A Revision of the Treaty / Being a Sequel to The Economic Consequence of the Peace

by John Maynard Keynes

(3) That the annual expenses of the Armies of Occupation should be limited to $60,000,000, which payment need not be additional to the above annuities but a first charge on them;

(4) That the Allies should waive their claim on Germany to build ships for them and should perhaps relinquish, or postpone, the claim for the delivery of a certain number of the existing German vessels;

(5) That Germany on her side should put her finances and her budget in order and should agree to the Allies taking control of her customs in the event of default under the above scheme.

IV. The Decisions of Paris (January 24–30, 1921)

The suggestions of the Brussels experts furnished no permanent settlement of the question, but they represented, nevertheless, a great advance from the ideas of the Treaty. In the meantime, however, opinion in France was rising against the concessions contemplated. M. Leygues, it appeared, would be unable to carry in the Chamber the scheme discussed at Boulogne. Prolonged political intrigue ended in the succession of M. Briand to the Premiership, with the extreme defenders of the literal integrity of the Treaty of Versailles, M. Poincaré, M. Tardieu, and M. Klotz, still in opposition. The projects of Boulogne and Brussels were thrown into the melting–pot, and another conference was summoned to meet at Paris at the end of January 1921.

It was at first doubtful whether the proceedings might not terminate with a breach between the British and the French points of view. Mr. Lloyd George was justifiably incensed at having to surrender most of the ground which had seemed definitely gained at Boulogne; with these fluctuations negotiation was a waste of time and progress impossible. He was also disinclined to demand payments from Germany which all the experts now thought impossible. For a few days he was entirely unaccommodating to the French contentions; but as the business proceeded he became aware that M. Briand was a kindred spirit, and that, whatever nonsense he might talk in public, he was secretly quite sensible. A breach in the conversations might mean the fall of Briand and the entrance to office of the wild men, Poincaré and Tardieu, who, if their utterances were to be taken seriously and were not merely a ruse to obtain office, might very well disturb the peace of Europe before they could be flung from authority. Was it not better that Mr. Lloyd George and M. Briand, both secretly sensible, should remain colleagues at the expense of a little nonsense in unison for a short time? This view of the situation prevailed, and an ultimatum was conveyed to Germany on the following lines.[7]

The Reparation payments, proposed to Germany by the Paris Conference, were made up of a determinate part and an indeterminate part. The former consisted of $500,000,000 per annum for two years, $750,000,000 for the next three, then $1,000,000,000 for three more, and $1,250,000,000 for three after that, and, finally, $1,500,000,000 annually for 31 years. The latter (the indeterminate part) consisted of an annual sum, additional to the above, equal in value to 12 per cent of the German exports. The fixed payments under this scheme added up to a gross total of $56,500,000,000 which was a little less than the gross total contemplated at Boulogne but, with the export proportion added, a far greater sum.

The indeterminate element renders impossible an exact calculation of this burden, and it is no longer worth while to go into details. But I calculated at the time, without contradiction, that these proposals amounted for the normal period to a demand exceeding $2,000,000,000 per annum, which is double the highest figure that any competent person in Great Britain or in the United States has ever attempted to justify.

The Paris Decisions, however, coming as they did after the discussions of Boulogne and Brussels, were not meant seriously, and were simply another move in the game, to give M. Briand a breathing space. I wonder if there has ever been anything quite like it—best diagnosed perhaps as a consequence of the portentous development of “propaganda.” The monster had escaped from the control of its authors, and the extraordinary situation was produced in which the most powerful statesmen in the world were compelled by forces, which they could not evade, to meet together day after day to discuss detailed variations of what they knew to be impossible.