Two obstacles remain. The Treaty, though unexecuted, is not revised. And that part of organization, which consists in currency regulation, public finance, and the foreign exchanges, remains nearly as bad as it ever was. In most European countries there is still no proper balance between the expenditure of the State and its income, so that inflation continues and the international values of their currencies are fluctuating and uncertain. The suggestions which follow are mainly directed towards these problems.
Some contemporary plans for the reconstruction of Europe err in being too paternal or too complicated; also, sometimes, in being too pessimistic. The patients need neither drugs nor surgery, but healthy and natural surroundings in which they can exert their own recuperative powers. Therefore a good plan must be in the main negative; it must consist in getting rid of shackles, in simplifying the situation, in canceling futile but injurious entanglements. At present every one is faced by obligations which they cannot meet. Until the problem set to the Finance Ministers of Europe is a possible one, there can be little incentive to energy or to the exercise of skill. But if the situation was made such that an insolvent country could have only itself to blame, then the highest integrity and the most accomplished financial technique would, in each separate country, have its chance. I seek by the proposals of this chapter, not to prescribe a solution, but to create a situation in which a solution is possible.
In their main substance, therefore, my suggestions are not novel. The now familiar project of the cancelation, in part or in their entirety, of the Reparation and Inter–allied Debts, is a large and unavoidable feature of them. But those who are not prepared for these measures must not pretend to a serious interest in the Reconstruction of Europe.
In so far as such cancelation or abatement involves concessions by Great Britain, an Englishman can write without embarrassment and with some knowledge of the tendency of popular opinion in his own country. But where concessions by the United States are concerned he is in more difficulty. The attitude of a section of the American press furnishes an almost irresistible temptation to deal out the sort of humbug (or discrete half–truths) which are believed to promote cordiality between nations; it is easy and terribly respectable; and what is much worse, it may even do good where frankness would do harm. I pursue the opposite course, with a doubting and uneasy conscience, yet supported (not only in this chapter but throughout my book) by the hope, possibly superstitious, that openness does good in the long run, even when it makes trouble at first.
So far, Reparation on a large scale has not been collected from Germany. So far, the Allies have not paid interest to the United States on what they owe. Our present troubles, when they are not attributable to the after–effects of war and the cyclical depression of trade, are due, therefore, not to the enforcement of these claims, but to the uncertainties of their possible enforcement. It follows, therefore, that merely to put off the problem will do us no good. That is what we have been doing for two years already. Even to reduce our Reparation demands to Germanyʼs maximum actual capacity and really force her to pay them, might make matters worse than they are. To write down inter–ally debts by half and then try to collect them, would be an aggravation, not a cure, of the existing difficulties. The solution, therefore, must not be one which tries to extract the last theoretical penny from everybody; its main object must be to set the Finance Ministers of every country a problem not incapable of wise solution over the next five years.
I. The Revision of the Treaty
The Reparation Commission have assessed the Treaty claims at 138 milliard gold marks, of which 132 milliards are for pensions and damage and 6 milliards for Belgian debt. They have not stated in what proportions the 132 milliards are divided between pensions and damages. My own assessment of the Treaty claims (p. 131 above) is 110 milliards, of which 74 milliards are for pensions and allowances, 30 milliards for damage and 6 milliards for Belgian debt.
The arguments of Chapter VI make it incumbent on those who are convinced by them to abandon as dishonorable the claims to pensions and allowances. This reduces the claims to 36 milliards, a sum which it may not be in our interest to exact in full, but which is probably within Germanyʼs theoretical capacity to pay.
Apart from clearing out of the way various clauses which are no longer operative or useful, and from terminating the occupation on conditions set forth below, I should limit my Revision of the Treaty to this simple stroke of the pen. Let the present assessment of 138 milliard gold marks be replaced by 36 milliard gold marks.