4: The Treaty
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Chapter 4
The Treaty
The thoughts which I have expressed in the second chapter
were not present to the mind of Paris. The future life of Europe
was not their concern; its means of livelihood was not their
anxiety. Their preoccupations, good and bad alike, related to
frontiers and nationalities, to the balance of power, to imperial
aggrandisements, to the future enfeeblement of a strong and
dangerous enemy, to revenge, and to the shifting by the victors
of their unbearable financial burdens on to the shoulders of the
defeated.
Two rival schemes for the future polity of the world took the
field -- the Fourteen Points of the President, and the
Carthaginian peace of M. Clemenceau. Yet only one of these was
entitled to take the field; for the enemy had not surrendered
unconditionally, but on agreed terms as to the general character
of the peace.
This aspect of what happened cannot, unfortunately, be passed
over with a word, for in the minds of many Englishmen at least it
has been a subject of very great misapprehension. Many persons
believe that the armistice terms constituted the first contract
concluded between the Allied and Associated Powers and the German
government, and that we entered the conference with our hands
free, except so far as these armistice terms might bind us. This
was not the case. To make the position plain, it is necessary
briefly to review the history of the negotiations which began
with the German Note of 5 October 1918, and concluded with
President Wilson's Note of 5 November 1918.
On 5 October 1918 the German government addressed a brief
Note to the President accepting the Fourteen Points and asking
for peace negotiations. The President's reply of 8 October asked
if he was to understand definitely that the German government
accepted 'the terms laid down' in the Fourteen Points and in his
subsequent addresses and 'that its object in entering into
discussion would be only to agree upon the practical details of
their application.' He added that the evacuation of invaded
territory must be a prior condition of an armistice. On 12
October the German government returned an unconditional
affirmative to these questions; 'its object in entering into
discussions would be only to agree upon practical details of the
application of these terms'. On 14 October, having received this
affirmative answer, the President made a further communication to
make clear the points: (1) that the details of the armistice
would have to be left to the military advisers of the United
States and the Allies, and must provide absolutely against the
possibility of Germany's resuming hostilities; (2) that submarine
warfare must cease if these conversations were to continue; and
(3) that he required further guarantees of the representative
character of the government with which he was dealing. On 20
October Germany accepted points (1) and (2), and pointed out, as
regards (3), that she now had a constitution and a government
dependent for its authority on the Reichstag. On 23 October the
President announced that, 'having received the solemn and
explicit assurance of the German government that it unreservedly
accepts the terms of peace laid down in his address to the
Congress of the United States on 8 January 1918 (the Fourteen
Points), and the principles of settlement enunciated in his
subsequent addresses, particularly the address of 27 September,
and that it is ready to discuss the details of their
application', he has communicated the above correspondence to the
governments of the Allied Powers 'with the suggestion that, if
these governments are disposed to effect peace upon the terms and
principles indicated,' they will ask their military advisers to
draw up armistice terms of such a character as to 'ensure to the
associated governments the unrestricted power to safeguard and
enforce the details of the peace to which the German government
has agreed'. At the end of this Note the President hinted more
openly than in that of 14 October at the abdication of the
Kaiser. This completes the preliminary negotiations to which the
President alone was a party, acting without the governments of
the Allied Powers.
On 5 November 1918 the President transmitted to Germany the
reply he had received from the governments associated with him,
and added that Marshal Foch had been authorised to communicate
the terms of an armistice to properly accredited representatives.
In this reply the allied governments, 'subject to the
qualifications which follow, declare their willingness to make
peace with the government of Germany on the terms of peace laid
down in the President's address to Congress of 8 January 1918,
and the principles of settlement enunciated in his subsequent
addresses'. The qualifications in question were two in number.
The first related to the freedom of the seas, as to which they
'reserved to themselves complete freedom'. The second related to
reparation and ran as follows: 'Further, in the conditions of
peace laid down in his address to Congress on 8 January 1918, the
President declared that invaded territories must be restored as
well as evacuated and made free. The allied governments feel that
no doubt ought to be allowed to exist as to what this provision
implies. By it they understand that compensation will be made by
Germany for all damage done to the civilian population of the
Allies and to their property by the aggression of Germany by
land, by sea, and from the air.'(1*)
The nature of the contract between Germany and the Allies
resulting from this exchange of documents is plain and
unequivocal. The terms of the peace are to be in accordance with
the addresses of the President, and the purpose of the peace
conference is 'to discuss the details of their application.' The
circumstances of the contract were of an unusually solemn and
binding character; for one of the conditions of it was that
Germany should agree to armistice terms which were to be such as
would leave her helpless. Germany having rendered herself
helpless in reliance on the contract, the honour of the Allies
was peculiarly involved in fulfilling their part and, if there
were ambiguities, in not using their position to take advantage
of them.
What, then, was the substance of this contract to which the
Allies had bound themselves? An examination of the documents
shows that, although a large part of the addresses is concerned
with spirit, purpose, and intention, and not with concrete
solutions, and that many questions requiring a settlement in the
peace treaty are not touched on, nevertheless there are certain
questions which they settle definitely. It is true that within
somewhat wide limits the Allies still had a free hand. Further,
it is difficult to apply on a contractual basis those passages
which deal with spirit, purpose, and intention; every man must
judge for himself whether, in view of them, deception or
hypocrisy has been practised. But there remain, as will be seen
below, certain important issues on which the contract is
unequivocal.
In addition to the Fourteen Points of 8 January 1918, the
addresses of the President which form part of the material of the
contract are four in number -- before the Congress of 11
February; at Baltimore on 6 April; at Mount Vernon on 4 July; and
at New York on 27 September, the last of these being specially
referred to in the contract. I venture to select from these
addresses those engagements of substance, avoiding repetitions,
which are most relevant to the German treaty. The parts I omit
add to, rather than detract from, those I quote; but they chiefly
relate to intention, and are perhaps too vague and general to be
interpreted contractually.(2*)
The Fourteen Points -- (3) 'The removal. so far as possible,
of all economic barriers and the establishment of an equality of
trade conditions among all the nations consenting to the peace
and associating themselves for its maintenance.' (4) 'Adequate
guarantees given and taken that national armaments will be
reduced to the lowest point consistent with domestic safety.' (5)
'A free, open-minded, and absolutely impartial adjustment of all
colonial claims', regard being had to the interests of the
populations concerned. (6), (7), (8), and (11) The evacuation and
'restoration' of all invaded territory, especially of Belgium. To
this must be added the rider of the Allies, claiming compensation
for all damage done to civilians and their property by land, by
sea, and from the air (quoted in full above). (8) The righting of
'the wrong done to France by Prussia in 1871 in the matter of
Alsace-Lorraine'. (13) An independent Poland, including 'the
territories inhabited by indisputably Polish populations' and
'assured a free and secure access to the sea'. (14) The League of
Nations.
Before the Congress, 11 February -- 'There shall be no
annexations, no contributions, no punitive damages...
Self-determination is not a mere phrase. It is an imperative
principle of action which statesmen will henceforth ignore at
their peril... Every territorial settlement involved in this war
must be made in the interest and for the benefit of the
populations concerned, and not as a part of any mere adjustment
or compromise of claims amongst rival States.'
New York, 27 September -- (1) 'The impartial justice meted
out must involve no discrimination between those to whom we wish
to be just and those to whom we do not wish to be just.' (2) 'No
special or separate interest of any single nation or any group of
nations can be made the basis of any part of the settlement which
is not consistent with the common interest of all.' (3) 'There
can be no leagues or alliances or special covenants and
understandings within the general and common family of the League
of Nations.' (4) 'There can be no special selfish economic
combinations within the League and no employment of any form of
economic boycott or exclusion, except as the power of economic
penalty by exclusion from the markets of the world may be vested
in the League of Nations itself as a means of discipline and
control.' (5) 'All international agreements and treaties of every
kind must be made known in their entirety to the rest of the
world.'
This wise and magnanimous programme for the world had passed,
on 5 November 1918, beyond the region of idealism and aspiration,
and had become part of a solemn contract to which all the Great
Powers of the world had put their signature. But it was lost,
nevertheless, in the morass of Paris -- the spirit of it
altogether, the letter in parts ignored and in other parts
distorted.
The German observations on the draft treaty of peace were
largely a comparison between the terms of this understanding, on
the basis of which the German nation had agreed to lay down its
arms, and the actual provisions of the document offered them for
signature thereafter. The German commentators had little
difficulty in showing that the draft treaty constituted a breach
of engagements and of international morality comparable with
their own offence in the invasion of Belgium. Nevertheless, the
German reply was not in all its parts a document fully worthy of
the occasion, because in spite of the justice and importance of
much of its contents, a truly broad treatment and high dignity of
outlook were a little wanting, and the general effect lacks the
simple treatment, with the dispassionate objectivity of despair,
which the deep passions of the occasion might have evoked. The
Allied governments gave it, in any case, no serious
consideration, and I doubt if anything which the German
delegation could have said at that stage of the proceedings would
have much influenced the result.
The commonest virtues of the individual are often lacking in
the spokesmen of nations; a statesman representing not himself
but his country may prove, without incurring excessive blame --
as history often records -- vindictive, perfidious, and
egotistic. These qualities are familiar in treaties imposed by
victors. But the German delegation did not succeed in exposing in
burning and prophetic words the quality which chiefly
distinguishes this transaction from all its historical
predecessors -- its insincerity.
This theme, however, must be for another pen than mine. I am
mainly concerned in what follows not with the justice of the
treaty -- neither with the demand for penal justice against the
enemy, nor with the obligation of contractual justice on the
victor -- but with its wisdom and with its consequences.
I propose, therefore, in this chapter to set forth baldly the
principal economic provisions of the treaty, reserving, however,
for the next my comments on the reparation chapter and on
Germany's capacity to meet the payments there demanded from her.
The German economic system as it existed before the war
depended on three main factors: I. Overseas commerce as
represented by her mercantile marine, her colonies, her foreign
investments, her exports, and the overseas connections of her
merchants. II. The exploitation of her coal and iron and the
industries built upon them. III. Her transport and tariff system.
Of these the first, while not the least important, was certainly
the most vulnerable. The treaty aims at the systematic
destruction of all three, but principally of the first two.
I
(1) Germany has ceded to the Allies all the vessels of her
mercantile marine exceeding 1,600 tons gross, half the vessels
between 1,000 tons and 1,600 tons, and one-quarter of her
trawlers and other fishing boats.(3*) The cession is
comprehensive, including not only vessels flying the German flag,
but also all vessels owned by Germans but flying other flags, and
all vessels under construction as well as those afloat.(4*)
Further, Germany undertakes, if required, to build for the Allies
such types of ships as they may specify up to 200,000 tons(5*)
annually for five years, the value of these ships being credited
to Germany against what is due from her for reparation.(6*)
Thus the German mercantile marine is swept from the seas and
cannot be restored for many years to come on a scale adequate to
meet the requirements of her own commerce. For the present, no
lines will run from Hamburg, except such as foreign nations may
find it worth while to establish out of their surplus tonnage.
Germany will have to pay to foreigners for the carriage of her
trade such charges as they may be able to exact, and will receive
only such conveniences as it may suit them to give her. The
prosperity of German ports and commerce can only revive, it would
seem, in proportion as she succeeds in bringing under her
effective influence the merchant marines of Scandinavia and of
Holland.
(2) Germany has ceded to the Allies 'all her rights and
titles over her overseas possessions.'(7*)
This cession not only applies to sovereignty but extends on
unfavourable terms to government property, all of which,
including railways, must be surrendered without payment, while,
on the other hand, the German government remains liable for any
debt which may have been incurred for the purchase or
construction of this property, or for the development of the
colonies generally.(8*)
In distinction from the practice ruling in the case of most
similar cessions in recent history, the property and persons of
private German nationals, as distinct from their government, are
also injuriously affected. The Allied government exercising
authority in any former German colony 'may make such provisions
as it thinks fit with reference to the repatriation from them of
German nationals and to the conditions upon which German subjects
of European origin shall, or shall not, be allowed to reside,
hold property, trade or exercise a profession in them'.(9*) All
contracts and agreements in favour of German nationals for the
construction or exploitation of public works lapse to the Allied
governments as part of the payment due for reparation.
But these terms are unimportant compared with the more
comprehensive provision by which 'the Allied and Associated
Powers reserve the right to retain and liquidate all property,
rights, and interests belonging at the date of the coming into
force of the present treaty to German nationals, or companies
controlled by them', within the former German colonies.(10*) This
wholesale expropriation of private property is to take place
without the Allies affording any compensation to the individuals
expropriated, and the proceeds will be employed, first, to meet
private debts due to Allied nationals from any German nationals,
and second, to meet claims due from Austrian, Hungarian,
Bulgarian, or Turkish nationals. Any balance may either be
returned by the liquidating Power direct to Germany, or retained
by them. If retained, the proceeds must be transferred to the
reparation commission for Germany's credit in the reparation
account.(11*)
In short, not only are German sovereignty and German
influence extirpated from the whole of her former overseas
possessions, but the persons and property of her nationals
resident or owning property in those parts are deprived of legal
status and legal security.
(3) The provisions just outlined in regard to the private
property of Germans in the ex-German colonies apply equally to
private German property in Alsace-Lorraine, except in so far as
the French government may choose to grant exceptions.(12*) This
is of much greater practical importance than the similar
expropriation overseas because of the far higher value of the
property involved and the closer interconnection, resulting from
the great development of the mineral wealth of these provinces
since 1871, of German economic interests there with those in
Germany itself. Alsace-Lorraine has been part of the German
empire for nearly fifty years -- a considerable majority of its
population is German-speaking -- and it has been the scene of
some of Germany's most important economic enterprises.
Nevertheless, the property of those Germans who reside there, or
who have invested in its industries, is now entirely at the
disposal of the French government without compensation, except in
so far as the German government itself may choose to afford it.
The French government is entitled to expropriate without
compensation the personal property of private German citizens and
German companies resident or situated within Alsace-Lorraine, the
proceeds being credited in part satisfaction of various French
claims. The severity of this provision is only mitigated to the
extent that the French government may expressly permit German
nationals to continue to reside, in which case the above
provision is not applicable. Government, state, and municipal
property, on the other hand, is to be ceded to France without any
credit being given for it. This includes the railway system of
the two provinces, together with its rolling-stock.(13*) But
while the property is taken over, liabilities contracted in
respect of it in the form of public debts of any kind remain the
liability of Germany.(14*) The provinces also return to French
sovereignty free and quit of their share of German war or pre-war
dead-weight debt; nor does Germany receive a credit on this
account in respect of reparation.
(4) The expropriation of German private property is not
limited, however, to the ex-German colonies and Alsace-Lorraine.
The treatment of such property forms, indeed, a very significant
and material section of the treaty, which has not received as
much attention as it merits, although it was the subject of
exceptionally violent objection on the part of the German
delegates at Versailles. So far as I know, there is no precedent
in any peace treaty of recent history for the treatment of
private property set forth below, and the German representatives
urged that the precedent now established strikes a dangerous and
immoral blow at the security of private property everywhere. This
is an exaggeration, and the sharp distinction, approved by custom
and convention during the past two centuries, between the
property and rights of a state and the property and rights of its
nationals is an artificial one, which is being rapidly put out of
date by many other influences than the peace treaty, and is
inappropriate to modern socialistic conceptions of the relations
between the state and its citizens. It is true, however, that the
treaty strikes a destructive blow at a conception which lies at
the root of much of so-called international law, as this has been
expounded hitherto.
The principal provisions relating to the expropriation of
German private property situated outside the frontiers of
Germany, as these are now determined, are overlapping in their
incidence, and the more drastic would seem in some cases to
render the others unnecessary. Generally speaking, however, the
more drastic and extensive provisions are not so precisely framed
as those of more particular and limited application. They are as
follows:
(a) The Allies 'reserve the right to retain and liquidate all
property, rights and interests belonging at the date of the
coming into force of the present treaty to German nationals, or
companies controlled by them, within their territories, colonies,
possessions and protectorates, including territories ceded to
them by the present treaty.'(15*)
This is the extended version of the provision which has been
discussed already in the case of the colonies and of
Alsace-Lorraine. The value of the property so expropriated will
be applied, in the first instance, to the satisfaction of private
debts due from Germany to the nationals of the Allied government
within whose jurisdiction the liquidation takes place, and,
second, to the satisfaction of claims arising out of the acts of
Germany's former allies. Any balance, if the liquidating
government elects to retain it, must be credited in the
reparation account.(16*) It is, however, a point of considerable
importance that the liquidating government is not compelled to
transfer the balance to the reparation commission, but can, if it
so decides, return the proceeds direct to Germany. For this will
enable the United States, if they so wish, to utilise the very
large balances in the hands of their enemy-property custodian to
pay for the provisioning of Germany, without regard to the views
of the reparation commission.
These provisions had their origin in the scheme for the
mutual settlement of enemy debts by means of a clearing house.
Under this proposal it was hoped to avoid much trouble and
litigation by making each of the governments lately at war
responsible for the collection of private debts due from its
nationals to the nationals of any of the other governments (the
normal process of collection having been suspended by reason of
the war), and for the distribution of the funds so collected to
those of its nationals who had claims against the nationals of
the other governments, any final balance either way being settled
in cash. Such a scheme could have been completely bilateral and
reciprocal. And so in part it is, the scheme being mainly
reciprocal as regards the collection of commercial debts. But the
completeness of their victory permitted the Allied governments to
introduce in their own favour many divergencies from reciprocity,
of which the following are the chief: Whereas the property of
Allied nationals within German jurisdiction reverts under the
treaty to Allied ownership on the conclusion of peace, the
property of Germans within Allied jurisdiction is to be retained
and liquidated as described above, with the result that the whole
of German property over a large part of the world can be
expropriated, and the large properties now within the custody of
public trustees and similar officials in the Allied countries may
be retained permanently. In the second place, such German assets
are chargeable, not only with the liabilities of Germans, but
also, if they run to it, with 'payment of the amounts due in
respect of claims by the nationals of such Allied or Associated
Power with regard to their property, rights, and interests in the
territory of other enemy Powers,' as, for example, Turkey,
Bulgaria, and Austria.(17*) This is a remarkable provision, which
is naturally non-reciprocal. In the third place, any final
balance due to Germany on private account need not be paid over,
but can be held against the various liabilities of the German
government.(18*) The effective operation of these articles is
guaranteed by the delivery of deeds, titles, and
information.(19*) In the fourth place, pre-war contracts between
Allied and German nationals may be cancelled or revived at the
option of the former, so that all such contracts which are in
Germany's favour will be cancelled, while, on the other hand, she
will be compelled to fulfil those which are to her disadvantage.
(b) So far we have been concerned with German property within
Allied jurisdiction. The next provision is aimed at the
elimination of German interests in the territory of her
neighbours and former allies, and of certain other countries.
Under article 260 of the financial clauses it is provided that
the reparation commission may, within one year of the coming into
force of the treaty, demand that the German government
expropriate its nationals and deliver to the reparation
commission 'any rights and interests of German nationals in any
public utility undertaking or in any concession(20*) operating in
Russia, China, Turkey, Austria, Hungary, and Bulgaria, or in the
possessions or dependencies of these states, or in any territory
formerly belonging to Germany or her allies, to be ceded by
Germany or her allies to any Power or to be administered by a
mandatory under the present treaty.' This is a comprehensive
description, overlapping in part the provisions dealt with under
(a) above, but including, it should be noted, the new states and
territories carved out of the former Russian, Austro-Hungarian,
and Turkish empires. Thus Germany's influence is eliminated and
her capital confiscated in all those neighbouring countries to
which she might naturally look for her future livelihood, and for
an outlet for her energy, enterprise, and technical skill.
The execution of this programme in detail will throw on the
reparation commission a peculiar task, as it will become
possessor of a great number of rights and interests over a vast
territory owing dubious obedience, disordered by war, disruption,
and Bolshevism. The division of the spoils between the victors
will also provide employment for a powerful office, whose
doorsteps the greedy adventurers and jealous concession-hunters
of twenty or thirty nations will crowd and defile.
Lest the reparation commission fail by ignorance to exercise
its rights to the full, it is further provided that the German
government shall communicate to it within six months of the
treaty's coming into force a list of all the rights and interests
in question, 'whether already granted, contingent or not yet
exercised', and any which are not so communicated within this
period will automatically lapse in favour of the Allied
governments.(21*) How far an edict of this character can be made
binding on a German national, whose person and property lie
outside the jurisdiction of his own government, is an unsettled
question; but all the countries specified in the above list are
open to pressure by the Allied authorities, whether by the
imposition of an appropriate treaty clause or otherwise.
(c) There remains a third provision more sweeping than either
of the above, neither of which affects German interests in
neutral countries. The reparation commission is empowered up to 1
May 1921 to demand payment up to £1,000 million in such manner as
they may fix, 'whether in gold, commodities, ships, securities or
otherwise'.(22*) This provision has the effect of entrusting to
the reparation commission for the period in question dictatorial
powers over all German property of every description whatever.
They can, under this article, point to any specific business,
enterprise, or property, whether within or outside Germany, and
demand its surrender; and their authority would appear to extend
not only to property existing at the date of the peace, but also
to any which may be created or acquired at any time in the course
of the next eighteen months. For example, they could pick out --
as presumably they will as soon as they are established-the fine
and powerful German enterprise in South America known as the
Deutsche Ueberseeische Elektrizitätsgesellschaft (the D.U.E.G.),
and dispose of it to Allied interests. The clause is unequivocal
and all-embracing. It is worth while to note in passing that it
introduces a quite novel principle in the collection of
indemnities. Hitherto, a sum has been fixed, and the nation
mulcted has been left free to devise and select for itself the
means of payment. But in this case the payees can (for a certain
period) not only demand a certain sum but specify the particular
kind of property in which payment is to be effected. Thus the
powers of the reparation commission, with which I deal more
particularly in the next chapter, can be employed to destroy
Germany's commercial and economic organisation as well as to
exact payment.
The cumulative effect of (a), (b), and (c) (as well as of
certain other minor provisions on which I have not thought it
necessary to enlarge) is to deprive Germany (or rather to empower
the Allies so to deprive her at their will -- it is not yet
accomplished) of everything she possesses outside her own
frontiers as laid down in the treaty. Not only are her overseas
investments taken and her connections destroyed, but the same
process of extirpation is applied in the territories of her
former allies and of her immediate neighbours by land.
(5) Lest by some oversight the above provisions should
overlook any possible contingencies, certain other articles
appear in the treaty, which probably do not add very much in
practical effect to those already described, but which deserve
brief mention as showing the spirit of completeness in which the
victorious Powers entered upon the economic subjection of their
defeated enemy.
First of all there is a general clause of barrer and
renunciation: 'In territory outside her European frontiers as
fixed by the present treaty, Germany renounces all rights, titles
and privileges whatever in or over territory which belonged to
her or to her allies, and all rights, titles and privileges
whatever their origin which she held as against the Allied and
Associated Powers...'(23*)
There follow certain more particular provisions. Germany
renounces all rights and privileges she may have acquired in
China.(24*) There are similar provisions for Siam,(25*) for
Liberia,(26*) for Morocco,(27*) and for Egypt.(28*) In the case
of Egypt not only are special privileges renounced, but by
article 150 ordinary liberties are withdrawn, the Egyptian
government being accorded 'complete liberty of action in
regulating the status of German nationals and the conditions
under which they may establish themselves in Egypt.'
By article 258 Germany renounces her right to any
participation in any financial or economic organisations of an
international character 'operating in any of the Allied or
Associated States, or in Austria, Hungary, Bulgaria or Turkey, or
in the dependencies of these states, or in the former Russian
empire'.
Generally speaking, only those pre-war treaties and
conventions are revived which it suits the Allied governments to
revive, and those in Germany's favour may be allowed to
lapse.(29*)
It is evident, however, that none of these provisions are of
any real importance, as compared with those described previously.
They represent the logical completion of Germany's outlawry and
economic subjection to the convenience of the Allies; but they do
not add substantially to her effective disabilities.
II
The provisions relating to coal and iron are more important
in respect of their ultimate consequences on Germany's internal
industrial economy than for the money value immediately involved.
The German empire has been built more truly on coal and iron than
on blood and iron. The skilled exploitation of the great
coalfields of the Ruhr, Upper Silesia, and the Saar, alone made
possible the development of the steel, chemical, and electrical
industries which established her as the first industrial nation
of continental Europe. One-third of Germany's population lives in
towns of more than 20,000 inhabitants, an industrial
concentration which is only possible on a foundation of coal and
iron. In striking, therefore, at her coal supply, the French
politicians were not mistaking their target. It is only the
extreme immoderation, and indeed technical impossibility, of the
treaty's demands which may save the situation in the long run.
(1) The treaty strikes at Germany's coal supply in four ways:
(i) 'As compensation for the destruction of the coal-mines in
the north of France, and as part payment towards the total
reparation due from Germany for the damage resulting from the
war, Germany cedes to France in full and absolute possession,
with exclusive rights of exploitation, unencumbered, and free
from all debts and charges of any kind, the coal-mines situated
in the Saar Basin.'(30*) While the administration of this
district is vested for fifteen years in the League of Nations, it
is to be observed that the mines are ceded to France absolutely.
Fifteen years hence the population of the district will be called
upon to indicate by plebiscite their desires as to the future
sovereignty of the territory; and, in the event of their electing
for union with Germany, Germany is to be entitled to repurchase
the mines at a price payable in gold.(31*)
The judgment of the world has already recognised the
transaction of the Saar as an act of spoliation and insincerity.
So far as compensation for the destruction of French coal-mines
is concerned, this is provided for, as we shall see in a moment,
elsewhere in the treaty. 'There is no industrial region in
Germany', the German representatives have said without
contradiction, 'the population of which is so permanent, so
homogeneous, and so little complex as that of the Saar district.
Among more than 650,000 inhabitants, there were in 1918 less than
100 French. The Saar district has been German for more than 1,000
years. Temporary occupation as a result of warlike operations on
the part of the French always terminated in a short time in the
restoration of the country upon the conclusion of peace. During a
period of 1,048 years France has possessed the country for not
quite 68 years in all. When, on the occasion of the first Treaty
of Paris in 1814, a small portion of the territory now coveted
was retained for France, the population raised the most energetic
opposition and demanded "reunion with their German fatherland,"
to which they were "related by language, customs, and religion".
After an occupation of one year and a quarter, this desire was
taken into account in the second Treaty of Paris in 1815. Since
then the country has remained uninterruptedly attached to
Germany, and owes its economic development to that connection.'
The French wanted the coal for the purpose of working the
ironfields of Lorraine, and in the spirit of Bismarck they have
taken it. Not precedent, but the verbal professions of the
Allies, have rendered it indefensible.(32*)
(ii) Upper Silesia, a district without large towns, in which,
however, lies one of the major coalfields of Germany with a
production of about 23% of the total German output of hard coal,
is, subject to a plebiscite,(33*) to be ceded to Poland. Upper
Silesia was never part of historic Poland; but its population is
mixed Polish, German, and Czechoslovakian, the precise
proportions of which are disputed.(34*) Economically it is
intensely German; the industries of eastern Germany depend upon
it for their coal; and its loss would be a destructive blow at
the economic structure of the German state.(35*)
With the loss of the fields of Upper Silesia and the Saar,
the coal supplies of Germany are diminished by not far short of
one-third.
(iii) Out of the coal that remains to her, Germany is obliged
to make good year by year the estimated loss which France has
incurred by the destruction and damage of war in the coalfields
of her northern provinces. In paragraph 2 of annex V to the
reparation chapter, 'Germany undertakes to deliver to France
annually, for a period not exceeding ten years, an amount of coal
equal to the difference between the annual production before the
war of the coal-mines of the Nord and Pas de Calais, destroyed as
a result of the war, and the production of the mines of the same
area during the year in question: such delivery not to exceed 20
million tons in any one year of the first five years, and 8
million tons in any one year of the succeeding five years'.
This is a reasonable provision if it stood by itself, and one
which Germany should be able to fulfil if she were left her other
resources to do it with.
(iv) The final provision relating to coal is part of the
general scheme of the reparation chapter by which the sums due
for reparation are to be partly paid in kind instead of in cash.
As a part of the payment due for reparation, Germany is to make
the following deliveries of coal or its equivalent in coke (the
deliveries to France being wholly additional to the amounts
available by the cession of the Saar or in compensation for
destruction in Northern France):
(a) to France 7 million tons annually for ten years;(36*)
(b) to Belgium 8 million tons annually for ten years;
(c) to Italy an annual quantity, rising by annual increments
from 4.5 million tons in 1919-20 to 8.5 million tons in each of
the six years 1923-4 to 1928-9;
(d) to Luxemburg, if required, a quantity of coal equal to
the pre-war annual consumption of German coal in Luxemburg.
This amounts in all to an annual average of about 25 million
tons.
These figures have to be examined in relation to Germany's
probable output. The maximum pre-war figure was reached in 1913
with a total of 191.5 million tons. Of this, 19 million tons were
consumed at the mines, and on balance (i.e. exports less imports)
33.5 million tons were exported, leaving 139 million tons for
domestic consumption. It is estimated that this total was
employed as follows:
Million tons
Railways 18.0
Gas, water, and electricity 12.5
Bunkers 6.5
House-fuel, small industry
and agriculture 24.0
Industry 78.0
139.0
The diminution of production due to loss of territory is:
Million tons
Alsace-Lorraine 3.8
Saar Basin 13.2
Upper Silesia 43.8
60.8
There would remain, therefore, on the basis of the 1913
output, 130.7 million tons or, deducting consumption at the mines
themselves, (say) 118 million tons. For some years there must be
sent out of this supply upwards of 20 million tons to France as
compensation for damage done to French mines, and 25 million tons
to France, Belgium, Italy, and Luxemburg;(37*) as the former
figure is a maximum, and the latter figure is to be slightly less
in the earliest years, we may take the total export to Allied
countries which Germany has undertaken to provide as 40 million
tons, leaving, on the above basis, 78 million tons for her own
use as against a pre-war consumption of 139 million tons.
This comparison, however, requires substantial modification
to make it accurate. On the one hand, it is certain that the
figures of pre-war output cannot be relied on as a basis of
present output. During 1918 the production was 161.5 million tons
as compared with 191.5 million tons in 1913; and during the first
half of 1919 it was less than 50 million tons, exclusive of
Alsace-Lorraine and the Saar but including Upper Silesia,
corresponding to an annual production of about 100 million
tons.(38*) The causes of so low an output were in part temporary
and exceptional, but the German authorities agree, and have not
been confuted, that some of them are bound to persist for some
time to come. In part they are the same as elsewhere; the daily
shift has been shortened from 8 1/2 to 7 hours, and it is
improbable that the powers of the central government will be
adequate to restore them to their former figure. But in addition,
the mining plant is in bad condition (due to the lack of certain
essential materials during the blockade), the physical efficiency
of the men is greatly impaired by malnutrition (which cannot be
cured if a tithe of the reparation demands are to be satisfied --
the standard of life will have rather to be lowered), and the
casualties of the war have diminished the numbers of efficient
miners. The analogy of English conditions is sufficient by itself
to tell us that a pre-war level of output cannot be expected in
Germany. German authorities put the loss of output at somewhat
above thirty per cent, divided about equally between the
shortening of the shift and the other economic influences. This
figure appears on general grounds to be plausible, but I have not
the knowledge to endorse or to criticise it.
The pre-war figure of 118 million tons net (i.e. after
allowing for loss of territory and consumption at the mines) is
likely to fall, therefore, at least as low as to 100 million(39*)
tons, having regard to the above factors. If 40 million tons of
this are to be exported to the Allies, there remain 60 million
tons for Germany herself to meet her own domestic consumption.
Demand as well as supply will be diminished by loss of territory,
but at the most extravagant estimate this could not be put above
29 million tons.(40*) Our hypothetical calculations, therefore,
leave us with post-war German domestic requirements, on the basis
of a prewar efficiency of railways and industry, of 110 million
tons against an output not exceeding 100 million tons, of which
40 million tons are mortgaged to the Allies.
The importance of the subject has led me into a somewhat
lengthy statistical analysis. It is evident that too much
significance must not be attached to the precise figures arrived
at, which are hypothetical and dubious.(41*) But the general
character of the facts presents itself irresistibly. Allowing for
the loss of territory and the loss of efficiency, Germany cannot
export coal in the near future (and will even be dependent on her
treaty rights to purchase in Upper Silesia), if she is to
continue as an industrial nation. Every million tons she is
forced to export must be at the expense of closing down an
industry. With results to be considered later this within certain
limits is possible. But it is evident that Germany cannot and
will not furnish the Allies with a contribution of 40 million
tons annually. Those Allied ministers who have told their peoples
that she can have certainly deceived them for the sake of
allaying for the moment the misgivings of the European peoples as
to the path along which they are being led.
The presence of these illusory provisions (amongst others) in
the clauses of the treaty of peace is especially charged with
danger for the future. The more extravagant expectations as to
reparation receipts, by which finance ministers have deceived
their publics, will be heard of no more when they have served
their immediate purpose of postponing the hour of taxation and
retrenchment. But the coal clauses will not be lost sight of so
easily -- for the reason that it will be absolutely vital in the
interests of France and Italy that these countries should do
everything in their power to exact their bond. As a result of the
diminished output due to German destruction in France, of the
diminished output of mines in the United Kingdom and elsewhere,
and of many secondary causes, such as the breakdown of transport
and of organisation and the inefficiency of new governments, the
coal position of all Europe is nearly desperate;(42*) and France
and Italy, entering the scramble with certain treaty rights, will
not lightly surrender them.
As is generally the case in real dilemmas, the French and
Italian case will possess great force, indeed unanswerable force
from a certain point of view. The position will be truly
represented as a question between German industry on the one hand
and French and Italian industry on the other. It may be admitted
that the surrender of the coal will destroy German industry; but
it may be equally true that its non-surrender will jeopardise
French and Italian industry. In such a case must not the victors
with their treaty rights prevail, especially when much of the
damage has been ultimately due to the wicked acts of those who
are now defeated? Yet if these feelings and these rights are
allowed to prevail beyond what wisdom would recommend, the
reactions on the social and economic life of Central Europe will
be far too strong to be confined within their original limits.
But this is not yet the whole problem. If France and Italy
are to make good their own deficiencies in coal from the output
of Germany, then northern Europe, Switzerland, and Austria, which
previously drew their coal in large part from Germany's
exportable surplus, must be starved of their supplies. Before the
war 13.4 million tons of Germany's coal exports went to
Austria-Hungary. Inasmuch as nearly all the coalfields of the
former empire lie outside what is now German Austria, the
industrial ruin of this latter state, if she cannot obtain coal
from Germany, will be complete. The case of Germany's neutral
neighbours, who were formerly supplied in part from Great Britain
but in large part from Germany, will be hardly less serious. They
will go to great lengths in the direction of making their own
supplies to Germany of materials which are essential to her,
conditional on these being paid for in coal. Indeed they are
already doing so.(43*) With the breakdown of money economy the
practice of international barter is becoming prevalent. Nowadays
money in Central and south-eastern Europe is seldom a true
measure of value in exchange, and will not necessarily buy
anything, with the consequence that one country, possessing a
commodity essential to the needs of another, sells it not for
cash but only against a reciprocal engagement on the part of the
latter country to furnish in return some article not less
necessary to the former. This is an extraordinary complication as
compared with the former almost perfect simplicity of
international trade. But in the no less extraordinary conditions
of today's industry it is not without advantages as a means of
stimulating production. The butter-shifts of the Ruhr(44*) show
how far modern Europe has retrograded in the direction of barter,
and afford a picturesque illustration of the low economic
organisation to which the breakdown of currency and free exchange
between individuals and nations is quickly leading us. But they
may produce the coal where other devices would fail.(45*)
Yet if Germany can find coal for the neighbouring neutrals,
France and Italy may loudly claim that in this case she can and
must keep her treaty obligations. In this there will be a great
show of justice, and it will be difficult to weigh against such
claims the possible facts that, while German miners will work for
butter, there is no available means of compelling them to get
coal the sale of which will bring in nothing, and that if Germany
has no coal to send to her neighbours she may fail to secure
imports essential to her economic existence.
If the distribution of the European coal supplies is to be a
scramble in which France is satisfied first, Italy next, and
everyone else takes their chance, the industrial future of Europe
is black and the prospects of revolution very good. It is a case
where particular interests and particular claims, however well
founded in sentiment or in justice, must yield to sovereign
expediency. If there is any approximate truth in Mr Hoover's
calculation that the coal output of Europe has fallen by
one-third, a situation confronts us where distribution must be
effected with evenhanded impartiality in accordance with need,
and no incentive can be neglected towards increased production
and economical methods of transport. The establishment by the
Supreme Council of the Allies in August 1919 of a European coal
commission, consisting of delegates from Great Britain, France,
Italy, Belgium, Poland, and Czechoslovakia, was a wise measure
which, properly employed and extended, may prove of great
assistance. But I reserve constructive proposals for chapter 7.
Here I am only concerned with tracing the consequences, per
impossibile, of carrying out the treaty au pied de la
lettre.(46*)
(2) The provisions relating to iron ore require less detailed
attention, though their effects are destructive. They require
less attention, because they are in large measure inevitable.
Almost exactly 75% of the iron ore raised in Germany in 1913 came
from Alsace-Lorraine.(47*) In this the chief importance of the
stolen provinces lay.
There is no question but that Germany must lose these
orefields. The only question is how far she is to be allowed
facilities for purchasing their produce. The German delegation
made strong efforts to secure the inclusion of a provision by
which coal and coke to be furnished by them to France should be
given in exchange for minette from Lorraine. But they secured no
such stipulation, and the matter remains at France's option.
The motives which will govern France's eventual policy are
not entirely concordant. While Lorraine comprised 75% of
Germany's iron ore, only 25 % of the blast furnaces lay within
Lorraine and the Saar basin together, a large proportion of the
ore being carried into Germany proper. Approximately the same
proportion of Germany's iron and steel foundries, namely 25 per
cent, were situated in Alsace-Lorraine. For the moment,
therefore, the most economical and profitable course would
certainly be to export to Germany, as hitherto, a considerable
part of the output of the mines.
On the other hand, France, having recovered the deposits of
Lorraine, may be expected to aim at replacing as far as possible
the industries which Germany had based on them by industries
situated within her own frontiers. Much time must elapse before
the plant and the skilled labour could be developed within
France, and even so she could hardly deal with the ore unless she
could rely on receiving the coal from Germany. The uncertainty,
too, as to the ultimate fate of the Saar will be disturbing to
the calculations of capitalists who contemplate the establishment
of new industries in France.
In fact, here, as elsewhere, political considerations cut
disastrously across economic. In a régime of free trade and free
economic intercourse it would be of little consequence that iron
lay on one side of a political frontier, and labour, coal, and
blast furnaces on the other. But as it is, men have devised ways
to impoverish themselves and one another; and prefer collective
animosities to individual happiness. It seems certain,
calculating on the present passions and impulses of European
capitalistic society, that the effective iron output of Europe
will be diminished by a new political frontier (which sentiment
and historic justice require), because nationalism and private
interest are thus allowed to impose a new economic frontier along
the same lines. These latter considerations are allowed, in the
present governance of Europe, to prevail over the intense need of
the continent for the most sustained and efficient production to
repair the destructions of war, and to satisfy the insistence of
labour for a larger reward.(48*)
The same influences are likely to be seen, though on a lesser
scale, in the event of the transference of Upper Silesia to
Poland. While Upper Silesia contains but little iron, the
presence of coal has led to the establishment of numerous blast
furnaces. What is to be the fate of these? If Germany is cut off
from her supplies of ore on the west, will she export beyond her
frontiers on the east any part of the little which remains to
her? The efficiency and output of the industry seem certain to
diminish.
Thus the treaty strikes at organisation, and by the
destruction of organisation impairs yet further the reduced
wealth of the whole community. The economic frontiers which are
to be established between the coal and the iron upon which modern
industrialism is founded will not only diminish the production of
useful commodities, but may possibly occupy an immense quantity
of human labour in dragging iron or coal, as the case may be,
over many useless miles to satisfy the dictates of a political
treaty or because obstructions have been established to the
proper localisation of industry.
III
There remain those treaty provisions which relate to the
transport and the tariff systems of Germany. These parts of the
treaty have not nearly the importance and the significance of
those discussed hitherto. They are pinpricks, interferences and
vexations, not so much objectionable for their solid
consequences, as dishonourable to the Allies in the light of
their professions. Let the reader consider what follows in the
light of the assurances already quoted, in reliance on which
Germany laid down her arms.
(1) The miscellaneous economic clauses commence with a number
of provisions which would be in accordance with the spirit of the
third of the Fourteen Points -- if they were reciprocal. Both for
imports and exports, and as regards tariffs, regulations, and
prohibitions, Germany binds herself for five years to accord
most-favoured-nation treatment to the Allied and Associated
states.(49*) But she is not entitled herself to receive such
treatment.
For five years Alsace-Lorraine shall be free to export into
Germany, without payment of customs duty, up to the average
amount sent annually into Germany from 1911 to 1913.(50*) But
there is no similar provision for German exports into
Alsace-Lorraine.
For three years Polish exports to Germany, and for five years
Luxemburg's exports to Germany, are to have a similar
privilege,(51*) but not German exports to Poland or to Luxemburg.
Luxemburg also, which for many years has enjoyed the benefits of
inclusion within the German customs union, is permanently
excluded from it henceforward.(52*)
For six months after the treaty has come into force Germany
may not impose duties on imports from the Allied and Associated
states higher than the most favourable duties prevalent before
the war; and for a further two years and a half (making three
years in all) this prohibition continues to apply to certain
commodities, notably to some of those as to which special
agreements existed before the war, and also to wine, to vegetable
oils, to artificial silk, and to washed or scoured wool.(53*)
This is a ridiculous and injurious provision, by which Germany is
prevented from taking those steps necessary to conserve her
limited resources for the purchase of necessaries and the
discharge of reparation. As a result of the existing distribution
of wealth in Germany, and of financial wantonness amongst
individuals, the offspring of uncertainty, Germany is threatened
with a deluge of luxuries and semi-luxuries from abroad, of which
she has been starved for years, which would exhaust or diminish
her small supplies of foreign exchange. These provisions strike
at the authority of the German government to ensure economy in
such consumption, or to raise taxation during a critical period.
What an example of senseless greed overreaching itself, to
introduce, after taking from Germany what liquid wealth she has
and demanding impossible payments for the future, a special and
particularised injunction that she must allow as readily as in
the days of her prosperity the import of champagne and of silk!
One other article affects the customs régime of Germany
which, if it was applied, would be serious and extensive in its
consequences. The Allies have reserved the right to apply a
special customs régime to the occupied area on the left bank of
the Rhine, 'in the event of such a measure being necessary in
their opinion in order to safeguard the economic interests of the
population of these territories'.(54*) This provision was
probably introduced as a possibly useful adjunct to the French
policy of somehow detaching the left-bank provinces from Germany
during the years of their occupation. The project of establishing
an independent republic under French clerical auspices, which
would act as a buffer state and realise the French ambition of
driving Germany proper beyond the Rhine, has not yet been
abandoned. Some believe that much may be accomplished by a régime
of threats, bribes, and cajolery extended over a period of
fifteen years or longer.(55*) If this article is acted upon, and
the economic system of the left bank of the Rhine is effectively
severed from the rest of Germany, the effect would be
far-reaching. But the dreams of designing diplomats do not always
prosper, and we must trust the future.
(2) The clauses relating to railways, as originally presented
to Germany, were substantially modified in the final treaty, and
are now limited to a provision by which goods coming from Allied
territory to Germany, or in transit through Germany, shall
receive the most favoured treatment as regards rail freight,
rates, etc., applied to goods of the same kind carried on any
German lines 'under similar conditions of transport, for example,
as regards length of route'.(56*) As a non-reciprocal provision
this is an act of interference in internal arrangements which it
is difficult to justify, but the practical effect of this,(57*)
and of an analogous provision relating to passenger traffic,(58*)
will much depend on the interpretation of the phrase, 'similar
conditions of transport'.(59*)
For the time being Germany's transport system will be much
more seriously disordered by the provisions relating to the
cession of rolling-stock. Under paragraph 7 of the armistice
conditions Germany was called on to surrender 5,000 locomotives
and 150,000 waggons, 'in good working order, with all necessary
spare parts and fittings'. Under the treaty Germany is required
to confirm this surrender and to recognise the title of the
Allies to the material.(60*) She is further required, in the case
of railway systems in ceded territory, to hand over these systems
complete with their full complement of rolling-stock 'in a normal
state of upkeep' as shown in the last inventory before 11
November 1918.(61*) That is to say, ceded railway systems are not
to bear any share in the general depletion and deterioration of
the German rolling-stock as a whole.
This is a loss which in course of time can doubtless be made
good. But lack of lubricating oils and the prodigious wear and
tear of the war, not compensated by normal repairs, had already
reduced the German railway system to a low state of efficiency.
The further heavy losses under the treaty will confirm this state
of affairs for some time to come, and are a substantial
aggravation of the difficulties of the coal problem and of export
industry generally.
(3) There remain the clauses relating to the river system of
Germany. These are largely unnecessary and are so little related
to the supposed aims of the Allies that their purport is
generally unknown. Yet they constitute an unprecedented
interference with a country's domestic arrangements, and are
capable of being so operated as to take from Germany all
effective control over her own transport system. In their present
form they are incapable of justification; but some simple changes
might transform them into a reasonable instrument.
Most of the principal rivers of Germany have their source or
their outlet in non-German territory. The Rhine, rising in
Switzerland, is now a frontier river for a part of its course,
and finds the sea in Holland; the Danube rises in Germany but
flows over its greater length elsewhere; the Elbe rises in the
mountains of Bohemia, now called Czechoslovakia; the Oder
traverses Lower Silesia; and the Niemen now bounds the frontier
of East Prussia and has its source in Russia. Of these, the Rhine
and the Niemen are frontier rivers, the Elbe is primarily German
but in its upper reaches has much importance for Bohemia, the
Danube in its German parts appears to have little concern for any
country but Germany, and the Oder is an almost purely German
river unless the result of the plebiscite is to detach all Upper
Silesia.
Rivers which, in the words of the treaty, 'naturally provide
more than one state with access to the sea', properly require
some measure of international regulation and adequate guarantees
against discrimination. This principle has long been recognised
in the international commissions which regulate the Rhine and the
Danube. But on such commissions the states concerned should be
represented more or less in proportion to their interests. The
treaty, however, has made the international character of these
rivers a pretext for taking the river system of Germany out of
German control.
After certain articles which provide suitably against
discrimination and interference with freedom of transit,(62*) the
treaty proceeds to hand over the administration of the Elbe, the
Oder, the Danube, and the Rhine to international
commissions.(63*) The ultimate powers of these commissions are to
be determined by 'a general convention drawn up by the Allied and
Associated Powers, and approved by the League of Nations'.(64*)
In the meantime the commissions are to draw up their own
constitutions and are apparently to enjoy powers of the most
extensive description, 'particularly in regard to the execution
of works of maintenance, control, and improvement on the river
system, the financial régime, the fixing and collection of
charges, and regulations for navigation.'(65*)
So far there is much to be said for the treaty. Freedom of
through transit is a not unimportant part of good international
practice and should be established everywhere. The objectionable
feature of the commissions lies in their membership. In each case
the voting is so weighted as to place Germany in a clear
minority. On the Elbe commission Germany has four votes out of
ten; on the Oder commission three out of nine; on the Rhine
commission four out of nineteen; on the Danube commission, which
is not yet definitely constituted, she will be apparently in a
small minority. On the government of all these rivers France and
Great Britain are represented; and on the Elbe for some
undiscoverable reason there are also representatives of Italy and
Belgium.
Thus the great waterways of Germany are handed over to
foreign bodies with the widest powers; and much of the local and
domestic business of Hamburg, Magdeburg, Dresden, Stettin,
Frankfurt, Breslau, and Ulm will be subject to a foreign
jurisdiction. It is almost as though the Powers of continental
Europe were to be placed in a majority on the Thames Conservancy
or the Port of London.
Certain minor provisions follow lines which in our survey of
the treaty are now familiar. Under annex III of the reparation
chapter Germany is to cede up to 20% of her inland navigation
tonnage. Over and above this she must cede such proportion of her
river craft upon the Elbe, the Oder, the Niemen, and the Danube
as an American arbitrator may determine, 'due regard being had to
the legitimate needs of the parties concerned, and particularly
to the shipping traffic during the five years preceding the war',
the craft so ceded to be selected from those most recently
built.(66*) The same course is to be followed with German vessels
and tugs on the Rhine and with German property in the port of
Rotterdam.(67*) Where the Rhine flows between France and Germany,
France is to have all the rights of utilising the water for
irrigation or for power and Germany is to have none;(68*) and all
the bridges are to be French property as to their whole
length.(69*) Finally, the administration of the purely German
Rhine port of Kehl lying on the eastern bank of the river is to
be united to that of Strassburg for seven years and managed by a
Frenchman nominated by the new Rhine commission.
Thus the economic clauses of the treaty are comprehensive,
and little has been overlooked which might impoverish Germany now
or obstruct her development in future. So situated, Germany is to
make payments of money, on a scale and in a manner to be examined
in the next chapter.
NOTES:
1. The precise force of this reservation is discussed in detail
in chapter 5.
2. I also omit those which have no special relevance to the
German settlement. The second of the Fourteen Points, which
relates to the freedom of the seas, is omitted because the Allies
did not accept it.
3. Part VIII, annex III (1).
4. Part VIII, annex III (3).
5. In the years before the war the average shipbuilding output of
Germany was about 350,000 tons annually, exclusive of warships.
6. Part VIII, annex III (5).
7. Article 119.
8. Article 120 and 257.
9. Article 122.
10. Articles 121 and 297(b). The exercise or non-exercise of this
option of expropriation appears to lie, not with the reparation
commission, but with the particular Power in whose territory the
property has become situated by cession or mandation.
11. Article 297(h) and paragraph 4 of annex to part X, section
IV.
12. Articles 53 and 74.
13. In 1871 Germany granted France credit for the railways of
Alsace-Lorraine but not for state property. At that time,
however, the railways were private property. As they afterwards
became the property of the German government, the French
government have held, in spite of the large additional capital
which Germany has sunk in them, that their treatment must follow
the precedent of state property generally.
14. Articles 55 and 255. This follows the precedent of 1871.
15. Articles 297(b).
16. Part X, sections III and IV and article 243.
17. The interpretation of the words between inverted commas is a
little dubious. The phrase is so wide as to seem to include
private debts. But in the final draft of the treaty private debts
are not explicitly referred to.
18. This provision is mitigated in the case of German property in
Poland and the other new states, the proceeds of liquidation in
these areas being payable direct to the owner (article 92).
19. Part x, section IV, annex, paragraph 10: 'Germany will,
within six months from the coming into force of the present
treaty, deliver to each Allied or Associated Power all
securities, certificates, deeds, or other documents of title held
by its nationals and relating to property, rights, or interests
situated in the territory of that Allied or Associated Power...
Germany will at any time on demand of any Allied or Associated
Power furnish such information as may be required with regard to
the property, rights, and interests of German nationals within
the territory of such Allied or Associated Power, or with regard
to any transactions concerning such property, rights, or
interests effected since 1 July 1914.'
20. 'Any public utility undertaking or concession' is a vague
phrase, the precise interpretation of which is not provided for.
21. Article 260.
22. Article 235.
23. Article 118.
24. Articles 129 and 132.
25. Articles 135-7.
26. Articles 135 40.
27. Article 141: 'Germany renounces all rights, titles and
privileges conferred on her by the general Act of Algeciras of 7
April 1906, and by the Franco-German agreements of 9 February
1909 and 4 November 1911...'
28. Article 148: 'All treaties, agreements, arrangements and
contracts concluded by Germany with Egypt are regarded as
abrogated from 4 August 1914.' Article 153: 'All property and
possessions in Egypt of the German empire and the German states
pass to the Egyptian government without payment.'
29. Article 289.
30. Article 45.
31. Part IV, section IV, annex, chapter III.
32. 'We take over the ownership of the Sarre mines, and in order
not to be inconvenienced in the exploitation of these coal
deposits, we constitute a distinct little estate for the 600,000
Germans who inhabit this coal basin, and in fifteen years we
shall endeavour by a plebiscite to bring them to declare that
they want to be French. We know what that means. During fifteen
years we are going to work on them, to attack them from every
point, till we obtain from them a declaration of love. It is
evidently a less brutal proceeding than the coup de force which
detached from us our Alsatians and Lorrainers. But if less
brutal, it is more hypocritical. We know quite well between
ourselves that it is an attempt to annex these 600,000 Germans.
One can understand very well the reasons of an economic nature
which have led Clemenceau to wish to give us these Sarre coal
deposits, but in order to acquire them must we give ourselves the
appearance of wanting to juggle with 600,000 Germans in order to
make Frenchmen of them in fifteen years?' (M. Hervé in La
Victoire, 31 May 1919).
33. This plebiscite is the most important of the concessions
accorded to Germany in the Allies' final Note, and one for which
Mr Lloyd George, who never approved the Allies' policy on the
eastern frontiers of Germany, can claim the chief credit. The
vote cannot take place before the spring of 1920, and may be
postponed until 1921. In the meantime the province will be
governed by an Allied commission. The vote will be taken by
communes, and the final frontiers will be determined by the
Allies, who shall have regard, partly to the results of the vote
in each commune, and partly 'to the geographical and economic
conditions of the locality'. It would require great local
knowledge to predict the result. By voting Polish, a locality can
escape liability for the indemnity and for the crushing taxation
consequent on voting German, a factor not to be neglected. On the
other hand, the bankruptcy and incompetence of the new Polish
state might deter those who were disposed to vote on economic
rather than on racial grounds. It has also been stated that the
conditions of life in such matters as sanitation and social
legislation are incomparably better in Upper Silesia than in the
adjacent districts of Poland, where similar legislation is in its
infancy. The argument in the text assumes that Upper Silesia will
cease to be German. But much may happen in a year, and the
assumption is not certain. To the extent that it proves erroneous
the conclusions must be modified.
34. German authorities claim, not without contradiction, that to
judge from the votes cast at elections, one-third of the
population would elect in the Polish interest, and two-thirds in
the German.
35. It must not be overlooked, however, that, amongst the other
concessions relating to Silesia accorded in the Allies' final
Note, there has been included article 90, by which 'Poland
undertakes to permit for a period of fifteen years the
exportation to Germany of the products of the mines in any part
of Upper Silesia transferred to Poland in accordance with the
present treaty. Such products shall be free from all export
duties or other charges or restrictions on exportation. Poland
agrees to take such steps as may be necessary to secure that any
such products shall be available for sale to purchasers in
Germany on terms as favourable as are applicable to like products
sold under similar conditions to purchasers in Poland or in any
other country.' This does not apparently amount to a right of
pre-emption, and it is not easy to estimate its effective
practical consequences. It is evident, however, that in so far as
the mines are maintained at their former efficiency, and in so
far as Germany is in a position to purchase substantially her
former supplies from that source, the loss is limited to the
effect on her balance of trade, and is without the more serious
repercussions on her economic life which are contemplated in the
text. Here is an opportunity for the Allies to render more
tolerable the actual operation of the settlement. The Germans, it
should be added, have pointed out that the same economic argument
which adds the Saar fields to France, allots Upper Silesia to
Germany. For whereas the Silesian mines are essential to the
economic life of Germany, Poland does not need them. Of Poland's
pre-war annual demand of 10.5 million tons, 6.8 million tons were
supplied by the indisputably Polish districts adjacent to Upper
Silesia, 1.5 million tons from Upper Silesia (out of a total
Upper Silesian output of 43.5 million tons) , and the balance
from what is now Czechoslovakia. Even without any supply from
Upper Silesia and Czechoslovakia, Poland could probably meet her
requirements by the fuller exploitation of her own coalfields
which are not yet scientifically developed, or from the deposits
of Western Galicia which are now to be annexed to her.
36. France is also to receive annually for three years 35,000
tons of benzol, 50,000 tons of coal tar, and 30,000 tons of
sulphate of ammonia.
37. The reparation commission is authorised under the treaty
(part VIII, annex V, paragraph 10) 'to postpone or to cancel
deliveries' if they consider 'that the full exercise of the
foregoing options would interfere unduly with the industrial
requirements of Germany'. In the event of such postponements or
cancellations 'the coal to replace coal from destroyed mines
shall receive priority over other deliveries'. This concluding
clause is of the greatest importance if, as will be seen, it is
physically impossible for Germany to furnish the full 45 million;
for it means that France will receive 20 million tons before
Italy receives anything. The reparation commission has no
discretion to modify this. The Italian Press has not failed to
notice the significance of the provision, and alleges that this
clause was inserted during the absence of the Italian
representatives from Paris (Corriere della Sera, 19 July 1919).
38. It follows that the current rate of production in Germany has
sunk to about sixty per cent of that of 1913. The effect on
reserves has naturally been disastrous, and the prospects for the
coming winter are dangerous.
39. This assumes a loss of output of fifteen per cent as compared
with the estimate of thirty per cent quoted above.
40. This supposes a loss of twenty-five per cent of Germany's
industrial undertakings and a diminution of thirteen per cent in
her other requirements.
41. The reader must be reminded in particular that the above
calculations take no account of the German production of lignite,
which yielded in 1913 13 million tons of rough lignite in
addition to an amount converted into 21 million tons of
briquette. This amount of lignite, however, was required in
Germany before the war in addition to the quantities of coal
assumed above. I am not competent to speak on the extent to which
the loss of coal can be made good by the extended use of lignite
or by economies in its present employment; but some authorities
believe that Germany may obtain substantial compensation for her
loss of coal by paying more attention to her deposits of lignite.
42. Mr Hoover, in July 1919, estimated that the coal output of
Europe, excluding Russia and the Balkans, had dropped from 679.5
million tons to 443 million tons -- as a result in a minor degree
of loss of material and labour, but owing chiefly to a relaxation
of physical effort after the privations and sufferings of the
war, a lack of rolling-stock and transport, and the unsettled
political fate of some of the mining districts.
43. Numerous commercial agreements during the war were arranged
on these lines. But in the month of June 1919 alone, minor
agreements providing for payment in coal were made by Germany
with Denmark, Norway, and Switzerland. The amounts involved were
not large, but without them Germany could not have obtained
butter from Denmark, fats and herrings from Norway, or milk and
cattle from Switzerland.
44. 'Some 60,000 Ruhr miners have agreed to work extra shifts --
so-called butter-shifts -- for the purpose of furnishing coal for
export to Denmark, whence butter will be exported in return. The
butter will benefit the miners in the first place, as they have
worked specially to obtain it' (Kölnische Zeitung, 11 June 1919).
45. What of the prospects of whisky-shifts in England?
46. As early as 1 September 1919 the coal commission had to face
the physical impracticability of enforcing the demands of the
treaty, and agreed to modify them as follows: 'Germany shall in
the next six months make deliveries corresponding to an annual
delivery of 20 million tons as compared with 43 millions as
provided in the peace treaty. If Germany's total production
exceeds the present level of about 108 millions a year, 60% of
the extra production, up to 128 millions, shall be delivered to
the Entente, and 50% of any extra beyond that, until the figure
provided in the peace treaty is reached. If the toil production
falls below 108 millions the Entente will examine the situation,
after hearing Germany, and take account of it.'
47. 21,136,265 tons out of a total of 28,607,903 tons. The loss
of iron ore in respect of Upper Silesia is insignificant. The
exclusion of the iron and steel of Luxemburg from the German
customs union is, however, important, especially when this loss
is added to that of Alsace-Lorraine. It may be added in passing
that Upper Silesia includes 75% of the zinc production of
Germany.
48. In April 1919 the British Ministry of Munitions despatched an
expert commission to examine the conditions of the iron and steel
works in Lorraine and the occupied areas of Germany. The Report
states that the iron and steel works in Lorraine, and to a lesser
extent in the Saar Valley, are dependent on supplies of coal and
coke from Westphalia. It is necessary to mix Westphalian coal
with Saar coal to obtain a good furnace coke. The entire
dependence of all the Lorraine iron and steel works upon Germany
for fuel supplies 'places them', says the Report, 'in a very
unenviable position'.
49. Articles 264, 265, 266, and 267. These provisions can only be
extended beyond five years by the council of the League of
Nations.
50. Article 268 (a).
51. Article 268 (b) and (c).
52. The Grand Duchy is also deneutralised and Germany binds
herself to 'accept in advance all international arrangements
which may be concluded by the Allied and Associated Powers
relating to the Grand Duchy' (article 40). At the end of
September 1919 a plebiscite was held to determine whether
Luxemburg should join the French or the Belgian customs union,
which decided by a substantial majority in favour of the former.
The third alternative of the maintenance of the union with
Germany was not left open to the electorate.
53. Article 269.
54. Article 270.
55. The occupation provisions may be conveniently summarised at
this point. German territory situated west of the Rhine, together
with the bridge-heads, is subject to occupation for a period of
fifteen years (article 428). If, however, 'the conditions of the
present treaty are faithfully carried out by Germany', the
Cologne district will be evacuated after five years, and the
Coblenz district after ten years (article 429). It is, however,
further provided that if at the expiration of fifteen years 'the
guarantees against unprovoked aggression by Germany are not
considered sufficient by the Allied and Associated governments,
the evacuation of the occupying troops may be delayed to the
extent regarded as necessary for the purpose of obtaining the
required guarantees' (article 429); and also that 'in case either
during the occupation or after the expiration of the fifteen
years, the reparation commission finds that Germany refuses to
observe the whole or part of her obligations under the present
treaty with regard to reparation, the whole or part of the areas
specified in article 429 will be re-occupied immediately by the
Allied and Associated Powers , (article 430). Since it will be
impossible for Germany to fulfil the whole of her reparation
obligations, the effect of the above provisions will be in
practice that the Allies will occupy the left bank of the Rhine
just so long as they choose. They will also govern it in such
manner as they may determine (e.g. not only as regards customs,
but such matters as the respective authority of the local German
representatives and the Allied governing commission), since 'all
matters relating to the occupation and not provided for by the
present treaty shall be regulated by subsequent agreements, which
Germany hereby undertakes to observe' (article 432). The actual
agreement under which the occupied areas are to be administered
for the present has been published as a White Paper (Cd. 222).
The supreme authority is to be in the hands of an inter-Allied
Rhineland commission, consisting of a Belgian, a French, a
British, and an American member. The articles of this agreement
are very fairly and reasonably drawn.
56. Article 365. After five years this article is subject to
revision by the Council of the League of Nations.
57. The German government withdrew, as from 1 September 1919, all
preferential railway tariffs for the export of iron and steel
goods, on the ground that these privileges would have been more
than counterbalanced by the corresponding privileges which, under
this article of the treaty, they would have been forced to give
to Allied traders.
58. Article 367.
59. Questions of interpretation and application are to be
referred to the League of Nations (article 376).
60. Article 250.
61. Article 371. This provision is even applied 'to the lines of
former Russian Poland converted by Germany to the German gauge,
such lines being regarded as detached from the Prussian state
system'.
62. Articles 332-7. Exception may be taken, however, to the
second paragraph of article 332, which allows the vessels of
other nations to trade between German towns but forbids German
vessels to trade between non-German towns except with special
permission; and article 333, which prohibits Germany from making
use of her river system as a source of revenue, may be
injudicious.
63. The Niemen and the Moselle are to be similarly treated at a
later date if required.
64. Article 338.
65. Article 344. This is with particular reference to the Elbe
and the Oder; the Danube and the Rhine are dealt with in relation
to the existing commissions.
66. Article 339.
67. Article 357.
68. Article 358. Germany is, however, to be allowed some payment
or credit in respect of power so taken by France.
69. Article 66.
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