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

by John Maynard Keynes

No new Reparation scheme, therefore, emerged from the Conference of London. Mr. Lloyd Georgeʼs acquiescence in the Decisions of Paris had led him too far. Some measure of personal annoyance at the demeanor of the German representatives and the failure of what, in its inception, may have been intended as bluff, had ended in his agreeing to an attempt to enforce the Decisions by the invasion of Germany. The economic penalties, whether they were legal or not, were so obviously ineffective for the purpose of collecting money, that they can hardly have been intended for that purpose, and were rather designed to frighten Germany into putting her name to what she could not, and did not intend to perform, by threatening a serious step in the direction of the policy, openly advocated in certain French quarters, of permanently detaching the Rhine provinces from the German Commonwealth. The grave feature of the Conference of London lay partly in Great Britainʼs lending herself to a furtherance of this policy, and partly in contempt for the due form and processes of law.

For it was impossible to defend the legality of the occupation of the three towns under the Treaty of Versailles.[12] Mr. Lloyd George endeavored to do so in the House of Commons, but at a later stage of the debate the contention was virtually abandoned by the Attorney–General.

The object of the Allies was to compel Germany to accept the Decisions of Paris. But Germanyʼs refusal to accept these proposals was within her rights and not contrary to the Treaty, since they lay outside the Treaty and included features unauthorized by the Treaty which Germany was at liberty either to accept or to reject. It was necessary, therefore, for the Allies to find some other pretext. Their effort in this direction was perfunctory, and consisted, as already recorded, in a vague reference to war criminals, disarmament, and the payment of 20 milliard gold marks.

The allegation of default in paying the 20 milliard gold marks was manifestly untenable at that date (March 7, 1921); for according to the Treaty, Germany had to pay this sum by May 1, 1921, “in such instalments and in such manner as the Reparation Commission may fix,” and in March 1921 the Reparation Commission had not yet demanded these cash payments.[13] But assuming that there had been technical default in respect of the war criminals and disarmament (and the original provisions of the Treaty had been so constantly modified that it was very difficult to say to what extent this was the case), it was our duty to state our charges precisely, and, if penalties were threatened, to make these penalties dependent on a failure to meet our charges. We were not entitled to make vague charges, and then threaten penalties unless Germany agreed to something which had nothing to do with the charges. The Ultimatum of March 7 substituted for the Treaty the intermittent application of force in exaction of varying demands. For whenever Germany was involved in a technical breach of any one part of the Treaty, the Allies were, apparently, to consider themselves entitled to make any changes they saw fit in any other part of the Treaty.

In any case the invasion of Germany beyond the Rhine was not a lawful act under the Treaty. This question became of even greater importance in the following month, when the French announced their intention of occupying the Ruhr. The legal issue is discussed in Excursus II. at the conclusion of this Chapter.

VI. The Second Conference of London (April 29–May 5, 1921)

The next two months were stormy. The Sanctions embittered the situation in Germany without producing any symptoms of surrender in the German Government. Towards the end of March the latter sought the intervention of the United States and transmitted a new counter–proposal through the Government of that country. In addition to being straightforward and more precise, this offer was materially better than that of Dr. Simons in London at the beginning of the month. The chief provisions[14] were as follows:

1. The German liability to be fixed at $12,500,000,000 present value.

2. As much of this as possible to be raised immediately by an international loan, issued on attractive terms, of which the proceeds would be handed over to the Allies, and the interest and sinking fund on which Germany would bind herself to meet.