and war-cost. He who has committed the wrong must make reparation for it to the extreme limits of his resources, and this principle, recognized by the jurists, requires that the total of the whole cost of the War fall upon the enemy nations. Later on, Hughes, who was a sincere man, recognized that it was not possible to go beyond asking for reparation of the damages.