Europe Since 1918

by Herbert Adams Gibbons

Following the British suggestion, the Cuno Cabinet sent a note to the Entente Powers and the United States on May 5 proposing that the obligation of Germany as to payments in cash and in kind under the Treaty of Versailles be fixed at 30,000,000,000 gold marks, of which by a bond-issue at normal rates on the international money-market, 20,000,000,000 gold marks were to be raised before July 1, 1927, 5,000,000,000 before July 1, 1929, and 5,000,000,000 before July 1, 1931. As an alternative Germany was willing to leave the whole reparations question to an international commission, as had been suggested by the American secretary of state. Germany would also agree to submit to international arbitration all conflicts of any kind between herself and France. However, Chancellor Cuno declared that Germany would continue her passive resistance until the French evacuated the areas “occupied in excess of the stipulations of the Treaty of Versailles.”

Before the German note was received the French press had declared that it would be rejected. It was felt that France could not afford to go back on her previous statement of policy, i. e., that the German Government rescind all the orders that had been given for passive resistance in the Ruhr before negotiations were begun. In other words, France, holding what she considered to be the trump card, demanded unconditional surrender on the part of Germany. Quite logically the Paris journals pointed out that the Poincaré Cabinet could not remain in power if the Ruhr expedition were confessed to be a failure. France and Belgium simply had to continue to affirm that the occupation of the Ruhr was legal and that German resistance was an infraction of the treaty. On the other hand, it was equally true that the Cuno Government would be overthrown if it surrendered unconditionally.

A strenuous effort was made by Bonar Law and Lord Curzon, who were beginning to feel the pressure of public opinion in Great Britain, to enter into conversation with Paris, Brussels, and Rome, and to see if the Entente Powers could not be induced to formulate a joint response to the German offer. Although it was intimated that Great Britain was willing to join in rejecting the Cuno note on the ground of its inadequacy, the French and Belgian Cabinets decided to reply immediately and to reject the German offer on their own responsibility. This was done. On May 8 the French and Belgian replies were published in Berlin. The Germans realized that there was no hope of inducing France to release her hold on the Ruhr. Not only was the German offer spurned but the Cuno Cabinet was informed that France and Belgium did not propose to release their tangible guarantees until the sums assessed against Germany by the Reparations Commission were paid in full. The French argued that at the last minute Germany would submit to France in order to avoid bankruptcy and internal chaos. France and Belgium made it clear that they were willing to take the risk of this if Germany did not submit, and that as the conflict was a matter between Germany and the powers occupying the Ruhr, London and Rome would not have to reply to the German note.

Neither Bonar Law nor Mussolini, however, felt that it would be good policy to ignore the German offer. Had not France and Belgium been showing a tendency, which had to be checked, to regard reparations from Germany as a matter interesting themselves exclusively? The British and Italian replies both pronounced the offer as “far from corresponding, either in form or in substance, to what might reasonably have been expected,” as Lord Curzon put it. The British answer called attention to the fact that the British program, which was rejected by the other Entente Powers in January, had provided for nearly double the amount Germany now offered. How could Germany expect that 30,000,000,000 gold marks would be accepted as a basis for discussion? The Italian answer declared that Germany failed to realize the importance of taking into account Italian reparation claims. These had been reduced to one tenth of the amount to be recovered from Germany on the ground that Italy was to receive compensation from Austria and Hungary, which had not been forthcoming. Both Governments omitted any reference to the Ruhr, or to Germany’s alternate proposal to refer the reparations question to an international tribunal.

One point in the Italian note was significant. It laid stress on the intimate connection between reparations and interallied war debts and insisted that this problem be solved at the earliest possible moment in order to “relieve the cost of reconstruction of the Italian invaded provinces.” The sacrifice demanded of Italy by Germany was therefore too great. The Paris “Temps,” commenting on the British and Italian notes, said that Great Britain and Italy, by encouraging the Germans in their passive resistance, must be held partly responsible for the inadequacy of the German proposition. Great Britain, declared the “Temps,” had to realize that “the amount France and Italy demand from Germany will necessarily depend upon the sums claimed from them by England.” Virtually every other Paris newspaper said in substance the same thing. By the middle of May it had become clear that if the deadlock was to be broken, and a tolerable sum fixed for German reparations, pressure in the Ruhr was not going to accomplish that purpose. Hope lay in a reconsideration of interallied indebtedness; and a part of the sacrifices to be made would be demanded of Great Britain and the United States.

At the beginning of May the French Government announced that two thirds of the expenses of the Ruhr occupation had already been recovered from coal and coke shipped out and taxes levied, and that it would not be long before the occupation “made expenses.” This news was sent out from Paris with an air of great satisfaction; but French newspapers revealed the fallacy of the Government’s statement. Making expenses was not the first objective of the Ruhr occupation, and in the announcements of policy and the many notes of the winter and spring of 1923, had not the French and Belgian Governments declared that the Ruhr occupation would bring in reparations? If one drew up a balance sheet it would be necessary to put on the debit side the complete cessation of deliveries in kind since the second week of January and the resultant loss to the two Governments. This was the only logical way of computing the cost of the occupation. Not until France and Belgium could meet all their military expenses out of the Ruhr, force the resumption of the 1922 rate of payments and deliveries in kind, and then see coming in a surplus over that amount could the Ruhr occupation be fairly asserted to be profitable.

In judging the Franco-Belgian policy, other considerations than that of financial return demand attention. Has the occupation of the Ruhr lessened Germany’s capacity to pay reparations? That is the business consideration. Has the Franco-Belgian policy weakened the political situation of France and Belgium in post-bellum Europe? That is the political consideration. Has the reign of martial law hurt France’s prestige as a chivalrous nation, scrupulous in her treatment of the civilian population at her mercy, and rigorous in her observance of international law and the elementary principles of justice? That is the moral consideration. The observer of European financial markets and international political currents, and the reader of the most influential journals of all European countries, must give a reluctant affirmative answer to all three of these questions.

In one of the many conferences on reparations the Japanese ambassador to Great Britain declared, “Gentlemen, there is only one question before us: ‘How can we best make Germany pay most?’” The Japanese ambassador was talking common sense. But his point of view was as little heeded in the heated discussions as had been the point of view of General Bliss several years earlier, when he insisted that the armistice with Germany was a military question and should be so regarded. The statesmen in 1918 had no intention of rendering Germany immediately and completely impotent; for they wanted a treaty in which terms could be incorporated, on the excuse of Germany’s power, that would serve their political and economic interests. In the reparations question what the statesmen feared most was a final definite and workable solution proposed by bankers and economic experts; for they intended to establish an indefinite protectorate over Germany. There is no doubt that Germany’s capacity to pay has decreased steadily since June, 1919, and received a still more serious blow by the rejection of the offer of the Cuno Government in May, 1923, to submit the question to any tribunal the Entente Powers might name, and agree to abide by its verdict.

The frank annoyance of the British Government at the “unnecessary precipitancy” of the French reply to the Cuno offer reveals a seriously disrupted Entente. In the House of Commons and in the House of Lords the same statement was made on May 8:

It was the view of His Majesty’s Government that the best and most natural course of procedure would be to return to a concerted reply ... the more so as the German note was in response to a suggestion made publicly and officially by the Foreign Minister of the British Government and as the problem involved ... was one in which the Allied Powers, and not merely France and Belgium alone, are deeply concerned.