CHAPTER IV

THE TREATY

The thoughts which I have expressed in the second chapter were not

present to the mind of Paris. The future life of Europe was not their

concern; its means of livelihood was not their anxiety. Their

preoccupations, good and bad alike, related to frontiers and

nationalities, to the balance of power, to imperial aggrandizements, to

the future enfeeblement of a strong and dangerous enemy, to revenge, and

to the shifting by the victors of their unbearable financial burdens on

to the shoulders of the defeated.

Two rival schemes for the future polity of the world took the

field,--the Fourteen Points of the President, and the Carthaginian Peace

of M. Clemenceau. Yet only one of these was entitled to take the field;

for the enemy had not surrendered unconditionally, but on agreed terms

as to the general character of the Peace.

This aspect of what happened cannot, unfortunately, be passed over with

a word, for in the minds of many Englishmen at least it has been a

subject of very great misapprehension. Many persons believe that the

Armistice Terms constituted the first Contract concluded between the

Allied and Associated Powers and the German Government, and that we

entered the Conference with our hands, free, except so far as these

Armistice Terms might bind us. This was not the case. To make the

position plain, it is necessary briefly to review the history, of the

negotiations which began with the German Note of October 5, 1918, and

concluded with President Wilson's Note of November 5, 1918.

On October 5, 1918, the German Government addressed a brief Note to the

President accepting the Fourteen Points and asking for Peace

negotiations. The President's reply of October 8 asked if he was to

understand definitely that the German Government accepted "the terms

laid down" in Fourteen Points and in his subsequent Addresses and "that

its object in entering into discussion would be only to agree upon the

practical details of their application." He added that the evacuation of

invaded territory must be a prior condition of an Armistice. On October

12 the German Government returned an unconditional affirmative to these

questions;-"its object in entering into discussions would be only to

agree upon practical details of the application of these terms." On

October 14, having received this affirmative answer, the President made

a further communication to make clear the points: (1) that the details

of the Armistice would have to be left to the military advisers of the

United States and the Allies, and must provide absolutely against the

possibility of Germany's resuming hostilities; (2) that submarine

warfare must cease if these conversations were to continue; and (3) that

he required further guarantees of the representative character of the

Government with which he was dealing. On October 20 Germany accepted

points (1) and (2), and pointed out, as regards (3), that she now had a

Constitution and a Government dependent for its authority on the

Reichstag. On October 23 the President announced that, "having received

the solemn and explicit assurance of the German Government that it

unreservedly accepts the terms of peace laid down in his Address to the

Congress of the United States on January 8, 1918 (the Fourteen Points),

and the principles of settlement enunciated in his subsequent Addresses,

particularly the Address of September 27, and that it is ready to

discuss the details of their application," he has communicated the above

correspondence to the Governments of the Allied Powers "with the

suggestion that, if these Governments are disposed to effect peace upon

the terms and principles indicated," they will ask their military

advisers to draw up Armistice Terms of such a character as to "ensure to

the Associated Governments the unrestricted power to safeguard and

enforce the details of the peace to which the German Government has

agreed." At the end of this Note the President hinted more openly than

in that of October 14 at the abdication of the Kaiser. This completes

the preliminary negotiations to which the President alone was a party,

adding without the Governments of the Allied Powers.

On November 5, 1918, the President transmitted to Germany the reply he

had received from the Governments associated with him, and added that

Marshal Foch had been authorized to communicate the terms of an

armistice to properly accredited representatives. In this reply the

Allied Governments, "subject to the qualifications which follow, declare

their willingness to make peace with the Government of Germany on the

terms of peace laid down in the President's Address to Congress of

January 8, 1918, and the principles of settlement enunciated in his

subsequent Addresses." The qualifications in question were two in

number. The first related to the Freedom of the Seas, as to which they

"reserved to themselves complete freedom." The second related to

Reparation and ran as follows:--"Further, in the conditions of peace

laid down in his Address to Congress on the 8th January, 1918 the

President declared that invaded territories must be restored as well as

evacuated and made free. The Allied Governments feel that no doubt

ought to be allowed to exist as to what this provision implies. By it

they understand that compensation will be made by Germany for all damage

done to the civilian population of the Allies and to their property by

the aggression of Germany by land, by sea, and from the air."[7]

The nature of the Contract between Germany and the Allies resulting from

this exchange of documents is plain and unequivocal. The terms of the

peace are to be in accordance with the Addresses of the President, and

the purpose of the Peace Conference is "to discuss the details of their

application." The circumstances of the Contract were of an unusually

solemn and binding character; for one of the conditions of it was that

Germany should agree to Armistice Terms which were to be such as would

leave her helpless. Germany having rendered herself helpless in reliance

on the Contract, the honor of the Allies was peculiarly involved in

fulfilling their part and, if there were ambiguities, in not using their

position to take advantage of them.

What, then, was the substance of this Contract to which the Allies had

bound themselves? An examination of the documents shows that, although a

large part of the Addresses is concerned with spirit, purpose, and

intention, and not with concrete solutions, and that many questions

requiring a settlement in the Peace Treaty are not touched on,

nevertheless, there are certain questions which they settle definitely.

It is true that within somewhat wide limits the Allies still had a free

hand. Further, it is difficult to apply on a contractual basis those

passages which deal with spirit, purpose, and intention;--every man must

judge for himself whether, in view of them, deception or hypocrisy has

been practised. But there remain, as will be seen below, certain

important issues on which the Contract is unequivocal.

In addition to the Fourteen Points of January 18, 1918, the Addresses of

the President which form part of the material of the Contract are four

in number,--before the Congress on February 11; at Baltimore on April 6;

at Mount Vernon on July 4; and at New York on September 27, the last of

these being specially referred to in the Contract. I venture to select

from these Addresses those engagements of substance, avoiding

repetitions, which are most relevant to the German Treaty. The parts I

omit add to, rather than detract from, those I quote; but they chiefly

relate to intention, and are perhaps too vague and general to be

interpreted contractually.[8]

_The Fourteen Points_.--(3). "The removal, so far as possible, of all

economic barriers and the establishment of an equality of trade

conditions among _all_ the nations consenting to the Peace and

associating themselves for its maintenance." (4). "Adequate guarantees

_given and taken_ that national armaments will be reduced to the lowest

point consistent with domestic safety." (5). "A free, open-minded, and

absolutely impartial adjustment of all colonial claims," regard being

had to the interests of the populations concerned. (6), (7), (8), and

(11). The evacuation and "restoration" of all invaded territory,

especially of Belgium. To this must be added the rider of the Allies,

claiming compensation for all damage done to civilians and their

property by land, by sea, and from the air (quoted in full above). (8).

The righting of "the wrong done to France by Prussia in 1871 in the

matter of Alsace-Lorraine." (13). An independent Poland, including "the

territories inhabited by indisputably Polish populations" and "assured a

free and secure access to the sea." (14). The League of Nations.

_Before the Congress, February 11_.--"There shall be no annexations, _no

contributions, no punitive damages_.... Self-determination is not a

mere phrase. It is an imperative principle of action which statesmen

will henceforth ignore at their peril.... Every territorial settlement

involved in this war must be made in the interest and for the benefit of

the populations concerned, and not as a part of any mere adjustment or

compromise of claims amongst rival States."

_New York, September 27_.--(1) "The impartial justice meted out must

involve no discrimination between those to whom we wish to be just and

those to whom we do not wish to be just." (2) "No special or separate

interest of any single nation or any group of nations can be made the

basis of any part of the settlement which is not consistent with the

common interest of all." (3) "There can be no leagues or alliances or

special covenants and understandings within the general and common

family of the League of Nations." (4) "There can be no special selfish

economic combinations within the League and no employment of any form of

economic boycott or exclusion, except as the power of economic penalty

by exclusion from the markets of the world may be vested in the League

of Nations itself as a means of discipline and control." (5) "All

international agreements and treaties of every kind must be made known

in their entirety to the rest of the world."

This wise and magnanimous program for the world had passed on November

5, 1918 beyond the region of idealism and aspiration, and had become

part of a solemn contract to which all the Great Powers of the world had

put their signature. But it was lost, nevertheless, in the morass of

Paris;--the spirit of it altogether, the letter in parts ignored and in

other parts distorted.

The German observations on the draft Treaty of Peace were largely a

comparison between the terms of this understanding, on the basis of

which the German nation had agreed to lay down its arms, and the actual

provisions of the document offered them for signature thereafter. The

German commentators had little difficulty in showing that the draft

Treaty constituted a breach of engagements and of international morality

comparable with their own offense in the invasion of Belgium.

Nevertheless, the German reply was not in all its parts a document fully

worthy of the occasion, because in spite of the justice and importance

of much of its contents, a truly broad treatment and high dignity of

outlook were a little wanting, and the general effect lacks the simple

treatment, with the dispassionate objectivity of despair which the deep

passions of the occasion might have evoked. The Allied governments gave

it, in any case, no serious consideration, and I doubt if anything which

the German delegation could have said at that stage of the proceedings

would have much influenced the result.

The commonest virtues of the individual are often lacking in the

spokesmen of nations; a statesman representing not himself but his

country may prove, without incurring excessive blame--as history often

records--vindictive, perfidious, and egotistic. These qualities are

familiar in treaties imposed by victors. But the German delegation did

not succeed in exposing in burning and prophetic words the quality which

chiefly distinguishes this transaction from all its historical

predecessors--its insincerity.

This theme, however, must be for another pen than mine. I am mainly

concerned in what follows, not with the justice of the Treaty,--neither

with the demand for penal justice against the enemy, nor with the

obligation of contractual justice on the victor,--but with its wisdom

and with its consequences.

I propose, therefore, in this chapter to set forth baldly the principal

economic provisions of the Treaty, reserving, however, for the next my

comments on the Reparation Chapter and on Germany's capacity to meet the

payments there demanded from her.

The German economic system as it existed before the war depended on

three main factors: I. Overseas commerce as represented by her

mercantile marine, her colonies, her foreign investments, her exports,

and the overseas connections of her merchants; II. The exploitation of

her coal and iron and the industries built upon them; III. Her transport

and tariff system. Of these the first, while not the least important,

was certainly the most vulnerable. The Treaty aims at the systematic

destruction of all three, but principally of the first two.

I

(1) Germany has ceded to the Allies _all_ the vessels of her mercantile

marine exceeding 1600 tons gross, half the vessels between 1000 tons and

1600 tons, and one quarter of her trawlers and other fishing boats.[9]

The cession is comprehensive, including not only vessels flying the

German flag, but also all vessels owned by Germans but flying other

flags, and all vessels under construction as well as those afloat.[10]

Further, Germany undertakes, if required, to build for the Allies such

types of ships as they may specify up to 200,000 tons[11] annually for

five years, the value of these ships being credited to Germany against

what is due from her for Reparation.[12]

Thus the German mercantile marine is swept from the seas and cannot be

restored for many years to come on a scale adequate to meet the

requirements of her own commerce. For the present, no lines will run

from Hamburg, except such as foreign nations may find it worth while to

establish out of their surplus tonnage. Germany will have to pay to

foreigners for the carriage of her trade such charges as they may be

able to exact, and will receive only such conveniences as it may suit

them to give her. The prosperity of German ports and commerce can only

revive, it would seem, in proportion as she succeeds in bringing under

her effective influence the merchant marines of Scandinavia and of

Holland.

(2) Germany has ceded to the Allies "all her rights and titles over her

oversea possessions."[13] This cession not only applies to sovereignty

but extends on unfavorable terms to Government property, all of which,

including railways, must be surrendered without payment, while, on the

other hand, the German Government remains liable for any debt which may

have been incurred for the purchase or construction of this property, or

for the development of the colonies generally.[14]

In distinction from the practice ruling in the case of most similar

cessions in recent history, the property and persons of private German

nationals, as distinct from their Government, are also injuriously

affected. The Allied Government exercising authority in any former

German colony "may make such provisions as it thinks fit with reference

to the repatriation from them of German nationals and to the conditions

upon which German subjects of European origin shall, or shall not, be

allowed to reside, hold property, trade or exercise a profession in

them."[15] All contracts and agreements in favor of German nationals for

the construction or exploitation of public works lapse to the Allied

Governments as part of the payment due for Reparation.

But these terms are unimportant compared with the more comprehensive

provision by which "the Allied and Associated Powers reserve the right

to retain and liquidate _all_ property, rights, and interests belonging

at the date of the coming into force of the present Treaty to German

nationals, or companies controlled by them," within the former German

colonies.[16] This wholesale expropriation of private property is to

take place without the Allies affording any compensation to the

individuals expropriated, and the proceeds will be employed, first, to

meet private debts due to Allied nationals from any German nationals,

and second, to meet claims due from Austrian, Hungarian, Bulgarian, or

Turkish nationals. Any balance may either be returned by the liquidating

Power direct to Germany, or retained by them. If retained, the proceeds

must be transferred to the Reparation Commission for Germany's credit in

the Reparation account.[17]

In short, not only are German sovereignty and German influence

extirpated from the whole of her former oversea possessions, but the

persons and property of her nationals resident or owning property in

those parts are deprived of legal status and legal security.

(3) The provisions just outlined in regard to the private property of

Germans in the ex-German colonies apply equally to private German

property in Alsace-Lorraine, except in so far as the French Government

may choose to grant exceptions.[18] This is of much greater practical

importance than the similar expropriation overseas because of the far

higher value of the property involved and the closer interconnection,

resulting from the great development of the mineral wealth of these

provinces since 1871, of German economic interests there with those in

Germany itself. Alsace-Lorraine has been part of the German Empire for

nearly fifty years--a considerable majority of its population is German

speaking--and it has been the scene of some of Germany's most important

economic enterprises. Nevertheless, the property of those Germans who

reside there, or who have invested in its industries, is now entirely at

the disposal of the French Government without compensation, except in so

far as the German Government itself may choose to afford it. The French

Government is entitled to expropriate without compensation the personal

property of private German citizens and German companies resident or

situated within Alsace-Lorraine, the proceeds being credited in part

satisfaction of various French claims. The severity of this provision is

only mitigated to the extent that the French Government may expressly

permit German nationals to continue to reside, in which case the above

provision is not applicable. Government, State, and Municipal property,

on the other hand, is to be ceded to France without any credit being

given for it. This includes the railway system of the two provinces,

together with its rolling-stock.[19] But while the property is taken

over, liabilities contracted in respect of it in the form of public

debts of any kind remain the liability of Germany.[20] The provinces

also return to French sovereignty free and quit of their share of German

war or pre-war dead-weight debt; nor does Germany receive a credit on

this account in respect of Reparation.

(4) The expropriation of German private property is not limited,

however, to the ex-German colonies and Alsace-Lorraine. The treatment of

such property forms, indeed, a very significant and material section of

the Treaty, which has not received as much attention as it merits,

although it was the subject of exceptionally violent objection on the

part of the German delegates at Versailles. So far as I know, there is

no precedent in any peace treaty of recent history for the treatment of

private property set forth below, and the German representatives urged

that the precedent now established strikes a dangerous and immoral blow

at the security of private property everywhere. This is an exaggeration,

and the sharp distinction, approved by custom and convention during the

past two centuries, between the property and rights of a State and the

property and rights of its nationals is an artificial one, which is

being rapidly put out of date by many other influences than the Peace

Treaty, and is inappropriate to modern socialistic conceptions of the

relations between the State and its citizens. It is true, however, that

the Treaty strikes a destructive blow at a conception which lies at the

root of much of so-called international law, as this has been expounded

hitherto.

The principal provisions relating to the expropriation of German private

property situated outside the frontiers of Germany, as these are now

determined, are overlapping in their incidence, and the more drastic

would seem in some cases to render the others unnecessary. Generally

speaking, however, the more drastic and extensive provisions are not so

precisely framed as those of more particular and limited application.

They are as follows:--

(_a_) The Allies "reserve the right to retain and liquidate all

property, rights and interests belonging at the date of the coming into

force of the present Treaty to German nationals, or companies controlled

by them, within their territories, colonies, possessions and

protectorates, including territories ceded to them by the present

Treaty."[21]

This is the extended version of the provision which has been discussed

already in the case of the colonies and of Alsace-Lorraine. The value of

the property so expropriated will be applied, in the first instance, to

the satisfaction of private debts due from Germany to the nationals of

the Allied Government within whose jurisdiction the liquidation takes

place, and, second, to the satisfaction of claims arising out of the

acts of Germany's former allies. Any balance, if the liquidating

Government elects to retain it, must be credited in the Reparation

account.[22] It is, however, a point of considerable importance that the

liquidating Government is not compelled to transfer the balance to the

Reparation Commission, but can, if it so decides, return the proceeds

direct to Germany. For this will enable the United States, if they so

wish, to utilize the very large balances, in the hands of their

enemy-property custodian, to pay for the provisioning of Germany,

without regard to the views of the Reparation Commission.

These provisions had their origin in the scheme for the mutual

settlement of enemy debts by means of a Clearing House. Under this

proposal it was hoped to avoid much trouble and litigation by making

each of the Governments lately at war responsible for the collection of

private _debts_ due from its nationals to the nationals of any of the

other Governments (the normal process of collection having been

suspended by reason of the war), and for the distribution of the funds

so collected to those of its nationals who had _claims_ against the

nationals of the other Governments, any final balance either way being

settled in cash. Such a scheme could have been completely bilateral and

reciprocal. And so in part it is, the scheme being mainly reciprocal as

regards the collection of commercial debts. But the completeness of

their victory permitted the Allied Governments to introduce in their own

favor many divergencies from reciprocity, of which the following are the

chief: Whereas the property of Allied nationals within German

jurisdiction reverts under the Treaty to Allied ownership on the

conclusion of Peace, the property of Germans within Allied jurisdiction

is to be retained and liquidated as described above, with the result

that the whole of German property over a large part of the world can be

expropriated, and the large properties now within the custody of Public

Trustees and similar officials in the Allied countries may be retained

permanently. In the second place, such German assets are chargeable, not

only with the liabilities of Germans, but also, if they run to it, with

"payment of the amounts due in respect of claims by the nationals of

such Allied or Associated Power with regard to their property, rights,

and interests in the territory of other Enemy Powers," as, for example,

Turkey, Bulgaria, and Austria.[23] This is a remarkable provision,

which is naturally non-reciprocal. In the third place, any final balance

due to Germany on private account need not be paid over, but can be held

against the various liabilities of the German Government.[24] The

effective operation of these Articles is guaranteed by the delivery of

deeds, titles, and information.[25] In the fourth place, pre-war

contracts between Allied and German nationals may be canceled or revived

at the option of the former, so that all such contracts which are in

Germany's favor will be canceled, while, on the other hand, she will be

compelled to fulfil those which are to her disadvantage.

(_b_) So far we have been concerned with German property within Allied

jurisdiction. The next provision is aimed at the elimination of German

interests in the territory of her neighbors and former allies, and of

certain other countries. Under Article 260 of the Financial Clauses it

is provided that the Reparation Commission may, within one year of the

coming into force of the Treaty, demand that the German Government

expropriate its nationals and deliver to the Reparation Commission "any

rights and interests of German nationals in any public utility

undertaking or in any concession[26] operating in Russia, China, Turkey,

Austria, Hungary, and Bulgaria, or in the possessions or dependencies of

these States, or in any territory formerly belonging to Germany or her

allies, to be ceded by Germany or her allies to any Power or to be

administered by a Mandatory under the present Treaty." This is a

comprehensive description, overlapping in part the provisions dealt with

under (_a_) above, but including, it should be noted, the new States and

territories carved out of the former Russian, Austro-Hungarian, and

Turkish Empires. Thus Germany's influence is eliminated and her capital

confiscated in all those neighboring countries to which she might

naturally look for her future livelihood, and for an outlet for her

energy, enterprise, and technical skill.

The execution of this program in detail will throw on the Reparation

Commission a peculiar task, as it will become possessor of a great

number of rights and interests over a vast territory owing dubious

obedience, disordered by war, disruption, and Bolshevism. The division

of the spoils between the victors will also provide employment for a

powerful office, whose doorsteps the greedy adventurers and jealous

concession-hunters of twenty or thirty nations will crowd and defile.

Lest the Reparation Commission fail by ignorance to exercise its rights

to the full, it is further provided that the German Government shall

communicate to it within six months of the Treaty's coming into force a

list of all the rights and interests in question, "whether already

granted, contingent or not yet exercised," and any which are not so

communicated within this period will automatically lapse in favor of the

Allied Governments.[27] How far an edict of this character can be made

binding on a German national, whose person and property lie outside the

jurisdiction of his own Government, is an unsettled question; but all

the countries specified in the above list are open to pressure by the

Allied authorities, whether by the imposition of an appropriate Treaty

clause or otherwise.

(_c_) There remains a third provision more sweeping than either of the

above, neither of which affects German interests in _neutral_

countries. The Reparation Commission is empowered up to May 1, 1921, to

demand payment up to $5,000,000,000 _in such manner as they may fix_,

"whether in gold, commodities, ships, securities or otherwise."[28] This

provision has the effect of intrusting to the Reparation Commission for

the period in question dictatorial powers over all German property of

every description whatever. They can, under this Article, point to any

specific business, enterprise, or property, whether within or outside

Germany, and demand its surrender; and their authority would appear to

extend not only to property existing at the date of the Peace, but also

to any which may be created or acquired at any time in the course of the

next eighteen months. For example, they could pick out--as presumably

they will as soon as they are established--the fine and powerful German

enterprise in South America known as the _Deutsche Ueberseeische

Elektrizit‰tsgesellschaft_ (the D.U.E.G.), and dispose of it to Allied

interests. The clause is unequivocal and all-embracing. It is worth

while to note in passing that it introduces a quite novel principle in

the collection of indemnities. Hitherto, a sum has been fixed, and the

nation mulcted has been left free to devise and select for itself the

means of payment. But in this case the payees can (for a certain

period) not only demand a certain sum but specify the particular kind of

property in which payment is to be effected. Thus the powers of the

Reparation Commission, with which I deal more particularly in the next

chapter, can be employed to destroy Germany's commercial and economic

organization as well as to exact payment.

The cumulative effect of (_a_), (_b_), and (_c_) (as well as of certain

other minor provisions on which I have not thought it necessary to

enlarge) is to deprive Germany (or rather to empower the Allies so to

deprive her at their will--it is not yet accomplished) of everything she

possesses outside her own frontiers as laid down in the Treaty. Not only

are her oversea investments taken and her connections destroyed, but the

same process of extirpation is applied in the territories of her former

allies and of her immediate neighbors by land.

(5) Lest by some oversight the above provisions should overlook any

possible contingencies, certain other Articles appear in the Treaty,

which probably do not add very much in practical effect to those already

described, but which deserve brief mention as showing the spirit of

completeness in which the victorious Powers entered upon the economic

subjection of their defeated enemy.

First of all there is a general clause of barrer and renunciation: "In

territory outside her European frontiers as fixed by the present Treaty,

Germany renounces all rights, titles and privileges whatever in or over

territory which belonged to her or to her allies, and all rights, titles

and privileges whatever their origin which she held as against the

Allied and Associated Powers...."[29]

There follow certain more particular provisions. Germany renounces all

rights and privileges she may have acquired in China.[30] There are

similar provisions for Siam,[31] for Liberia,[32] for Morocco,[33] and

for Egypt.[34] In the case of Egypt not only are special privileges

renounced, but by Article 150 ordinary liberties are withdrawn, the

Egyptian Government being accorded "complete liberty of action in

regulating the status of German nationals and the conditions under which

they may establish themselves in Egypt."

By Article 258 Germany renounces her right to any participation in any

financial or economic organizations of an international character

"operating in any of the Allied or Associated States, or in Austria,

Hungary, Bulgaria or Turkey, or in the dependencies of these States, or

in the former Russian Empire."

Generally speaking, only those pre-war treaties and conventions are

revived which it suits the Allied Governments to revive, and those in

Germany's favor may be allowed to lapse.[35]

It is evident, however, that none of these provisions are of any real

importance, as compared with those described previously. They represent

the logical completion of Germany's outlawry and economic subjection to

the convenience of the Allies; but they do not add substantially to her

effective disabilities.

II

The provisions relating to coal and iron are more important in respect

of their ultimate consequences on Germany's internal industrial economy

than for the money value immediately involved. The German Empire has

been built more truly on coal and iron than on blood and iron. The

skilled exploitation of the great coalfields of the Ruhr, Upper Silesia,

and the Saar, alone made possible the development of the steel,

chemical, and electrical industries which established her as the first

industrial nation of continental Europe. One-third of Germany's

population lives in towns of more than 20,000 inhabitants, an industrial

concentration which is only possible on a foundation of coal and iron.

In striking, therefore, at her coal supply, the French politicians were

not mistaking their target. It is only the extreme immoderation, and

indeed technical impossibility, of the Treaty's demands which may save

the situation in the long-run.

(1) The Treaty strikes at Germany's coal supply in four ways:--

(i.) "As compensation for the destruction of the coal-mines in the north

of France, and as part payment towards the total reparation due from

Germany for the damage resulting from the war, Germany cedes to France

in full and absolute possession, with exclusive rights of exploitation,

unencumbered, and free from all debts and charges of any kind, the

coal-mines situated in the Saar Basin."[36] While the administration of

this district is vested for fifteen years in the League of Nations, it

is to be observed that the mines are ceded to France absolutely. Fifteen

years hence the population of the district will be called upon to

indicate by plebiscite their desires as to the future sovereignty of the

territory; and, in the event of their electing for union with Germany,

Germany is to be entitled to repurchase the mines at a price payable in

gold.[37]

The judgment of the world has already recognized the transaction of the

Saar as an act of spoliation and insincerity. So far as compensation for

the destruction of French coal-mines is concerned, this is provided for,

as we shall see in a moment, elsewhere in the Treaty. "There is no

industrial region in Germany," the German representatives have said

without contradiction, "the population of which is so permanent, so

homogeneous, and so little complex as that of the Saar district. Among

more than 650,000 inhabitants, there were in 1918 less than 100 French.

The Saar district has been German for more than 1,000 years. Temporary

occupation as a result of warlike operations on the part of the French

always terminated in a short time in the restoration of the country upon

the conclusion of peace. During a period of 1048 years France has

possessed the country for not quite 68 years in all. When, on the

occasion of the first Treaty of Paris in 1814, a small portion of the

territory now coveted was retained for France, the population raised the

most energetic opposition and demanded 'reunion with their German

fatherland,' to which they were 'related by language, customs, and

religion.' After an occupation of one year and a quarter, this desire

was taken into account in the second Treaty of Paris in 1815. Since then

the country has remained uninterruptedly attached to Germany, and owes

its economic development to that connection."

The French wanted the coal for the purpose of working the ironfields of

Lorraine, and in the spirit of Bismarck they have taken it. Not

precedent, but the verbal professions of the Allies, have rendered it

indefensible.[38]

(ii.) Upper Silesia, a district without large towns, in which, however,

lies one of the major coalfields of Germany with a production of about

23 per cent of the total German output of hard coal, is, subject to a

plebiscite,[39] to be ceded to Poland. Upper Silesia was never part of

historic Poland; but its population is mixed Polish, German, and

Czecho-Slovakian, the precise proportions of which are disputed.[40]

Economically it is intensely German; the industries of Eastern Germany

depend upon it for their coal; and its loss would be a destructive blow

at the economic structure of the German State.[41]

With the loss of the fields of Upper Silesia and the Saar, the coal

supplies of Germany are diminished by not far short of one-third.

(iii.) Out of the coal that remains to her, Germany is obliged to make

good year by year the estimated loss which France has incurred by the

destruction and damage of war in the coalfields of her northern

Provinces. In para. 2 of Annex V. to the Reparation Chapter, "Germany

undertakes to deliver to France annually, for a period not exceeding ten

years, an amount of coal equal to the difference between the annual

production before the war of the coal-mines of the Nord and Pas de

Calais, destroyed as a result of the war, and the production of the

mines of the same area during the year in question: such delivery not to

exceed 20,000,000 tons in any one year of the first five years, and

8,000,000 tons in any one year of the succeeding five years."

This is a reasonable provision if it stood by itself, and one which

Germany should be able to fulfil if she were left her other resources to

do it with.

(iv.) The final provision relating to coal is part of the general scheme

of the Reparation Chapter by which the sums due for Reparation are to be

partly paid in kind instead of in cash. As a part of the payment due for

Reparation, Germany is to make the following deliveries of coal or

equivalent in coke (the deliveries to France being wholly additional to

the amounts available by the cession of the Saar or in compensation for

destruction in Northern France):--

(i.) To France 7,000,000 tons annually for ten years;[42]

(ii.) To Belgium 8,000,000 tons annually for ten years;

(iii.) To Italy an annual quantity, rising by annual increments from

4,500,000 tons in 1919-1920 to 8,500,000 tons in each of the six years,

1923-1924 to 1928-1929;

(iv.) To Luxemburg, if required, a quantity of coal equal to the

pre-war annual consumption of German coal in Luxemburg.

This amounts in all to an annual average of about 25,000,000 tons.

* * * * *

These figures have to be examined in relation to Germany's probable

output. The maximum pre-war figure was reached in 1913 with a total of

191,500,000 tons. Of this, 19,000,000 tons were consumed at the mines,

and on balance (_i.e._ exports less imports) 33,500,000 tons were

exported, leaving 139,000,000 tons for domestic consumption. It is

estimated that this total was employed as follows:--

Railways 18,000,000 tons.

Gas, water, and electricity 12,500,000 "

Bunkers 6,500,000 "

House-fuel, small industry

and agriculture 24,000,000 "

Industry 78,000,000 "

-----------

139,000,000 "

The diminution of production due to loss of territory is:--

Alsace-Lorraine 3,800,000 tons.

Saar Basin 13,200,000 "

Upper Silesia 43,800,000 "

-----------

60,800,000 "

There would remain, therefore, on the basis of the 1913 output,

130,700,000 tons, or, deducting consumption at the mines themselves,

(say) 118,000,000 tons. For some years there must be sent out of this

supply upwards of 20,000,000 tons to France as compensation for damage

done to French mines, and 25,000,000 tons to France, Belgium, Italy, and

Luxemburg;[43] as the former figure is a maximum, and the latter figure

is to be slightly less in the earliest years, we may take the total

export to Allied countries which Germany has undertaken to provide as

40,000,000 tons, leaving, on the above basis, 78,000,000 tons for her

own use as against a pre-war consumption of 139,000,000 tons.

This comparison, however, requires substantial modification to make it

accurate. On the one hand, it is certain that the figures of pre-war

output cannot be relied on as a basis of present output. During 1918 the

production was 161,500,000 tons as compared with 191,500,000 tons in

1913; and during the first half of 1919 it was less than 50,000,000

tons, exclusive of Alsace-Lorraine and the Saar but including Upper

Silesia, corresponding to an annual production of about 100,000,000

tons.[44] The causes of so low an output were in part temporary and

exceptional but the German authorities agree, and have not been

confuted, that some of them are bound to persist for some time to come.

In part they are the same as elsewhere; the daily shift has been

shortened from 8-1/2 to 7 hours, and it is improbable that the powers of

the Central Government will be adequate to restore them to their former

figure. But in addition, the mining plant is in bad condition (due to

the lack of certain essential materials during the blockade), the

physical efficiency of the men is greatly impaired by malnutrition

(which cannot be cured if a tithe of the reparation demands are to be

satisfied,--the standard of life will have rather to be lowered), and

the casualties of the war have diminished the numbers of efficient

miners. The analogy of English conditions is sufficient by itself to

tell us that a pre-war level of output cannot be expected in Germany.

German authorities put the loss of output at somewhat above 30 per

cent, divided about equally between the shortening of the shift and the

other economic influences. This figure appears on general grounds to be

plausible, but I have not the knowledge to endorse or to criticize it.

The pre-war figure of 118,000,000 tons net (_i.e._ after allowing for

loss of territory and consumption at the mines) is likely to fall,

therefore, at least as low as to 100,000,000[45] tons, having regard to

the above factors. If 40,000,000 tons of this are to be exported to the

Allies, there remain 60,000,000 tons for Germany herself to meet her own

domestic consumption. Demand as well as supply will be diminished by

loss of territory, but at the most extravagant estimate this could not

be put above 29,000,000 tons.[46] Our hypothetical calculations,

therefore, leave us with post-war German domestic requirements, on the

basis of a pre-war efficiency of railways and industry, of 110,000,000

tons against an output not exceeding 100,000,000 tons, of which

40,000,000 tons are mortgaged to the Allies.

The importance of the subject has led me into a somewhat lengthy

statistical analysis. It is evident that too much significance must not

be attached to the precise figures arrived at, which are hypothetical

and dubious.[47] But the general character of the facts presents itself

irresistibly. Allowing for the loss of territory and the loss of

efficiency, Germany cannot export coal in the near future (and will even

be dependent on her Treaty rights to purchase in Upper Silesia), if she

is to continue as an industrial nation. Every million tons she is forced

to export must be at the expense of closing down an industry. With

results to be considered later this within certain limits is _possible_.

But it is evident that Germany cannot and will not furnish the Allies

with a contribution of 40,000,000 tons annually. Those Allied Ministers,

who have told their peoples that she can, have certainly deceived them

for the sake of allaying for the moment the misgivings of the European

peoples as to the path along which they are being led.

The presence of these illusory provisions (amongst others) in the

clauses of the Treaty of Peace is especially charged with danger for

the future. The more extravagant expectations as to Reparation

receipts, by which Finance Ministers have deceived their publics, will

be heard of no more when they have served their immediate purpose of

postponing the hour of taxation and retrenchment. But the coal clauses

will not be lost sight of so easily,--for the reason that it will be

absolutely vital in the interests of France and Italy that these

countries should do everything in their power to exact their bond. As a

result of the diminished output due to German destruction in France, of

the diminished output of mines in the United Kingdom and elsewhere, and

of many secondary causes, such as the breakdown of transport and of

organization and the inefficiency of new governments, the coal position

of all Europe is nearly desperate;[48] and France and Italy, entering

the scramble with certain Treaty rights, will not lightly surrender

them.

As is generally the case in real dilemmas, the French and Italian case

will possess great force, indeed unanswerable force from a certain point

of view. The position will be truly represented as a question between

German industry on the one hand and French and Italian industry on the

other. It may be admitted that the surrender of the coal will destroy

German industry, but it may be equally true that its non-surrender will

jeopardize French and Italian industry. In such a case must not the

victors with their Treaty rights prevail, especially when much of the

damage has been ultimately due to the wicked acts of those who are now

defeated? Yet if these feelings and these rights are allowed to prevail

beyond what wisdom would recommend, the reactions on the social and

economic life of Central Europe will be far too strong to be confined

within their original limits.

But this is not yet the whole problem. If France and Italy are to make

good their own deficiencies in coal from the output of Germany, then

Northern Europe, Switzerland, and Austria, which previously drew their

coal in large part from Germany's exportable surplus, must be starved of

their supplies. Before the war 13,600,000 tons of Germany's coal exports

went to Austria-Hungary. Inasmuch as nearly all the coalfields of the

former Empire lie outside what is now German-Austria, the industrial

ruin of this latter state, if she cannot obtain coal from Germany, will

be complete. The case of Germany's neutral neighbors, who were formerly

supplied in part from Great Britain but in large part from Germany,

will be hardly less serious. They will go to great lengths in the

direction of making their own supplies to Germany of materials which are

essential to her, conditional on these being paid for in coal. Indeed

they are already doing so.[49] With the breakdown of money economy the

practice of international barter is becoming prevalent. Nowadays money

in Central and South-Eastern Europe is seldom a true measure of value in

exchange, and will not necessarily buy anything, with the consequence

that one country, possessing a commodity essential to the needs of

another, sells it not for cash but only against a reciprocal engagement

on the part of the latter country to furnish in return some article not

less necessary to the former. This is an extraordinary complication as

compared with the former almost perfect simplicity of international

trade. But in the no less extraordinary conditions of to-day's industry

it is not without advantages as a means of stimulating production. The

butter-shifts of the Ruhr[50] show how far modern Europe has

retrograded in the direction of barter, and afford a picturesque

illustration of the low economic organization to which the breakdown of

currency and free exchange between individuals and nations is quickly

leading us. But they may produce the coal where other devices would

fail.[51]

Yet if Germany can find coal for the neighboring neutrals, France and

Italy may loudly claim that in this case she can and must keep her

treaty obligations. In this there will be a great show of justice, and

it will be difficult to weigh against such claims the possible facts

that, while German miners will work for butter, there is no available

means of compelling them to get coal, the sale of which will bring in

nothing, and that if Germany has no coal to send to her neighbors she

may fail to secure imports essential to her economic existence.

If the distribution of the European coal supplies is to be a scramble in

which France is satisfied first, Italy next, and every one else takes

their chance, the industrial future of Europe is black and the prospects

of revolution very good. It is a case where particular interests and

particular claims, however well founded in sentiment or in justice,

must yield to sovereign expediency. If there is any approximate truth in

Mr. Hoover's calculation that the coal output of Europe has fallen by

one-third, a situation confronts us where distribution must be effected

with even-handed impartiality in accordance with need, and no incentive

can be neglected towards increased production and economical methods of

transport. The establishment by the Supreme Council of the Allies in

August, 1919, of a European Coal Commission, consisting of delegates

from Great Britain, France, Italy, Belgium, Poland, and Czecho-Slovakia

was a wise measure which, properly employed and extended, may prove of

great assistance. But I reserve constructive proposals for Chapter VII.

Here I am only concerned with tracing the consequences, _per

impossibile_, of carrying out the Treaty _au pied de lettre_.[52]

(2) The provisions relating to iron-ore require less detailed attention,

though their effects are destructive. They require less attention,

because they are in large measure inevitable. Almost exactly 75 per cent

of the iron-ore raised in Germany in 1913 came from Alsace-Lorraine.[53]

In this the chief importance of the stolen provinces lay.

There is no question but that Germany must lose these ore-fields. The

only question is how far she is to be allowed facilities for purchasing

their produce. The German Delegation made strong efforts to secure the

inclusion of a provision by which coal and coke to be furnished by them

to France should be given in exchange for _minette_ from Lorraine. But

they secured no such stipulation, and the matter remains at France's

option.

The motives which will govern France's eventual policy are not entirely

concordant. While Lorraine comprised 75 per cent of Germany's iron-ore,

only 25 per cent of the blast furnaces lay within Lorraine and the Saar

basin together, a large proportion of the ore being carried into Germany

proper. Approximately the same proportion of Germany's iron and steel

foundries, namely 25 per cent, were situated in Alsace-Lorraine. For

the moment, therefore, the most economical and profitable course would

certainly be to export to Germany, as hitherto, a considerable part of

the output of the mines.

On the other hand, France, having recovered the deposits of Lorraine,

may be expected to aim at replacing as far as possible the industries,

which Germany had based on them, by industries situated within her own

frontiers. Much time must elapse before the plant and the skilled labor

could be developed within France, and even so she could hardly deal with

the ore unless she could rely on receiving the coal from Germany. The

uncertainty, too, as to the ultimate fate of the Saar will be disturbing

to the calculations of capitalists who contemplate the establishment of

new industries in France.

In fact, here, as elsewhere, political considerations cut disastrously

across economic. In a rÈgime of Free Trade and free economic intercourse

it would be of little consequence that iron lay on one side of a

political frontier, and labor, coal, and blast furnaces on the other.

But as it is, men have devised ways to impoverish themselves and one

another; and prefer collective animosities to individual happiness. It

seems certain, calculating on the present passions and impulses of

European capitalistic society, that the effective iron output of Europe

will be diminished by a new political frontier (which sentiment and

historic justice require), because nationalism and private interest are

thus allowed to impose a new economic frontier along the same lines.

These latter considerations are allowed, in the present governance of

Europe, to prevail over the intense need of the Continent for the most

sustained and efficient production to repair the destructions of war,

and to satisfy the insistence of labor for a larger reward.[54]

The same influences are likely to be seen, though on a lesser scale, in

the event of the transference of Upper Silesia to Poland. While Upper

Silesia contains but little iron, the presence of coal has led to the

establishment of numerous blast furnaces. What is to be the fate of

these? If Germany is cut off from her supplies of ore on the west, will

she export beyond her frontiers on the east any part of the little which

remains to her? The efficiency and output of the industry seem certain

to diminish.

Thus the Treaty strikes at organization, and by the destruction of

organization impairs yet further the reduced wealth of the whole

community. The economic frontiers which are to be established between

the coal and the iron, upon which modern industrialism is founded, will

not only diminish the production of useful commodities, but may possibly

occupy an immense quantity of human labor in dragging iron or coal, as

the case may be, over many useless miles to satisfy the dictates of a

political treaty or because obstructions have been established to the

proper localization of industry.

III

There remain those Treaty provisions which relate to the transport and

the tariff systems of Germany. These parts of the Treaty have not nearly

the importance and the significance of those discussed hitherto. They

are pin-pricks, interferences and vexations, not so much objectionable

for their solid consequences, as dishonorable to the Allies in the light

of their professions. Let the reader consider what follows in the light

of the assurances already quoted, in reliance on which Germany laid down

her arms.

(i.) The miscellaneous Economic Clauses commence with a number of

provisions which would be in accordance with the spirit of the third of

the Fourteen Points,--if they were reciprocal. Both for imports and

exports, and as regards tariffs, regulations, and prohibitions, Germany

binds herself for five years to accord most-favored-nation treatment to

the Allied and Associated States.[55] But she is not entitled herself to

receive such treatment.

For five years Alsace-Lorraine shall be free to export into Germany,

without payment of customs duty, up to the average amount sent annually

into Germany from 1911 to 1913.[56] But there is no similar provision

for German exports into Alsace-Lorraine.

For three years Polish exports to Germany, and for five years

Luxemburg's exports to Germany, are to have a similar privilege,[57]--

but not German exports to Poland or to Luxemburg. Luxemburg also, which

for many years has enjoyed the benefits of inclusion within the German

Customs Union, is permanently excluded from it henceforward.[58]

For six months after the Treaty has come into force Germany may not

impose duties on imports from the Allied and Associated States higher

than the most favorable duties prevalent before the war and for a

further two years and a half (making three years in all) this

prohibition continues to apply to certain commodities, notably to some

of those as to which special agreements existed before the war, and also

to wine, to vegetable oils, to artificial silk, and to washed or scoured

wool.[59] This is a ridiculous and injurious provision, by which Germany

is prevented from taking those steps necessary to conserve her limited

resources for the purchase of necessaries and the discharge of

Reparation. As a result of the existing distribution of wealth in

Germany, and of financial wantonness amongst individuals, the offspring

of uncertainty, Germany is threatened with a deluge of luxuries and

semi-luxuries from abroad, of which she has been starved for years,

which would exhaust or diminish her small supplies of foreign exchange.

These provisions strike at the authority of the German Government to

ensure economy in such consumption, or to raise taxation during a

critical period. What an example of senseless greed overreaching itself,

to introduce, after taking from Germany what liquid wealth she has and

demanding impossible payments for the future, a special and

particularized injunction that she must allow as readily as in the days

of her prosperity the import of champagne and of silk!

One other Article affects the Customs RÈgime of Germany which, if it was

applied, would be serious and extensive in its consequences. The Allies

have reserved the right to apply a special customs rÈgime to the

occupied area on the bank of the Rhine, "in the event of such a measure

being necessary in their opinion in order to safeguard the economic

interests of the population of these territories."[60] This provision

was probably introduced as a possibly useful adjunct to the French

policy of somehow detaching the left bank provinces from Germany during

the years of their occupation. The project of establishing an

independent Republic under French clerical auspices, which would act as

a buffer state and realize the French ambition of driving Germany proper

beyond the Rhine, has not yet been abandoned. Some believe that much may

be accomplished by a rÈgime of threats, bribes, and cajolery extended

over a period of fifteen years or longer.[61] If this Article is acted

upon, and the economic system of the left bank of the Rhine is

effectively severed from the rest of Germany, the effect would be

far-reaching. But the dreams of designing diplomats do not always

prosper, and we must trust the future.

(ii.) The clauses relating to Railways, as originally presented to

Germany, were substantially modified in the final Treaty, and are now

limited to a provision by which goods, coming from Allied territory to

Germany, or in transit through Germany, shall receive the most favored

treatment as regards rail freight rates, etc., applied to goods of the

same kind carried on _any_ German lines "under similar conditions of

transport, for example, as regards length of route."[62] As a

non-reciprocal provision this is an act of interference in internal

arrangements which it is difficult to justify, but the practical effect

of this,[63] and of an analogous provision relating to passenger

traffic,[64] will much depend on the interpretation of the phrase,

"similar conditions of transport."[65]

For the time being Germany's transport system will be much more

seriously disordered by the provisions relating to the cession of

rolling-stock. Under paragraph 7 of the Armistice conditions Germany was

called on to surrender 5000 locomotives and 150,000 wagons, "in good

working order, with all necessary spare parts and fittings." Under the

Treaty Germany is required to confirm this surrender and to recognize

the title of the Allies to the material.[66] She is further required, in

the case of railway systems in ceded territory, to hand over these

systems complete with their full complement of rolling-stock "in a

normal state of upkeep" as shown in the last inventory before November

11, 1918.[67] That is to say, ceded railway systems are not to bear any

share in the general depletion and deterioration of the German

rolling-stock as a whole.

This is a loss which in course of time can doubtless be made good. But

lack of lubricating oils and the prodigious wear and tear of the war,

not compensated by normal repairs, had already reduced the German

railway system to a low state of efficiency. The further heavy losses

under the Treaty will confirm this state of affairs for some time to

come, and are a substantial aggravation of the difficulties of the coal

problem and of export industry generally.

(iii.) There remain the clauses relating to the river system of Germany.

These are largely unnecessary and are so little related to the supposed

aims of the Allies that their purport is generally unknown. Yet they

constitute an unprecedented interference with a country's domestic

arrangements and are capable of being so operated as to take from

Germany all effective control over her own transport system. In their

present form they are incapable of justification; but some simple

changes might transform them into a reasonable instrument.

Most of the principal rivers of Germany have their source or their

outlet in non-German territory. The Rhine, rising in Switzerland, is now

a frontier river for a part of its course, and finds the sea in Holland;

the Danube rises in Germany but flows over its greater length elsewhere;

the Elbe rises in the mountains of Bohemia, now called Czecho-Slovakia;

the Oder traverses Lower Silesia; and the Niemen now bounds the frontier

of East Prussia and has its source in Russia. Of these, the Rhine and

the Niemen are frontier rivers, the Elbe is primarily German but in its

upper reaches has much importance for Bohemia, the Danube in its German

parts appears to have little concern for any country but Germany, and

the Oder is an almost purely German river unless the result of the

plebiscite is to detach all Upper Silesia.

Rivers which, in the words of the Treaty, "naturally provide more than

one State with access to the sea," properly require some measure of

international regulation and adequate guarantees against discrimination.

This principle has long been recognized in the International Commissions

which regulate the Rhine and the Danube. But on such Commissions the

States concerned should be represented more or less in proportion to

their interests. The Treaty, however, has made the international

character of these rivers a pretext for taking the river system of

Germany out of German control.

After certain Articles which provide suitably against discrimination and

interference with freedom of transit,[68] the Treaty proceeds to hand

over the administration of the Elbe, the Oder, the Danube, and the Rhine

to International Commissions.[69] The ultimate powers of these

Commissions are to be determined by "a General Convention drawn up by

the Allied and Associated Powers, and approved by the League of

Nations."[70] In the meantime the Commissions are to draw up their own

constitutions and are apparently to enjoy powers of the most extensive

description, "particularly in regard to the execution of works of

maintenance, control, and improvement on the river system, the financial

rÈgime, the fixing and collection of charges, and regulations for

navigation."[71]

So far there is much to be said for the Treaty. Freedom of through

transit is a not unimportant part of good international practice and

should be established everywhere. The objectionable feature of the

Commissions lies in their membership. In each case the voting is so

weighted as to place Germany in a clear minority. On the Elbe Commission

Germany has four votes out of ten; on the Oder Commission three out of

nine; on the Rhine Commission four out of nineteen; on the Danube

Commission, which is not yet definitely constituted, she will be

apparently in a small minority. On the government of all these rivers

France and Great Britain are represented; and on the Elbe for some

undiscoverable reason there are also representatives of Italy and

Belgium.

Thus the great waterways of Germany are handed over to foreign bodies

with the widest powers; and much of the local and domestic business of

Hamburg, Magdeburg, Dresden, Stettin, Frankfurt, Breslan, and Ulm will

be subject to a foreign jurisdiction. It is almost as though the Powers

of Continental Europe were to be placed in a majority on the Thames

Conservancy or the Port of London.

Certain minor provisions follow lines which in our survey of the Treaty

are now familiar. Under Annex III. of the Reparation Chapter Germany is

to cede up to 20 per cent of her inland navigation tonnage. Over and

above this she must cede such proportion of her river craft upon the

Elbe, the Oder, the Niemen, and the Danube as an American arbitrator may

determine, "due regard being had to the legitimate needs of the parties

concerned, and particularly to the shipping traffic during the five

years preceding the war," the craft so ceded to be selected from those

most recently built.[72] The same course is to be followed with German

vessels and tugs on the Rhine and with German property in the port of

Rotterdam.[73] Where the Rhine flows between France and Germany, France

is to have all the rights of utilizing the water for irrigation or for

power and Germany is to have none;[74] and all the bridges are to be

French property as to their whole length.[75] Finally the administration

of the purely German Rhine port of Kehl lying on the eastern bank of the

river is to be united to that of Strassburg for seven years and managed

by a Frenchman to be nominated by the new Rhine Commission.

Thus the Economic Clauses of the Treaty are comprehensive, and little

has been overlooked which might impoverish Germany now or obstruct her

development in future. So situated, Germany is to make payments of

money, on a scale and in a manner to be examined in the next chapter.

FOOTNOTES:

[7] The precise force of this reservation is discussed in

detail in Chapter V.

[8] I also omit those which have no special relevance to the

German Settlement. The second of the Fourteen Points, which relates to

the Freedom of the Seas, is omitted because the Allies did not accept

it. Any italics are mine.

[9] Part VIII. Annex III. (1).

[10] Part VIII. Annex III. (3).

[11] In the years before the war the average shipbuilding

output of Germany was about 350,000 tons annually, exclusive of

warships.

[12] Part VIII. Annex III. (5).

[13] Art. 119.

[14] Arts. 120 and 257.

[15] Art. 122.

[16] Arts. 121 and 297(b). The exercise or non-exercise of this

option of expropriation appears to lie, not with the Reparation

Commission, but with the particular Power in whose territory the

property has become situated by cession or mandation.

[17] Art. 297 (h) and para. 4 of Annex to Part X. Section IV.

[18] Arts. 53 and 74.

[19] In 1871 Germany granted France credit for the railways of

Alsace-Lorraine but not for State property. At that time, however, the

railways were private property. As they afterwards became the property

of the German Government, the French Government have held, in spite of

the large additional capital which Germany has sunk in them, that their

treatment must follow the precedent of State property generally.

[20] Arts. 55 and 255. This follows the precedent of 1871.

[21] Art. 297 (_b_).

[22] Part X. Sections III. and IV. and Art. 243.

[23] The interpretation of the words between inverted commas is

a little dubious. The phrase is so wide as to seem to include private

debts. But in the final draft of the Treaty private debts are not

explicitly referred to.

[24] This provision is mitigated in the case of German property

in Poland and the other new States, the proceeds of liquidation in these

areas being payable direct to the owner (Art. 92.)

[25] Part X. Section IV. Annex, para. 10: "Germany will, within

six months from the coming into force of the present Treaty, deliver to

each Allied or Associated Power all securities, certificates, deeds, or

other documents of title held by its nationals and relating to property,

rights, or interests situated in the territory of that Allied or

Associated Power.... Germany will at any time on demand of any Allied or

Associated Power furnish such information as may be required with regard

to the territory, rights, and interests of German nationals within the

territory of such Allied or Associated Power, or with regard to any

transactions concerning such property, rights, or interests effected

since July 1, 1914."

[26] "Any public utility undertaking or concession" is a vague

phrase, the precise interpretation of which is not provided for.

[27] Art. 260.

[28] Art. 235.

[29] Art. 118.

[30] Arts. 129 and 132.

[31] Arts. 135-137.

[32] Arts. 135-140.

[33] Art. 141: "Germany renounces all rights, titles and

privileges conferred on her by the General Act of Algeciras of April 7,

1906, and by the Franco-German Agreements, of Feb. 9, 1909, and Nov. 4,

1911...."

[34] Art. 148: "All treaties, agreements, arrangements and

contracts concluded by Germany with Egypt are regarded as abrogated from

Aug. 4, 1914." Art. 153: "All property and possessions in Egypt of the

German Empire and the German States pass to the Egyptian Government

without payment."

[35] Art. 289.

[36] Art. 45.

[37] Part IV. Section IV. Annex, Chap. III.

[38] "We take over the ownership of the Sarre mines, and in

order not to be inconvenienced in the exploitation of these coal

deposits, we constitute a distinct little estate for the 600,000 Germans

who inhabit this coal basin, and in fifteen years we shall endeavor by a

plebiscite to bring them to declare that they want to be French. We know

what that means. During fifteen years we are going to work on them, to

attack them from every point, till we obtain from them a declaration of

love. It is evidently a less brutal proceeding than the _coup de force_

which detached from us our Alsatians and Lorrainers. But if less brutal,

it is more hypocritical. We know quite well between ourselves that it is

an attempt to annex these 600,000 Germans. One can understand very well

the reasons of an economic nature which have led Clemenceau to wish to

give us these Sarre coal deposits, but in order to acquire them must we

give ourselves the appearance of wanting to juggle with 600,000 Germans

in order to make Frenchmen of them in fifteen years?" (M. HervÈ in _La

Victorie_, May 31, 1919).

[39] This plebiscite is the most important of the concessions

accorded to Germany in the Allies' Final Note, and one for which Mr.

Lloyd George, who never approved the Allies' policy on the Eastern

frontiers of Germany, can claim the chief credit. The vote cannot take

place before the spring of 1920, and may be postponed until 1921. In the

meantime the province will be governed by an Allied Commission. The vote

will be taken by communes, and the final frontiers will be determined by

the Allies, who shall have regard, partly to the results of the vote in

each commune, and partly "to the geographical and economic conditions of

the locality." It would require great local knowledge to predict the

result. By voting Polish, a locality can escape liability for the

indemnity, and for the crushing taxation consequent on voting German, a

factor not to be neglected. On the other hand, the bankruptcy and

incompetence of the new Polish State might deter those who were disposed

to vote on economic rather than on racial grounds. It has also been

stated that the conditions of life in such matters as sanitation and

social legislation are incomparably better in Upper Silesia than in the

adjacent districts of Poland, where similar legislation is in its

infancy. The argument in the text assumes that Upper Silesia will cease

to be German. But much may happen in a year, and the assumption is not

certain. To the extent that it proves erroneous the conclusions must be

modified.

[40] 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.

[41] It must not be overlooked, however, that, amongst the

other concessions relating to Silesia accorded in the Allies' Final

Note, there has been included Article 90, by which "Poland undertakes to

permit for a period of fifteen years the exportation to Germany of the

products of the mines in any part of Upper Silesia transferred to Poland

in accordance with the present Treaty. Such products shall be free from

all export duties or other charges or restrictions on exportation.

Poland agrees to take such steps as may be necessary to secure that any

such products shall be available for sale to purchasers in Germany on

terms as favorable as are applicable to like products sold under similar

conditions to purchasers in Poland or in any other country." This does

not apparently amount to a right of preemption, and it is not easy to

estimate its effective practical consequences. It is evident, however,

that in so far as the mines are maintained at their former efficiency,

and in so far as Germany is in a position to purchase substantially her

former supplies from that source, the loss is limited to the effect on

her balance of trade, and is without the more serious repercussions on

her economic life which are contemplated in the text. Here is an

opportunity for the Allies to render more tolerable the actual operation

of the settlement. The Germans, it should be added, have pointed out

that the same economic argument which adds the Saar fields to France

allots Upper Silesia to Germany. For whereas the Silesian mines are

essential to the economic life of Germany, Poland does not need them. Of

Poland's pre-war annual demand of 10,500,000 tons, 6,800,000 tons were

supplied by the indisputably Polish districts adjacent to Upper Silesia.

1,500,000 tons from Upper Silesia (out of a total Upper Silesian output

of 43,500,000 tons), and the balance from what is now Czecho-Slovakia.

Even without any supply from Upper Silesia and Czecho-Slovakia, Poland

could probably meet her requirements by the fuller exploitation of her

own coalfields which are not yet scientifically developed, or from the

deposits of Western Galicia which are now to be annexed to her.

[42] France is also to receive annually for three years 35,000

tons of benzol, 60,000 tons of coal tar, and 30,000 tons of sulphate of

ammonia.

[43] The Reparation Commission is authorized under the Treaty

(Part VIII Annex V. para. 10) "to postpone or to cancel deliveries" if

they consider "that the full exercise of the foregoing options would

interfere unduly with the industrial requirements of Germany." In the

event of such postponements or cancellations "the coal to replace coal

from destroyed mines shall receive priority over other deliveries." This

concluding clause is of the greatest importance, if, as will be seen, it

is physically impossible for Germany to furnish the full 45,000,000; for

it means that France will receive 20,000,000 tons before Italy receives

anything. The Reparation Commission has no discretion to modify this.

The Italian Press has not failed to notice the significance of the

provision, and alleges that this clause was inserted during the absence

of the Italian representatives from Paris (_Corriere della Sera_, July

19, 1919).

[44] It follows that the current rate of production in Germany

has sunk to about 60 per cent of that of 1913. The effect on reserves

has naturally been disastrous, and the prospects for the coming winter

are dangerous.

[45] This assumes a loss of output of 15 per cent as compared

with the estimate of 30 per cent quoted above.

[46] This supposes a loss of 23 per cent of Germany's

industrial undertaking and a diminution of 13 per cent in her other

requirements.

[47] The reader must be reminded in particular that the above

calculations take no account of the German production of lignite, which

yielded in 1913 13,000,000 tons of rough lignite in addition to an

amount converted into 21,000,000 tons of briquette. This amount of

lignite, however, was required in Germany before the war _in addition

to_ the quantities of coal assumed above. 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.

[48] Mr. Hoover, in July, 1919, estimated that the coal output

of Europe, excluding Russia and the Balkans, had dropped from

679,500,000 tons to 443,000,000 tons,--as a result in a minor degree of

loss of material and labor, but owing chiefly to a relaxation of

physical effort after the privations and sufferings of the war, a lack

of rolling-stock and transport, and the unsettled political fate of some

of the mining districts.

[49] Numerous commercial agreements during the war ware

arranged on these lines. But in the month of June, 1919, alone, minor

agreements providing for payment in coal were made by Germany with

Denmark, Norway, and Switzerland. The amounts involved were not large,

but without them Germany could not have obtained butter from Denmark,

fats and herrings from Norway, or milk and cattle from Switzerland.

[50] "Some 60,000 Ruhr miners have agreed to work extra

shifts--so-called butter-shifts--for the purpose of furnishing coal for

export to Denmark hence butter will be exported in return. The butter

will benefit the miners in the first place, as they have worked

specially to obtain it" (_Kˆlnische Zeitung_, June 11, 1919).

[51] What of the prospects of whisky-shifts in England?

[52] As early as September, 1919, the Coal Commission had to

face the physical impracticability of enforcing the demands of the

Treaty, and agreed to modify them as follows:--"Germany shall in the

next six months make deliveries corresponding to an annual delivery of

20 million tons as compared with 43 millions as provided in the Peace

Treaty. If Germany's total production exceeds the present level of about

108 millions a year, 60 per cent of extra production, up to 128

millions, shall be delivered to the Entente and 50 per cent of any extra

beyond that, until the figure provided in the Peace Treaty is reached.

If the total production falls below 108 millions the Entente will

examine the situation, after hearing Germany, and take account of it."

[53] 21,136,265 tons out of a total of 28,607,903 tons. The

loss of iron-ore in respect of Upper Silesia is insignificant. The

exclusion of the iron and steel of Luxemburg from the German Customs

Union is, however, important, especially when this loss is added to that

of Alsace-Lorraine. It may be added in passing that Upper Silesia

includes 75 per cent of the zinc production of Germany.

[54] In April, 1919, the British Ministry of Munitions

despatched an expert Commission to examine the conditions of the iron

and steel works in Lorraine and the occupied areas of Germany. The

Report states that the iron and steel works in Lorraine, and to a lesser

extent in the Saar Valley, are dependent on supplies of coal and coke

from Westphalia. It is necessary to mix Westphalian coal with Saar coal

to obtain a good furnace coke. The entire dependence of all the Lorraine

iron and steel works upon Germany for fuel supplies "places them," says

the Report, "in a very unenviable position."

[55] Arts. 264, 265, 266, and 267. These provisions can only be

extended beyond five years by the Council of the League of Nations.

[56] Art. 268 (_a_).

[57] Art. 268 (_b_) and (_c_).

[58] The Grand Duchy is also deneutralized and Germany binds

herself to "accept in advance all international arrangements which may

be concluded by the Allied and Associated Powers relating to the Grand

Duchy" (Art. 40). At the end of September, 1919, a plebiscite was held

to determine whether Luxemburg should join the French or the Belgian

Customs Union, which decided by a substantial majority in favour of the

former. The third alternative of the maintenance of the union with

Germany was not left open to the electorate.

[59] Art. 269.

[60] Art. 270.

[61] The occupation provisions may be conveniently summarized

at this point. German territory situated west of the Rhine, together

with the bridge-heads, is subject to occupation for a period of fifteen

years (Art. 428). If, however, "the conditions of the present Treaty are

faithfully carried out by Germany," the Cologne district will be

evacuated after five years, and the Coblenz district after ten years

(Art. 429). It is, however, further provided that if at the expiration

of fifteen years "the guarantees against unprovoked aggression by

Germany are not considered sufficient by the Allied and Associated

Governments, the evacuation of the occupying troops may be delayed to

the extent regarded as necessary for the purpose of obtaining the

required guarantees" (Art. 429); and also that "in case either during

the occupation or after the expiration of the fifteen years, the

Reparation Commission finds that Germany refuses to observe the whole or

part of her obligations under the present Treaty with regard to

Reparation, the whole or part of the areas specified in Article 429 will

be re-occupied immediately by the Allied and Associated Powers" (Art.

430). Since it will be impossible for Germany to fulfil the whole of her

Reparation obligations, the effect of the above provisions will be in

practice that the Allies will occupy the left bank of the Rhine just so

long as they choose. They will also govern it in such manner as they may

determine (_e.g._ not only as regards customs, but such matters as the

respective authority of the local German representatives and the Allied

Governing Commission), since "all matters relating to the occupation and

not provided for by the present Treaty shall be regulated by subsequent

agreements, which Germany hereby undertakes to observe" (Art. 432). The

actual Agreement under which the occupied areas are to be administered

for the present has been published as a White Paper [Cd. 222]. The

supreme authority is to be in the hands of an Inter-Allied Rhineland

Commission, consisting of a Belgian, a French, a British, and an

American member. The articles of this Agreement are very fairly and

reasonably drawn.

[62] Art. 365. After five years this Article is subject to

revision by the Council of the League of Nations.

[63] The German Government withdrew, as from September 1, 1919,

all preferential railway tariffs for the export of iron and steel goods,

on the ground that these privileges would have been more than

counterbalanced by the corresponding privileges which, under this

Article of the Treaty, they would have been forced to give to Allied

traders.

[64] Art. 367.

[65] Questions of interpretation and application are to be

referred to the League of Nations (Art. 376).

[66] Art. 250.

[67] Art 371. This provision is even applied "to the lines of

former Russian Poland converted by Germany to the German gage, such

lines being regarded as detached from the Prussian State System."

[68] Arts. 332-337. Exception may be taken, however, to the

second paragraph of Art. 332, which allows the vessels of other nations

to trade between German towns but forbids German vessels to trade

between non-German towns except with special permission; and Art. 333,

which prohibits Germany from making use of her river system as a source

of revenue, may be injudicious.

[69] The Niemen and the Moselle are to be similarly treated at

a later date if required.

[70] Art. 338.

[71] Art. 344. This is with particular reference to the Elbe

and the Oder; the Danube and the Rhine are dealt with in relation to the

existing Commissions.

[72] Art. 339.

[73] Art. 357.

[74] Art. 358. Germany is, however, to be allowed some payment

or credit in respect of power so taken by France.

[75] Art. 66.