[Illustration: LORD KEYNES.]
A REVISION OF THE TREATY
A REVISION
OF THE TREATY
BEING A SEQUEL TO
THE ECONOMIC CONSEQUENCES
OF THE PEACE
BY
JOHN MAYNARD KEYNES, C.B.
FELLOW OF KING’S COLLEGE, CAMBRIDGE
[Illustration]
NEW YORK
HARCOURT, BRACE AND COMPANY
1922
COPYRIGHT, 1922, BY
HARCOURT, BRACE AND COMPANY, INC.
PRINTED IN THE U. S. A. BY
THE QUINN BODEN & COMPANY
RAHWAY, N. J.
PREFACE
_The Economic Consequences of the Peace_, which I published in
December 1919, has been reprinted from time to time without revision
or correction. So much has come to our knowledge since then, that a
revised edition of that book would be out of place. I have thought it
better, therefore, to leave it unaltered, and to collect together in
this _Sequel_ the corrections and additions which the flow of events
makes necessary, together with my reflections on the present facts.
But this book is strictly what it represents itself to be—a _Sequel_;
I might almost have said an Appendix. I have nothing very new to say on
the fundamental issues. Some of the Remedies which I proposed two years
ago are now everybody’s commonplaces, and I have nothing startling to
add to them. My object is a strictly limited one, namely to provide
facts and materials for an intelligent review of the Reparation Problem
as it now is.
“The great thing about this wood,” said M. Clemenceau of his pine
forest in La Vendée, “is that, here, there is not the slightest chance
of meeting Lloyd George or President Wilson. Nothing here but the
squirrels.” I wish that I could claim the same advantages for this book.
J. M. KEYNES.
KING’S COLLEGE, CAMBRIDGE,
_December_ 1921.
CONTENTS
CHAPTER I
PAGE
THE STATE OF OPINION 3
CHAPTER II
FROM THE RATIFICATION OF THE TREATY OF VERSAILLES TO
THE SECOND ULTIMATUM OF LONDON 11
EXCURSUS I.—COAL 44
EXCURSUS II.—THE LEGALITY OF OCCUPYING GERMANY
EAST OF THE RHINE 57
CHAPTER III
THE BURDEN OF THE LONDON SETTLEMENT 64
EXCURSUS III.—THE WIESBADEN AGREEMENT 92
EXCURSUS IV.—THE MARK EXCHANGE 100
CHAPTER IV
THE REPARATION BILL 106
EXCURSUS V.—RECEIPTS AND EXPENSES PRIOR TO
MAY 1, 1921 131
EXCURSUS VI.—THE DIVISION OF RECEIPTS BETWEEN
THE ALLIES 138
CHAPTER V
THE LEGALITY OF THE CLAIM FOR PENSIONS 144
CHAPTER VI
REPARATION, INTER–ALLY DEBT, AND INTERNATIONAL TRADE 163
CHAPTER VII
THE REVISION OF THE TREATY AND THE SETTLEMENT OF
EUROPE 179
APPENDIX OF DOCUMENTS
I. SUMMARY OF SPA AGREEMENT (JULY 1920) 203
II. THE DECISIONS OF PARIS (JANUARY 1921) 207
III. THE CLAIMS SUBMITTED TO THE REPARATION COMMISSION
(FEBRUARY 1921) 210
IV. THE FIRST ULTIMATUM OF LONDON (MARCH 1921) 213
V. THE GERMAN COUNTER–PROPOSAL (APRIL 1921) 215
VI. THE REPARATION COMMISSION’S ASSESSMENT (APRIL
1921) 219
VII. THE SECOND ULTIMATUM OF LONDON (MAY 1921) 219
VIII. SUMMARY OF THE WIESBADEN AGREEMENT (OCTOBER
1921) 228
IX. TABLES OF INTER–GOVERNMENTAL INDEBTEDNESS 238
INDEX 240
A REVISION OF THE TREATY
BEING A SEQUEL TO
THE ECONOMIC CONSEQUENCES OF THE PEACE
CHAPTER I
THE STATE OF OPINION
It is the method of modern statesmen to talk as much folly as the
public demand and to practise no more of it than is compatible with
what they have said, trusting that such folly in action as must wait
on folly in word will soon disclose itself as such, and furnish an
opportunity for slipping back into wisdom,—the Montessori system for
the child, the Public. He who contradicts this child will soon give
place to other tutors. Praise, therefore, the beauty of the flames he
wishes to touch, the music of the breaking toy; even urge him forward;
yet waiting with vigilant care, the wise and kindly savior of Society,
for the right moment to snatch him back, just singed and now attentive.
I can conceive for this terrifying statesmanship a plausible defense.
Mr. Lloyd George took the responsibility for a Treaty of Peace, which
was not wise, which was partly impossible, and which endangered the
life of Europe. He may defend himself by saying that he knew that it
was not wise and was partly impossible and endangered the life of
Europe; but that public passions and public ignorance play a part
in the world of which he who aspires to lead a democracy must take
account; that the Peace of Versailles was the best momentary settlement
which the demands of the mob and the characters of the chief actors
conjoined to permit; and for the life of Europe, that he has spent his
skill and strength for two years in avoiding or moderating the dangers.
Such claims would be partly true and cannot be brushed away. The
private history of the Peace Conference, as it has been disclosed by
French and American participators, displays Mr. Lloyd George in a
partly favorable light, generally striving against the excesses of the
Treaty and doing what he could, short of risking a personal defeat.
The public history of the two years which have followed it exhibit him
as protecting Europe from as many of the evil consequences of his own
Treaty, as it lay in his power to prevent, with a craft few could have
bettered, preserving the peace, though not the prosperity, of Europe,
seldom expressing the truth, yet often acting under its influence. He
would claim, therefore, that by devious paths, a faithful servant of
the possible, he was serving Man.
He may judge rightly that this is the best of which a democracy is
capable,—to be jockeyed, humbugged, cajoled along the right road. A
preference for truth or for sincerity _as a method_ may be a prejudice
based on some esthetic or personal standard, inconsistent, in
politics, with practical good.
We cannot yet tell. Even the public learns by experience. Will
the charm work still, when the stock of statesmen’s credibility,
accumulated before these times, is getting exhausted?
In any event, private individuals are not under the same obligation
as Cabinet Ministers to sacrifice veracity to the public weal. It is
a permitted self–indulgence for a private person to speak and write
freely. Perhaps it may even contribute one ingredient to the congeries
of things which the wands of statesmen cause to work together, so
marvelously, for our ultimate good.
* * * * *
For these reasons I do not admit error in having based _The Economic
Consequences of the Peace_ on a literal interpretation of the Treaty
of Versailles, or in having examined the results of actually carrying
it out. I argued that much of it was _impossible;_ but I do not agree
with many critics, who held that, for this very reason, it was also
harmless. Inside opinion accepted from the beginning many of my main
conclusions about the Treaty.[1] But it was not therefore unimportant
that outside opinion should accept them also.
For there are, in the present times, two opinions; not, as in former
ages, the true and the false, but the outside and the inside; the
opinion of the public voiced by the politicians and the newspapers,
and the opinion of the politicians, the journalists and the civil
servants, upstairs and backstairs and behind–stairs, expressed in
limited circles. In time of war it became a patriotic duty that the two
opinions should be as different as possible; and some seem to think it
so still.
This is not entirely new. But there has been a change. Some say that
Mr. Gladstone was a hypocrite; yet if so, he dropped no mask in
private life. The high tragedians, who once ranted in the Parliaments
of the world, continued it at supper afterwards. But appearances can
no longer be kept up behind the scenes. The paint of public life, if
it is ruddy enough to cross the flaring footlights of to–day, cannot
be worn in private,—which makes a great difference to the psychology
of the actors themselves. The multitude which lives in the auditorium
of the world needs something larger than life and plainer than the
truth. Sound itself travels too slowly in this vast theater, and a true
word no longer holds when its broken echoes have reached the furthest
listener.
Those who live in the limited circles and share the inside opinion pay
both too much and too little attention to the outside opinion; too
much, because, ready in words and promises to concede to it everything,
they regard open opposition as absurdly futile; too little, because
they believe that these words and promises are so certainly destined to
change in due season, that it is pedantic, tiresome, and inappropriate
to analyze their literal meaning and exact consequences. They know all
this nearly as well as the critic, who wastes, in their view, his time
and his emotions in exciting himself too much over what, on his own
showing, cannot possibly happen. Nevertheless, what is said before the
world is, still, of deeper consequence than the subterranean breathings
and well–informed whisperings, knowledge of which allows inside opinion
to feel superior to outside opinion, even at the moment of bowing to it.
But there is a further complication. In England (and perhaps elsewhere
also), there are _two_ outside opinions, that which is expressed in the
newspapers and that which the mass of ordinary men privately suspect to
be true. These two degrees of the outside opinion are much nearer to
one another than they are to the inside, and under some aspects they
are identical; yet there is under the surface a real difference between
the dogmatism and definiteness of the press and the living, indefinite
belief of the individual man. I fancy that even in 1919 the average
Englishman never really believed in the indemnity; he took it always
with a grain of salt, with a measure of intellectual doubt. But it
seemed to him that for the time being there could be little practical
harm in going on the indemnity tack, and also that, in relation to
his feelings at that time, a belief in the possibility of boundless
payments by Germany was in better sentiment, even if less true, than
the contrary. Thus the recent modification in British outside opinion
is only partly intellectual, and is due rather to changed conditions;
for it is seen that perseverance with the indemnity does now involve
practical harm, whilst the claims of sentiment are no longer so
decisive. He is therefore prepared to attend to arguments, of which he
had always been aware out of the corner of his eye.
Foreign observers are apt to heed too little these unspoken
sensibilities, which the voice of the press is bound to express
ultimately. Inside opinion gradually affects them by percolating to
wider and wider circles; and they are susceptible in time to argument,
common sense, or self–interest. It is the business of the modern
politician to be accurately aware of all three degrees; he must have
enough intellect to understand the inside opinion, enough sympathy to
detect the inner outside opinion, and enough brass to express the outer
outside opinion.
Whether this account is true or fanciful, there can be no doubt as
to the immense change in public sentiment over the past two years.
The desire for a quiet life, for reduced commitments, for comfortable
terms with our neighbors is now paramount. The megalomania of war has
passed away, and every one wishes to conform himself with the facts.
For these reasons the Reparation Chapter of the Treaty of Versailles is
crumbling. There is little prospect now of the disastrous consequences
of its fulfilment.
I undertake in the following chapters a double task, beginning with
a chronicle of events and a statement of the present facts, and
concluding with proposals of what we ought to do. I naturally attach
primary importance to the latter. But it is not only of historical
interest to glance at the recent past. If we look back a little closely
on the two years which have just elapsed (and the general memory
unaided is now so weak that we know the past little better than the
future), we shall be chiefly struck, I think, by the large element
of injurious make–believe. My concluding proposals assume that this
element of make–believe has ceased to be politically necessary; that
outside opinion is now ready for inside opinion to disclose, and act
upon, its secret convictions; and that it is no longer an act of futile
indiscretion to speak sensibly in public.
FOOTNOTE:
[1] “Its merely colorable fulfilment of solemn contracts with a
defeated nation, its timorous failure to reckon with economic
realities,” as Professor Allyn Young wrote in a review of my book.
Yet Professor Young has thought right, nevertheless, to make
himself a partial apologist of the Treaty, and to describe it as “a
forward–looking document.”