FROM THE RATIFICATION OF THE TREATY OF VERSAILLES TO THE SECOND
ULTIMATUM OF LONDON
I. _The Execution of the Treaty and the Plebiscites_
The Treaty of Versailles was ratified on January 10, 1920, and except
in the plebiscite areas its territorial provisions came into force on
that date. The Slesvig plebiscite (February and March, 1920) awarded
the north to Denmark and the south to Germany, in each case by a
decisive majority. The East Prussian plebiscite (July, 1920) showed an
overwhelming vote for Germany. The Upper Silesian plebiscite (March,
1921) yielded a majority of nearly two to one in favor of Germany for
the province as a whole,[2] but a majority for Poland in certain areas
of the south and east. On the basis of this vote, and having regard to
the industrial unity of certain disputed areas, the principal Allies,
with the exception of France, were of opinion that, apart from the
southeastern districts of Pless and Rybnik which, although they contain
undeveloped coalfields of great importance, are at present agricultural
in character, nearly the whole of the province should be assigned to
Germany. Owing to the inability of France to accept this solution,
the whole problem was referred to the League of Nations for final
arbitration. This body bisected the industrial area in the interests of
racial or nationalistic justice; and introduced at the same time, in
the endeavor to avoid the consequences of this bisection, complicated
economic provisions of doubtful efficiency in the interests of material
prosperity. They limited these provisions to fifteen years, trusting
perhaps that something will have occurred to revise their decision
before the end of that time. Broadly speaking, the frontier has been
drawn, entirely irrespective of economic considerations, so as to
include as large as possible a proportion of German voters on one side
of it and Polish voters on the other (although to achieve this result
it has been thought necessary to assign two almost purely German towns,
Kattowitz and Königshütte to Poland). From this limited point of view
the work may have been done fairly. But the Treaty had directed that
economic and geographical considerations should be taken into account
also.
I do not intend to examine in detail the wisdom of this decision. It
is believed in Germany that subterranean influence brought to bear
by France contributed to the result. I doubt if this was a material
factor, except that the officials of the League were naturally anxious,
in the interests of the League itself, to produce a solution which
would not be a fiasco through the members of the Council of the
League failing to agree about it amongst themselves; which inevitably
imported a certain bias in favor of a solution acceptable to France.
The decision raises, I think, much more fundamental doubts about this
method of settling international affairs.
Difficulties do not arise in simple cases. The League of Nations
will be called in where there is a conflict between opposed and
incommensurable claims. A good decision can only result by impartial,
disinterested, very well–informed and authoritative persons taking
_everything_ into account. Since International Justice is dealing with
vast organic units and not with a multitude of small units of which
the individual particularities are best ignored and left to average
themselves out, it cannot be the same thing as the cut–and–dried
lawyer’s justice of the municipal court. It will be a dangerous
practice, therefore, to entrust the settlement of the ancient conflicts
now inherent in the tangled structure of Europe, to elderly gentlemen
from South America and the far Asiatic East, who will deem it their
duty to extract a strict legal interpretation from the available
signed documents,—who will, that is to say, take account of as _few_
things as possible, in an excusable search for a simplicity which is
not there. That would only give us more judgments of Solomon with the
ass’s ears, a Solomon with the bandaged eyes of law, who, when he says
“Divide ye the living child in twain,” means it.
The Wilsonian dogma, which exalts and dignifies the divisions of race
and nationality above the bonds of trade and culture, and guarantees
frontiers but not happiness, is deeply embedded in the conception of
the League of Nations as at present constituted. It yields us the
paradox that the first experiment in international government should
exert its influence in the direction of intensifying nationalism.
These parenthetic reflections have arisen from the fact that from a
certain limited point of view the Council of the League may be able to
advance a good case in favor of its decision. My criticism strikes more
deeply than would a mere allegation of partiality.
With the conclusion of the plebiscites the frontiers of Germany were
complete.
In January 1920 Holland was called on to surrender the Kaiser; and,
to the scarcely concealed relief of the Governments concerned, she
duly refused (January 23, 1920). In the same month the surrender of
some thousands of “war criminals” was claimed, but, in the face of a
passionate protest from Germany, was not insisted on. It was arranged
instead that, in the first instance at least, only a limited number of
cases should be pursued, not before Allied Courts, as provided by the
Treaty, but before the High Court of Leipzig. Some such cases have been
tried; and now, by tacit consent, we hear no more about it.
On March 13, 1920, an outbreak by the reactionaries in Berlin (the
Kapp “Putsch”) resulted in their holding the capital for five days
and in the flight of the Ebert Government to Dresden. The defeat of
this outbreak, largely by means of the weapon of the general strike
(the first success of which was, it is curious to note, in defense
of established order), was followed by Communist disturbances in
Westphalia and the Ruhr. In dealing with this second outbreak, the
German Government despatched more troops into the district than was
permissible under the Treaty, with the result that France seized the
opportunity, without the concurrence of her Allies, of occupying
Frankfurt (April 6, 1920) and Darmstadt, this being the immediate
occasion of the first of the series of Allied Conferences recorded
below—the Conference of San Remo.
These events, and also doubts as to the capacity of the Central German
Government to enforce its authority in Bavaria, led to successive
postponements of the completion of disarmament, due under the Treaty
for March 31, 1920, until its final enforcement by the London Ultimatum
of May 5, 1921.
There remains Reparation, the chief subject of the chronicle which
follows. In the course of 1920 Germany carried out certain specific
deliveries and restitutions prescribed by the Treaty. A vast quantity
of identifiable property, removed from France and Belgium, was duly
restored to its owners.[3] The Mercantile Marine was surrendered. Some
dyestuffs were delivered, and a certain quantity of coal. But Germany
paid no cash, and the real problem of Reparation was still postponed.[4]
With the Conferences of the spring and summer of 1920 there began the
long series of attempts to modify the impossibilities of the Treaty and
to mold it into workable form.
II. _The Conferences of San Remo_ (_April_ 19–26, 1920), _Hythe_ (_May_
15 _and June_ 19, 1920), _Boulogne_ (_June_ 21, 22, 1920), _Brussels_
(_July_ 2–3, 1920), _and Spa_ (_July_ 5–16, 1920)
It is difficult to keep distinct the series of a dozen discussions
between the Premiers of the Allied Powers which occupied the year from
April 1920 to April 1921. The result of each Conference was generally
abortive, but the total effect was cumulative; and by gradual stages
the project of revising the Treaty gained ground in every quarter. The
Conferences furnish an extraordinary example of Mr. Lloyd George’s
methods. At each of them he pushed the French as far as he could, but
not as far as he wanted; and then came home to acclaim the settlement
provisionally reached (and destined to be changed a month later) as an
expression of complete accord between himself and his French colleague,
as a nearly perfect embodiment of wisdom, and as a settlement which
Germany would be well advised to accept as final, adding about every
third time that, if she did not, he would support the invasion of
her territory. As time went on, his reputation with the French was
not improved; yet he steadily gained his object,—though this may be
ascribed not to the superiority of the method as such, but to facts
being implacably on his side.
The first of the series, the Conference of San Remo (April 19–26,
1920), was held under the presidency of the Italian Premier, Signor
Nitti, who did not conceal his desire to revise the Treaty. M.
Millerand stood, of course, for its integrity, whilst Mr. Lloyd George
(according to _The Times_ of that date) occupied a middle position.
Since it was evident that the French would not then accept any new
formula, Mr. Lloyd George concentrated his forces on arranging for a
discussion face to face between the Supreme Council and the German
Government, such a meeting, extraordinary to relate, having never yet
been arranged, neither during the Peace Conference nor afterwards.
Defeated in a proposal to invite German representatives to San Remo
forthwith, he succeeded in carrying a decision to summon them to
visit Spa in the following month “for the discussion of the practical
application of the Reparation Clauses.” This was the first step; and
for the rest the Conference contented itself with a Declaration on
German Disarmament. Mr. Lloyd George had had to concede to M. Millerand
that the integrity of the Treaty should be maintained; but speaking in
the House of Commons on his return home, he admitted a preference for a
not “too literal” interpretation of it.
In May the Premiers met in privacy at Hythe to consider their course
at Spa. The notion of the sliding scale, which was to play a great
part in the Paris Decisions and the Second Ultimatum of London, now
came definitely on the carpet. A Committee of Experts was appointed to
prepare for examination a scheme by which Germany should pay a certain
minimum sum each year, supplemented by further sums in accordance with
her capacity. This opened the way for new ideas, but no agreement was
yet in sight as to actual figures. Meantime the Spa Conference was put
off for a month.
In the following month the Premiers met again at Boulogne (June 21,
1920), this meeting being preceded by an informal week–end at Hythe
(June 19, 1920). It was reported that on this occasion the Allies got
so far as definitely to agree on the principle of minimum annuities
extensible in accordance with Germany’s economic revival. Definite
figures even were mentioned, namely, a period of thirty–five years and
minimum annuities of three milliard gold marks. The Spa Conference was
again put off into the next month.
At last the Spa meeting was really due. Again the Premiers met
(Brussels, July 2, 3, 1920) to consider the course they would adopt.
They discussed many things, especially the proportions in which the
still hypothetical Reparation receipts were to be divided amongst
the claimants.[5] But no concrete scheme was adopted for Reparation
itself. Meanwhile a memorandum handed in by the German experts made
it plain that no plan politically possible in France was economically
possible in Germany. “The Note of the German economic experts,” wrote
_The Times_ on July 3, 1920, “is tantamount to a demand for a complete
revision of the Peace Treaty. The Allies have therefore to consider
whether they will call the Germans sharply to order under the menace of
definite sanctions, or whether they will risk creating the impression
of feebleness by dallying with German tergiversations.” This was a
good idea; if the Allies could not agree amongst themselves as to the
precise way of altering the Treaty, a “complete accord” between them
could be re–established by “calling the Germans sharply to order” for
venturing to suggest that the Treaty could be altered at all.
At last, on July 5, 1920, the long–heralded Conference met. But,
although it occupied twelve days, no time was found for reaching
the item on the agenda which it had been primarily summoned to
discuss—namely, Reparations. Before this dangerous topic could be
reached urgent engagements recalled M. Millerand to Paris. One of the
chief subjects actually dealt with, coal, is treated in Excursus I.
at the conclusion of this chapter. But the chief significance of the
meeting lay in the fact that then for the first time the responsible
ministers and experts of Germany and the Allied States met face to face
and used the methods of public conference and even private intimacy.
The Spa Conference produced no plan; but it was the outward sign of
some progress under the surface.
III. _The Brussels Conference_ (_December_ 16–22, 1920)
Whilst the Spa Conference made no attempt to discuss the general
question of the Reparation settlement, it was again agreed that the
latter should be tackled at an early date. But time passed by, and
nothing happened. On September 23, 1920, M. Millerand succeeded to
the Presidency of the French Republic, and his place as Premier was
taken by M. Leygues. French official opinion steadily receded from
the concessions, never fully admitted to the French public, which
Mr. Lloyd George had extracted at Boulogne. They now preferred to
let the machinery of the Reparation Commission run its appointed
course. At last, however, on November 6, 1920, after much diplomatic
correspondence, it was announced that once again the French and British
Governments were in “complete accord.” A conference of experts,
nominated by the Reparation Commission, was to sit with German experts
and report; then a conference of ministers was to meet the German
Government and report; with these two reports before it the Reparation
Commission was to fix the amount of Germany’s liability; and finally,
the heads of the Allied Governments were to meet and “take decisions.”
“Thus,” _The Times_ recorded, “after long wanderings in the wilderness
we are back once more at the Treaty of Versailles.” The re–perusal of
old files of newspapers, which the industrious author has undertaken,
corroborates, if nothing else does, the words of the Preacher and the
dustiness of fate.
The first stage of this long procedure was in fact undertaken, and
certain permanent officials of the Allied Governments[6] met German
representatives at Brussels, shortly before Christmas 1920, to
ascertain facts and to explore the situation generally. This was a
conference of “experts” as distinguished from the conferences of
“statesmen” which preceded and followed it.
The work of the Brussels experts was so largely ignored and overthrown
by the meetings of the statesmen at Paris shortly afterwards, that it
is not now worth while to review it in detail. It marked, however,
a new phase in our relations with Germany. The officials of the two
sides met in an informal fashion and talked together like rational
beings. They were representative of the pick of what might be called
“international officialdom,” cynical, humane, intelligent, with a
strong bias towards facts and a realistic treatment. Both sides
believed that progress was being made towards a solution; mutual
respect was fostered; and a sincere regret was shared at the early
abandonment of reasonable conversations.
The Brussels experts did not feel themselves free to consider an
average payment less than that contemplated at Boulogne. They
recommended to the Allied Governments, accordingly, (1) that during the
five years from 1921 to 1926 Germany should pay an _average_ annuity of
$750,000,000, but that this average annuity should be so spread over
the five years that less than this amount would be payable in the first
two years and more in the last two years, the question of the amount of
subsequent payments, after the expiry of five years, being postponed
for the present;
(2) That a substantial part of this sum should be paid in the form of
deliveries of material and not of cash;
(3) That the annual expenses of the Armies of Occupation should be
limited to $60,000,000, which payment need not be additional to the
above annuities but a first charge on them;
(4) That the Allies should waive their claim on Germany to build ships
for them and should perhaps relinquish, or postpone, the claim for the
delivery of a certain number of the existing German vessels;
(5) That Germany on her side should put her finances and her budget in
order and should agree to the Allies taking control of her customs in
the event of default under the above scheme.
IV. _The Decisions of Paris_ (_January_ 24–30, 1921)
The suggestions of the Brussels experts furnished no permanent
settlement of the question, but they represented, nevertheless, a
great advance from the ideas of the Treaty. In the meantime, however,
opinion in France was rising against the concessions contemplated.
M. Leygues, it appeared, would be unable to carry in the Chamber the
scheme discussed at Boulogne. Prolonged political intrigue ended in the
succession of M. Briand to the Premiership, with the extreme defenders
of the literal integrity of the Treaty of Versailles, M. Poincaré, M.
Tardieu, and M. Klotz, still in opposition. The projects of Boulogne
and Brussels were thrown into the melting–pot, and another conference
was summoned to meet at Paris at the end of January 1921.
It was at first doubtful whether the proceedings might not terminate
with a breach between the British and the French points of view. Mr.
Lloyd George was justifiably incensed at having to surrender most of
the ground which had seemed definitely gained at Boulogne; with these
fluctuations negotiation was a waste of time and progress impossible.
He was also disinclined to demand payments from Germany which _all_
the experts now thought impossible. For a few days he was entirely
unaccommodating to the French contentions; but as the business
proceeded he became aware that M. Briand was a kindred spirit, and
that, whatever nonsense he might talk in public, he was secretly quite
sensible. A breach in the conversations might mean the fall of Briand
and the entrance to office of the wild men, Poincaré and Tardieu,
who, if their utterances were to be taken seriously and were not
merely a ruse to obtain office, might very well disturb the peace of
Europe before they could be flung from authority. Was it not better
that Mr. Lloyd George and M. Briand, both secretly sensible, should
remain colleagues at the expense of a little nonsense in unison for a
short time? This view of the situation prevailed, and an ultimatum was
conveyed to Germany on the following lines.[7]
The Reparation payments, proposed to Germany by the Paris Conference,
were made up of a determinate part and an indeterminate part.
The former consisted of $500,000,000 per annum for two years,
$750,000,000 for the next three, then $1,000,000,000 for three more,
and $1,250,000,000 for three after that, and, finally, $1,500,000,000
annually for 31 years. The latter (the indeterminate part) consisted of
an annual sum, additional to the above, equal in value to 12 per cent
of the German exports. The fixed payments under this scheme added up to
a gross total of $56,500,000,000 which was a little less than the gross
total contemplated at Boulogne but, with the export proportion added, a
far greater sum.
The indeterminate element renders impossible an exact calculation of
this burden, and it is no longer worth while to go into details. But
I calculated at the time, without contradiction, that these proposals
amounted for the normal period to a demand exceeding $2,000,000,000 per
annum, which is double the highest figure that any competent person in
Great Britain or in the United States has ever attempted to justify.
The Paris Decisions, however, coming as they did after the discussions
of Boulogne and Brussels, were not meant seriously, and were simply
another move in the game, to give M. Briand a breathing space. I wonder
if there has ever been anything quite like it—best diagnosed perhaps
as a consequence of the portentous development of “propaganda.”
The monster had escaped from the control of its authors, and the
extraordinary situation was produced in which the most powerful
statesmen in the world were compelled by forces, which they could not
evade, to meet together day after day to discuss detailed variations of
what they knew to be impossible.
Mr. Lloyd George successfully took care, however, that the bark should
have no immediate bite behind it. The consideration of effective
penalties was postponed, and the Germans were invited to attend in
London in a month’s time to convey their answer by word of mouth.
M. Briand duly secured his triumph in the Chamber. “Rarely,” _The
Times_ reported, “can M. Briand in all his long career as a speaker
and Parliamentarian have been in better form. The flaying of M.
Tardieu was intensely dramatic, even if at times almost a little
painful for the spectators as well as for the victim.” M. Tardieu
had overstated his case, and “roundly asserting that the policy of
France during the last year had been based on the conclusion that the
financial clauses of the Treaty of Versailles could not be executed,
had gained considerable applause by declaring that this was just the
thesis of the pacifist, Mr. Keynes, and of the German delegate, Count
Brockdorff–Rantzau,”—which was certainly rather unfair to the Paris
Decisions. But by that date, even in France, to praise the perfections
of the Treaty was to make oneself ridiculous. “I am an ingenuous man,”
said M. Briand as he mounted the tribune, “and when I received from M.
Tardieu news that he was going to interpellate me, I permitted myself
to feel a little pleased. I told myself that M. Tardieu was one of the
principal architects of the Treaty of Versailles, and that as such,
though he knew its good qualities, he would also know its blemishes,
and that he would, therefore, be indulgent to a man who had done
his best in fulfilling his duty of applying it—_mais voilà_ (with
a gesture)—I did not stop to remember that M. Tardieu had already
expended all his stock of indulgence upon his own handiwork.” The
monstrous offspring of propaganda was slowly dying.
V. _The First Conference of London_ (_March_ 1–7, 1921)
In Germany the Paris proposals were taken seriously and provoked
a considerable outcry. But Dr. Simons accepted the invitation to
London and his experts got to work at a counter–proposal. “I was
in agreement,” he said at Stuttgart on February 13, “with the
representatives of Britain and France at the Brussels Conference. The
Paris Conference shattered that. A catastrophe has occurred. German
public opinion will never forget these figures. Now it is impossible
to return to the Seydoux plan put forward at Brussels (_i.e._, a
provisional settlement for five years), for the German people would
always see enormous demands rising before them like a specter.... We
shall rather accept unjust dictation than sign undertakings we are not
firmly persuaded the German people can keep.”
On March 1, 1921, Dr. Simons presented his counter–proposal to the
Allies assembled in London. Like the original counter–proposal of
Brockdorff–Rantzau at Versailles, it was not clear–cut or entirely
intelligible; and it was rumored that the German experts were divided
in opinion amongst themselves. Instead of stating in plain language
what Germany thought she could perform, Dr. Simons started from the
figures of the Paris Decisions and then proceeded by transparent
and futile juggling to reduce them to a quite different figure. The
process was as follows. Take the gross total of the fixed annuities of
the Paris scheme (_i.e._, apart from the export proportion), namely
$56,500,000,000, and calculate its present value at _8 per cent
interest_, namely $12,500,000,000; deduct from this $5,000,000,000
as the alleged (but certainly not the actual) value of Germany’s
deliveries up to date, which leaves $7,500,000,000. This was the
utmost Germany could pay. If the Allies could raise an international
loan of $2,000,000,000, Germany would pay the interest and sinking
fund on this, and in addition $250,000,000 a year for five years,
towards the discharge of the capital sum remaining over and above the
$2,000,000,000, namely, $5,500,000,000, which capital sum, however,
would not carry interest pending repayment. At the end of five years
the rate of repayment would be reconsidered. The whole proposal was
contingent on the retention of Upper Silesia and the removal of all
impediments to German trade.
The actual substance of this proposal was not unreasonable and probably
as good as the Allies will ultimately secure. But the figures were far
below even those of the Brussels experts, and the mode of putting it
forward naturally provoked prejudice. It was summarily rejected.
Two days later Mr. Lloyd George read to the German Delegation a
lecture on the guilt of their country, described their proposals as
“an offense and an exasperation,” and alleged that their taxes were
“ridiculously low compared with Great Britain’s.” He then delivered
a formal declaration on behalf of the Allies that Germany was in
default in respect of “the delivery for trial of the criminals who have
offended against the laws of war, disarmament, and the payment in cash
or kind of $5,000,000,000”; and concluded with an ultimatum[8] to
the effect that unless he heard by Monday (March 7) “that Germany was
either prepared to accept the Paris Decisions or to submit proposals
which would be in other ways an equally satisfactory discharge of her
obligations under the Treaty of Versailles (subject to the concessions
made in the Paris proposals),” the Allies would proceed to (1) the
occupation of Duisberg, Ruhrort, and Düsseldorf on the right bank of
the Rhine, (2) a levy on all payments due to Germany on German goods
sent to Allied countries, (3) the establishment of a line of Customs
between the occupied area of Germany and the rest of Germany, and (4)
the retention of the Customs paid on goods entering or leaving the
occupied area.
During the next few days negotiations proceeded, to no purpose, behind
the scenes. At midnight on March 6, M. Loucheur and Lord D’Abernon
offered the Germans the alternative of a fixed payment of $750,000,000
for 30 years and an export proportion of 30 per cent.[9] The formal
Conference was resumed on March 7. “A crowd gathered outside Lancaster
House in the morning and cheered Marshal Foch and Mr. Lloyd George.
Shouts of ‘Make them pay, Lloyd George!’ were general. The German
delegates were regarded with curiosity. General von Seeckt wore uniform
with a sword. He wore also an eyeglass in the approved manner of the
Prussian officer and bore himself as the incarnation of Prussian
militarism. Marshal Foch, Field–Marshal Sir Henry Wilson, and the other
Allied soldiers also wore uniform.”[10]
Dr. Simons communicated his formal reply. He would accept the _régime_
of the Paris Decisions as fixed for the first five years, provided
Germany was helped to pay by means of a loan and retained Upper
Silesia. At the end of five years the Treaty of Versailles would
resume its authority, the provisions of which he preferred, as he was
entitled to do, to the proposals of Paris. “The question of war guilt
is to be decided neither by the Treaty, nor by acknowledgment, nor by
Sanctions; only history will be able to decide the question as to who
was responsible for the world war. We are all of us still too near to
the event.” The Sanctions threatened were, he pointed out, all of them
illegal. Germany could not be technically in default in respect of
Reparation until the Reparation Commission had made the pronouncements
due from them on May 1. The occupation of further German territory was
not lawful under the Treaty. The retention of part of the value of
German goods was contrary to undertakings given by the British and
Belgian Governments. The erection of a special Customs tariff in the
Rhineland was only permissible under Article 270 of the Treaty for
the protection of the economic interests of the Rhineland population
and not for the punishment of the whole German people in respect of
unfulfilled Treaty obligations. The arguments as to the illegality of
the Sanctions were indisputable, and Mr. Lloyd George made no attempt
to answer them. He announced that the Sanctions would be put into
operation immediately.
The rupture of the negotiations was received in Paris “with a sigh of
relief,”[11] and orders were telegraphed by Marshal Foch for his troops
to march at 7 A.M. next morning.
No new Reparation scheme, therefore, emerged from the Conference of
London. Mr. Lloyd George’s acquiescence in the Decisions of Paris had
led him too far. Some measure of personal annoyance at the demeanor of
the German representatives and the failure of what, in its inception,
may have been intended as bluff, had ended in his agreeing to an
attempt to enforce the Decisions by the invasion of Germany. The
economic penalties, whether they were legal or not, were so obviously
ineffective for the purpose of collecting money, that they can hardly
have been intended for that purpose, and were rather designed to
frighten Germany into putting her name to what she could not, and did
not intend to perform, by threatening a serious step in the direction
of the policy, openly advocated in certain French quarters, of
permanently detaching the Rhine provinces from the German Commonwealth.
The grave feature of the Conference of London lay partly in Great
Britain’s lending herself to a furtherance of this policy, and partly
in contempt for the due form and processes of law.
For it was impossible to defend the legality of the occupation
of the three towns under the Treaty of Versailles.[12] Mr. Lloyd
George endeavored to do so in the House of Commons, but at a later
stage of the debate the contention was virtually abandoned by the
Attorney–General.
The object of the Allies was to compel Germany to accept the Decisions
of Paris. But Germany’s refusal to accept these proposals was within
her rights and not contrary to the Treaty, since they lay outside the
Treaty and included features unauthorized by the Treaty which Germany
was at liberty either to accept or to reject. It was necessary,
therefore, for the Allies to find some other pretext. Their effort in
this direction was perfunctory, and consisted, as already recorded, in
a vague reference to war criminals, disarmament, and the payment of 20
milliard gold marks.
The allegation of default in paying the 20 milliard gold marks was
manifestly untenable at that date (March 7, 1921); for according to
the Treaty, Germany had to pay this sum by May 1, 1921, “in such
instalments and in such manner as the Reparation Commission may fix,”
and in March 1921 the Reparation Commission had not yet demanded these
cash payments.[13] But assuming that there had been technical default
in respect of the war criminals and disarmament (and the original
provisions of the Treaty had been so constantly modified that it was
very difficult to say to what extent this was the case), it was our
duty to state our charges precisely, and, if penalties were threatened,
to make these penalties dependent on a failure to meet our charges. We
were not entitled to make vague charges, and then threaten penalties
unless Germany agreed to something which had nothing to do with the
charges. The Ultimatum of March 7 substituted for the Treaty the
intermittent application of force in exaction of varying demands. For
whenever Germany was involved in a technical breach of any one part
of the Treaty, the Allies were, apparently, to consider themselves
entitled to make any changes they saw fit in any other part of the
Treaty.
In any case the invasion of Germany beyond the Rhine was not a lawful
act under the Treaty. This question became of even greater importance
in the following month, when the French announced their intention of
occupying the Ruhr. The legal issue is discussed in Excursus II. at the
conclusion of this Chapter.
VI. _The Second Conference of London_ (_April_ 29–_May_ 5, 1921)
The next two months were stormy. The Sanctions embittered the situation
in Germany without producing any symptoms of surrender in the German
Government. Towards the end of March the latter sought the intervention
of the United States and transmitted a new counter–proposal through the
Government of that country. In addition to being straightforward and
more precise, this offer was materially better than that of Dr. Simons
in London at the beginning of the month. The chief provisions[14] were
as follows:
1. The German liability to be fixed at $12,500,000,000 present value.
2. As much of this as possible to be raised immediately by an
international loan, issued on attractive terms, of which the proceeds
would be handed over to the Allies, and the interest and sinking fund
on which Germany would bind herself to meet.
3. Germany to pay interest on the balance at 4 per cent for the present.
4. The sinking fund on the balance to vary with the rate of Germany’s
recovery.
5. Germany, in part discharge of the above, to take upon herself the
actual reconstruction of the devastated areas on any lines agreeable to
the Allies, and in addition to make deliveries in kind on commercial
lines.
6. Germany is prepared, “up to her powers of performance,” to assume
the obligations of the Allies to America.
7. As an earnest of her good intentions, she offers $250,000,000 in
cash immediately.
If this is compared with Dr. Simons’s first offer, it will be seen that
it is at least 50 per cent better, because there is no longer any talk
of deducting from the total of $12,500,000,000 an alleged (and in fact
imaginary) sum of $5,000,000,000 in respect of deliveries prior to May
1, 1921. If we assume an international loan of $1,250,000,000, costing
8 per cent for interest and sinking fund,[15] the German offer amounted
to an immediate payment of $550,000,000 per annum, with a possibility
of an increase later in proportion to the rate of Germany’s economic
recovery.
The United States Government, having first ascertained privately that
this offer would not be acceptable to the Allies, refrained from its
formal transmission.[16] On this account, and also because it was
overshadowed shortly afterwards by the Second Conference of London,
this very straightforward proposal has never received the attention
it deserves. It was carefully and precisely drawn up, and probably
represented the full maximum that Germany could have performed, if not
more.
But the offer, as I have said, made very little impression; it was
largely ignored in the press, and scarcely commented on anywhere.
For in the two months which elapsed between the First and Second
Conferences of London there were two events of great importance, which
modified the situation materially.[17]
The first of these was the result of the Silesian plebiscite held
in March 1921. The earlier German Reparation offers had all been
contingent on her retention of Upper Silesia; and this condition was
one which, in advance of the plebiscite, the Allies were unable to
accept. But it now appeared that Germany was in fact entitled to most
of the country, and, possibly, to the greater part of the industrial
area. But this result also brought to a head the acute divergence
between the policy of France and the policy of the other Allies towards
this question.
The second event was the decision of the Reparation Commission,
communicated to Germany on April 27, 1921, as to her aggregate
liabilities under the Treaty. Allied Finance Ministers had foreshadowed
300 milliard gold marks; at the time of the Decisions of Paris,
responsible opinion expected 160–200 milliards;[18] and the author
of _The Economic Consequences of the Peace_ had suffered widespread
calumny for fixing on the figure of 137 milliards,[19] as being the
nearest estimate he could make. The public, and the Government also,
were, therefore, taken by surprise when the Reparation Commission
announced that they unanimously assessed the figure at 132 milliards
(_i.e._, $33,000,000,000).[20] It now turned out that the Decisions
of Paris, which had been represented as a material amelioration of the
Treaty which Germany was ungrateful not to accept, were no such thing;
and that Germany was at that moment suffering from an invasion of her
territory for a refusal to subscribe to terms which were severer in
some respects than the Treaty itself. I shall examine the decision of
the Reparation Commission in detail in Chapter IV. It put the question
on a new basis and the Decisions of London could hardly have been
possible otherwise.
The decision of the Reparation Commission and the arrival of the date,
May 1, 1921, fixed in the Treaty for the promulgation of a definite
Reparation scheme, provided a sufficient ground for reopening the whole
question. Germany had refused the Decisions of Paris; the Sanctions had
failed to move her; the régime of the Treaty was therefore reinstated;
and under the Treaty it was for the Reparation Commission to propose a
scheme.
In these circumstances the Allies met once more in London in the
closing days of April 1921. The scheme there concerted was really
the work of the Supreme Council, but the forms of the Treaty were
preserved, and the Reparation Commission were summoned from Paris to
adopt and promulgate as their own the decree of the Supreme Council.
The Conference met in circumstances of great tension. M. Briand had
found it necessary to placate his Chamber by announcing that he
intended to occupy the Ruhr on May 1. The policy of violence and
illegality, which began with the Conference of Paris, had always
included hitherto just a sufficient ingredient of make–believe to
prevent its being as dangerous as it pretended to the peace and
prosperity of Europe. But a point had now been reached when something
definite, whether good or bad, seemed bound to happen; and there was
every reason for anxiety. Mr. Lloyd George and M. Briand had walked
hand–in–hand to the edge of a precipice; Mr. Lloyd George had looked
over the edge; and M. Briand had praised the beauties of the prospect
below and the exhilarating sensations of a descent. Mr. Lloyd George,
having indulged to the full his habitual morbid taste for looking over,
would certainly end in drawing back, explaining at the same time how
much he sympathized with M. Briand’s standpoint. But would M. Briand?
In this atmosphere the Conference met, and, considering all the
circumstances, including the past commitments of the principals,
the result was, on the whole, a victory for good sense, not least
because the Allies there decided to return to the pathway of legality
within the ambit of the Treaty. The new proposals, concerted at this
Conference, were, whether they were practicable or not in execution,
a lawful development of the Treaty, and in this respect sharply
distinguished from the Decisions of Paris in the January preceding.
However bad the Treaty might be, the London scheme provided a way of
escape from a policy worse even than that of the Treaty,—acts, that
is, of arbitrary lawlessness based on the mere possession of superior
force.
In one respect the Second Ultimatum of London was lawless; for it
included an illegal threat to occupy the Ruhr Valley if Germany
refused its terms. But this was for the sake of M. Briand, whose
minimum requirement was that he should at least be able to go home
in a position to use, for conversational purposes, the charms of the
precipice from which he was hurrying away. And the Ultimatum made
no demand on Germany to which she was not already committed by her
signature to the Treaty.
For this reason the German Government was right, in my judgment,
to accept the Ultimatum unqualified, even though it still included
demands impossible of fulfilment. For good or ill Germany had signed
the Treaty. The new scheme added nothing to the Treaty’s burdens,
and, although a reasonable permanent settlement was left where it
was before,—in the future,—in some respects it abated them. Its
ratification, in May 1921, was in conformity with the Treaty, and
merely carried into effect what Germany had had reason to anticipate
for two years past. It did not call on her to do immediately—that is
to say, in the course of the next six months—anything incapable of
performance. It wiped out the impossible liability under which she lay
of paying forthwith a balance of $3,000,000,000 due under the Treaty
on May 1. And, above all, it obviated the occupation of the Ruhr and
preserved the peace of Europe.
There were those in Germany who held that it must be wrong that Germany
should under threats profess insincerely what she could not perform.
But the submissive acceptance by Germany of a lawful notice under a
Treaty she had already signed committed her to no such profession,
and involved no recantation of her recent communication through the
President of the United States as to what would eventually prove in her
sincere belief to be the limits of practicable performance.
In the existence of such sentiments, however, Germany’s chief
difficulty lay. It has not been understood in England or in America how
deep a wound has been inflicted on Germany’s self–respect by compelling
her, not merely to perform acts, but to subscribe to beliefs which she
did not in fact accept. It is not usual in civilized countries to use
force to compel wrongdoers to confess, even when we are convinced of
their guilt; it is still more barbarous to use force, after the fashion
of inquisitors, to compel adherence to an article of belief because we
ourselves believe it. Yet towards Germany the Allies had appeared to
adopt this base and injurious practice, and had enforced on this people
at the point of the bayonet the final humiliation of reciting, through
the mouths of their representatives, what they believed to be untrue.
But in the Second Ultimatum of London the Allies were no longer in
this fanatical mood, and no such requirement was intended. I hoped,
therefore, at the time that Germany would accept the notification of
the Allies and do her best to obey it, trusting that the whole world
is not unreasonable and unjust, whatever the newspapers may say; that
Time is a healer and an illuminator; and that we had still to wait a
little before Europe and the United States could accomplish in wisdom
and mercy the economic settlement of the war.
EXCURSUS I
COAL
The question of coal has always considerable importance for Reparation,
both because (in spite of the exaggerations of the Treaty) it is a form
in which Germany can make important payments, and also because of the
reaction of coal deliveries on Germany’s internal economy. Up to the
middle of 1921 Germany’s payments for Reparation were almost entirely
in the form of coal. And coal was the main topic of the Spa Conference,
where for the first time the Governments of the Allies and of Germany
met face to face.
Under the terms of the Treaty Germany was to deliver 3,400,000 tons
of coal per month. For reasons explained in detail in _The Economic
Consequences of the Peace_ (pp. 74–89) this total was a figure of
rhetoric and not capable of realization. Accordingly for the first
quarter of 1920 the Reparation Commission reduced their demand to
1,660,000 tons per month, and in the second quarter to 1,500,000 tons
per month; whilst in the second quarter Germany actually delivered
at the rate of 770,000 tons per month. This last figure was unduly
low, and by the latter date coal was in short supply throughout the
world and very dear. The main object of the Spa Coal Agreement was,
therefore, to secure for France an increased supply of German coal.
The Conference was successful in obtaining coal, but on terms not
unfavorable to Germany. After much bargaining the deliveries were
fixed at 2,000,000 tons a month for six months from August 1920. But
the German representatives succeeded in persuading the Allies that
they could not deliver this amount unless their miners were better
fed and that this meant foreign credit. The Allies agreed, therefore,
to _pay_ Germany something substantial for this coal, the sums thus
received to be utilized in purchasing from abroad additional food
for the miners. In form, the greater part of the sum thus paid was a
loan; but, since it was set off as a prior charge against the value of
Reparation deliveries (_e.g._, the ships), it really amounted to paying
back to Germany the value of a part of these deliveries. Germany’s
total cash receipts[21] under these arrangements actually came to about
360,000,000 gold marks,[22] which worked out at about 40s. per ton
averaged over the whole of the deliveries. As at this time the German
internal price was from 25s. to 30s. per ton, the German Government
received in foreign currency substantially more than they had to pay
for the coal to the home producers. The high figure of 2,000,000 tons
per month involved short supplies to German transport and industry.
But the money was badly wanted, and was of the utmost assistance
in paying for the German food program (and also in meeting German
liabilities in respect of pre–war debts) during the autumn and winter
of 1920.
This is a convenient point at which to record the subsequent history
of the coal deliveries. During the next six months Germany very nearly
fulfilled the Spa Agreement, her deliveries towards the 2,000,000 tons
per month being 2,055,227 tons in August, 2,008,470 tons in September,
2,288,049 tons in October, 1,912,696 tons in November, 1,791,828 tons
in December, and 1,678,675 tons in January 1921. At the end of January
1921 the Spa Agreement lapsed, and since that time Germany has had to
continue her coal deliveries without any payment or advance of cash
in return for them. To make up for the accumulated deficit under the
Spa Agreement, the Reparation Commission called for 2,200,000 tons per
month in February and March, and continued to demand this figure in
subsequent months. Like so much else, however, this demand was only
on paper. Germany was not able to fulfil it, her actual deliveries
during the next six months amounting to 1,885,051 tons in February
1921, 1,419,654 tons in March, 1,510,332 tons in April, 1,549,768 tons
in May, 1,453,761 tons in June, and 1,399,132 tons in July. And the
Reparation Commission, not really wanting the coal, tacitly acquiesced
in these quantities. During the first half of 1921 there was, in fact,
a remarkable reversal of the situation six months earlier. In spite of
the British Coal Strike, France and Belgium, having replenished their
stocks and suffering from a depression in the iron and steel trades,
were in risk of being glutted with coal. If Germany had complied with
the full demands of the Reparation Commission the recipients would not
have known what to do with the deliveries. Even as it was, some of the
coal received was sold to exporters, and the coal miners of France and
Belgium were in danger of short employment.
The statistics of the aggregate German output of pit coal are now as
follows, exclusive of Alsace–Lorraine, the Saar, and the Palatinate, in
million tons:
─────────────────┬──────┬──────┬──────┬──────┬──────┬────────────
│ 1913.│ 1917.│ 1918.│ 1919.│ 1920.│ 1921 (first
│ │ │ │ │ │nine months)
─────────────────┼──────┼──────┼──────┼──────┼──────┼────────────
Germany exclusive│ │ │ │ │ │
of Upper Silesia│130.19│111.66│109.54│ 92.76│ 99.66│ 76.06
Germany inclusive│ │ │ │ │ │
of Upper Silesia│173.62│154.41│148.19│117.69│131.35│ 100.60
Per cent of 1913 │ │ │ │ │ │
output │100.00│ 88.90│ 85.40│ 67.80│ 75.70│ 77.20
─────────────────┴──────┴──────┴──────┴──────┴──────┴────────────
The production of rough lignite (I will not risk controversy by
attempting to convert this into its pit–coal equivalent) rose from 87.1
million tons in 1913 to 93.8 in 1919, 111.6 in 1920, and 90.8 in the
first three–quarters of 1921.
The Spa Agreement supplied a temporary palliative of the anomalous
conditions governing the _price_ at which these coal deliveries are
credited to Germany. But with the termination of this Agreement they
again require attention. Under the Treaty Germany is credited in the
case of coal delivered _overland_ with “the German pithead price to
German nationals” plus the freight to the frontier; and in the case
of coal delivered _by sea_ with the export price; provided in each
case this price is not in excess of the British export price. Now for
various internal reasons the German Government have thought fit to
maintain the pithead price to German nationals far below the world
price, with the result that she gets credited with much less than its
real value for her deliveries of Reparation coal. During the year
ending June 1921 the average legal maximum price of the different
kinds of coal was about 270 marks a ton, inclusive of a tax of 20 per
cent on the price,[23] which at the exchange then prevailing was about
20s., _i.e._, between a third and a half of the British price at that
date. The fall in the mark exchange in the autumn of 1921 increased the
discrepancy. For although the price of German coal was substantially
increased in terms of paper marks, and although the price of British
coal had fallen sharply, the movements of exchange so out–distanced the
other factors, that in November 1921 the price of British coal worked
out at about three and half times the price of the best bituminous coal
from the Ruhr. Thus not only were the German iron–masters placed in an
advantageous position for competing with British producers, but the
Belgian and French industries also benefited artificially through the
receipt by their Governments of very low–priced coal.
The German Government is in rather a dilemma in this matter. An
increase in the coal tax is one of the most obvious sources for an
increased revenue, and such a tax would be, from the standpoint of
the exchequer, twice blessed, since it would increase correspondingly
the Reparation credits. But on the other hand, such a proposal unites
two groups against them, the industrialists, who want cheap coal for
industry and the Socialists who want cheap coal for the domestic stove.
From the revenue standpoint the tax would probably stand an increase
from 20 per cent to 60 per cent; but from the political standpoint an
increase from 20 per cent to 30 per cent is the highest contemplated at
present, with a differential price in favor of domestic consumers.[24]
I take this opportunity of making a few corrections or amplifications
of the passages in _The Economic Consequences of the Peace_ which deal
with coal.
1. The fate of Upper Silesia is highly relevant to some of the
conclusions about coal in Chapter IV of _The Economic Consequences
of the Peace_ (pp. 77–84). I there stated that “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,” which forecast turned out to
be in almost exact accordance with the facts. I also urged that, unless
the plebiscite went in a way which I did not expect, the industrial
districts ought to be assigned to Germany. But I felt no confidence,
having regard to the policy of France, that this would be done; and
I allowed, therefore, in my figures for the possibility that Germany
would lose this area.
The actual decision of the Allies, acting on the advice of the Council
of the League of Nations to whom the matter had been referred, which
we have discussed briefly above (pp. 12–14), divides the industrial
triangle between the two claimants to it. According to an estimate
of the Prussian Ministry of Trade 86 per cent of the total coal
deposits of Upper Silesia fall to Poland, leaving 14 per cent to
Germany. Germany retains a somewhat larger proportion of pits in actual
operation, 64 per cent of the current production of coal falling to
Poland and 36 per cent to Germany.[25]
The figure of 100,000,000 tons, given in _The Economic Consequences
of the Peace_ for the _net_ German production (_i.e._, deducting
consumption at the mines themselves) in the near future _excluding_
Upper Silesia, should, therefore, be replaced by the figure of (say)
115,000,000 tons, _including_ such part of Upper Silesia as Germany is
now to retain.
2. I beg leave to correct a misleading passage in a footnote to p. 79
of _The Economic Consequences of the Peace_. I there spoke of “Poland’s
pre–war annual demand” for coal, where I should have said “pre–war
Poland’s pre–war annual demand.” The mistake was not material, as I
allowed for Germany’s diminished requirements for coal, due to loss of
territory, in the body of the text. But I confess that the footnote,
as published, might be deemed misleading. At the same time it is, I
think, a tribute to the general accuracy of _The Economic Consequences_
that partizan critics should have fastened so greedily on the omission
of the word “pre–war” before the word “Poland” in the footnote in
question. Quite a considerable literature has grown up round it. The
Polish Diet devoted January 20, 1921, to the discussion and patriotic
analysis of this footnote, and concluded with a Resolution ordering
the chief speech of the occasion (that of Deputy A. Wierzlicki) to be
published throughout the world in several languages at the expense of
the State. I apologize for any depreciation in the Polish mark for
which I may have been so inadvertently responsible. Mr. Wierzlicki
begins: “A book appeared by Keynes ... the author of a well–known work
on India, that pearl of the English crown, that land which is a beloved
subject of study to the English. Through such studies a man may win
himself name and fame,”—which was certainly a little unscrupulous of
me. And he concludes: “But England too must believe in facts! And if
Keynes, whose book is impregnated with a humanitarian spirit and with
understanding of the necessity to get up beyond selfish interests,
if Keynes is convinced by actual data that he has done a wrong, that
he has wrought confusion in the ideas of statesmen and politicians
as regards Upper Silesia, then he too will see with his eyes and
must become the friend of Poland, of Poland as an active factor in
the development of the natural wealth of Silesia.” I owe it to so
generous and eloquent a critic to quote the corrected figures, which
are as follows: the Polish lands, united by the Peace Treaty into the
new Polish State, consumed in 1913 19,445,000 tons of coal, of which
8,989,000 tons were produced within that area and 7,370,000 tons were
imported from Upper Silesia (the total production of Upper Silesia in
that year being 43,800,000 tons).[26] The Silesian Plebiscite has been
preceded and followed by a mass of propagandist literature on both
sides. For the economic questions involved see, particularly, on the
Polish side: Wierzlicki, _The Truth about Upper Silesia_; Olszewski,
_Upper Silesia, Her Influence on the Solvability and on the Economic
Life of Germany_, and _The Economic Value of Upper Silesia for Poland
and Germany respectively_; and on the German side: Sidney Osborne, _The
Upper Silesian Question and Germany’s Coal Problem, The Problem of
Upper Silesia_ (papers by various authors, not all on the German side,
with excellent maps, edited by Sidney Osborne), various pamphlets by
Professor Schulz–Gavernitz, and documents circulated by the Breslau
Chamber of Commerce.
3. My observations on Germany’s capacity to deliver reparation coal
have been criticized in some quarters[27] on the ground that I made
insufficient allowance for the compensation which is available to
her by the more intensive exploitation of her deposits of lignite
or brown coal. This criticism is scarcely fair, because I was the
first in popular controversy to call attention to the factor of
lignite, and because I was careful from the outset to disclaim expert
knowledge of the subject.[28] I still find it difficult, in the face
of conflicting expert opinions, to know how much importance to attach
to this material. Since the Armistice there has been a substantial
increase in output, which was 36 per cent higher in the first half
of 1921 than in 1913.[29] In view of the acute shortage of coal this
output must have been of material assistance towards meeting the
situation. The deposits are near the surface, and no great amount
of capital or machinery is needed for its production. But lignite
briquette is a substitute for coal for certain purposes only, and the
evidence is conflicting as to whether any further material expansion is
economically practicable.[30]
The process of briquetting the rough lignite is probably a wasteful
one, and it is doubtful whether it would be worth while to set up _new_
plant with a view to production on a larger scale. Some authorities
hold that the real future of lignite and its value as an element in the
future wealth of Germany lie in improved methods of _distillation_ (the
chief obstacle to which, as also to other uses, lies in its high water
content), by which the various oils, ammonia and benzine, latent in it
can be released for commercial uses.
It is certainly the case that the future possibilities of lignite
should not be overlooked. But there is a tendency at present, just
as was the case with potash some little time ago, to exaggerate its
importance greatly as a decisive factor in the wealth–producing
capacity of Germany.
EXCURSUS II
THE LEGALITY OF OCCUPYING GERMANY EAST OF THE RHINE
The years 1920 and 1921 have been filled with excursions and with
threats of excursions by the French Army into Germany east of the
Rhine. In March 1920 France, without the approval of her Allies,
occupied Frankfort and Darmstadt. In July 1920 a threat to invade
Germany by the Allies as a whole was successful in enforcing the Spa
Agreement. In March 1921 a similar threat was unsuccessful in securing
assent to the Paris Decisions, and Duisberg, Ruhrort, and Düsseldorf
were occupied accordingly. In spite of the objections of her Allies
France continued this occupation when, by the acceptance of the second
Ultimatum of London, the original occasion for it had disappeared, on
the ground that so long as the Upper Silesian question was unsettled,
it was in the opinion of Marshal Foch just as well to retain this
hold.[31] In April 1921 the French Government announced their intention
of occupying the Ruhr, though they were prevented from carrying this
out by the pressure of the other Allies. In May 1921 the Second
Ultimatum of London was successfully enforced by a threat to occupy
the Ruhr Valley. Thus, within the space of little more than a year the
invasion of Germany, beyond the Rhine, was threatened five times and
actually carried out twice.
We are supposed to be at peace with Germany, and the invasion of a
country in time of peace is an irregular act, even when the invaded
country is not in a position to resist. We are also bound by our
adhesion to the League of Nations to avoid such action. It is,
however, the contention of France, and apparently, from time to time,
that of the British Government also, that these acts are in some way
permissible under the Treaty of Versailles, whenever Germany is in
technical default in regard to any part of the Treaty, that is to say,
since some parts of the Treaty are incapable of literal fulfilment, at
any time. In particular the French Government maintained in April 1921
that so long as Germany possessed any tangible assets capable of being
handed over, she was in voluntary default in respect of Reparation,
and that if she was in voluntary default any Ally was entitled to
invade and pillage her territory without being guilty of an act of war.
In the previous month the Allies as a whole had argued that default
under Chapters of the Treaty, other than the Reparation Chapter, also
justified invasion.
Though the respect shown for legality is now very small, the legal
position under the Treaty deserves nevertheless an exact examination.
The Treaty of Versailles expressly provides for breaches by Germany of
the _Reparation_ Chapter. It contains no special provision for breaches
of other Chapters, and such breaches are, therefore, in exactly the
same position as breaches of any other Treaty. Accordingly, I will
discuss separately default in respect of Reparation, and other defaults.
Sections 17 and 18 of the Reparation Chapter, Annex II. run as follows:
“(17) In case of default by Germany in the performance of any
obligation under this part of the present Treaty, the Commission will
forthwith give notice of such default to each of the interested Powers,
and will make such recommendations as to the action to be taken in
consequence of such default as it may think necessary.
“(18) The measures which the Allied and Associated Powers shall have
the right to take in case of voluntary default by Germany, and which
Germany agrees not to regard as acts of war, may include economic
and financial prohibitions and reprisals, and in general such other
measures as the respective Governments may determine to be necessary in
the circumstances.”
There is also a provision in Article 430 of the Treaty, by which any
part of the occupied area which has been evacuated may be reoccupied if
Germany fails to observe her obligations with regard to Reparation.
The French Government base their contention on the words “and in
general such other measures” in § 18, arguing that this gives them
an entirely free hand. The sentence taken as a whole, however,
supports, on the principle of _ejusdem generis_, the interpretation
that the other measures contemplated are of the nature of economic
and financial reprisals. This view is confirmed by the fact that the
rest of the Treaty narrowly limits the rights of occupying German
territory, which, as M. Tardieu’s book shows, was the subject of an
acute difference of opinion between France and her Associates at the
Peace Conference. There is _no_ provision for occupying territory on
the _right_ bank of the Rhine; and the only provision for occupation in
the event of default is that contained in Article 430. This Article,
which provides for _reoccupation_ of the _left_ bank in the event of
default, would have been entirely pointless and otiose if the French
view were correct. Indeed the theory, that at any time during the next
thirty years any Ally can invade any part of Germany on the ground that
Germany has not fulfilled every letter of the Treaty, is on the face of
it unreasonable.
In any case, however, §§ 17, 18 of Annex II. of the Reparation Chapter
only operate after a specific procedure has been set on foot by the
Reparation Commission. It is the duty of the Reparation Commission to
give notice of the default to each of the interested Powers, including
presumably the United States, and to recommend action. If the default
is voluntary—there is no provision as to who is to decide this—then
the paragraphs in question become operative. There is no warrant
here for isolated action by a single Ally. And indeed the Reparation
Commission have never so far put this procedure in operation.
If, on the other hand, Germany is alleged to be in default under some
other Chapter of the Treaty, then the Allies have no recourse except
to the League of Nations; and they are bound to bring into operation
Article 17 of the Covenant, which provides for the case of a dispute
between a member of the League and a non–member. That is to say,
apart from procedure by the Reparation Commission as set forth above,
breaches or alleged breaches of this Treaty are in precisely the same
position as breaches of any other treaty between two Powers which are
at peace.
According to Article 17, in the event of a dispute between a member
of the League and a State which is not a member of the League, the
latter “shall be invited to accept the obligations of membership in
the League for the purposes of such dispute, upon such conditions
as the Council may deem just. If such invitation is accepted, the
provisions of Articles 12 to 16 inclusive shall be applied, with such
modifications as may be deemed necessary by the Council. Upon such
invitation being given, the Council shall immediately institute an
inquiry into the circumstances of the dispute, and recommend such
action as may seem best and most effectual in the circumstances.”
Articles 12 to 16 provide, amongst other things, for arbitration in
any case of “disputes as to the interpretation of a Treaty; as to
any question of international law; as to the existence of any fact
which, if established, would constitute a breach of any international
obligation; or as to the extent and nature of the reparation to be made
for any such breach.”
The Allies as signatories of the Treaty and of the Covenant are
therefore absolutely precluded in the event of a breach or alleged
breach by Germany of the Treaty, from proceeding except under the power
given to the Reparation Commission as stated above, or under Article 17
of the Covenant. Any other act on their part is illegal.
In any case it is _obligatory_ on the Council of the League, under
Article 17, to invite Germany, in the event of a dispute between
Germany and the Allies, to accept the obligations of membership in the
League for the purposes of such dispute, and to institute immediately
an inquiry into the circumstances of the dispute.
In my opinion the protest addressed by the German Government to the
Council of the League of Nations in March 1921 was correctly argued.
But, as with the inclusion of pensions in the Reparation Bill, we
reserve the whole stock of our indignation over illegality between
nations for the occasions when it is the fault of others. I am told
that to object to this is to overlook “the human element” and is
therefore both wrong and foolish.
FOOTNOTES:
[2] More exactly, out of 1,220,000 entitled to vote and 1,186,000
actual voters, 707,000 votes or seven–elevenths were cast for Germany,
and 479,000 votes or four–elevenths for Poland. Out of 1522 communes,
844 showed a majority for Germany and 678 for Poland. The Polish voters
were mainly rural, as is shown by the fact that in 36 towns Germany
polled 267,000 votes against 70,000 for Poland, and in the country
440,000 votes against 409,000 for Poland.
[3] Up to May 31, 1920, securities and other identifiable assets to
the value of 8300 million francs and 500,000 tons of machinery and raw
material had been restored to France (_Report of Finance Commission of
French Chamber_, June 14, 1920), also 445,000 head of live stock.
[4] Up to May, 1921, the _cash_ receipts of the Reparation Commission
amounted to no more than 124,000,000 gold marks.
[5] See Excursus VI.
[6] Lord D’Abernon and Sir John Bradbury for Great Britain, Seydoux and
Cheysson for France, d’Amelio and Giannini for Italy, Delacroix and
Lepreux for Belgium, and, in accordance with custom, two Japanese. The
German representatives included Bergmann, Havenstein, Cuno, Melchior,
von Stauss, Bonn, and Schroeder.
[7] The text of these Decisions is given in Appendix No. 2.
[8] The full text is given in Appendix No. 4.
[9] Compare this with the fixed payment of $500,000,000 and an export
proportion of 26 per cent proposed in the second Ultimatum of London,
only two months later.
[10] _The Times_, March 8, 1921.
[11] _The Times_, March 8, 1921.
[12] A week or two later the German Government made a formal appeal to
the League of Nations against the legality of this act; but I am not
aware that the League took any action on it.
[13] A few weeks later the Reparation Commission endeavored to put the
action of the Supreme Council in order, by demanding one milliard marks
in gold ($250,000,000), that is to say, the greater part of the reserve
of the Reichsbank against its note issue. This demand was afterwards
dropped.
[14] The full text is given in Appendix No. 5.
[15] The practicability of such a loan on a large scale is of course
more than doubtful.
[16] The German Government is reported also to have offered,
alternatively, to accept any sum which the President of the United
States might fix.
[17] After the enforcement of the Sanctions and the failure of the
counter–proposals, the Cabinet of Herr Fehrenbach and Dr. Simons was
succeeded by that of Dr. Wirth.
[18] As late as January 26, 1921, M. Doumer gave a forecast of 240
milliards.
[19] Exclusive of sums due in repayment of war loans made to Belgium.
[20] Exclusive of sums due in repayment of war loans made to Belgium.
[21] Under the Spa Agreement (see Appendix No. 1) Germany was to be
paid in cash 5 gold marks per ton for _all_ coal delivered, and, in
the case of coal delivered _overland_, “lent” (_i.e._, advanced out
of Reparation receipts) the difference between the German inland
price and the British export price. At the date of the Spa Conference
this difference was about 70s. per ton (100s. less 30s.), but this
sum was not to be advanced in the case of the undetermined amount of
coal delivered _by sea_. The advances were made by the Allies in the
proportions, 61 per cent by France, 24 per cent by Great Britain, and
15 per cent by Belgium and Italy.
[22] For details of these payments see p. 133.
[23] This very valuable tax, first imposed in 1917, yielded in 1920–21
mks. 4½ milliards.
[24] Dr. Wirth’s first Government prepared a Bill to raise the tax to
30 per cent, with power, however, to reduce the rate temporarily to 25
per cent. It was estimated that the 30 per cent tax would bring in a
revenue of 9.2 milliard marks.
[25] The same authority estimates that 85.6 of Upper Silesia’s zinc
ore production and all the zinc smelting works fall to Poland. This is
of some importance, since before the war Upper Silesia was responsible
for 17 per cent of the total world production of zinc. Of the iron and
steel production of the area 63 per cent falls to Poland. I am not in
a position to check any of these figures. Some authorities ascribe a
higher proportion of the coal to Poland.
[26] These are the figures according to the Polish authorities. But it
is difficult to obtain accurate pre–war figures for an area which was
not coterminous with any then existing State; and these totals have
been questioned in detail by Dr. W. Schotte.
[27] See _e.g._, my controversy with M. Brenier in _The Times_.
[28] In _The Economic Consequences of the Peace_, p. 92 _n._, I wrote
as follows: “The reader must be reminded in particular that the above
calculations take no account of the German production of lignite....
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.”
[29] That is to say, production in the middle of 1921 was at the rate
of about 120,000,000 tons per annum. At that time the legal maximum
price was 60 paper marks per ton (_i.e._, 5s. or less); so that the
national _profit_ on the output in terms of money cannot have been a
very material amount.
[30] In order to secure the increased output the number of miners was
increased much more than in proportion, namely from 59,000 in 1913 to
171,000 in the first half of 1921. As a result, the cost of production
of lignite rose much faster than that of coal. Also since its calorific
value is much less than that of coal per unit of weight (even when it
is briquetted), it can only compete with coal, unless it is assisted by
preferential freight rates, within a limited area in the neighborhood
of the mines.
[31] At the Paris Conference of August 1921 Lord Curzon tried
unavailingly to persuade France to abandon this illegal occupation.
The so–called “Economic Sanctions” were raised on October 1, 1921. The
occupation still continues, though both the above pretexts have now
disappeared.