I

WHEN the armistice between the Allied Powers and Germany went into effect in November, 1918, the whole world drew a breath of relief. The slaughter, the suspension of intercourse between nations, was at an end; peace was bound to come, and with it a resuscitation of the afflicted peoples. To imagine that the peace treaties would without further ado prove guarantees of everlasting peace would have been a Utopian dream. But it was reasonable to expect that the conclusion of peace in 1919 would bring about a pacific state of affairs which would last at least as long as that effected by the Congress of Vienna in 1814 and 1815, to which, until 1853, no European war succeeded. Instead, however, we find an uninterrupted, nay, in many cases a constantly increasing unrest--war in the east, a series of political and economic crises in the west. Europe is unable to free herself from the fear of new disruptions which threaten to involve in ruin the entire civilized world.

Why did this latest World War come to a close so different from that which terminated the Napoleonic wars? We are able to look back upon the century since the Napoleonic wars as one of most brilliant economic growth, of fabulous progress in science and technology, of uninterrupted advance in democracy. Were not the conquerors of 1815 narrow-minded and reactionary? Were not those of 1918, on the contrary, progressive and enlightened? Certainly. But for the very reason that narrow, absolutist governments were made possible by the political and economic conditions of a hundred years ago, the problems of such governments, whenever they came to make peace, were of an extremely simple nature. The peoples had no recourse save passively to accept the dictates of their governments. And, except in rare instances, they were still economically dependent one on another. Nowadays all the peoples of Europe are inspired with an intense passion for self-determination, and even the peoples of the Orient are today harder to hold in leash than were those of the continent of Europe a century ago. At the same time international intercourse has so increased that, collectively, nations are living in close economic community. They are not always aware of this solidarity, and it is often interrupted by the antagonisms of competition or of monopolization. Yet every major violation of this solidarity not only injures those against whom it is directed, but in the end avenges itself even on its authors, no matter how powerful they may be.

The problems attending the laying of a foundation for world peace were in 1919, therefore, far more complicated than had been those facing the Congress of Vienna. They were such as could be solved only by the widest application of democratic principles and by the calmest consideration of economic questions, scrutinized in the light of all their consequences. But, as a matter of fact, the peace terms were evolved by methods and on principles suggestive of the era of absolutism and commercialism rather than those of an era of democracy and international intercourse.

In many respects the authors of the Versailles peace terms proved even less advanced than had been the statesmen at the Congress of Vienna. The latter had made a clear distinction between Napoleon and the French people. It was against Napoleon alone that they had waged war, not against his nation. Napoleon they deposed and banished, but to France they left the same frontiers she had had in 1792, and they imposed no war indemnity upon her. Even after Napoleon had returned from Elba and, to the great exultation of part of the French people, had recommenced the war, the peace conditions offered to France after he had succumbed a second time were only slightly more harsh. France had to cede a few communities and to pay a small war indemnity of seven hundred million francs--far less than the sum which the new France tossed to her nobles on their return from banishment by way of indemnity for the confiscation of their estates by the Revolution. French patriotism was so little aggrieved by the readjustment of the French frontiers in 1815 that even the Treaty of Versailles failed to extend them in 1919. Nor was this peace one-sidedly dictated to the French by the victors. At the Congress of Vienna, where the peace was negotiated and where its conditions were determined, France herself had a seat and a voice, on a footing of national equality; and she was, as an equal, abundantly able to defend her interests, thanks to the superior diplomacy of her representative, Talleyrand.

There were good reasons for this concession. The reactionary monarchs of 1814 were well able to distinguish between the government and the people. They had not waged war against the French nation, but against Napoleon. It was he whom they had wished to render powerless. But they realized very plainly that to attain their ends it was not only necessary to conquer him by the power of their armies, but also to see that the new government erected in France in opposition to him should win the favor of the country generally. It was possible to accomplish this only if the new government were successful in efficiently defending the interests of France against her conquerors.

But the Allies of 1918 were far from giving weight to these considerations of the Allies of 1814. It is true that Par. 227 of the Treaty of Versailles indicts "William II of Hohenzollern, formerly German Emperor, for a supreme offence against international morality and the sanctity of treaties." But in Par. 231 William II is no longer named as responsible for the war; it is Germany.

Now one may estimate as highly as one likes William's responsibility for the war; I myself do not consider it to have been small. But it was not he who signed the treaty of peace--it was the government of the German Republic. And the latter certainly bore not the least responsibility for the war. Moreover, in 1918 Germany had repudiated her war-guilty emperor far more decisively than France did her Napoleon in 1814. The German people had risen in irresistible revolt against William. France, on the other hand, left it to the Allies to remove Napoleon from his throne.

The great bulk of the German population had turned from the Emperor as from the author of the war who was therefore the author of all its misery. When, however, the republic came to be charged with as full a responsibility for the war as was that attributed to the emperor, when it was deprived of power to guard the people's interests against the conqueror, then the idea of the empire again began gradually to gain ground. If today Germany is confronted with the possibility of a monarchist coup d'etat, if she faces the threat of civil war, it is the fault of the Peace of Versailles, which is compelling the republic to do penance for the sins of the emperor. The monarchs of the Holy Alliance of 1814 understood better how to protect the interests of the Bourbons against Napoleon in France than did the democracies which took the field against the military monarchy of Germany in 1918 know how to guard those of the democratic republic against Kaiserism. Despite their intentions, they have, by the Treaty of Versailles, worked "pour le roi de Prusse."

Furthermore, by their refusal to discuss the terms of peace with the conquered they have injured themselves in yet another way. The economic and political conditions of a modern state are so complicated that no contemporary statesman, no matter how great his genius, is capable of foreseeing the consequences of every legislative proposal, even in his own country. Victors as well as vanquished have suffered severely as a result of numerous requirements of the peace treaties which were either incapable of fulfillment or which brought about economic confusion for them as well as for us. It is not by chance that simultaneously a cry is being sounded in Russia for the revision of the Communist system of administration and in the countries of the victors for the revision of the peace treaties. Both were evolved simultaneously and by the same methods, methods which are incompatible with the conditions and the necessities of modern existence. Nevertheless, let it not be denied that, just as in the Soviet administrative system, so in the peace treaties there are a number of excellent requirements. But these treaties were unable to do justice to their task of creating a permanent state of peace because their authors did not take counsel with the representatives of the peoples affected and because they did not consistently follow the course of modern social development.

II

It was a good thing that Germany was compelled to disarm by land and by sea. Unfortunately, the act was not followed by consequences correspondingly good. It was said before the war that German armament was forcing all the nations to increase their fleets and armies. But this incitement to the extension of armaments has now disappeared. France might reduce her army, thereby remedying her finances. What she is doing in this respect, however, is altogether insufficient. Poland, also, feels obliged to maintain in service a great and extravagant army at the expense of her economic welfare. This is not exactly the way to strengthen the pacifist idea in Germany and to make German disarmament lasting. The whole business is nothing but an imitation of the disarming of Prussia after Jena by a Bonapartism bristling with weapons--an act by which the peace of the world was in no way assured. Disarmament can only become a lasting institution, a source of economic prosperity and an instrument of peace, when it is general, not one-sided. When it is only an individual affair it does nothing but excite the predatory and belligerent passions of the strong.

While disarming the vanquished, the peace treaties also brought about numerous alterations of frontiers, among them several of an excellent character which represent a permanent advance. Such are the breaking-up of moribund Austria, the restoration of Poland, the return of Northern Schleswig to Denmark and the return of Alsace-Lorraine to France.

The violent severance of the inhabitants of Alsace-Lorraine from France, to which they remained devotedly attached, was the original sin with which the new German Empire entered upon its existence in 1871. Therewith commenced the dislike of the democracies of the world for the German Empire; and thereby was the French Republic driven into the arms of the Russian Czar. Thus was evolved the concatenation of circumstances which led to the World War of 1914 and to the collapse of the Hohenzollern dynasty, and for which the German Republic is now doing such sore penance.

But the Peace of Versailles set about cutting Germany to pieces. The Saar Basin, with 600,000 inhabitants, was separated from Germany for fifteen years, its purely German population being robbed of their civic rights for this period and subjected to an alien rule which owes them not the least responsibility. Nominally the government of the Saar Basin is appointed by the League of Nations. Actually it governs in the interest of France. Matters were not improved by the decision that the population should, after the lapse of fifteen years, be polled on the question of whether or not they would prefer union with France. This decision merely constitutes an incitement to the French-controlled administration to torment as much as possible inhabitants of pro-German proclivities, in order either to intimidate them or to drive them out, thus establishing a population in agreement with the views of France.

Furthermore, as a guarantee for the performance of the terms of the peace treaty, there is the occupation by the victors' troops of the German territory west of the Rhine, with its six and a half million inhabitants. This comes near to being government of those regions by a military dictatorship. This condition of affairs is to last for fifteen years. But it may be extended by the conquerors even beyond that period, if they should be of the opinion that Germany had not given them sufficient guarantees against unprovoked attack. This authorizes an interminable stay of foreign troops in the occupied territory. But besides this, the treaty of peace gives the victors the right, if they believe themselves able to establish a "deliberate non-fulfillment" of the treaty by Germany, to take all such measures "as the respective governments may determine to be necessary in the circumstances." This clause is being construed, by France at least, in a manner which delivers Germany wholly over to the option of the conquerors. Indeed, French troops have already occupied districts eastward of the Rhine, near Düsseldorf and Frankfurt.

No less provocative are the frontiers laid down in the east. The authors of the peace treaty attempted to replace the Austrian state with a series of nationalistic states. That was a great step in advance. The object was not easy to achieve, for in the east the various nationalist groups were not definitely separated territorially, but were much intermingled. It was inevitable that each of the Succession States carved from the body of the old Austria-Hungary should contain not only its dominating race but also fragmentary groups of other nationalities. But, except in the cases of German-Austria and of Hungary, the establishment of the frontiers of these new states was carried far beyond the limits indicated by the circumstances. Each of the new states sought to embrace not only the entire body of the nationality which gave it its name, but also, for reasons of strategy or from a desire for important traffic routes or rich districts, to expand its borders as much further as was possible. Hence, with the aforementioned exceptions of German-Austria and Hungary, every one of the Succession States has become a new little Austria.

The oppression of the Germanic people by the peace treaties reached its climax in the determination to forbid Austria from attaching herself to Germany. Until 1866 Austria had belonged to the German confederation. The Germans of Austria had never ceased to look upon themselves as Germans. Only the antagonism between the Hohenzollern and Hapsburg dynasties had excluded them from the German Empire. These dynasties were overthrown by the victory of the Entente, which had taken the field for the liberation of subjugated peoples; and now it celebrated its victory by enslaving and dismembering the German nation, already given over to ruin by the Hohenzollerns and Hapsburgers, to an even greater degree than had been done by those guilt-burdened dynasties.

The victors did not perceive that by acting in this manner they were merely continuing the work of one of the vanquished. It was Bismarck who in 1866 threw the German-Austrians out of the German Confederation in order to secure the supremacy of Prussia in truncated Germany. The preponderance of Prussia in Germany will come to an end just as soon as the union of the latter with German-Austria is accomplished.

III

I have already referred to the fact that in 1814 the Allies refrained from imposing any war indemnity upon vanquished France. But even though the principal intention of the victorious monarchs may have been to give the new French government a good standing in the opinion of its people, their moderation also proved economically advantageous to the whole world. If that policy had not been followed Europe would never have calmed down and recovered so quickly after the downfall of Napoleon, nor, without it, would peace have endured four decades. It is true that the return of Napoleon from Elba led to the imposition upon France, after his overthrow, of a charge for war costs, but it was inconsiderable--700 million francs.

It was a long time before large war indemnities again made their appearance. The terms of the Peace of Paris, which terminated the Crimean War in 1856, imposed upon Russia no payment of indemnity. Nor did the vanquished Austria have to pay any war compensation in 1859; and in 1866 she had to pay only thirty million gulden to Prussia while she received thirty-five millions from Italy in part payment for the cession of Venice.

Hence the astonishment was all the greater when that same Bismarck who in 1866 had shown himself in such a moderate light, broke four years later with all the traditions of the past few decades in his dealings with vanquished France and demanded five billion francs as a war indemnity. To be sure, France caused even greater astonishment by producing this sum through loans so quickly that within two years she was able to pay her conquerors and rid French territory of foreign troops. From that time until the World War Russia alone of all the European powers was engaged in great conflicts. In 1877-1878, she defeated Turkey and at the Congress of Berlin imposed upon her a war indemnity of three hundred million rubles. An even greater war, that between Russia and Japan, came to an end in 1905, the quarrel being settled through the mediation of America, who saved Russia from the payment of any indemnity. A few years before, in 1898, the United States had conducted a victorious war against Spain. By the treaty of peace the victors not only dispensed with the payment of any damages or war indemnity, but even paid the vanquished twenty million dollars as compensation for the cession of the Philippines.

In the face of such precedents the procedure of the conquerors at the conclusion of peace in 1919 could not but seem astonishing. During the whole century following the Napoleonic wars there had been concluded only one peace by the terms of which a huge war indemnity had been imposed. The victor--Germany--had not only suffered therefor the stern condemnation of the vanquished--France--but also that of the greater part of the civilized world. And yet, what were the four billion marks demanded by Bismarck in 1871 compared to the reparation claims of the Entente half a century later?

IV

On the present occasion the demand for an indemnity was nevertheless quite comprehensible. For four long years France and Belgium had been forced to submit to a horrible invasion which, especially in the north of France, resulted in widespread devastation. England had suffered severely from the new weapons, the airplane and the submarine. Were they finally to be victorious in the bloody conflict, only to bear alone the damages which had been sustained? Germany not only expected but was also willing, after her military collapse, to pay an enormous war indemnity out of which the victors would be able to make good a large portion of their damage. Had negotiations with the German government been opened, and on the basis of these negotiations had there been fixed a sum of such size that Germany would have been able to pay it without overstepping the limits of her capacity--Germany herself figured this sum in 1921 at fifty billions of gold marks--this amount might long ago have been raised through international loans. Northern France would have been restored, Germany would have been freed from foreign troops and foreign control, world commerce would have been again in full swing and general prosperity restored. Unfortunately, the victors were unable to adopt this simple, farsighted procedure.

They wanted no payments made on the basis of military law, but an indemnification on that of higher morality; the Germans were to pay not because they had been conquered, but because they were wicked rascals, criminals who had brought on the war.

I have already pointed out the injustice of holding a people responsible for the deeds of a government which it has driven out. Subsequent governments are undoubtedly legally bound by the obligations with other lands entered into by their predecessors; but they are not morally responsible for the acts of those predecessors. Should such a responsibility be admitted, however, the Germans and the Hungarians should not alone be held responsible. There were Polish members, too, in the Austrian government which declared war on Serbia, and a large portion of the Polish population greeted with joy a war against Russia. It was only after the outbreak of the Russian Revolution that they turned to the Entente. If the Germans are to be held responsible for the war and all its devastation, then the same treatment should be accorded the Poles. But the latter, instead of being punished by the victors, have been rewarded.

However, if the republic was supposed to be responsible for the misery brought about by the empire, it should have sufficed for the victors to have announced this as their conviction. They could, furthermore, have called to witness the fact that the decisive declarations of war were made by Germany and have coupled with this the invasion of Belgium. But that was not enough for the authors of the Treaty of Versailles. They demanded that the representatives of Germany should themselves recognize her responsibility--even her sole responsibility--for the war. Without this confession there was not to be any peace, the war was to continue--no longer against the armies of the Central Powers, for these had been dissolved, but against starving children, women, old men, whose every avenue of sustenance had been cut off by the victors.

Nevertheless, the German signature to a confession of guilt was exacted. And today many statesmen even dare to proclaim this signature as the evidence of German guilt and as a legal title to complete indemnification by Germany for all damages.

The reparation charges which were imposed upon Germany were divided into two groups. On one side they were definite and exact. They consisted of the delivery of the most widely diverse materials, including the transfer of the entire German fleet to the victors. The handing over of the war fleet was not a bad thing. It relieved Germany of a heavy load and rescued her from the false position into which she had been brought by her naval armaments, which, without purpose and without the possibility of success, had called forth the enmity of England and the mistrust of America. But the surrender of the merchant fleet was another matter. Germany had to deliver nearly five million tons of shipping, gross register. That was a hard blow to German commerce. Like blows to German industry were the loss of the Saar coal district, together with a great portion of the Upper Silesian coal district, and the annual loss of the great quantities of coal--in round figures about forty million tons a year--which Germany had to deliver to Belgium, France and Italy. Along with all this countless deliveries of chemical products, live-stock, etc., were required.

In addition there must be figured the expenses, annually renewed, of maintaining the conquerors' troops in the occupied territory. Up to the present they have already cost four billions of gold marks, nearly as much as the entire war indemnity which France had to pay in 1871. The occupation is to last another quarter of a century. How many billions are in this way going to be needlessly wasted in the name of reparations, to which not even a penny of them is applied?

All these requirements serve the purpose of restoring the devastated regions and repairing the damages of the war far less than they serve that of creating, year in, year out, ever-renewed sources of friction with Germany.

V

Worst of all, however, are those reparation charges which have to be paid straight-out in cash, for by the treaty of peace their amount is in no way definitely stipulated. To determine them there was appointed a Commission on which Germany is not represented, which is not even required to negotiate with the German Government, which consults in camera, and which "shall not be bound by any particular code or rules of law or by any particular rule of evidence or of procedure, but shall be guided by justice, equity and good faith." This is unrestricted dictatorship, after the kind of the Bolsheviks, and it is extended over a very wide territory. "The Commission shall in general have wide latitude as to the control of the present treaty and the handling of the whole reparation problem." Unbelievable sums were spoken of as to be raised in the shape of reparations by the Commission. Mention was made of more than three hundred billions--about as much as the national wealth of Germany before the war. This wealth, too, has been considerably reduced since by the demands of the war, by the loss of territory and by the deliveries of raw materials. Very conservative estimates put this diminution at one-third of the whole.

At the Paris Conference in January, 1921, the total amount of reparations to be paid in money to the Allied governments was fixed at 226 billion gold marks. This was to be paid in full within forty-two years, in annual installments which, commencing with one of two billions in 1921, were to be made at the rate of six billions a year from 1932 to 1963. In addition to this there was to be paid twelve per cent of the value of German exports over a period of forty-two years, which might amount in all to between 40 and 60 billions. Altogether, nearly 300 billions. Messrs. Briand, Lloyd George, and the others who formulated this marvelous demand, seemed to believe it possible that Germany could keep on paying, one year after another, about twice the sum which France, in 1871, had to pay but once, and which she was then enabled to get together merely in the form of a loan on which she had only to pay the annual interest.

And this mad state of affairs was to last for over forty years! For that length of time Germany and the world were not to be allowed to quiet down!

Even the Reparations Commission itself was startled at such madness. A few months later it set the sum of Germany's reparation obligations at one hundred and thirty-two billions, less than half of what the leaders of the Entente had shortly before demanded. Nothing can more clearly indicate the frivolity with which such demands were conceived--a frivolity fully equal to that with which the German Government set going a World War in 1914. It is also a very plain indication of the rationality and precision of a treaty which left such enormous sums hanging absolutely in the air.

The authors of the Treaty of Versailles can not say that they wandered on to the wrong road unwarned. Keynes early pointed out its perils with admirable clearness, advising that there be fixed a definite total for the war indemnities which would not overtax the power of Germany. Today this demand is being reechoed everywhere. In the meanwhile, however, Germany's affairs have become so thoroughly entangled that their reclamation is much more difficult. They could nevertheless be improved in time to prevent catastrophe in Europe if the reparations demands were to be so modified that German credit could be reestablished in the money markets of the world. That Germany has no such credit at the present moment is the most striking proof of the fact that in the opinion of the world's bankers the reparations demands as at present conceived surpass Germany's capacity to pay.

A moratorium, whatever relief it might have afforded earlier, would no longer suffice today.

It seems to be imagined that Germany's failure to command credit is due to her financial disorganization, that she should first rectify her budget deficiency by higher taxation, and that then she would be able to get credits. As a matter of fact, the case is just the other way around. Germany's financial disability is principally occasioned by the rapid and persistent fall of exchange, a result of the banknote inflation. But the latter is the consequence not only of the deficit in the budget, but also of the adverse balance of international payments.

This last is being enormously increased by the reparation demands. Yet even disregarding the reparations, the German payments balance is for the moment on the wrong side of the book. Germany is an industrial nation, producing an insufficient amount of food supplies and raw materials. Such nations, as a rule, have a balance of trade against them; England has, Germany had even before the war. The war wiped out Germany's reserve stocks of food and raw materials, and peace deprived Germany of a number of districts producing such supplies and materials. The result is that today Germany's need for foreign raw materials and food stuffs is greater than ever, far greater than her industrial exports. Germany's special trade in 1920 consisted of imports to the total value of 99 billions of paper marks and exports to the value of 69 billions. The imports of raw materials and food stuffs amounted to 72 billion marks, the exports of industrial products only to 52 billions. The balance of trade deficit which in the last years before the war amounted annually to a round two billions (in gold marks) was in those days covered by the receipts of the mercantile marine on the one hand and on the other by the interest payments on German capital investments abroad, the proceeds from which flowed back to Germany. The war, with its consequences, destroyed both these means of compensating for the deficit of the balance of trade, at the same time forcing German capitalists to seek credit abroad or to sell their holdings to foreigners. Thus the flow of interest is headed away from Germany. All this has combined to make the deficit of Germany's payments balance even larger than that of her balance of trade. The only way of compensating for this deficit remains, for the moment, that easy but universally destructive process, note inflation.

The foes of Germany are fond of asserting that she is less heavily loaded with taxation than are the victorious countries. This assertion is contested by the German Government. In January, 1922, Dr. Wirth, Chancellor of the German Republic, presented to the Reparations Commission a memorial in which, among other matters, it was reckoned that in Germany roughly thirty per cent of the popular income was being paid in taxes, while in France the ratio was but fifteen per cent. According to the proposal of the German national budget, appearing in the recently published "Statistical Year-Book of the German Reich," out of an estimate of expenditures totaling 352 billion marks not less than 226 billions--sixty-four per cent--were designated as expenditures in connection with the execution of the peace treaty. Only thirty-six per cent were to be used for German purposes.

That a budget of this sort should constantly be broken down by the force of circumstances is evident, nor is it any less plain that the falling rate of exchange should make it impossible to calculate with certainty in advance either in the commercial or the political field. A tax levy may appear enormously high at the moment of its establishment and by the time of its collection its money value may have shrunk materially. When its proceeds are applied to the compensation of expenditures, the value of the tax may be at a minimum.

It is quite hopeless to expect to rehabilitate Germany's finances and to put an end to money inflation until Germany is granted credits that will permit her for a time to meet her obligations without issuing further notes. Then such issuance can be forbidden; then it will be possible to construct a stable and provident system of taxation; then the taxes can be so ordered that they will suffice to cover expenditures--unless reparations make further senseless demands. And then we should be given time to draw our breath and an opportunity of attaining a surplus of exports, which, together with the income from a growing mercantile marine and from capitalistic accumulations, might serve to pay interest and amortization charges on the reparations debt.

As to getting a loan that would save us, there are various means of accomplishing that end. This is not the place for me to discuss them. I can only emphasize here once more that such a loan is an urgent necessity, and that very soon.

One should not be led astray by misleading tales of comfort and swollen luxury discovered by foreign observers in Germany. Moscow, also, has similar pictures to offer. But no one would venture to assert for that reason that the Russian people were living in comfort.

German conditions so far are naturally not as bad as those of Soviet Russia. But each approximation to the latter must here in Germany have a far more disintegrating effect than in Russia, because there the agricultural element is preponderant and many industrial laborers can become simple peasants. That way out is closed to the mass of German workmen. Even emigration is today open to but few of them. If their industrial labor fails them, if their products become incapable of purchasing food from abroad, there will be a terrible mortality.

There are, of course, capitalists in Germany who have been interested in the fall of the rate of exchange because they believed that it would make German industry capable of more effective competition. Such a belief is based on the fact that wages rise more slowly than the value of money declines, and that in this way the German working classes are constantly becoming more miserable. But now even these shortsighted capitalists are beginning to groan over the decline of exchange value, for it constantly is increasing their difficulty in obtaining foreign raw materials and foreign credits.

The only ones who still have a personal interest in the decline of the exchange and in inflation are the speculators, those vultures who always foregather wherever a people is dying. They make their profits from the uncertainty of circumstances, they become rich not by any productive activity but through dealings that are the counterpart of gambling. And, gambler-like, they never think of accumulating their winnings, but squander them in the most frivolous and prodigal fashion.

Such are the elements that give rise to the appearance of wellbeing and of luxury in Germany. That the consumption of champagne within the customs jurisdiction of Germany has not decreased is to be laid at their door. In 1913 this consumption reached a total of twelve and a half million bottles; in 1920 (I have at hand no later figures) ten and one-tenth million. The per capita consumption, therefore, of the population since the war is practically the same as in the days that preceded it. It might be fair to investigate to what degree exchange-favored foreigners and officers of the armies of occupation are concerned in this consumption. But in any case, the figures relating to the consumption of champagne testify to a notable looseness of conduct among certain higher elements of the population. The statistics tell quite a different story, however, when we look into the use of luxuries by the lower classes. The consumption of beer within the German excise jurisdiction declined from 69 million hectoliters in the year 1913 to 23 million in the year 1920.

The intellectual workers are hit even harder than are the manual laborers by the results of the fall in exchange. Everywhere, whenever there is a rise in prices, it becomes plain that many of the actual laborers, whose activities cannot for a moment be dispensed with, are much better able to protect themselves against the consequences of the rise than are the intellectual workers, without whose labor the world can, in case of need, get along for a while. But nowhere, except perhaps still in Austria, is the privation of scholars and artists so distressingly manifest as in Germany. Many of them are literally starving. And they are starving not only physically; they are finding it more and more impossible to satisfy their intellectual hunger, to purchase books,instruments and other scientific means of support.

In this wise Germany is steadily becoming more and more impovished by the fall in the exchange value of her currency. She is losing not only in material values, but also in her physical ability to work and in the field of scientific qualifications.

Nearly a hundred years ago Charles Dickens showed, with masterly delineation, how imprisonment for debt deprives the debtor of every capacity for and enjoyment in labor and demoralizes him to the utmost, without the slightest advantage to the creditor and to the disadvantage of society as a whole.

The German nation is now undergoing imprisonment for debt. It is wasting away and is more and more losing in the process the capacity to make its labors pay its debts.

VI

When the conditions of the Treaty of Versailles became known in Germany we were all horrified. The German people had been far from unanimous in their attitude toward the war. Those of us who judged the war to have been brought about by the German Government, either by design or through incompetence, were not, even from the beginning, merely an isolated portion of the population, and the longer the war continued the larger became the number of those who opposed its continuation and who demanded of the German Government that it express its readiness to enter into a peace of understanding. But all of us, even the most determined denouncers of Germany's military policy, were fully agreed that the Versailles Treaty was terrific and impracticable, and that, if mention were to be made of moral guilt, the criminal war-responsibility of Germany was more or less matched by the criminal peace-responsibility of the authors of the treaty provisions. We held it to be our duty to criticize this peace-guilt as sharply as we had criticized that war-guilt.

When the German people learned the conditions of peace in May, 1919, they were completely united for the first time since the outbreak of the war. They condemned them with a single voice. But a new disagreement arose as to whether or not, despite all condemnation, the treaty should be signed.

We who demanded that it be signed were at first very few in number. But as the decisive moment approached the majority came over to us. No one, however, demanded that it be signed because he deemed it tolerable or practicable; the reason of everyone who made the demand was merely that there was nothing else to do. After the evidence we had received from the victors, it seemed to us that there was no possibility that a refusal would influence them to reconsideration and to negotiation. Refusal would have been taken as a defiant denial of any sort of reparation; it would have roused the victors to unmeasured fury, to deeds of violence which would have imparted to Germany's desperate situation an even more dreadful aspect and which would not have saved us in the end from having to sign under even more unfavorable circumstances.

But although nobody in Germany who advocated the signing of the treaty regarded its complete execution as possible, that must not be taken to mean that the treaty was signed with a reservatio mentalis, with the intention of not carrying it out. It was signed with the firm determination to fulfill all of its obligations as far as should prove possible. A revision was considered inevitable, but this was not expected as the result of passive resistance. By that our opponents would only be irritated and made still more implacable. The revision was hoped for as the result of a change of mind on the part of the conquerors. But this change of mind was to be expected only in the event that the most loyal fulfillment of the terms of the treaty was contemplated. Despite some opposition here and there, manifested among a few of the organs of the government and a few groups of the population, that is what occurred. In reality the policy of fulfilling the treaty is much more generally recognized as necessary than the party ratios in parliament would seem to indicate. It met with decisive opposition only from the Communists, who hoped that the repudiation of the treaty would be a cause of renewed chaos in Germany,--from the Pan-Germans, principally former officers,--from the intellectuals,--and from déclassés of all sorts. Among the productive elements, only a portion of the agricultural population imagined that the German Government could act like that of Angora. It is worthy of remark that the districts from which the strongest opposition to the policy of fulfillment emanates are the most backward agrarian ones of Germany, such as Southern Bavaria and East Prussia.

The governments committed to the policy of fulfillment have been not only weak, they have also been responsible for many blunders, and have thus interfered with their own objectives: the cooling of the war hatred against Germany and the growth of a realization that under present conditions of international intercourse the economic collapse of any great civilized nation, even of Germany, would create uncertainties all over the world.

This policy of fulfillment has not yet accomplished its aim of stabilizing conditions in Germany. But during the past year there has been unmistakably a softening of the previous attitude of Germany's late opponents. They have begun to abandon the Bolshevistic method of dictation and to adopt the democratic one of negotiation between parties equally entitled to justice. For all that, the process of modification is going on all too slowly and too inadequately, while the ruin which the peace terms brought in their train advances swiftly. It is not always enough to do the right thing; it must be done at the right time. The words "too late" have played a fateful role in every great historical catastrophe.

VII

For all this holding off and hanging back and postponing of the inevitable the French Government is principally to blame.

It is a well known fact, and one that needs no further elaboration, that it is the French Government which most bitterly opposes every suggestion of discussion or of alleviation of the reparation terms and which is first in the field to threaten fresh violence, such as for instance the occupation of the Ruhr district.

Since the German population is growing while that of France scarcely increases at all, the German nation will soon be twice as numerous as the French. For France that is a very alarming outlook. And it goes far toward explaining her present policy.

There is no doubt that a rehabilitated Germany could become terrible to France as an enemy. But one would think that a realization of this fact would lead her to consider the necessity of pursuing a policy which would not isolate her from the world and which would render it possible for her to live on friendly terms with Germany. Otherwise she is left with no alternative but to strive from now until eternity to prevent Germany's recuperation, to tear open afresh, day by day, the wounds inflicted on her by both war and peace, thus permanently depriving all Europe of tranquillity, security and welfare--a policy which would finally rally all Europe in support of Germany and lead to a catastrophe for herself.

There could be an excuse for this suicidal policy only if Germans and Frenchmen were fashioned by nature to be as hostile towards each other as cats and dogs, a state of affairs which could never be altered. This conception is as senseless as was the one which counted for so much throughout the eighteenth century and into the beginning of the nineteenth, namely that a natural enmity existed between Englishmen and Frenchmen. Enmity between two nations always is only the result of historical circumstance and it passes with the historic causes which occasioned it. The historic causes which brought France as well as many other nations into opposition with Germany are practically passed.

This opposition was fundamentally an opposition to Prussian militarism. Prussia as the youngest, smallest and poorest of the great powers in the eighteenth century was only able to assert herself by making sure that her army was equal to that of any other important state, an achievement requiring of her that more than any other state she should devote all her energies to her army. During the whole of the first half of the nineteenth century what was then the most cultivated portion of Germany, her west and south, full of sympathy for the France of the great revolution, strove against Prussian militarism. Only when the attempt of 1848 failed to unite Germany by democratic methods, and when later from 1866 to 1870 Prussian militarism succeeded by its own methods and by the expulsion of Austria in bringing about unification, did this militarism win over the sympathies of the portion of the German people living outside of old Prussia--and even then not without exceptions. In that very period, too, about 1866-1870, there came into being, though from very different causes, the two parties opposed to Prussian militarism, namely the Social Democrats and the Catholic Centerists, which today constitute a majority of the German people.

The policy of Prussia increased the aversion toward Germany in the most influential European nations. We have already designated the violent annexation of Alsace-Lorraine as the original sin of the new German Empire. With this mistake of Bismarck's William II associated the second and far greater one of a competition in naval armament, whereby England felt herself threatened. Finally German policy committed still a third error, the most fateful of all. Being able to find only a single ally whom she trusted under all circumstances, Germany allowed herself to be influenced in her decisions by that ally. And the ally was the Empire of Austria, which had become wholly moribund. For Austria's sake Germany came into opposition with Russia, with the growing Balkan states and even with her old associate Italy. It was not in defense of a German but of an Austrian claim that the World War broke out. Thus the German Empire made all the world its enemy and consequently it had in the end to fight against almost all the world.

Along with the German Empire, all these stumbling blocks have been removed. The old Austria has vanished, the German war fleet has been surrendered, Alsace-Lorraine has been given back to France. At the same time the root of all the evil, Prusso-German militarism, has ceased to exist. Nor was it overcome only from outside by the act of compulsory disarmament; it was vanquished also from within. It has lost the commanding influence that it used to exert on the mind of the German people.

No great army in Europe ever had such an almost unbroken series of victories to point to as did the Prussian army. True, this army which believed itself almost invincible was disastrously smitten in 1806 at Jena; but in 1913 it had ironed out this dent in its shield. From 1870 on the confidence of the entire German people in its army reached almost unbelievable heights.

And now, at the conclusion of the World War, came crushing defeat, all the more paralyzing because it was not due to any lack of stoutness in the troops but to the incompetent policy of the military command, which had taken upon itself to lead the German nation into the field against an overwhelmingly superior force. From the heights of wealth and glory Germany was cast down by the war into the depths of bitter poverty and indignity. Hereafter only absolute despair could make it try once more a passage at arms, which, under the circumstances, would but lead to renewed, to absolutely crushing disaster.

The German people are therefore becoming more and more convinced that Germany's salvation no longer depends on competitive armaments, but on a general disarmament; not on the increase of her own army, but on the decrease of the armies of others. The rôle that she would play in the society of nations is the exact opposite of what it has hitherto been. From a menace she is becoming a promise; from a martial peril she is turning into a pledge of world peace.

In many quarters the sincerity of this intention is not trusted. People seem to think that it would vanish again upon the economic rehabilitation of Germany.

It must be admitted that this new intention is not yet universal, although it already inspires a majority of the nation. The old generation cannot easily rid itself of inherited trains of thought. But the new idea is being developed by the new conditions themselves, and will root itself ever more deeply in the minds of the young generation which is growing up under its influence and is no longer being dazzled by militaristic stage-shows.

The strengthening of Germany's economic life will not impede but will further a pacifistic development. The stronger the peaceably inclined body of workmen becomes, the less numerous will be those déclassés who are bent on desperate schemes.

It is not Germany's economic resuscitation but her economic collapse which means danger to her neighbors. If the victors pursue a policy tending to plunge the German people ever deeper into misery, they will be adopting the best means of bringing again to life ideas of armed opposition and revenge.

What the German nation wants and needs is peace--lasting, actual peace, with complete self-determination for all its parts and with no slave labor to perform for the benefit of its conquerors. It demands nothing but that these shall at last proceed to make good what they promised in Wilson's Fourteen Points. The principal obstruction in the matter up to the present has been offered by France. But it is not from outside that this obstruction can be overcome. It is wholly mistaken to expect Germany's rescue to result from a conflict between England and France. Such a conflict would only put the climax to Europe's hapless situation and would not improve French relations with Germany. The world needs peace and friendship between France and England just as urgently as it needs peace and friendship between these two and Germany. Should these three become united and join in a hearty understanding with the great transatlantic Republic, the peace of the world would be assured; then would be possible a League of Nations which would not be a gendarme of the conquerors, but one to which all nations would belong, which all nations would trust, and which would be in a position to solve peacefully all the problems which have grown out of the peace pacts concluded in 1919.

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  • KARL KAUTSKY, German Socialist writer, Assistant Minister of Foreign Affairs of Germany after the revolution of November 9, 1918, Editor of a celebrated volume of documents revealing the origins of the war
  • More By Karl Kautsky