dollar of their own. They were more dependent upon trade than the Americans, who could coin it in from the dollar’s privileged position, and trade inevitably suffered if traders did not know what they were getting for their trade. However, from this to a European common currency was a long way, and there were detours through the Common Agricultural Policy: was the cathedral of subsidies and export-primes and import rebates and value-added tax to be translated into Marks or francs or dollars and at what rate? A Pierre Werner, of Luxemburg, commissioned in 1970 to examine these matters, came up with a central fiscal authority, though not a bank or a currency except, after a period of co-operation, in 1980. Then there was some agreement, not as it turned out lasting, that the dollar would fluctuate within agreed limits, the ‘Smithsonian bands’. The pound joined this, and its behaviour — a wriggling of the graphed values in the lower percentages — gave the whole scheme its name, ‘the snake’.
To keep the weaker currencies from going below the floor, there was a European Monetary Co-operation Fund, meaning that the German taxpayer would pay in order for German traders to have an artificially low currency. However, the weaker currencies were weakened by the oil shock, and the collapse in dollars meant that no-one wanted them, either. The Mark strengthened against the pound and against the franc as well, such that France dropped out of ‘the snake’ in 1974 and again in 1976, so that governments could go on pumping out paper money that would allegedly stop unemployment. It did, 25 per cent of the French working directly for their government, and though the French did not on paper abandon free trade, they (and the Italians) put so many informal obstacles in its way that protectionism appeared to be returning, and the effect on the arithmetic of the Common Agricultural Policy, already weird, was understood, Helmut Schmidt complained, only by one man, who could not then clearly explain it. In October 1976 there was a realignment of currencies at Frankfurt, but this suffered because the various countries had different import priorities, and there was no general agreement as to how the inflationary problem was to be dealt with. At this level, Europe was part miniature protection racket, part pulpit and entirely irritating.
‘Europe’ had initially been an American idea, and a very good one at that. However, with the decline of American power and prestige at the time of the Vietnam War, there was also trouble with the European creation. Part of this was a straightforward outcome of geopolitics: if the USA were going to be sucked into Far Eastern adventures, Europe would have to do something for her own security vis-a-vis Russia. Part of the story was, however, financial. In the later sixties, the dollar empire was weakening; in the early seventies it fell apart. These troubles had their effects in western Europe, and the seventies were far from being the happy time that the sixties had been. France was marking time; but Italy fell into trouble. Her history had been for a very long time in counterpoint with German: Guelfs and Ghibellines, Romans and Goths: in one view, healthy barbarians coming to put life into effete southern stock, and in another, naive buffoons coming in to be seduced and robbed, or maybe used as mercenaries (the Papal Guard to this day have uniforms of the old Swiss Landsknechte who fought the sixteenth-century wars). Since the war, there had been an interesting Italian descant on German history as well: a miracle, with undercurrents of gloom. Here, too, was terrorism, worse than in Germany; here, too, was head-shaking, and a failure of population growth; and for the Left — Germanic Ghibellines for the greater part — the seventies turned into ‘the years of lead’. The arch-Ghibelline Paul Ginsborg litanizes: public finance fell into vast disorder, deficit growing; public industry had to be shored up; in 1971 a state institution was established to bail out even private industries, this then becoming ‘an albatross’. There was welfare, but without taxes to match, and pensions represented the largest loss. Housing laws were sabotaged. The bureaucracy was a nightmare. There was another side of this, that the unofficial economy did rather well, as a new Italy, hairdressers and small artisans working away while big industry languished, was emerging, and the black economy amounted to about a quarter of the country’s takings. This distorted perceptions. If governments attempted serious reform, there followed a tired choreography: capital flight, deficit, IMF, devaluation (in 1976 against the dollar, 25 per cent), deflation, factory closure and even, originally, a return to the land. In 1980 there was a disastrous earthquake around Naples. Of $40bn sent in relief, half was stolen, and $4bn went into bribes for politicians. Sicily had many roofless and unfinished buildings, put up with public subsidy and not finished by the private owner who would have had to pay tax. The context was a strange political system: the Christian Democrats were in charge all the way through, but they consisted of rival factions and their allies varied. An old political tactic had to be used. In 1975 the Communists were running out of steam, and were being taken over by other enthusiasms — feminism raised its head — and they were anyway much engaged purely in matters of administration since all of the cities except for Bari and Palermo were in the hands of left-wing coalitions. Left-wing infantilism of a sinister nature then took over. ‘Red Brigades’ developed, from October 1970. In May 1974 a bomb in Brescia killed eight, and another, in a Bologna train, twelve. The killing went on, amid accusations from the Left that they amounted to a provocation, and the police were slow and inept. By 1976 terrorism had started again, with an asinine hard-drugs-fuelled occupation of Rome university and battles for control of the microphones, while women slogged it out with each other, the trade union leader was shouted down, and French representatives orated in an absurd echo of the Catalan internationalist in Education sentimentale. In 1976-7 the Red Brigades killed eight and wounded Indro Montanelli, a great figure of Italian journalism, in the legs. All of this softened the Communists, who co-operated secretly with the Christian Democrats.
On 16 March 1978 came a strange episode. One of the wheezes with which the Christian Democrats kept on and on in office was to get their own dissident allies faced down by the threat of a Communist alliance — not of course a formal one, but an arrangement by which the Communists would just abstain, much as had happened with de Gaulle in 1968. One Giulio Andreotti could act as a front for these schemes. However, he was something of a puppet prime minister, and Aldo Moro, prime minister twice previously, was the long-term fixer behind the scenes. On his way to the parliament, his car was ambushed, his guards being killed, and Moro was bundled away in the middle of Rome. He was hidden for two months, issuing appeals, and the government did not give way to demands for the release of prisoners. The Communists in fact supported the government and there was even a general strike against the terrorists; but Moro’s corpse was found in a car boot in the middle of the city on 9 May. Thereafter the Red Brigade killings went on — 29 in 1978, 22 in 1979, 30 in 1980. For Moscow, Italy was therefore a soft target.
But it was Germany that offered the greatest target of all. Were not the Germans, already formidably rich, now becoming a Great Power again, and, at that, in charge of Europe? However, Germany had changed.
It was common to talk of 1945 as Stunde Null, but the Germany that had emerged by 1960 did have long historical roots. What was now emerging, and in politics generally dull to the point of genius, was the ‘third Germany’, a world of petty duchies and prince-bishoprics that had been smothered in the imperial ventures of Prussia and Austria. An Englishman who knew Germany well was Geoffrey Barraclough. His Origins of Modern Germany (1952) was a classic: he started it with a quotation from Nicholas of Cusa, to the effect that Germany’s divisions would mean domination by foreigners. The divisions went back to the Golden Bull (1356) which allowed Electoral princes, with their own capitals and coinages, to run quite free. The Church played a disintegrative role after the Investiture Contest in the late eleventh century and this also sucked Germany into Italian affairs. Later on, German history was written round the Thirty Years War, and the wreckage thereby caused; and that Catholic-Protestant war carried on in other forms far into the twentieth century. Was Germany to be united by Protestant Prussia, with her disproportionately sized army and mainly small-squireen nobility, or by Catholic Austria, with her great reach into the Balkans, her role as defender of Europe against the Turks, her fairy-tale aristocracy and her imperial rule over Slavs and Magyars? That battle had produced Bismarck, the Prussian maker of united Germany in 1871; it had also produced Hitler, who was Austrian and a believer in the unity of all Germans, regardless of religion, and therefore including Austrians. It was notoriously a formula for the end of the world: a superbly talented nation, daemonically driven. By 1943 representatives of almost every country in the world were queuing up to declare war, and in 1945, when Hitler celebrated his final birthday on 20 April, a small, bedraggled cohort of diplomats was left to totter through the rubble of central Berlin, with the wounded groaning in the lobbies of the Kaiserhof and Adlon hotels, to present their top-hatted congratulations to Adolf Hitler, raving, far below, in his bunker, as to how treachery had prevailed, that it had all been the fault of the Jews. There was a Croat; there was an Irishman; there was a Slovak; there was a Japanese. Their names were meticulously recorded in the Visitors’ Book, while the Russians occupied the old Reichsbank building on the Werdersche Ufer, a hundred yards down the road. Greater Germany ended in the blackest farce of the entire history of the world, its final scene, with Hitler’s fate, of all things, the only inefficient cremation in the history of the Third Reich.
Since 1947 there had been another Germany, and again it was an extraordinary success story. This time it was a Germany minus Prussia and Austria. It was a return to the old Holy Roman Empire, to a Germany where true civilization existed on a very local level, that of the prince-bishopric. And here there was another British historian,
