by Adam Tooze
Table 7. The New Hierarchy of Financial Power: An American Assessment of Budget Positions Ahead of Versailles, December 1918 (billion $)
Of course, to Lloyd George’s critics this was precisely the demagoguery: to link widows’ pensions with German reparations. A liberal peace was perfectly compatible with domestic reform so long as governments had the courage to impose heavy taxation on their own wealthy elites.49 A capital levy, a tax on wealth as opposed to income, was much discussed in Britain in 1919, as it was in France and Germany. It was given serious attention by some of the most influential economists of the day, including in His Majesty’s Treasury, the bastion of economic orthodoxy.50 As their pre-war track records demonstrated, neither Clemenceau nor Lloyd George was averse to soaking the rich. But to carry such a radical measure would have required precisely the kind of broad-based radical coalition between Liberals and Labour that neither the French Socialists nor the British Labour Party would contemplate. It was the failure of the left to offer a viable alternative majority that foreclosed more radical financial options.
In any case, the fact that a capital levy was not widely adopted did not mean that Europe’s elite escaped unscathed. Everywhere tax rates were pushed to unprecedented levels. Despite the failure of ambitions to outright revolution, whether through inflation or taxation, one of the consequences of World War I was to initiate an unprecedented levelling of wealth across Europe. This was not a shift limited to one country. None of the major European combatants would ever be the same again. More than that, it was an interlinked process. Through reparations and the vast international debts accumulated during the war, the governments and societies of Europe were interlocked as never before. On 27 May 1919, France’s unfortunate Finance Minister Louis-Lucien Klotz found himself calling upon the Chamber of Deputies to approve painful tax increases, so as to demonstrate to ‘our allies that France still knows how to make the sacrifices the situation demands, and thus deserves . . . the maintenance of the agreements in the military, economic, and financial sphere, which have produced the victory of right over might’.51
Taxation was no longer a strictly national matter. To impose heavy reparations on Germany was one way out of that dilemma. But it was not the only way. The war had been won by the US and the Entente through cooperation. For the economies most severely wounded by the war, the great hope was that this mutual assistance might be extended into peacetime. In 1918 Britain and France had both proposed plans for a post-war economic organization to secure them during the period of reconstruction.52 These plans extended unprecedented commitments to their national populations. As the French socialist Léon Blum noted, for the first time in history promises had been made by the war-fighting states to compensate their citizens for the damage done.53 This had international as well as domestic implications. It was in this spirit that the French Minister of Commerce, the solidarist and social reformer Etienne Clémentel, wrote to Clemenceau in December 1918, expressing his confidence that ‘our new ally the United States will certainly come around to this way of thinking and will agree that the complete reconstruction of the North of France and Belgium is in essence everyone’s business, the primordial task of the economic league of free peoples’.54 It was at Versailles that this wager would be put to the test.
THREE
The Unfinished Peace
13
A Patchwork World Order
On 18 January 1919 the long-awaited peace conference convened in the Hall of Mirrors in Louis XIV’s palace at Versailles outside Paris. It was fifty years to the day that the first emperor of the new Germany had been proclaimed on the same spot. With revolution seething across central Europe, with an army of 12 million American and Entente soldiers waiting on the defeated enemy’s borders for their demobilization, it might have seemed obvious to start with a general discussion of a European peace. But three weeks earlier, on the British leg of his grand tour, President Wilson had already made clear his refusal to fall in with this sense of priority. America, he had told his English audience, was ‘not now interested in European politics’ or ‘merely in the peace of Europe’. America was interested in ‘the peace of the world’.1 As if to put the old world in its place, the first decision of the Supreme Council on 25 January was not to begin the conference with Europe, but to appoint a Commission consisting of representatives of the five great powers – the US, Great Britain, France, Italy and Japan – together with delegations from China, Brazil, Serbia, Portugal and Belgium – to draft the Covenant of a League of Nations. The full Commission convened for its first meeting on Monday 3 February in Colonel House’s suite, Room 351 of the Hotel Crillon overlooking the Place de la Concorde. Ever since the end of the seventeenth century there had been talk of a League of peace. Now the first draft of the League of Nations was put together in a matter of a fortnight, in a dozen sessions, held in the evenings, lasting a total of perhaps 30 hours. On 14 February an exhausted Woodrow Wilson delivered the first draft of the Covenant to a crowded Plenary meeting of the peace conference at the Quai d’Orsay. After several months of revisions it would form the first part of the Treaty of Versailles.
As one of his biographers remarked, ‘February 14 1919, would seem to be the climactic day towards which Wilson’s life had supremely moved’.2 Wilson deliberately placed himself at the centre of the drama, chairing all but one of the Commission meetings. It was his triumph. It would also be his defeat. The President’s hopes for a new world, so the Wilsonian propagandists told the story, were wrecked by the avarice of Europe and Japan.3 It was they who mangled the President’s vision until it became easy prey for his enemies at home. But the story of the League as Woodrow Wilson’s crusade against the vices of old world imperialism was self-defeating. It refused to acknowledge the fact that in early 1919 Britain, France and Japan were all looking to the peace conference to answer the question of how a new world order would be shaped. They had interests to defend and ambitions to pursue, but they had been severely shaken by the war and the upheavals at both ends of Eurasia. The fact that the imperialist practices of the pre-war period could not continue was obvious. The age of imperialist Weltpolitik had proved ruinously dangerous. Nor despite the loose talk of ‘old world’ or ‘traditional’ imperialism was head-on rivalry between the major powers in every arena of the world an ingrained habit. It dated to the 1880s. What Britain, France and Japan aspired to construct, no less than the American delegation, was a new order of security. The drafting of the League Covenant was for them the moment at which Wilson would answer the fundamental question of the post-war world: what could they expect from the United States? The answer they received was incoherent. For its most perceptive critics the fundamental defining feature of the League was not its internationalism, nor the logic of imperial power that it cloaked, but its failure to respond to the challenges of the twentieth century by explicitly laying out a new model of territorial or political organization.4 Wilson himself insisted that the League Covenant must not be confining, it must ‘not be a straitjacket’. It was a ‘vehicle of power, but a vehicle of power which may be varied at the discretion of those who exercise it and in accordance with the changing circumstances of the time’.5 The question that haunted the rest of the world was who would have the power to exercise that discretion, to wield that power.
I
As far as Wilson and his entourage were concerned, an important battle-line with the Europeans was drawn already at the end of 1918. In early December as the USS George Washington carried the President across the Atlantic to Europe, the attitude in Wilson’s circle toward the old continent hardened. Wilson fumed at British resistance to ‘freedom of the seas’, he inveighed against the plot by France, Great Britain and Italy to ‘get everything out of Germany’ that they could. Wilson was ‘absolutely opposed’. As he put it to journalists in his entourage: ‘A statement that I once made that this should be a “peace without victory” holds more strongly today than ever.’6 How would th
e ‘old world’ reply?
On 29 December, Prime Minister Clemenceau rose to address the Chamber of Deputies. For months he had been plied with questions. Was the government committed to the 14 Points? Did it support the League of Nations? Unlike Wilson and Lloyd George, Clemenceau had preserved a profound silence over war aims. Now, finally, he rounded on his hecklers.7 He paid his respects to the hopes inspired by the League, but he declared that the fundamentals of security remained the same. France must look to its military strength, its borders and its allies. At a stroke, the French Premier appeared to have defined the coming argument. For Joseph Tumulty, Wilson’s chief of staff, Clemenceau’s speech vindicated the President’s controversial decision to attend the Paris conference in person. The stage was set for the ‘final issue between balance of power and league of nations’.8 But to accept the Wilsonian reading of Clemenceau is to miss the point. Clemenceau was no conventional advocate of old school Realpolitik. The transatlantic security system he had in mind was neither old-fashioned nor reactionary. In fact it was unprecedented.9 Since the spring of 1917 he had been hailing the unique historic opportunity to align the three great democratic powers and thus to make a peace that would see ‘justice fortified’.10 Clemenceau was sceptical about talk of disarmament and arbitration as panaceas. But what really worried him about the League was that it would allow Britain and the United States the freedom to retreat into self-satisfied isolation, leaving France alone. To guard against either prospect, the most internationally minded French republicans, men like Léon Bourgeois, the French negotiator on the League of Nation’s commission, argued that the League must become a multilateral democratic alliance with powerful collective security provisions. Insofar as there was a truly strong internationalist vision on offer in the League of Nations Commission in early February 1919, it was put forward, not by Wilson, but by the representatives of the French Republic.11
For Britain no less than for France the strategic relationship with the United States was crucial. As Lloyd George put it, the ‘reality’ of the League as an organization of global peace must be grounded in the ‘cooperation between Great Britain and the USA’.12 By comparison with the French, the British preferred a minimal organizational architecture for the League precisely because they wanted to use it as a flexible vehicle for their alliance with Washington. But, as was true for the French, what the British were proposing was radically new. Not since Spain and Portugal had divided up the New World in 1494 with the Treaty of Tordesillas had there been a strategic vision of comparable scope. As far as both French and German observers were concerned, the prospect of such an Anglo-American condominium was regarded as ushering in the end of Europe as an independent locus of global political power.13
What of the fourth great power? In the course of the Congressional ‘Treaty Fight’ in 1919, denunciations of Japan’s imperialism would do lasting damage to the reputation of the Versailles Treaty. Japan’s track record was notorious. The eagerness with which the Japanese Army rushed 75,000 men into Siberia in the autumn of 1918, ten times the number reluctantly agreed by Wilson in the summer, was just the latest demonstration of its aggression. But the irony was that precisely at this moment the trend of Japanese politics was running strongly in the opposite direction. In September 1918, following the nationwide rice riots, Terauchi Masatake’s Conservative cabinet had collapsed. As leader of the largest parliamentary party, Hara Takashi was appointed Prime Minister, the first commoner to hold that position in Japan’s modern political history.14 Hara was no progressive. But the cornerstone of his conservative strategy was the search for an accommodation with the United States. Hara found important allies in the liberal barons Saionji Kinmochi and Makino Nobuaki, who headed the delegation to Paris. In France in the 1870s Saionji had become acquainted with Clemenceau in radical liberal circles. The venerable baron was selected to head the delegation on account of his popularity with the Japanese public.15 But Makino too was a convert to the new rules. ‘The respect for peace and rejection of high handedness are trends of the world today,’ Makino insisted. Given that ‘Americanism’ was now ‘being propounded across the earth’, Japan could not continue its policy of militarist aggression toward China.
Nor was this merely a matter of elite strategy. Public opinion carried an increasingly heavy weight, a factor that was easily underestimated by Western observers. A powerful democratic agitation was sweeping across Japan, which by 1925 would force the introduction of male suffrage. The Japanese professoriate, students in their tens of thousands, and the readership of Japan’s burgeoning broadsheet press were politicized as never before. For Japan’s most influential liberal thinker, Yoshino Sakuzo, it was clear that the victory of November 1918 had delivered the Hegelian verdict of history. The war had brought the triumph of liberalism, progressivism and democracy over authoritarianism, conservatism and militarism. Once a prominent liberal imperialist, Yoshino now embraced the principle of ‘no annexations’ and the League of Nations as representing ‘the prevailing world trend for greater international justice by consolidating democracy internally and establishing equality externally’.16 But Japan’s era of popular political mobilization was not confined to the left. Popular nationalism too experienced a dramatic revival. They too demanded to know: would the peace offer their country a legitimate and equal place in the new world order?
II
By the time they arrived in Paris in January 1919, the American delegation understood the practical necessity of collaborating with the British Empire. Even before the meetings of the Commission began, American and British negotiators had agreed the disposal of the German and Ottoman empires by means of the mandate system and had prepared a draft Covenant for the League. As Wilson put it, ‘it would be good politics to play the British game “more or less” in formulating the League Covenant in order that England might feel her views were chiefly to be embodied in the final draft’.17 The basic constitution was clear. There would be a League Council and a General Assembly. Sovereignty and territorial integrity would be protected. There would be collective enforcement action. It was over the all-important details of the Covenant that opinions differed. The British position as articulated by Robert Cecil was clear. To be functional, the Council must be small. The great powers must at all times maintain the majority of votes. No great power should find itself unwillingly ‘dragged’ into a major international confrontation on account of the petty resentments of a smaller League member. There must be no repetition of Sarajevo. The Council’s decision must therefore be taken unanimously, which again put a premium on having a compact decision-making body.
True to this conception, the first joint Anglo-American draft restricted membership in the League’s inner council to the five great powers.18. Other League members were to be summoned as and when the great powers needed their advice. Not surprisingly, this offended the ‘lesser nations’. By the second meeting of the Commission, as the minutes coyly record, the discussion had become ‘very animated’.19 To force their point the delegates of the smaller states, over the objection of both the Americans and the British, insisted that the drafting Commission be expanded to include four additional members – Greece, Poland, Romania and Czechoslovakia. Though to the British it seemed ‘most unreal’ to insist on the absolute equality of states and though the practical advantages of an intimate council of the great powers were obvious, Cecil was a true-believing internationalist and the overriding purpose of the League was to act as a ‘voice of the world’, affirming the ‘equality of the powers’.20 Wilson, as chair of the Commission, was non-committal. He did not openly distance himself from the British. He insisted that there were compelling reasons for the great powers to have special representation. After all, the burden of enforcing any League decisions would fall disproportionately on them. Furthermore, if the question of interest was what should decide representation, then the great powers, by virtue of their worldwide activities, were ‘always interested’. By contrast, after the cre
ation of the League the smaller states had even less reason for independent diplomacy than before, since they could live contentedly in the knowledge that their fundamental interests were protected by the international community.21 But, as everyone was well aware, Wilson’s own first draft of the Covenant had provided for the smaller powers to have a significant voice in the Council, and as chairman he happily opened the floor to critical contributions from Serbia, Belgium and China.22
Faced with this wall of opposition, Cecil accepted that the draft would have to be redone, but this begged the question of how the distribution of seats within the Council was to be characterized. A number of delegates were uncomfortable with the distinction between great and small powers, let alone Wilson’s even more invidious tripartite distinction between ‘great’, ‘middling’ and ‘minor’ powers. Furthermore, the Belgian delegation pointed out that any such system of classes suggested the possibility that ‘other powers might take shape and be properly described as great powers . . .’. Provision would have to be made to promote rising powers to permanent Council membership and to counterbalance their addition by adding smaller members. In reply, Cecil asked whether the Belgians were thinking of Germany as a potential future member of the Council. This provoked general consternation and prompted Ferdinand Larnaude, the second French delegate, to ram home what was really at stake for France. Given Cecil’s train of thought, Larnaude ‘thought that the use of the general terms “great” and “small” power was inadvisable’. The League was ‘the outcome of this war’. Of course, the Big Five were not the only ones to have made a contribution. ‘But the matter is not one to be discussed in the abstract or on the basis of sentiment; but a thing of cold fact; and the fact is that the war was won by Great Britain, France, Japan, Italy and the United States. It is essential that the League be formed around these effective powers . . .’23 ‘During the course of the war,’ continued the second French delegate, Bourgeois, ‘the five nations had made a league of nations after a sort; they have fought, actuated by a single idea. Now it is important that it be made known to the world that they are creating this League under the influence of a single idea.’24