The Economic Consequences of the Peace

The above analysis affords some indication of the possible magnitude of the maximum modification of Germany's export balance under the conditions which will prevail after the Peace. On the assumptions (1) that we do not specially favor Germany over ourselves in supplies of such raw materials as cotton and wool (the world's supply of which is limited), (2) that France, having secured the iron-ore deposits, makes a serious attempt to secure the blast-furnaces and the steel trade also, (3) that Germany is not encouraged and assisted to undercut the iron and other trades of the Allies in overseas market, and (4) that a substantial preference is not given to German goods in the British Empire, it is evident by examination of the specific items that not much is practicable.

Let us run over the chief items again: (1) Iron goods. In view of Germany's loss of resources, an increased net export seems impossible and a large decrease probable. (2) Machinery. Some increase is possible. (3) Coal and coke. The value of Germany's net export before the war was $110,000,000; the Allies have agreed that for the time being 20,000,000 tons is the maximum possible export with a problematic (and in fact) impossible increase to 40,000,000 tons at some future time; even on the basis of 20,000,000 tons we have virtually no increase of value, measured in pre-war prices;[129] whilst, if this amount is exacted, there must be a decrease of far greater value in the export of manufactured articles requiring coal for their production. (4) Woolen goods. An increase is impossible without the raw wool, and, having regard to the other claims on supplies of raw wool, a decrease is likely. (5) Cotton goods. The same considerations apply as to wool. (6) Cereals. There never was and never can be a net export. (7) Leather goods. The same considerations apply as to wool.

We have now covered nearly half of Germany's pre-war exports, and there is no other commodity which formerly represented as much as 3 per cent of her exports. In what commodity is she to pay? Dyes?—their total value in 1913 was $50,000,000. Toys? Potash?—1913 exports were worth $15,000,000. And even if the commodities could be specified, in what markets are they to be sold?—remembering that we have in mind goods to the value not of tens of millions annually, but of hundreds of millions.

On the side of imports, rather more is possible. By lowering the standard of life, an appreciable reduction of expenditure on imported commodities may be possible. But, as we have already seen, many large items are incapable of reduction without reacting on the volume of exports.

Let us put our guess as high as we can without being foolish, and suppose that after a time Germany will be able, in spite of the reduction of her resources, her facilities, her markets, and her productive power, to increase her exports and diminish her imports so as to improve her trade balance altogether by $500,000,000 annually, measured in pre-war prices. This adjustment is first required to liquidate the adverse trade balance, which in the five years before the war averaged $370,000,000; but we will assume that after allowing for this, she is left with a favorable trade balance of $250,000,000 a year. Doubling this to allow for the rise in pre-war prices, we have a figure of $500,000,000. Having regard to the political, social, and human factors, as well as to the purely economic, I doubt if Germany could be made to pay this sum annually over a period of 30 years; but it would not be foolish to assert or to hope that she could.

Such a figure, allowing 5 per cent for interest, and 1 per cent for repayment of capital, represents a capital sum having a present value of about $8,500,000,000.[130]

I reach, therefore, the final conclusion that, including all methods of payment—immediately transferable wealth, ceded property, and an annual tribute—$10,000,000,000 is a safe maximum figure of Germany's capacity to pay. In all the actual circumstances, I do not believe that she can pay as much. Let those who consider this a very low figure, bear in mind the following remarkable comparison. The wealth of France in 1871 was estimated at a little less than half that of Germany in 1913. Apart from changes in the value of money, an indemnity from Germany of $2,500,000,000 would, therefore, be about comparable to the sum paid by France in 1871; and as the real burden of an indemnity increases more than in proportion to its amount, the payment of $10,000,000,000 by Germany would have far severer consequences than the $1,000,000,000 paid by France in 1871.

There is only one head under which I see a possibility of adding to the figure reached on the line of argument adopted above; that is, if German labor is actually transported to the devastated areas and there engaged in the work of reconstruction. I have heard that a limited scheme of this kind is actually in view. The additional contribution thus obtainable depends on the number of laborers which the German Government could contrive to maintain in this way and also on the number which, over a period of years, the Belgian and French inhabitants would tolerate in their midst. In any case, it would seem very difficult to employ on the actual work of reconstruction, even over a number of years, imported labor having a net present value exceeding (say) $1,250,000,000; and even this would not prove in practice a net addition to the annual contributions obtainable in other ways.

A capacity of $40,000,000,000 or even of $25,000,000,000 is, therefore, not within the limits of reasonable possibility. It is for those who believe that Germany can make an annual payment amounting to hundreds of millions sterling to say in what specific commodities they intend this payment to be made and in what markets the goods are to be sold. Until they proceed to some degree of detail, and are able to produce some tangible argument in favor of their conclusions, they do not deserve to be believed.[131]

I make three provisos only, none of which affect the force of my argument for immediate practical purposes.

First: if the Allies were to "nurse" the trade and industry of Germany for a period of five or ten years, supplying her with large loans, and with ample shipping, food, and raw materials during that period, building up markets for her, and deliberately applying all their resources and goodwill to making her the greatest industrial nation in Europe, if not in the world, a substantially larger sum could probably be extracted thereafter; for Germany is capable of very great productivity.

Second: whilst I estimate in terms of money, I assume that there is no revolutionary change in the purchasing power of our unit of value. If the value of gold were to sink to a half or a tenth of its present value, the real burden of a payment fixed in terms of gold would be reduced proportionately. If a sovereign comes to be worth what a shilling is worth now, then, of course, Germany can pay a larger sum than I have named, measured in gold sovereigns.

Third: I assume that there is no revolutionary change in the yield of Nature and material to man's labor. It is not impossible that the progress of science should bring within our reach methods and devices by which the whole standard of life would be raised immeasurably, and a given volume of products would represent but a portion of the human effort which it represents now. In this case all standards of "capacity" would be changed everywhere. But the fact that all things are possible is no excuse for talking foolishly.

It is true that in 1870 no man could have predicted Germany's capacity in 1910. We cannot expect to legislate for a generation or more. The secular changes in man's economic condition and the liability of human forecast to error are as likely to lead to mistake in one direction as in another. We cannot as reasonable men do better than base our policy on the evidence we have and adapt it to the five or ten years over which we may suppose ourselves to have some measure of prevision; and we are not at fault if we leave on one side the extreme chances of human existence and of revolutionary changes in the order of Nature or of man's relations to her. The fact that we have no adequate knowledge of Germany's capacity to pay over a long period of years is no justification (as I have heard some people claim that, it is) for the statement that she can pay $50,000,000,000.

Why has the world been so credulous of the unveracities of politicians? If an explanation is needed, I attribute this particular credulity to the following influences in part.

In the first place, the vast expenditures of the war, the inflation of prices, and the depreciation of currency, leading up to a complete instability of the unit of value, have made us lose all sense of number and magnitude in matters of finance. What we believed to be the limits of possibility have been so enormously exceeded, and those who founded their expectations on the past have been so often wrong, that the man in the street is now prepared to believe anything which is told him with some show of authority, and the larger the figure the more readily he swallows it.

But those who look into the matter more deeply are sometimes misled by a fallacy, much more plausible to reasonableness. Such a one might base his conclusions on Germany's total surplus of annual productivity as distinct from her export surplus. Helfferich's estimate of Germany's annual increment of wealth in 1913 was $2,000,000,000 to $2,125,000,000 (exclusive of increased money value of existing land and property). Before the war, Germany spent between $250,000,000 and $500,000,000 on armaments, with which she can now dispense. Why, therefore, should she not pay over to the Allies an annual sum of $2,500,000,000? This puts the crude argument in its strongest and most plausible form.

But there are two errors in it. First of all, Germany's annual savings, after what she has suffered in the war and by the Peace, will fall far short of what they were before, and, if they are taken from her year by year in future, they cannot again reach their previous level. The loss of Alsace-Lorraine, Poland, and Upper Silesia could not be assessed in terms of surplus productivity at less than $250,000,000 annually. Germany is supposed to have profited about $500,000,000 per annum from her ships, her foreign investments, and her foreign banking and connections, all of which have now been taken from her. Her saving on armaments is far more than balanced by her annual charge for pensions now estimated at $1,250,000,000,[132] which represents a real loss of productive capacity. And even if we put on one side the burden of the internal debt, which amounts to 24 milliards of marks, as being a question of internal distribution rather than of productivity, we must still allow for the foreign debt incurred by Germany during the war, the exhaustion of her stock of raw materials, the depletion of her live-stock, the impaired productivity of her soil from lack of manures and of labor, and the diminution in her wealth from the failure to keep up many repairs and renewals over a period of nearly five years. Germany is not as rich as she was before the war, and the diminution in her future savings for these reasons, quite apart from the factors previously allowed for, could hardly be put at less than ten per cent, that is $200,000,000 annually.

These factors have already reduced Germany's annual surplus to less than the $500,000,000 at which we arrived on other grounds as the maximum of her annual payments. But even if the rejoinder be made, that we have not yet allowed for the lowering of the standard of life and comfort in Germany which may reasonably be imposed on a defeated enemy,[133] there is still a fundamental fallacy in the method of calculation. An annual surplus available for home investment can only be converted into a surplus available for export abroad by a radical change in the kind of work performed. Labor, while it may be available and efficient for domestic services in Germany, may yet be able to find no outlet in foreign trade. We are back on the same question which faced us in our examination of the export trade—in what export trade is German labor going to find a greatly increased outlet? Labor can only he diverted into new channels with loss of efficiency, and a large expenditure of capital. The annual surplus which German labor can produce for capital improvements at home is no measure, either theoretically or practically, of the annual tribute which she can pay abroad.

IV. The Reparation Commission.

This body is so remarkable a construction and may, if it functions at all, exert so wide an influence on the life of Europe, that its attributes deserve a separate examination.

There are no precedents for the indemnity imposed on Germany under the present Treaty; for the money exactions which formed part of the settlement after previous wars have differed in two fundamental respects from this one. The sum demanded has been determinate and has been measured in a lump sum of money; and so long as the defeated party was meeting the annual instalments of cash no consequential interference was necessary.

But for reasons already elucidated, the exactions in this case are not yet determinate, and the sum when fixed will prove in excess of what can be paid in cash and in excess also of what can be paid at all. It was necessary, therefore, to set up a body to establish the bill of claim, to fix the mode of payment, and to approve necessary abatements and delays. It was only possible to place this body in a position to exact the utmost year by year by giving it wide powers over the internal economic life of the enemy countries, who are to be treated henceforward as bankrupt estates to be administered by and for the benefit of the creditors. In fact, however, its powers and functions have been enlarged even beyond what was required for this purpose, and the Reparation Commission has been established as the final arbiter on numerous economic and financial issues which it was convenient to leave unsettled in the Treaty itself.[134]

The powers and constitution of the Reparation Commission are mainly laid down in Articles 233-241 and Annex II. of the Reparation Chapter of the Treaty with Germany. But the same Commission is to exercise authority over Austria and Bulgaria, and possibly over Hungary and Turkey, when Peace is made with these countries. There are, therefore, analogous articles mutatis mudandis in the Austrian Treaty[135] and in the Bulgarian Treaty.[136]

The principal Allies are each represented by one chief delegate. The delegates of the United States, Great Britain, France, and Italy take part in all proceedings; the delegate of Belgium in all proceedings except those attended by the delegates of Japan or the Serb-Croat- Slovene State; the delegate of Japan in all proceedings affecting maritime or specifically Japanese questions; and the delegate of the Serb-Croat-Slovene State when questions relating to Austria, Hungary, or Bulgaria are under consideration. Other allies are to be represented by delegates, without the power to vote, whenever their respective claims and interests are under examination.

In general the Commission decides by a majority vote, except in certain specific cases where unanimity is required, of which the most important are the cancellation of German indebtedness, long postponement of the instalments, and the sale of German bonds of indebtedness. The Commission is endowed with full executive authority to carry out its decisions. It may set up an executive staff and delegate authority to its officers. The Commission and its staff are to enjoy diplomatic privileges, and its salaries are to be paid by Germany, who will, however, have no voice in fixing them, If the Commission is to discharge adequately its numerous functions, it will be necessary for it to establish a vast polyglot bureaucratic organization, with a staff of hundreds. To this organization, the headquarters of which will be in Paris, the economic destiny of Central Europe is to be entrusted.

Its main functions are as follows:—

1. The Commission will determine the precise figure of the claim against the enemy Powers by an examination in detail of the claims of each of the Allies under Annex I. of the Reparation Chapter. This task must be completed by May, 1921. It shall give to the German Government and to Germany's allies "a just opportunity to be heard, but not to take any part whatever in the decisions of the Commission." That is to say, the Commission will act as a party and a judge at the same time.

2. Having determined the claim, it will draw up a schedule of payments providing for the discharge of the whole sum with interest within thirty years. From time to time it shall, with a view to modifying the schedule within the limits of possibility, "consider the resources and capacity of Germany . . . giving her representatives a just opportunity to be heard."

"In periodically estimating Germany's capacity to pay, the Commission shall examine the German system of taxation, first, to the end that the sums for reparation which Germany is required to pay shall become a charge upon all her revenues prior to that for the service or discharge of any domestic loan, and secondly, so as to satisfy itself that, in general, the German scheme of taxation is fully as heavy proportionately as that of any of the Powers represented on the Commission."

3. Up to May, 1921, the Commission has power, with a view to securing the payment of $5,000,000,000, to demand the surrender of any piece of German property whatever, wherever situated: that is to say, "Germany shall pay in such installments and in such manner, whether in gold, commodities, ships, securities, or otherwise, as the Reparation Commission may fix."

4. The Commission will decide which of the rights and interests of German nationals in public utility undertakings operating in Russia, China, Turkey, Austria, Hungary, and Bulgaria, or in any territory formerly belonging to Germany or her allies, are to be expropriated and transferred to the Commission itself; it will assess the value of the interests so transferred; and it will divide the spoils.

5 The Commission will determine how much of the resources thus stripped from Germany must be returned to her to keep enough life in her economic organization to enable her to continue to make Reparation payments in future.[137]

6. The Commission will assess the value, without appeal or arbitration, of the property and rights ceded under the Armistice, and under the Treaty,—roiling-stock, the mercantile marine, river craft, cattle, the Saar mines, the property in ceded territory for which credit is to be given, and so forth.

7. The Commission will determine the amounts and values (within certain defined limits) of the contributions which Germany is to make in kind year by year under the various Annexes to the Reparation Chapter.

8. The Commission will provide for the restitution by Germany of property which can be identified.

9. The Commission will receive, administer, and distribute all receipts from Germany in cash or in kind. It will also issue and market German bonds of indebtedness.

10. The Commission will assign the share of the pre-war public debt to be taken over by the ceded areas of Schleswig, Poland, Danzig, and Upper Silesia. The Commission will also distribute the public debt of the late Austro-Hungarian Empire between its constituent parts.

11. The Commission will liquidate the Austro-Hungarian Bank, and will supervise the withdrawal and replacement of the currency system of the late Austro-Hungarian Empire.

12. It is for the Commission to report if, in their judgment, Germany is falling short in fulfillment of her obligations, and to advise methods of coercion.

13. In general, the Commission, acting through a subordinate body, will perform the same functions for Austria and Bulgaria as for Germany, and also, presumably, for Hungary and Turkey.[138]

There are also many other relatively minor duties assigned to the Commission. The above summary, however, shows sufficiently the scope and significance of its authority. This authority is rendered of far greater significance by the fact that the demands of the Treaty generally exceed Germany's capacity. Consequently the clauses which allow the Commission to make abatements, if in their judgment the economic conditions of Germany require it, will render it in many different particulars the arbiter of Germany's economic life. The Commission is not only to inquire into Germany's general capacity to pay, and to decide (in the early years) what import of foodstuffs and raw materials is necessary; it is authorized to exert pressure on the German system of taxation (Annex II. para. 12(b))[139] and on German internal expenditure, with a view to insuring that Reparation payments are a first charge on the country's entire resources; and it is to decide on the effect on German economic life of demands for machinery, cattle, etc., and of the scheduled deliveries of coal.

By Article 240 of the Treaty Germany expressly recognizes the Commission and its powers "as the same may be constituted by the Allied and Associated Governments," and "agrees irrevocably to the possession and exercise by such Commission of the power and authority given to it under the present Treaty." She undertakes to furnish the Commission with all relevant information. And finally in Article 241, "Germany undertakes to pass, issue, and maintain in force any legislation, orders, and decrees that may be necessary to give complete effect to these provisions."

The comments on this of the German Financial Commission at Versailles were hardly an exaggeration:—"German democracy is thus annihilated at the very moment when the German people was about to build it up after a severe struggle—annihilated by the very persons who throughout the war never tired of maintaining that they sought to bring democracy to us.... Germany is no longer a people and a State, but becomes a mere trade concern placed by its creditors in the hands of a receiver, without its being granted so much as the opportunity to prove its willingness to meet its obligations of its own accord. The Commission, which is to have its permanent headquarters outside Germany, will possess in Germany incomparably greater rights than the German Emperor ever possessed, the German people under its régime would remain for decades to come shorn of all rights, and deprived, to a far greater extent than any people in the days of absolutism, of any independence of action, of any individual aspiration in its economic or even in its ethical progress."

In their reply to these observations the Allies refused to admit that there was any substance, ground, or force in them. "The observations of the German Delegation," they pronounced, "present a view of this Commission so distorted and so inexact that it is difficult to believe that the clauses of the Treaty have been calmly or carefully examined. It is not an engine of oppression or a device for interfering with German sovereignty. It has no forces at its command; it has no executive powers within the territory of Germany; it cannot, as is suggested, direct or control the educational or other systems of the country. Its business is to ask what is to be paid; to satisfy itself that Germany can pay; and to report to the Powers, whose delegation it is, in case Germany makes default. If Germany raises the money required in her own way, the Commission cannot order that it shall be raised in some other way; if Germany offers payment in kind, the Commission may accept such payment, but, except as specified in the Treaty itself, the Commission cannot require such a payment."

This is not a candid statement of the scope and authority of the Reparation Commission, as will be seen by a comparison of its terms with the summary given above or with the Treaty itself. Is not, for example, the statement that the Commission "has no forces at its command" a little difficult to justify in view of Article 430 of the Treaty, which runs:—"In case, either during the occupation or after the expiration of the fifteen years referred to above, 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 reoccupied immediately by the Allied and Associated Powers"? The decision, as to whether Germany has kept her engagements and whether it is possible for her to keep them, is left, it should be observed, not to the League of Nations, but to the Reparation Commission itself; and an adverse ruling on the part of the Commission is to be followed "immediately" by the use of armed force. Moreover, the depreciation of the powers of the Commission attempted in the Allied reply largely proceeds from the assumption that it is quite open to Germany to "raise the money required in her own way," in which case it is true that many of the powers of the Reparation Commission would not come into practical effect; whereas in truth one of the main reasons for setting up the Commission at all is the expectation that Germany will not be able to carry the burden nominally laid upon her.

It is reported that the people of Vienna, hearing that a section of the Reparation Commission is about to visit them, have decided characteristically to pin their hopes on it. A financial body can obviously take nothing from them, for they have nothing; therefore this body must be for the purpose of assisting and relieving them. Thus do the Viennese argue, still light-headed in adversity. But perhaps they are right. The Reparation Commission will come into very close contact with the problems of Europe; and it will bear a responsibility proportionate to its powers. It may thus come to fulfil a very different rôle from that which some of its authors intended for it. Transferred to the League of Nations, an appanage of justice and no longer of interest, who knows that by a change of heart and object the Reparation Commission may not yet be transformed from an instrument of oppression and rapine into an economic council of Europe, whose object is the restoration of life and of happiness, even in the enemy countries?

V. The German Counter-Proposals

The German counter-proposals were somewhat obscure, and also rather disingenuous. It will be remembered that those clauses of the Reparation Chapter which dealt with the issue of bonds by Germany produced on the public mind the impression that the Indemnity had been fixed at $25,000,000,000, or at any rate at this figure as a minimum. The German Delegation set out, therefore, to construct their reply on the basis of this figure, assuming apparently that public opinion in Allied countries would not be satisfied with less than the appearance of $25,000,000,000; and, as they were not really prepared to offer so large a figure, they exercised their ingenuity to produce a formula which might be represented to Allied opinion as yielding this amount, whilst really representing a much more modest sum. The formula produced was transparent to any one who read it carefully and knew the facts, and it could hardly have been expected by its authors to deceive the Allied negotiators. The German tactic assumed, therefore, that the latter were secretly as anxious as the Germans themselves to arrive at a settlement which bore some relation to the facts, and that they would therefore be willing, in view of the entanglements which they had got themselves into with their own publics, to practise a little collusion in drafting the Treaty,—a supposition which in slightly different circumstances might have had a good deal of foundation. As matters actually were, this subtlety did not benefit them, and they would have done much better with a straightforward and candid estimate of what they believed to be the amount of their liabilities on the one hand, and their capacity to pay on the other.

The German offer of an alleged sum of $25,000,000,000 amounted to the following. In the first place it was conditional on concessions in the Treaty insuring that "Germany shall retain the territorial integrity corresponding to the Armistice Convention,[140] that she shall keep her colonial possessions and merchant ships, including those of large tonnage, that in her own country and in the world at large she shall enjoy the same freedom of action as all other peoples, that all war legislation shall be at once annulled, and that all interferences during the war with her economic rights and with German private property, etc., shall be treated in accordance with the principle of reciprocity";—that is to say, the offer is conditional on the greater part of the rest of the Treaty being abandoned. In the second place, the claims are not to exceed a maximum of $25,000,000,000, of which $5,000,000,000 is to be discharged by May 1, 1926; and no part of this sum is to carry interest pending the payment of it.[141] In the third place, there are to be allowed as credit against it (amongst other things): (a) the value of all deliveries under the Armistice, including military material (e.g. Germany's navy); (b) the value of all railways and State property in ceded territory; (c) the pro rata share of all ceded territory in the German public debt (including the war debt) and in the Reparation payments which this territory would have had to bear if it had remained part of Germany; and (d) the value of the cession of Germany's claims for sums lent by her to her allies in the war.[142]

The credits to be deducted under (a), (b), (c), and (d) might be in excess of those allowed in the actual Treaty, according to a rough estimate, by a sum of as much as $10,000,000,000, although the sum to be allowed under (d) can hardly be calculated.

If, therefore, we are to estimate the real value of the German offer of $25,000,000,000 on the basis laid down by the Treaty, we must first of all deduct $10,000,000,000 claimed for offsets which the Treaty does not allow, and then halve the remainder in order to obtain the present value of a deferred payment on which interest is not chargeable. This reduces the offer to $7,500,000,000, as compared with the $40,000,000,000 which, according to my rough estimate, the Treaty demands of her.

This in itself was a very substantial offer—indeed it evoked widespread criticism in Germany—though, in view of the fact that it was conditional on the abandonment of the greater part of the rest of the Treaty, it could hardly be regarded as a serious one.[143] But the German Delegation would have done better if they had stated in less equivocal language how far they felt able to go.

In the final reply of the Allies to this counter-proposal there is one important provision, which I have not attended to hitherto, but which can be conveniently dealt with in this place. Broadly speaking, no concessions were entertained on the Reparation Chapter as it was originally drafted, but the Allies recognized the inconvenience of the indeterminacy of the burden laid upon Germany and proposed a method by which the final total of claim might be established at an earlier date than May 1, 1921. They promised, therefore, that at any time within four months of the signature of the Treaty (that is to say, up to the end of October, 1919), Germany should be at liberty to submit an offer of a lump sum in settlement of her whole liability as defined in the Treaty, and within two months thereafter (that is to say, before the end of 1919) the Allies "will, so far as may be possible, return their answers to any proposals that may be made."

This offer is subject to three conditions. "Firstly, the German authorities will be expected, before making such proposals, to confer with the representatives of the Powers directly concerned. Secondly, such offers must be unambiguous and must be precise and clear. Thirdly, they must accept the categories and the Reparation clauses as matters settled beyond discussion."

The offer, as made, does not appear to contemplate any opening up of the problem of Germany's capacity to pay. It is only concerned with the establishment of the total bill of claims as defined in the Treaty—whether (e.g.) it is $35,000,000,000, $40,000,000,000, or $50,000,000,000. "The questions," the Allies' reply adds, "are bare questions of fact, namely, the amount of the liabilities, and they are susceptible of being treated in this way."

If the promised negotiations are really conducted on these lines, they are not likely to be fruitful. It will not be much easier to arrive at an agreed figure before the end of 1919 that it was at the time of the Conference; and it will not help Germany's financial position to know for certain that she is liable for the huge sum which on any computation the Treaty liabilities must amount to. These negotiations do offer, however, an opportunity of reopening the whole question of the Reparation payments, although it is hardly to be hoped that at so very early a date, public opinion in the countries of the Allies has changed its mood sufficiently.[144]

I cannot leave this subject as though its just treatment wholly depended either on our own pledges or on economic facts. The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable,—abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Some preach it in the name of Justice. In the great events of man's history, in the unwinding of the complex fates of nations Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.