In the state of mind in which France exists at present there is a
reasonable cause of worry for the future. Since the conclusion of
the War the United States of America have withdrawn. They concern
themselves with Europe no more, or only in a very limited form and
with diffidence. The Monroe doctrine has come into its own again.
Great Britain watches the decadence of the European continent, but,
girt by the sea, has nothing to fear. She is a country of Europe, but
she does not live the life of Europe; she stands apart from it. Italy,
when she has overcome the difficulties of her economic situation, can
be certain of her future. The very fact that she stands in direct
opposition to no State, that she may have competition with various
peoples but not long-nurtured hatreds, gives Italy a relative
security. But France, who has been in less than forty-four years twice
at war with Germany, has little security for her future. Germany
and the Germanic races increase rapidly in number. France does not
increase. France, notwithstanding the new territories, after her war
losses, has probably no more inhabitants than in 1914. In her almost
tormented anxiety to destroy Germany we see her dread for the
future--more indeed than mere hatred. To occupy with numerous troops
the left bank of the Rhine and the bridgeheads is an act of vengeance;
but in the vengeance there is also anxiety. There are many in France
who think that neither now nor after fifteen years must the territory
of the vanquished be abandoned. And so France maintains in effective
force too large an army and nourishes too great a rancour. And for
this reason she helps the Poles in their unjustifiable attempt in
Upper Silesia, will not allow the Germans of Austria to live, and
seeks to provoke and facilitate all movements and political actions
which can tend towards the dismemberment of Germany. The British and
the Italian viewpoints are essentially different. France, which knows
it can no longer count on the co-operation of Great Britain, of the
United States, or of Italy, keeps on foot her numerous army, has
allied herself with Belgium and Poland, and tries to suffocate Germany
in a ring of iron. The attempt is a vain one and destined to fail
within a few years, inasmuch as France's allies have no capacity for
resistance. Yet, all the same, her attempt derives from a feeling that
is not only justifiable but just.
France had obtained at Paris, apart from the occupation of the left
bank of the Rhine and all the military controls, two guaranteeing
treaties from the United States and from Great Britain: in case of
unprovoked aggression on the part of Germany, Great Britain and
the United States pledged themselves to defend France. The British
Parliament, as we have seen, approved the treaty provisionally on the
similar approbation of the United States. But as the latter has not
approved the Treaty of Versailles, and has not even discussed the
guarantee treaty, France has now no guarantee treaty.
If we are anxious to realize a peace politic two things are necessary:
1. That France has security, and that for twenty years at least
Great Britain and Italy pledge themselves to defend her in case of
aggression.
2. That the measures for the disarmament of the conquered States be
maintained, maybe with some tempering of their conditions, and that
their execution and control be entrusted with the amplest powers to
the League of Nations.
No one can think it unjust that the parties who provoked the War or
those who have, if not the entire, at least the greatest share of
responsibility, should be rendered for a certain time incapable.
The fall of the military caste in Germany and the formation of a
democratic society will derive much help from the abolition, for a not
too brief period of time, of the permanent army, and this will render
possible, at no distant date, an effective reduction of the armaments
in the victorious countries.
Great Britain has the moral duty to proffer a guarantee already
spontaneously given. Italy also must give such a guarantee if she
wishes truly to contribute towards the peace of Europe.
As long as Germany has no fleet, and cannot put together an artillery
and an aviation corps, she cannot present a menace.
Great Britain and Italy can, however, only give their guarantees on
the condition that they guarantee a proper state of things and not a
continued condition of violence. The withdrawal of all the troops from
the Rhine ought to coincide with a clear definition concerning the
fate of the Germans of Austria and the Germans detached from Germany
without motive. Such a retirement must coincide with the definition
of the territory of the Saar, and the assigning, pure and simple, of
Upper Silesia to Germany and the end of all the insupportable controls
and the indemnity regulations.
Being myself contrary to any pledge binding Italy for too long a
period, I am of opinion that it is perfectly right that Great Britain
and Italy should make this sacrifice for the peace of Europe.
But no guarantee is possible, either for Great Britain or Italy, until
the most essential problems be resolved in the justest manner by means
of straightforward and explicit understandings.
Italy's tendency towards British policy on the continent of Europe
depends on the fact that Great Britain has never wished or tolerated
that any continental State should have a hegemony over others. And,
therefore, she has found herself at different epochs ranged against
France, Germany and Russia.
England is in the Mediterranean solely to secure her passage through
it, not to dominate it. She continues to follow the grand policy by
which she has transformed her colonies into dominions, and, in spite
of errors, she has always shown the greatest respect for the liberty
of other peoples.
But Europe will not have peace until the three progressive countries
of the Continent, Germany, France and Italy, find a way of agreement
which can reunite all their energies in one common force.
Russia has conceived the idea of having the hegemony of Europe;
Germany has indeed had the illusion of such a hegemony. Now this
illusion penetrates certain French elements. Can a people of forty
million inhabitants, who are not increasing, who already find
difficulties in dominating and controlling their immense colonies,
aspire to hegemonic action, even taking count of their great political
prestige? Can France lastingly dominate and menace a country like
Germany, which at no distant date will have a population double that
of France?
The future of European civilization requires that Germany, France and
Italy, after so much disaster, find a common road to travel.
The first step to be taken is to give security of existence and of
reconstruction to Germany; the second is to guarantee France from the
perils of a not distant future; the third is to find at all costs a
means of accord between Germany, France and Italy.
But only vast popular movements and great currents of thought and
of life can work effectively in those cases where the labours of
politicians have revealed themselves as characterized by uncertainty
and as being too traditional. Europe is still under the dominion of
old souls which often enough dwell in young bodies and, therefore,
unite old errors with violence. A great movement can only come from
the intellectuals of the countries most menaced and from fresh popular
energies.
4.--REGULATING INTER-ALLIED DEBTS, GERMANY'S INDEMNITY AND THAT OF THE
DEFEATED COUNTRIES
These two problems are closely connected.
The victorious countries demand an indemnity from the conquered
countries which, except Germany, who has a great productive force even
in her hour of difficulties, are in extreme depression and misery.
Great Britain is in debt to the United States, and France, Italy and
minor nations are in their turn heavy debtors to the Americans and to
Great Britain.
The experience of the last three years has shown that, even with the
best will, none of the countries owing money to the Entente has been
able to pay its debts or even the interest. With an effort Great
Britain could pay; France and Italy will never be able to, and have,
moreover, exchanges which constitute a real menace for the future of
each.
The fact that France and Italy, although they came out of the war
victoriously, have not been able to pay their debts or even the
interest on them is the proof that Germany, whose best resources have
been taken away from her, can only pay an indemnity very different
from the fantastic figures put forward at the time of the Conference
of Paris, when even important political men spoke of monstrous and
ridiculous indemnities.
The problem of the inter-allied debts, as well as that of the
indemnity, will be solved by a certain sacrifice on the part of all
who participated in the War.
The credits of the United States amount to almost 48 milliards of lire
or francs at par, and the credits of Great Britain to 44 milliards.
Great Britain owes about 21 milliards to the United States and is in
turn creditor for some 44 milliards. She has a bad debt owing from
Russia for more than 14 milliards, but 13 milliards are owing from
France, about 12 milliards from Italy, and almost 2-1/2 milliards from
Belgium. That is to say, that Great Britain could well pay her debt
to the United States, ceding the greater part of her credits towards
France and Italy.
But the truth is that, while on the subject of the German indemnities,
stolid illusions continue to be propagated (perhaps now with greater
discretion), neither France nor Italy is in a position to pay its
debts.
The most honest solution, which, intelligently enough, J.M. Keynes has
seen from the first, is that each of the inter-allied countries should
renounce its state credits towards countries that were allies or
associates during the War. The United States of America are creditors
only; Great Britain has lent the double of what she has borrowed.
France has received on loan the triple of what she has lent to others.
The credits of France are for almost two-thirds undemandable credits
of Great Britain; more than 14 milliards being with Russia, they are
for considerably more than one-third bad debts.
France and Italy would be benefited chiefly by this provision. Great
Britain would scarcely either benefit or lose, or, rather, the benefit
accruing to her would be less in so much as her chief credits are to
Russia.
The United States would doubtless have to bear the largest burden. But
when one thinks of the small sacrifice which the United States has
made in comparison with the efforts of France and Italy (and Italy was
not obliged to enter the War), the new sacrifice demanded does not
seem excessive.
During the War the United States of America, who for three years
furnished food, provisions and arms to the countries of the Entente,
have absorbed the greater part of their available resources. Not only
are the States of Europe debtors, but so are especially the private
citizens who have contracted debts during or after the War. Great
Britain during the War had to sell at least 25 milliards of her
foreign values. The United States of America, on the contrary, have
immensely increased their reserves.
But this very increase is harmful to them, inasmuch as the capacity
for exchange of the States of Europe has been much reduced. The United
States now risk seeing still further reduced, if not destroyed,
this purchasing capacity of their best clients; and this finally
constitutes for the U.S.A. infinitely greater damage than the
renouncing of all their credits.
To reconstruct Germany, to intensify exchange of goods with the old
countries of Austria-Hungary and Russia, to settle the situation of
the exchange of goods with Italy and the Balkan countries is much more
important for the United States and the prosperity of its people than
to demand payment or not demand payment of those debts made for the
common cause.
I will speak of the absurd situation which has come about.
Czeko-Slovakia and Poland unwillingly indeed fought against the
Entente, which has raised them to free and autonomous States; and
not only have they no debts to pay, being now in the position of
conquerors, or at least allies of the conquerors, but they have, in
fact, scarcely any foreign debts.
The existence of enormous War debts is, then, everywhere a menace to
financial stability. No one is anxious to repudiate his debts in order
not to suffer in loss of dignity, but almost all know that they cannot
pay. The end of the War, as Keynes has justly written, has brought
about that all owe immense sums of money to one another. The holders
of loan stock in every country are creditors for vast sums towards
the State, and the State, in its turn, is creditor for enormous sums
towards the taxpayers. The whole situation is highly artificial and
irritating. We shall be unable to move unless we succeed in freeing
ourselves from this chain of paper.
The work of reconstruction can begin by annulling the inter-allied
debts.
If it is not thought desirable to proceed at once to annulment, there
remains only the solution of including them in the indemnity which
Germany must pay in the measure of 20 per cent., allocating a certain
proportion to each country which has made loans to allied and
associated governments on account of the War. In round figures the
inter-allied loans come to 100 milliards. They can be reduced to 20,
and then each creditor can renounce his respective credit towards
allies or associates and participate proportionately in the new credit
towards Germany. Such a credit, bearing no interest, could only be
demanded after the payment of all the other indemnities, and would be
considered in the complete total of the indemnities.
All the illusions concerning the indemnities are now fated to
disappear. They have already vanished for the other countries; they
are about to vanish in the case of Germany.
Nevertheless it is right that Germany should pay an indemnity. Yet, if
the conquerors cannot meet their foreign debts, how can the vanquished
clear the vast indemnity asked? Each passing day demonstrates more
clearly the misunderstanding of the indemnity. The non-experts have
not learned financial technics, but common sense tells them that the
golden nimbus which has been trailed before their eyes is only a thick
cloud of smoke that is slowly dissipating.
I have already said that the real damages to repair do not exceed
40 milliards of gold marks and that all the other figures are pure
exaggerations.
If it be agreed that Germany accept 20 per cent. of the inter-allied
debt, the indemnity may be raised to 60 milliards of francs at par, to
be paid in gold marks.
But we must calculate for Germany's benefit all that she has already
given in immediate marketable wealth. Apart from her colonies, Germany
has given up all her mercantile marine fleet, her submarine cables,
much railway material and war material, government property in ceded
territory without any diminution of the amount of public debts, etc.
Without taking account, then, of the colonies and her magnificent
commercial organization abroad, Germany has parted with at least 20
milliards. If we were to calculate what Germany has ceded with the
same criteria with which the conquering countries have calculated
their losses, we should arrive at figures much surpassing these. We
may agree in taxing Germany with an indemnity equivalent in gold marks
to 60 milliards of francs at par--an indemnity to be paid in the
following manner:
(a) Twenty milliards of francs to be considered as already paid in
consideration of all that Germany has ceded in consequence of the
treaties.
(b) Twenty milliards from the indemnity which Germany must pay to her
conquerors, especially in coal and other materials, according to the
proportions already established.
(c) Twenty milliards--after the payment of the debts in the second
category to be taken over by Germany--as part of the reimbursement for
countries which have made credits to the belligerents of the Entente:
that is, the United States, Great Britain and France, in proportion to
the sums lent.
In what material can Germany pay 20 milliards in a few years?
Especially in coal and in material for repairing the devastated
territories of France. Germany must pledge herself for ten years to
consign to France a quantity of coal at least equal in bulk to the
difference between the annual production before the War in the mines
of the north and in the Pas de Calais and the production of the mines
in the same area during the next ten years. She must also furnish
Italy--who, after the heavy losses sustained, has not the possibility
of effecting exchanges--a quantity of coal that will represent
three-quarters of the figures settled upon in the Treaty of
Versailles. We can compel Germany to give to the Allies for ten years,
in extinction of their credits, at least 500 millions a year in gold,
with privileges on the customs receipts.
This systematization, which can only be imposed by the free agreement
of the United States and Great Britain, would have the effect of
creating excellent relations. The United States, cancelling their, in
great part, impossible debt, would derive the advantage of developing
their trade and industry, and thus be able to guarantee credits for
private individuals in Europe. It would also be of advantage to Great
Britain, who would lose nothing. Great Britain has about an equal
number of debits and credits, with this difference, that the debits
are secured, while the credits are, in part, unsecured. France's
credits are proportionately the worst and her debits largest, almost
27 milliards. France, liberated from her debt, and in a position to
calculate on a coal situation comparable with that of before the War
and with her new territories, would be in a position to re-establish
herself. The cancellation of 27 milliards of debt, a proportionate
share in 20 milliards, together with all that she has had, represent
on the whole a sum that perhaps exceeds 50 milliards. Italy would
have the advantage of possessing for ten years the minimum of coal
necessary to her existence, and would be liberated from her foreign
debt, which amounts to much more than she can possibly hope for from
the indemnity.
Such an arrangement, or one like it, is the only way calculated to
allow Europe to set out again on the path of civilization and to
re-establish slowly that economic equilibrium which the War has
destroyed with enormous damage for the conquerors and the certain ruin
of the vanquished.
But, before speaking of any indemnity, the Reparations Commission must
be abolished and its functions handed over to the League of Nations,
while all the useless controls and other hateful vexations must be put
an end to.
While the Allied troops' occupation of the Rhine costs Germany
25 milliards of paper marks a year, it is foolish to speak of
reconstruction or indemnity. Either all occupation must cease or the
expenses ought not to exceed, according to the foregoing agreements, a
maximum of 80 millions at par, or even less.
We shall, however, never arrive at such an arrangement until the
Continental countries become convinced of two things: first, that the
United States will grant no credits under any formula; secondly, that
Germany, under the present system, will be unable to pay anything and
will collapse, dragging down to ruin her conquerors.
Among many uncertainties these two convictions become ever clearer.
If in all countries the spirit of insubordination among the working
classes is increasing, the state of mind of the German operatives
is quite remarkable. The workmen almost everywhere, in face of the
enormous fortunes which the War has created and by reason of the
spirit of violence working in them, have worked with bad spirit after
the War because they have thought that a portion of their labour has
gone to form the profits of the industrials. It is useless to say that
we are dealing here with an absurd and dangerous conception, because
the profit of the capitalist is a necessary element of production,
and because production along communist lines, wherever it has been
attempted, has brought ruin and misery. But it is useless to deny that
such a situation exists, together with the state of mind which it
implies. We can well imagine, then, the conditions in which Germany
and the vanquished countries find themselves. The workmen, who in
France, England and Italy exhibit in various degree and measure a
state of intractability, in Germany have to face a situation still
graver. When they work they know that a portion of their labour is
destined to go to the victors, another part to the capitalist, and
finally there will remain something for them. Add to this that in
all the beaten countries hunger is widespread, with a consequent
diminution of energy and work.
No reasonable person can explain how humanity can continue to believe
in the perpetuation of a similar state of things for another forty
years.
In speaking of the indemnity which Germany can pay, it is necessary
to consider this special state of mind of the operatives and other
categories of producers.
But the mere announcement of the settling of the indemnity, of the
immediate admission of the vanquished nations into the League of
Nations, of the settling the question of the occupation of the Rhine,
and of the firm intention to modify the constitution of the League
of Nations, according it the powers now held by the Reparations
Commission, will improve at once the market and signalize a definite
and assured revival.
The United States made a great financial effort to assist their
associates, and in their own interests, as well as for those of
Europe, they would have done badly to have continued with such
assistance. When the means provided by America come to be employed to
keep going the anarchy of central Europe, Rumania's disorder, Greece's
adventures and Poland's violences, together with Denikin's and
Wrangel's restoration attempts, it is better that all help should
cease. In fact, Europe has begun to reason a little better than her
governments since the financial difficulties have increased.
The fall of the mark and Germany's profound economic depression have
already destroyed a great part of the illusions on the subject of the
indemnity, and the figures with which for three years the public has
been humbugged no longer convince anyone.