by Adam Tooze
It was to calm anxieties about east European self-determination that Smuts originally proposed the patronizing foreign oversight of the mandate system. This proved unacceptable to everyone in the region. But international supervision nevertheless formed an essential element of the 1919 treaty in central Europe.49 In Danzig as well as in Fiume on the Adriatic the irreconcilable conflict of national claims was resolved through internationalization. In the summer of 1919, Poland was forced to agree to a minority protection regime that became a model for the rest of eastern Europe in the 1920s. At the League of Nations a standing committee system was set up to ensure that the new minorities were given the chance to appeal against persecution, a system of which the Germans were to make aggressive and highly effective use. The provisions for the plebiscite that would decide the fate of Silesia in March 1921 were extraordinarily elaborate. Some 15,000 Allied troops oversaw the territory and hundreds of international officials were deployed.50 Virtually the entire population voted and when the Poles resorted to an uprising, Allied forces restored order and removed the Polish rebels from the large swath of German territory. Once more it was the League of Nations that was handed the unenviable task of making the final partition. Inevitably, it fell far short of satisfying Germany. But it was certainly no capitulation to Poland.
IV
The indignant response of the Germans to the peace was not surprising. Defeat was a disaster. The consequences were shocking. The ‘Wilsonian’ armistice won in the nick of time in November 1918 had misled the German public into imagining that they would be treated as equal partners in shaping the peace. To discover that the armistice negotiations were part of a larger power play between Washington and the Entente, and that a ‘peace of equals’ meant that henceforth German interests would be treated on an equal footing with those of Poland, was nightmarish. But painful as it was, German discomfort was only the most radical manifestation of the traumatic adjustment that all the European powers were undergoing in the wake of the war. Clemenceau might insist that Versailles conceded to Germany its dream of the nineteenth century, its claim to a nation state. But in light of the consequences of the war, this assertion begged so many questions that it was hard not to suspect him of bad faith.
The war had been precipitated by an age of imperialist rivalry, which by the 1890s had left behind the idea that mere national sovereignty was enough. What counted was the global stage. With the era of global competition having being declared over, Germany stood alone, shorn of its overseas territories and its navy. A republican of Clemenceau’s ilk would, of course, reply that a large landlocked European nation could well do without an ill-assorted collection of African and Pacific possessions.51 But he did not think of France’s own future in such provincial terms. For France, beyond imperialism there was a brighter future. Paris had made serious and far-reaching proposals for a strong League of Nations. Those had been foiled. But at least France was acknowledged as a permanent Council member by right. If Paris had its way, Germany might never be admitted to the League. And what would admission to the League mean, if it was merely a vehicle for Anglo-American hegemony?52 To be just another member of a general assembly of nations was not what Weltpolitik had promised at the turn of the century. Precisely so as to insure against that fate, Clemenceau looked beyond the League to a trilateral transatlantic alliance with Britain and the United States.
But that only raised further questions for Germany. Faced with such an overwhelmingly powerful and futuristic coalition in the West, what did Germany’s bare European sovereignty amount to? In response, it was tempting for Germany to look to the East. But there, too, it was to be hemmed in. Under the oversight of Asians and Latin Americans, German and Polish votes were cast into the same ballot box. The cruelty and kindness of the Versailles Treaty were felt so acutely because in them were intertwined historically anachronistic visions of international order. In a global age the naked sovereignty acknowledged for Germany had come to seem like a badge of second-tier status. The more imaginative critics of the peace saw Germany as the victimized test subject for new forms of hollowed-out, depoliticized sovereignty.53 What Germans’ resentment made it hard for them to acknowledge was that this painful adjustment was in varying degrees the prospect facing all the European states.
15
Reparations
In the first days of April 1919, as the peace conference entered its critical stage, the question of reparations became ever more central to the architecture of the peace. The payments mattered not only in financial terms. They provided a running test of German compliance with the Versailles Treaty. The notorious war-guilt clause, Article 231, actually stated not Germany’s guilt, but its ‘responsibility’ for the damage suffered by the Allies due to ‘the war imposed upon them by the aggression’ of the Central Powers. France for its part counted on the joint responsibility of the Allies for enforcing payment. The eventual withdrawal of the occupying forces in the Rhineland and the return of the Saar were both conditional on Germany meeting its reparations obligations. France and the Allies would leave German soil 15 years after it began making regular payments. If Germany did not pay, France would not leave, so at least Clemenceau reassured the French Chamber of Deputies. Under the terms of the Armistice, the parties of the Reichstag majority never disputed Germany’s obligation to make good the damage done by the Kaiser’s armies. Nor did they dispute that the sums would run to tens of billions of pre-war, full-value Goldmarks. But despite this basic agreement, there was a yawning gap between what the French and the British, even at their most moderate, felt entitled to demand and the sum that Germany, even in its moments of greatest cooperativeness, was willing to offer.
Furthermore, from the German point of view there was a quality to the reparations demands – the remorseless, inescapable weight of debt – that made them in some ways even more odious than the territorial provisions of the treaty. Unlike the loss of territory, which directly affected only the border regions, reparations touched every man, woman and child in Germany. They burdened the entire nation literally every day. Their weight would not be lifted for generations to come. Nationalist propagandists spoke of reparations as bondage and slavery.1 The nightmare of Senegalese troopers in the Rhineland occupation force raping German women had its more rarefied counterpart in political commentary, which saw Germany reduced by reparations to a semi-colonial status. The imposition of these foreign debts seemed to threaten Germany with relegation to the netherworld of third-class states – the Ottoman Empire, Persia, Egypt and China – which in the age of imperialism had retained the vestiges of sovereignty, but were in practice subordinate to foreign oversight and financial control.2
Nor were these fears without their echo on the French side. There were those who did fantasize about turning the Saar into a coal colony. In incautious moments there was talk in Paris of ‘ottomanizing’ the Reich.3 These echoes of the age of imperialism are crucial to understanding why Germany reacted with such outrage to the financial claims against it. But like their obverse, namely Clemenceau’s insistence that German sovereignty was respected by the peace, they imposed on the situation after World War I a vision that was out of date. It wasn’t simply the inherent implausibility of viewing Germany as a French imperial possession, a story that had been played to its violent conclusion already in the Napoleonic era. The truly misleading aspect was to view Germany’s situation under the Versailles Treaty in isolation from the global force-field in which all the European combatants now found themselves. Ironically, since it was the Entente that had constructed the new geometry of international finance, France’s future position of subordination was already more definitely marked out by the spring of 1919 than was that of Germany.4
I
For the Entente there was nothing that was clearer in the wake of the war than that its economic and financial position had changed forever. For the French the shock was no doubt severest of all.5 Before the war Paris had been second only to Londo
n as a source of international credit. Now France was a needy borrower. One prong of the French response was to rebalance the European economy at the expense of Germany. French heavy industry would be strengthened above all by deliveries of German coal and the ore from Alsace-Lorraine.6 But this effort at European industrial rebalancing was combined with a wider vision that foresaw the extension of inter-Allied and transatlantic cooperation beyond the end of the war. In strategic terms this was in line with Clemenceau’s insistence on the absolute priority of the three-way transatlantic democratic alliance. But whereas Clemenceau’s mind roamed over centuries of European history and his rhetoric was that of nineteenth-century radicalism, the vision pushed by his Commerce Minister Étienne Clémentel was of a modernist, technocratic character.7 Following the resolutions of the London economic conference of 1916, Clémentel envisioned a global collaboration between France, Britain and the US to secure joint control over key raw materials.8 As he put it at the London conference, Clémentel hoped that the war would usher in nothing less than ‘the beginning of a new economic era, one which permits the application of new methods, founded on control, on collaboration, on everything that can introduce some order into the process of production . . . a new order of things, which will mark one of the great turning points in the economic history of the world’.9
Whereas the French vision of a military alliance of the Western democracies pointed forward to NATO, Clémentel’s vision anticipated European integration.10 Amongst his collaborators was the young businessman Jean Monnet, who spent the war based in London, helping to perfect the inter-Allied system of shipping control. After 1919 Monnet was to join his wartime colleague Arthur Salter for a stint at the economic commission of the League of Nations. Following a spell of entrepreneurial activity in China, Monnet joined de Gaulle in London in 1940, where he worked once again on questions of inter-Allied economic cooperation, emerging in 1945 as the godfather of French industrial modernization. In 1950 Monnet was to become renowned as the architect of the European Coal and Steel Community.11 Fifty years later in his Memoirs, Monnet looked back with regret on what he saw as the missed opportunity of 1919. At this moment Europe might have taken a bold step toward industrial cooperation. ‘It was to take many years and much suffering before Europeans began to realize that they must choose either unity or decline.’12
But it was the American position at least as much as the European that was to change between 1919 and 1945. Both future President Harry S. Truman and his fabled Secretary of State, George Marshall, saw combat in France in 1918. Returning to Europe in 1945, they hustled Paris into leading the rest of the continent toward cooperation and integration. Jean Monnet was amongst their most active collaborators. Back in 1919 the Wilson administration took a very different line. Washington set itself firmly against Clémentel and his integrationist schemes. Already on 21 November 1918, Treasury Secretary William McAdoo cabled the American representatives in London calling for them to cut back the functions of the inter-Allied bodies to a minimum, ‘thus concentrating all important negotiations and decisions in Washington’.13 Herbert Hoover, who had responsibility for food supplies, promised that the United States would ‘not agree to any programme that even looks like inter-Allied control of our economic resources after peace’.14 The proposal for a permanent joint wheat-purchasing scheme filled him ‘with complete horror’. As far as the Wilson administration was concerned, the inter-Allied structures promoted by the French were really ‘arrangements, which the English’ would ‘set up in London for provisioning the world with our foodstuffs and on our credit’.15 The only guarantee that ‘justice’ would be done ‘all around’, Hoover insisted, was for America to act alone.
The sooner wartime regulations were stripped away, the sooner the unfettered movement of capital and goods would resume. Prosperity and peace would return and American pre-eminence would assert itself in its God-given medium. Markets and business would replace politics and military power.16 But the consequences of this push to depoliticize the world economy were perverse. Far from taking politics out of economic life, the result was to drive Europe ever more deeply into the greatest financial and political entanglement of all – reparations. On 5 February 1919 Clémentel confronted the Economic Drafting Committee of the Council of Ten with the clear choice. France was willing to approve a moderate peace. But this depended on instituting ‘by means of measures based on common agreement, an economic organization designed to assure the world a secure recovery . . .’. If not, the ‘guarantee’ of ‘security’ would have to be provided by a ‘peace of reprisals and punishments’.17
II
Superficially the question was simple: how much reparation would the Allies demand? No answer was given at Versailles because the Big Three could not agree on a figure that seemed both realistic and politically acceptable. In this argument the chief roadblock to agreement were not the French, but the British. The basis for a Franco-American agreement was visible from the start. The restitution of the damage done by the Kaiser’s army had been explicitly vouchsafed in the armistice terms. This was not even seriously disputed by the Germans. The bill for French reconstruction was agreed amongst the Allies at approximately 64 billion Goldmarks ($15 billion). Allowing for uncontentious claims by other parties, France announced it would settle for an overall total for all countries as low as 91 billion Goldmarks – providing it was allocated the lion’s share. Paris was also happy to approve a far larger figure, provided that France’s priority was acknowledged by an allotment of at least 55 per cent. In January 1919 French and American experts converged on a figure of 120 billion Goldmarks ($28.6 billion), within striking distance of the final figure of 132 billion Goldmarks that was eventually to be settled upon in London in May 1921.
Given the fact that its main claim was undisputed, the French priority was to obtain payment as quickly as possible. The reconstruction of northern France could not wait. Millions of people needed to be rehoused, villages rebuilt, farmyards restocked and industry set back on its feet. In the first instance, this would have to be financed either out of the savings of the French people or by loans from London or New York. By 1922, the French government had already advanced the equivalent of $4.5 billion for pensions and reconstruction in the devastated regions on a reparations account filled in the main through domestic loans. The crucial question was how soon Germany would assume the burden of financing.18
The British situation was entirely different. Britain had not suffered significant damage to its territory. But London had incurred huge losses to its shipping, it had run down its capital stock and borrowed on a gigantic scale to fund the entire Entente. For Britain the essential point was distributional. It needed to ensure that the wealth which had made London the hub of the Entente war effort did not leave it carrying a disproportionate burden for decades to come. The risk was that the spectacular damage to France and Belgium would be made good whilst the less visible attrition Britain had suffered would go unacknowledged. Furthermore, Britain needed to ensure that Germany did not emerge from the war as an even more formidable competitor than it already had been before. At its simplest, in the spring of 1919 the objective of the Lloyd George government was to impose a final total that was impressive and to ensure that Britain was allocated at least one-quarter of whatever Germany actually paid. If this proved unattainable then London would block any specific agreement, postponing a final settlement until the dust of the post-war crisis had settled. The initial demand formulated in December 1918 by the most hawkish experts that Lloyd George could muster was for a crushing total of 220 billion Reichsmarks.19 At more than five times the best-known estimate of German pre-war national income, this figure was so exaggerated that it came to haunt Lloyd George as a symbol of his bad faith. It clearly took him by surprise as well. To maintain the balance of the European economy, Britain needed Germany hobbled but not crushed. The figure agreed in Paris between the French and Americans of only 120 billion Reichsmarks would have imp
osed a debt burden on Germany that was more sustainable, but by the same token it implied a British share that was dangerously lean. If the final figure was going to be a disappointment, Lloyd George preferred to postpone the bad news.
Table 8. The Heavy Hand of the ‘Associate’: Allied Indebtedness to the United States (million $)
When the French would not agree to reduce their percentage share, Lloyd George shifted the argument to an in-depth discussion of the specific types of damage. This was the point at which the British introduced the battering ram of pensions. As the father of National Insurance in Britain, the subject was dear to Lloyd George’s heart. But for the American legal team, the British insistence on the inclusion of pensions came to stand as a symbol of the betrayal of the armistice commitments. Berlin had agreed to pay for reconstruction and for damage caused by the aggression of the Kaiser. To include the costs arising from Allied welfare payments was going too far. On 1 April 1919 President Wilson himself was called upon to adjudicate. The ensuing debate is often taken to be a typical instance of Wilson’s capitulation to European guile. After sitting through hours of argument, the President, according to the notes taken by Thomas W. Lamont, a partner in J. P. Morgan, gave voice to his frustrations: ‘Logic! Logic! . . . I don’t give a damn for logic. I am going to include pensions!’ Was this the moment at which the President abandoned Germany to the rancour of Britain and France? Lamont was clearly anxious that his notes might be taken this way. So he included the explanation that the President’s expostulation was not an ‘offhand utterance’. Wilson was not expressing a ‘contempt for logic, but simply an impatience with technicality; a determination to brush aside verbiage and get at the root of things.’ And there was ‘not one of us in the room whose heart did not beat with a like feeling . . .’.20 The question at hand could not be settled ‘in accordance with strict legal principles . . .’. Wilson had no patience for the doctrine of original intent. ‘He was . . . continuously finding new meanings and the necessity of broad application of principles previously enunciated even though imperfectly, and that he felt that justice would be done by compelling the enemy to make good . . .21 Regardless of the wording of the Armistice, why should war widows not be compensated? On 1 April Wilson gave his personal approval to the British push to expand the class of possible claims.