The Economic Consequences of the Peace

war has impoverished us, but not seriously;⁠—I should judge that the real wealth of the country in 1919 is at least equal to what it was in 1900. Our balance of trade is adverse, but not so much so that the readjustment of it need disorder our economic life.157 The deficit in our Budget is large, but not beyond what firm and prudent statesmanship could bridge. The shortening of the hours of labor may have somewhat diminished our productivity. But it should not be too much to hope that this is a feature of transition, and no one who is acquainted with the British workingman can doubt that, if it suits him, and if he is in sympathy and reasonable contentment with the conditions of his life, he can produce at least as much in a shorter working day as he did in the longer hours which prevailed formerly. The most serious problems for England have been brought to a head by the war, but are in their origins more fundamental. The forces of the nineteenth century have run their course and are exhausted. The economic motives and ideals of that generation no longer satisfy us: we must find a new way and must suffer again the malaise, and finally the pangs, of a new industrial birth. This is one element. The other is that on which I have enlarged in Chapter II;⁠—the increase in the real cost of food and the diminishing response of nature to any further increase in the population of the world, a tendency which must be especially injurious to the greatest of all industrial countries and the most dependent on imported supplies of food.

But these secular problems are such as no age is free from. They are of an altogether different order from those which may afflict the peoples of Central Europe. Those readers who, chiefly mindful of the British conditions with which they are familiar, are apt to indulge their optimism, and still more those whose immediate environment is American, must cast their minds to Russia, Turkey, Hungary, or Austria, where the most dreadful material evils which men can suffer⁠—famine, cold, disease, war, murder, and anarchy⁠—are an actual present experience, if they are to apprehend the character of the misfortunes against the further extension of which it must surely be our duty to seek the remedy, if there is one.

What then is to be done? The tentative suggestions of this chapter may appear to the reader inadequate. But the opportunity was missed at Paris during the six months which followed the Armistice, and nothing we can do now can repair the mischief wrought at that time. Great privation and great risks to society have become unavoidable. All that is now open to us is to redirect, so far as lies in our power, the fundamental economic tendencies which underlie the events of the hour, so that they promote the reestablishment of prosperity and order, instead of leading us deeper into misfortune.

We must first escape from the atmosphere and the methods of Paris. Those who controlled the Conference may bow before the gusts of popular opinion, but they will never lead us out of our troubles. It is hardly to be supposed that the Council of Four can retrace their steps, even if they wished to do so. The replacement of the existing Governments of Europe is, therefore, an almost indispensable preliminary.

I propose then to discuss a program, for those who believe that the Peace of Versailles cannot stand, under the following heads:

1. The Revision of the Treaty.

2. The settlement of inter-Ally indebtedness.

3. An international loan and the reform of the currency.

4. The relations of Central Europe to Russia.

1. The Revision of the Treaty

Are any constitutional means open to us for altering the Treaty? President Wilson and General Smuts, who believe that to have secured the Covenant of the League of Nations outweighs much evil in the rest of the Treaty, have indicated that we must look to the League for the gradual evolution of a more tolerable life for Europe. “There are territorial settlements,” General Smuts wrote in his statement on signing the Peace Treaty, “which will need revision. There are guarantees laid down which we all hope will soon be found out of harmony with the new peaceful temper and unarmed state of our former enemies. There are punishments foreshadowed over most of which a calmer mood may yet prefer to pass the sponge of oblivion. There are indemnities stipulated which cannot be enacted without grave injury to the industrial revival of Europe, and which it will be in the interests of all to render more tolerable and moderate.⁠ ⁠… I am confident that the League of Nations will yet prove the path of escape for Europe out of the ruin brought about by this war.” Without the League, President Wilson informed the Senate when he presented the Treaty to them early in July, 1919, “… long-continued supervision of the task of reparation which Germany was to undertake to complete within the next generation might entirely break down;158 the reconsideration and revision of administrative arrangements and restrictions which the Treaty prescribed, but which it recognized might not provide lasting advantage or be entirely fair if too long enforced, would be impracticable.”

Can we look forward with fair hopes to securing from the operation of the League those benefits which two of its principal begetters thus encourage us to expect from it? The relevant passage is to be found in Article XIX of the Covenant, which runs as follows:

“The Assembly may from time to time advise the reconsideration by Members of the League of treaties which have become inapplicable and the consideration of international conditions whose continuance might endanger the peace of the world.”

But alas! Article V provides that “Except where otherwise expressly provided in this Covenant or by the terms of the present Treaty, decisions at any meeting of the Assembly or of the Council shall require the agreement of