EconGuru Economics Guide &raquo; The Economic Consequences of the Peace

It is difficult to maintain true perspective in large affairs. I have criticised the work of Paris, and have depicted in sombre colours the condition and the prospects of Europe. This is one aspect of the position and, I believe, a true one. But in so complex a phenomenon the prognostics do not all point one way; and we may make the error of expecting consequences to follow too swiftly and too inevitably from what perhaps are not all the relevant causes. The blackness of the prospect itself leads us to doubt its accuracy; our imagination is dulled rather than stimulated by too woeful a narration, and our minds rebound from what is felt ‘too bad to be true’. But before the reader allows himself to be too much swayed by these natural reflections, and before I lead him, as is the intention of this chapter, towards and ameliorations remedies and the discovery of happier tendencies, let him redress the balance of his thought by recalling two contrasts — England and Russia, of which the one may encourage his optimism too much, but the other should remind him that catastrophes can still happen, and that modern society is not immune from the very greatest evils.

Chapter 6: Europe After the Treaty

This chapter must be one of pessimism. The treaty includes no provisions for the economic rehabilitation of Europe — nothing to make the defeated Central empires into good neighbours, nothing to stabilise the new states of Europe, nothing to reclaim Russia; nor does it promote in any way a compact of economic solidarity amongst the Allies themselves; no arrangement was reached at Paris for restoring the disordered finances of France and Italy, or to adjust the systems of the Old World and the New.

Chapter 5: Reparations

I. Undertakings Given Pride to the Peace Negotiations

The categories of damage in respect of which the Allies were entitled to ask for reparation are governed by the relevant passages in President Wilson’s Fourteen Points of 8 January 1918, as modified by the Allied governments in their qualifying Note, the text of which the President formally communicated to the German government as the basis of peace on 5 November 1918. These passages have been quoted in full at the beginning of chapter 4. That is to say, ‘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.’ The limiting quality of this sentence is reinforced by the passage in the President’s speech before Congress on 11 February 1918 (the terms of this speech being an express part of the contract with the enemy), that there shall be ‘no contributions’ and ‘no punitive damages’.

Chapter 4: 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 aggrandisements, 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.

Chapter 3: The Conference

In chapters 4 and 5 I shall study in some detail the economic and financial provisions of the treaty of peace with Germany. But it will be easier to appreciate the true origin of many of these terms if we examine here some of the personal factors which influenced their preparation. In attempting this task I touch, inevitably, questions of motive, on which spectators are liable to error and are not entitled to take on themselves the responsibilities of final judgment. Yet, if I seem in this chapter to assume sometimes the liberties which are habitual to historians, but which, in spite of the greater knowledge with which we speak, we generally hesitate to assume towards contemporaries, let the reader excuse me when he remembers how greatly, if it is to understand its destiny, the world needs light, even if it is partial and uncertain, on the complex struggle of human will and purpose, not yet finished, which, concentrated in the persons of four individuals in a manner never paralleled, made them in the first months of 1919 the microcosm of mankind.

Chapter 2: Europe Before the War

Before 1870 different parts of the small continent of Europe had specialised in their own products; but, taken as a whole, it was substantially self-subsistent. And its population was adjusted to this state of affairs.

Chapter 1: Introductory

The power to become habituated to his surroundings is a marked characteristic of mankind. Very few of us realise with conviction the intensely unusual, unstable, complicated, unreliable, temporary nature of the economic organisation by which Western Europe has lived for the last half century. We assume some of the most peculiar and temporary of our late advantages as natural, permanent, and to be depended on, and we lay our plans accordingly. On this sandy and false foundation we scheme for social improvement and dress our political platforms, pursue our animosities and particular ambitions, and feel ourselves with enough margin in hand to foster, not assuage, civil conflict in the European family. Moved by insane delusion and reckless self-regard, the German people overturned the foundations on which we all lived and built. But the spokesmen of the French and British peoples have run the risk of completing the ruin which Germany began, by a peace which, if it is carried into effect, must impair yet further, when it might have restored, the delicate, complicated organisation, already shaken and broken by war, through which alone the European peoples can employ themselves and live.