Germany for what the American representative in Paris termed her
technical default, to recollect that, between the expense of the army
of occupation and contributions already made towards reparations,
Germany has already paid to the Allies over three times the amount of
the total indemnity exacted by Bismarck in 1871.
This is without making any allowance for the vast and highly developed
colonies which she surrendered. Let, therefore, no one approach this
problem as if he were dealing with a recalcitrant country that is
deliberately refusing to acknowledge any of her obligations under a
treaty which she has signed.
The costs of the last war are acknowledged to be irrecoverable. It is
difficult enough to find the means for payment of damages. Who will pay
the growing cost of this new war?
So far I have referred only to the direct outlay upon these aggressive
measures. The indirect cost to victor and vanquished alike will be
crushing.
It is already accumulating. The mere threat has depreciated the value
of the franc, and thus reduced its purchasing capacity abroad. This
loss must be borne by the French consumer. There may be a rally; but I
shall be surprised if the improvement is more than temporary.
All that is obvious for the moment to the untrained eye is the way in
which the mark is dragging the French and Belgian franc slowly along
its own downward course.
As the distance between them lengthens and the invisible cord which
ties them together becomes more and more attenuated, it may ultimately
snap and the franc be released from this dangerous association. That I
doubt, for a bankrupt Germany means a country to which even the most
hopeful cannot look as a means of redeeming French deficits.
Once that is clear to the French peasant he will not so readily part
with his savings, and the real difficulties of French finance will
begin at that stage. A policy, therefore, which demoralises the German
currency is one which is also fatal to the solvency of French finance.
Let us follow the probable sequence of events. The terrified German
mark is rushing headlong to the bottom of the pit where the Austrian
krone is already lost beyond rescue.
As long as reparation coal is dug out by bayonets, and reparation
timber is cut down by swords, it is idle to talk of restoring the mark
by putting German finance in order.
No tariff, however nimble, can keep pace with the runaway mark. It
would baffle the most resourceful finance minister to adapt his budget
to a currency which disappears beyond the horizon while he is sitting
at his desk to pen his proposals.
If the mere threat of force has produced such a panic, what will be the
effect of the actual measures? It is safe to predict that the advance
of French troops into Germany will not restore the composure of the
frightened mark and arrest its flight.
What, then, becomes of the hope of renewed payments of the annuity? At
best Germany could only be expected to pay when her foreign trade was
so improved that she could provide a margin out of her exports with
which to pay her annuities. Her foreign trade is largely dependent
upon her foreign exchanges. These are now destroyed beyond prospect of
recovery for years.
Britain proposed a voluntary moratorium for a short term of years in
order to place Germany in a position where she could at the end of that
term pay a reasonable annuity. The French government have in effect
substituted a compulsory moratorium for an indefinite period with no
prospect of payment in sight.
The only chance of securing an early instalment of reparation payments
was by pressing Germany to put her finances in order and giving her
fair time in which to do so. The only chance of negotiating a loan
on German security to assist France to pay for the repair of her
devastated provinces, and to enable her to put her own finances in
order, was by restoring the stability of German currency.
French statesmen have deliberately thrown both these chances away. The
effect on the value of their own currency must be grave, and Frenchmen
will have to pay in increased cost of living for a venture dictated by
short-sighted and short-tempered statesmanship.
When one thinks of the consequences one is driven to ask whether French
politicians are really seeking reparations or are pursuing another
purpose quite incompatible with the recovery of money payments under
the treaty.
This is the wrong road to reparations. It leads in exactly the opposite
direction.
Whither, then, does it lead? There is no doubt that its effect will
be ruinous as far as German industry is concerned. I have already
dealt with its disastrous influence upon German currency, and with the
indirect effect of a rapidly depreciating currency upon German foreign
trade. The seizure of the Ruhr mines will have another serious effect.
Even now the result of the compulsory alienation of so much of
Germany's coal supply in the Ruhr, in Silesia, and the Saar, from
German industry, has diminished German productiveness. The fuel
deficiency thereby created inside Germany has been partially supplied
by purchases of coal from outside sources. The necessity for providing
gold to pay for foreign coal has added considerably to Germany's
financial difficulties.
A still larger foreign purchase will be the inevitable result of the
forcible diversion of large quantities of Ruhr coal to France and
Italy, with further financial embarrassments as a consequence.
That is bad enough. But I fear worse. Will the German miner work with
the same regularity and efficiency for a foreign master as he does for
a German employer? Is there the least possibility of the production
being maintained at its present level?
The influence of this added muddle on world trade is incalculable.
Nobody gains; everybody is a loser by the move. How is a Germany whose
embarrassed finances are made still more involved--how is a Germany
whose industry becomes more and more difficult--how is a Germany
reduced to despair to be of the slightest use to France, Belgium,
Italy, or anybody else?
The feather-headed scribes who have advocated this rash policy assume
that France will be helped because Germany will thus be reduced to
impotence. For how long?
The disintegration of Germany is not an unlikely consequence of this
move. I know that is the expectation. Frenchmen still hanker after
the days when Saxons and Bavarians and Wurtembergers were allies, and
almost vassals, of France against Prussia. It was the lure that led the
Third Napoleon to his ruin. It is the attraction which is now drawing
France once more to a sure doom. The policy will bring no security to
France in the future. It deprives her of all hope of reparations in the
immediate present. There will no longer be a Germany to pay. It would
be too hopeless a task to attempt recovery from each of the severed
states.
But what of increased security? Nothing can keep Germans permanently
apart. They will, at the suitable moment reunite under more favourable
conditions, freed from external as well as internal debt. France will
have lost her reparations and only retained the hatred of an implacable
foe become more redoubtable than ever.
How would Europe have fared in the interval whilst France was learning
from events what every other country can see now? There is no knowing
what will happen when a brave people of 60,000,000 find themselves
faced with utter ruin. Whether they turn to the left or to the right
will depend on questions of personal leadership, which are not yet
determined. All we can be sure of is that they can hardly go on as they
are, maintaining an honest struggle for ordered freedom and democratic
self-government. The French proclamation, with its threat of "severest
measures in case of recalcitrancy," is ominous of much that may happen.
No people accustomed to national independence have ever been able long
to tolerate a foreign yoke.
Chancellor Cuno's action is the first manifestation of the spirit of
revolt. It will certainly grow in intensity. The lash will then fall,
sooner or later, and Germany will be inevitably driven to desperate
courses. A Communist Germany would infect Europe. European vitality
is so lowered by exhaustion that it is in no condition to resist the
plague. Would a reactionary Germany be much better--brooding and
scheming vengeance?
Russia, with her incalculable resources of men and material, is at
hand, needing all that Germany can best give and best spare. The
Bolshevik leaders only require what Germany is so well fitted to supply
in order to reorganise their country and convert it into the most
formidable state in Europe or Asia.
Nations hard pressed on the East have in the past moved forward
irresistibly to the West. In obedience to the same law a people hard
pressed on the West will look to the East.
When the French troops marched on Essen they began a movement the most
far-reaching, and probably the most sinister in its consequences, that
has been witnessed for many centuries in Europe. And these are the
people who, after fifty years of patient and laborious waiting, have
demonstrated to the world in 1918 the stupidity of abusing victory in
1871.
If the teacher so soon forgets his own special lesson the pupil is not
likely to remember when fury overcomes terror.
_Algeciras, January 15th, 1923._
XIII
LOST OPPORTUNITIES
The French government, having conspicuously failed to win its
anticipated coup, is doubling the stakes each time it loses. When will
it end? And where will it end? It is ill gambling with human passions.
They are all engaged in this wild venture--on both sides of the
table. Pride, greed, vanity, obstinacy, temper, combativeness, racial
antagonisms, but also patriotism, love of justice, hatred of wrong and
high courage. Each side draws from the same arsenal of fiery human
emotions. Unless some one steps in to induce a halt I fear the result
will be devastating.
France has now abandoned all hope of being able to run the mines,
railways, and workshops of the Ruhr by military agencies. In these
days you cannot shoot every worker who fails to excavate so many
hundredweights of coal per diem, or who refuses to fill a wagon or
drive a locomotive when and by whomsoever he is told to do so. France
cannot provide the necessary complement of miners and railwaymen from
outside to fill vacancies created by sulky workers. And even if she
could it would take many months ere they become sufficiently accustomed
to their new conditions to work without peril to themselves. So a
new policy has been improvised. It is nothing less than the siege of
Germany. Sixty millions of Germans are to be starved into surrender.
That is a long business, as every one knows who has been engaged on
the difficult operations of strike breaking. We have often witnessed
workers with little support or sympathy from the rest of the community
hold out for weeks after their funds have been exhausted. In Germany
all classes are united in resistance. The national pride fortifies
endurance and incites to sacrifice. And the ports are still open.
Meanwhile incidents may happen, developments may occur which will
create a situation that will baffle all the resources the invaders can
command.
It is very little use looking backward. But there are many who are
disposed to say that the invasion of the Ruhr was bound to come and
the sooner the safer. The Ruhr coal mines were the wild oats of
reparation. Get it over quickly. The headache will bring repentance
and France will then settle down to a quiet life. That is the argument.
I must enter an emphatic protest against this view. If this ill-judged
enterprise had been put off for a few more months I do not believe
any French government would have embarked upon it. There is no French
statesman of any standing who, in his heart, believes in its wisdom.
Now that the credit of France is involved in its success they will all
support it. But French opinion, as a whole, was moving with startling
rapidity from this policy. The Parisian pulse was still feverish,
but the provinces had completely calmed down. Vacancies occurring in
the Senate, the Chamber of Deputies and the provincial assemblies
during several months have afforded an opportunity of testing real
French opinion and the results have been sensational. At election
after election, fought in typical constituencies all over France, the
champions of Ruhrism have been beaten by emphatic majorities. Masses of
French workmen have always opposed this policy. The peasant in every
land always moves slowly. But there can be no doubt that the French
peasant has had enough of military adventures. His sons were never
numbered amongst the "exempts," and the losses in the peasant homes
of France were appalling. Driving through the villages in agricultural
France you find yourself asking, "Where are the young men?" The answer
invariably comes, "This village suffered severely in the war." You
will receive the same answer in the next village, and the next. We
cannot wonder, therefore, that by-elections in rural as well as in
urban France display an unmistakable weariness of plans which involve
the marching of armed Frenchmen into hostile territory. The sorrowing
people of France have good reason to shrink from any course of action
that leads to further shedding of blood.
For these reasons I have steadily favoured every scheme that had the
effect of postponing decision as to the Ruhr. Delay meant ultimate
defeat for the Chauvinists. That is why they strove so hard to rush
their government into this precipitate action. The abrupt termination
of the Paris conference was their opportunity and they seized it with
tingling fingers. Until then there had never been a clean break on
which violence could be founded. The friends of moderation both here
and on the continent had seen to that. There had been reference of
questions for the scrutiny of experts and calming adjournments to
await their report. When it arrived there were endless suggestions and
counter-suggestions to meet difficulties. In the end Europe was saved
from the catastrophe of once more handing over its destinies to the
guidance of blind force. Unhappily, weariness or impatience induced
the Paris negotiators in a few hours to drop the reins which had for
at least four years held the furies from dashing along their career of
destruction. There were many alternative plans that might have been
discussed. There was the proposal to refer the whole question to the
League of Nations. It is true that when I suggested it in August last
M. Poincaré summarily rejected it. But the Allies also rejected M.
Poincaré's proposals by a majority of four to one at that conference.
That did not prevent his repeating them in January--and this time he
succeeded in winning over the majority to his view. A little more
persistence and less pessimism might have persuaded Belgium, Italy and
Japan to aid our appeals to France to trust rather to the League of
Nations than to the uncertainties of war.
What is still more inexplicable is the failure of the conference to
take any note of Mr. Secretary Hughes's New Haven speech. Neglected
opportunities litter the path of this troublesome question. There
were the Cannes conversations, broken off just as they were reaching
fruition. Had they been continued another week they would have ended in
a helpful settlement which would have brought reparations to France,
confidence to Germany, and peace to Europe. They struck on one of the
many sunken reefs which bestrew the French political seas, and it will
not surprise me to find that the whole cargo of reparations disappeared
then beyond salvage into the deep with these shipwrecked negotiations.
Again, Germany threw away a great opportunity at Genoa when all
the nations of Europe came together for the first time to discuss
their troubles in the spirit of equality and amity. It is true that
reparations were excluded at the instance of France from the programme
of the conference. But the spirit engendered by a friendly settlement
of all other outstanding questions would have rendered a reasonable
and temperate consideration of reparations inevitable. Germany, by its
foolish staging of its Russian agreement, made all that impossible.
Resentment and suspicion were once more equipped with a scourge and
they used it relentlessly to drive out all goodwill for Germany from
the purlieus of that great congress. Another lost opportunity.
Then there was the bankers' committee, appointed to consider the
question of raising an international loan to help France to finance
the repair of her devastated area and also to assist Germany to
restore her demoralised currency. I remember how eager poor Rathenau
was to float that loan and how sanguine he was that it would succeed.
He was confident that the German nationals who have invested their
gold in other lands could be induced to subscribe heavily to the
loan. The bankers concerned--all were of the highest reputation in
the financial world--were confident that if German reparations were
fixed at a reasonable sum investors throughout the world would gladly
put their money into a great international loan which would help to
restore Europe. The French government testily declined to consider
the essential conditions indicated by the bankers. Another lost
opportunity, and Europe once more lumbered along its dreary way to seek
another.
It came with Mr. Hughes's famous speech. It was clearly the result
of prolonged consideration. For weeks there had been rumours of
much consultation in Washington on the state of Europe, and we were
encouraged to hope that America meant business. The result was Mr.
Secretary Hughes's offer. It was made four days before the Paris
conference and was obviously intended to be discussed by the Allies
there. An endeavour has been made to minimise the importance of this
American approach to Europe, but it is incomprehensible to me how so
momentous a pronouncement has been treated as if it were merely the
casual utterance of a politician who had to find some topic of more or
less interest with which to illuminate a discourse. Another opportunity
lost--perhaps the greatest--perhaps the last. Never has luck striven so
hard to save stupidity. But luck loses its temper easily and then it is
apt to hit hard.
_London, February 15th, 1923._
XIV
FRENCH SCHEMES
"French troops occupying fresh German territory." "Further advance into
Germany." "Reinforcements." "French cut off the British bridgehead on
the Rhine." "Proposals for new coinage in the Ruhr." What is it all
leading to? Is it really reparations? Signor Nitti, who has made a
thorough study of all the documents bearing on French designs against
Germany, has come definitely to the conclusion that these measures
have no reference to the recovery of damages for the devastated area,
but that they are all taken in the execution of a vast project for
securing French control over all the coal and iron of continental
Europe. He supplies chapter and verse for his theory. Something has
undoubtedly roused the suspicions of Signor Mussolini. They come rather
late in the day to be effective. He naturally does not relish the idea
of an Italy whose coal and steel supplies are placed at the mercy of
a gigantic trust directed from Paris. Italy has no coal and iron of
her own. Her interest is, therefore, in a free market. Hence Signor
Mussolini's alarm. Is there any ground for it? Let those who imagine
that Italian statesmen are unnecessarily disturbed read the discussions
in the French press leading up to the speeches recently delivered by M.
Millerand, M. Barthou, and M. Poincaré.
With regard to M. Barthou's intervention, I feel I must, as one of
the founders of the Reparations Commission, say a word. There were
important questions of amount, method, and time which could not be
determined before the signature of the peace treaty and could not be
settled at all without giving Germany a full opportunity of being
heard. Hence the appointment of the Reparations Commission. It was
called into existence to settle these questions after hearing evidence
and deliberating on its effect. Of this commission M. Barthou is now
chairman. He, therefore, presides over a body which has committed
to its charge judicial functions of a momentous character. He has
to adjudicate from time to time on the case presented by Germany
under a multitude of different heads. Inflammatory speeches on the
very subjects upon which he has to preserve judicial calm are quite
incompatible with his position. When he occupied the same post M.
Poincaré ultimately recognised that he could not continue to write
controversial articles on questions which might come before him
for decision as a judge. He, therefore, very properly resigned his
commissionership.
But to revert to the speeches delivered by these eminent statesmen.
If they mean what the actual words convey, then France means to stick
to the Ruhr. Not by way of annexation. Oh, no. That, according to M.
Barthou, is a "foolish, mendacious and stupid" lie. But France means
to hang on to the _gages_ until reparation is paid. What are the
_gages_? The industries of the Ruhr. If the French government is to
control the industries which represent the life of this prosperous
area for thirty years it assumes greater authority over the district
than it exercises over the mining area of the Pas de Calais. In its
own mining districts no government takes upon itself--except during a
war--to give directions as to the destination and distribution of the
coal produced. But there are indications that the control over the Ruhr
industries is to be of a much more far-reaching character than this.
And this is where the hints--broad hints--thrown out by the French
press come in. France, in order to secure the payment of the reparation
instalments in future, is to be given shares in these great mines and
industries. What proportion of shares? Amongst the _gages_ demanded by
M. Poincaré in August of last year were sixty per cent. of the shares
in certain pivotal German industries in the Rhine area. Now the Ruhr
industries are clearly to be included within the scope of the demand.
France has the iron ore of Lorraine and the coal of the Saar valley.
Her financiers have been engaged in buying up coal mines in Silesia. If
she can secure the controlling interest in the Ruhr mines and Belgium
and Poland can be persuaded to join in the deal, then the continent of
Europe will be at the mercy of this immense coal and iron combine.
I said in the previous chapter that the ports were still open. As long
as they are, Central Europe can protect itself to a certain extent
against this gigantic trust, for the products of Britain and America
will be available. But that possibility is to be provided against.
Nothing is to be left to chance. One of the _gages_ is to be control
over German customs. How can Germany balance her budget without a
revenue? How can she raise a revenue without a tariff? What more
productive tariff than a duty on foreign coal and metal manufactures?
And thus all competitive products will be excluded from the German
markets. The combine will be supreme.
It is true that if this cynical scheme comes off there is an end of
reparations--for the independence of German industry is strangled and
its life will soon languish. But there are signs that French enterprise
has abandoned all idea of recovering reparations and that it is now
brooding upon loot--on an immense scale. For the discussions in the
French press contemplate even wider and more far-reaching developments
than those involved in the control of German industries. Italy, Poland,
and even Russia are to be brought in. The high line taken for years
by the Parisian papers about "no traffic with murder" is being given
up. Instead we have much sentimental twaddle about restoring the
old friendly relations between France and Russia--of course, for a
consideration. Russia is to buy; Germany is to manufacture; France is
to profit.