The conditions of life are so serious that there is no comparison; some prices have only risen five to tenfold, but very many from thirty to fifty and even higher. Grain, which before the War cost 31 crowns, costs now 500 crowns; corn has passed from 17 to 220 and 250 crowns. A kilogram of rice, which used to cost 70 centimes, can be found now only at 80 crowns. Sugar, coffee and milk are at prices which are absolutely prohibitive.

Of the financial situation it is almost useless to speak. The documents presented to the Conference of Brussels are sad evidence, and a sure index is the course of the crown, now so reduced as to have hardly any value in international relations. The effective income is more than a fourth part of the effective expenses, and the rest is covered especially by the circulation.

Such is the situation of Hungary, which has lost everything, and which suffers the most atrocious privations and the most cruel pangs of hunger. In this condition she should, according to the Treaty of Trianon, not only have sufficient for herself, but pay indemnities to the enemy.

The Hungarian deputies, at the sitting which approved the Treaty of Trianon, were clad in mourning, and many were weeping. At the close they all rose and sang the national hymn.

A people which is in the condition of mind of the Magyar people can accept the actual state of affairs as a temporary necessity, but have we any faith that it will not seek all occasions to retake what it has unjustly lost, and that in a certain number of years there will not be new and more terrible wars?

I cannot hide the profound emotion which I felt when Count Apponyi, on January 16, 1920, before the Supreme Council at Paris, gave the reasons of Hungary.

You, gentlemen [he said], whom victory has permitted to place yourselves in the position of judges, you have pronounced the culpability of your late enemies and the point of view which directs you in your resolutions is that of making the consequences of the War fall on those who were responsible for it.

Let us examine now with great serenity the conditions imposed on Hungary, conditions which are inacceptable without the most serious consequences. Taking away from Hungary the larger part of her territory, the greater part of her population, the greater portion of her economic resources, can this particular severity be justified by the general principles which inspire the Entente? Hungary not having been heard (and was not heard except to take note of the declaration of the head of the delegation), cannot accept a verdict which destroys her without explaining the reasons.

The figures furnished by the Hungarian delegation left no doubt behind: they treated of the dismemberment of Hungary and the sacrifice of three millions and a half of Magyars and of the German population of Hungary to people certainly more ignorant and less advanced. At the end Apponyi and the Hungarian delegation did not ask for anything more than a plebiscite for the territories in dispute.

After he had explained in a marvellous manner the great function of historic Hungary, that of having saved on various occasions Europe from barbaric invasion, and of having known how to maintain its unity for ten centuries in spite of the many differences amongst nations, Count Apponyi showed how important it was for Europe to have a solid Hungary against the spread of Bolshevism and violence.

You can say [added Apponyi] that against all these reasons there is only one—victory, the right of victory. We know it, gentlemen; we are sufficient realists in politics to count on this factor. We know what we owe to victory and we are ready to pay the price of our defeat. But should this be the sole principle of construction: that force alone should be the basis of what you would build, that force alone should be the base of the new building, that material force alone should be the power to hold up those constructions which fall whilst you are trying to build them? The future of Europe would then be sad, and we cannot believe it. We do not find all that in the mentality of the victorious nations; we do not find it in the declarations in which you have defined the principles for which you have fought, and the objects of the War which you have proposed to yourselves.

And after having referred to the traditions of the past, Count Apponyi added:

We have faith in the sincerity of the principles which you have proclaimed: it would be doing you injustice to think otherwise. We have faith in the moral forces with which you have wished to identify your cause. And all that I wish to hope, gentlemen, is that the glory of your arms may be surpassed by the glory of the peace which you will give to the world.

The Hungarian delegation was simply heard; but the treaty, which had been previously prepared and was the natural consequence of the Treaty of Versailles, was in no way modified.

An examination of the Treaty of Trianon is superfluous. By a stroke of irony the financial and economic clauses inflict the most serious burdens on a country which had lost almost everything: which has lost the greatest number of men proportionately in the War, which since the War has had two revolutions, which for four months suffered the sackings of Bolshevism—led by Bela Kun and the worst elements of revolutionary political crime—and, finally, has suffered a Rumanian occupation, which was worse almost than the revolutions or Bolshevism.

It is impossible to say which of the peace treaties imposed on the conquered is lasting and which is the least supportable: after the Treaty of Versailles, all the treaties have had the same tendency and the same conformation.

The situation of German-Austria is now such that she can say with Andromache: "Let it please God that I have still something more to fear!" Austria has lost everything, and her great capital, which was the most joyous in Europe, shelters now a population whose resources are reduced to the minimum. The slump in her production, which is carried on amidst all the difficulties, the fall in her credit, the absolute lack of foreign exchanges, the difficulty of trading with the hostile populations which surround her, put Austria in an extremely difficult position and in progressive and continuous decadence. The population, especially in the cities, is compelled to the hardest privations; the increase of tuberculosis is continuous and threatening.

Bulgaria has had rather less loss, and although large tracts of Bulgarian territory have been given without any justifiable motive to Greece and Jugo-Slavia, and although all outlet on the Aegean has been taken from her by assigning to Greece lands which she cannot maintain, on the whole Bulgaria, after the Treaty of Neuilly, has less sharp sufferings than the other conquered countries. Bulgaria had a territorial extension of 113,809 square kilometres; she has now lost about 9,000 square kilometres. She had a population of 4,800,000, and has lost about 400,000.

As for Turkey, if the treaties should continue to exist, she can be considered as disappearing from Europe and on the road to disappear from Asia. The Turkish population has been distributed haphazard, especially to Greece, or divided up under the form of mandates to countries of the Entente. According to the Treaty of Sevres of August 10, 1920, Turkey abandons all her territory in Europe, withdrawing her frontier to the Ciatalgia lines.

Turkey in Europe is limited, therefore, to the surroundings of Constantinople, with little more than 2,000 square kilometres, and a population which is rather hard to estimate, but which is that only of the city and the surroundings—perhaps a million and a half men. In Asia Minor Turkey loses the territory of the Sanjak of Smyrna, over which, however, she retains a purely nominal sovereignty; the territory still undefined of the Armenian Republic: Syria, Cilicia, Palestine and Mesopotamia, which become independent under mandatory powers; in Arabia the territory of the Hedjaz, whilst the remainder of the peninsula will enjoy almost complete independence. Besides, Constantinople and the Straits are subject to international control, and the three States now the most closely interested—Great Britain, France and Italy—assume the control of the finances and other aspects of the Ottoman administration.

Every programme has ignored Turkey except when the Entente has had opportunity to favour Greece. The Greece of Venezelos was the ward of the Entente almost more than Poland itself. Having participated in the War to a very small extent and with almost insignificant losses, she has, after the War, almost trebled her territory and almost doubled her population. Turkey was put entirely, or almost so, outside Europe; Greece has taken almost everything. Rejected was the idea of fixing the frontier on the Enos Medea line, and the frontier fixed at Ciatalgia; Constantinople was under the fire of the Greek artillery, and Constantinople was nominally the only city which remained to Turkey. The Sanjak of Smyrna, in Asia Minor, was the true wealth of Turkey; it represented forty-five per cent. of the imports of the Turkish Empire. Although the population of the whole vilayet of Audin and the majority of the Sanjak of Smyrna was Mussulman, Greece had the possession. The whole of Thrace was assigned to Greece; Adrianople, a city sacred to Islam, which contains the tombs of the Caliphs, has passed to the Greeks.

The Entente, despite the resistance of some of the heads of governments, always yielded to the requests of Greece. There was a sentiment of antipathy for the Turks and there was a sympathy for the Greeks: there was the idea to put outside Europe all Mussulman dominion, and the remembrance of the old propaganda of Gladstone, and there were the threats of Wilson, who in one of his proposals desired exactly to put Turkey outside Europe. But above all there was the personal work of Venezelos. Every request, without being even examined thoroughly, was immediately justified by history, statistics, ethnography. In any discussion he took care to solliciter doucement les textes as often the learned with few scruples do. I have met few men in my career who united to an exalted patriotism such a profound ability as Venezelos. Every time that, in a friendly way, I gave him counsels of moderation and showed him the necessity of limiting the requests of Greece, I never found a hard or intemperate spirit. He knew how to ask and obtain, to profit by all the circumstances, to utilize all the resources better even than the professional diplomats. In asking he always had the air of offering, and, obtaining, he appeared to be conceding something. He had at the same time a supreme ability to obtain the maximum force with the minimum of means and a mobility of spirit almost surprising.

He saw no difficulty, convinced as he was, of erecting a Greek Empire on the remnants of Turkey. Every time that doubts were expressed to him, or he was shown data which should have moderated the positions, he denied the most evident things, he recognized no danger, and saw no difficulty. He affirmed always with absolute calm the certainty of success. It was his opinion that the Balkan peninsula should be, in the north, under the action of the Serb-Croat-Slovene State and of Rumania, and in the south of Greece. But Greece, having almost all the islands of the Aegean, a part of the territory of Turkey and all the ports in the Aegean, and having the Sanjak of Smyrna, should form a littoral Empire of the East and chase the Turks into the poorer districts of Anatolia.

In the facility with which the demands of Greece were accepted (and in spite of everything they were accepted even after the fall of Venezelos) there was not only a sympathy for Greece, but, above all, the certainty that a large Greek army at Smyrna would serve principally towards the security of those countries which have and wished to consolidate great interests in Asia Minor, as long as the Turks of Anatolia were thinking specially about Smyrna and could not use her forces elsewhere. For the same motive, in the last few years, all the blame is attributed to the Turks. If they have erred much, the errors, even the minor ones, have been transformed into crimes. The atrocities of the Turks have been described, illustrated, exaggerated; all the other atrocities, often no less serious, have been forgotten or ignored.

The idea of a Hellenic Empire which dominates all the coast of the Aegean in Europe and Asia encounters one fundamental difficulty. To dominate the coast it is necessary to have the certainty of a large hinterland. The Romans in order to dominate Dalmatia were obliged to go as far as the Danube. Alexander the Great, to have a Greek Empire, had, above all, to provide for land dominion. Commercial colonies or penetration in isolation are certainly possible, but vast political organizations are not possible. It is not sufficient to have territory; it is necessary to organize it and regulate the life. Mankind does not nourish itself on what it eats, and even less on what it digests, but on what it assimilates.

Historians of the future will be profoundly surprised to learn that in the name of the principle of nationality the vilayet of Adrianople, which contains the city dearest to the heart of Islam after Mecca, was given to the Greeks. According to the very data supplied by Venezelos there were 500,000 Turks, 365,000 Greeks, and 107,000 Bulgarians; in truth the Turks are in much greater superiority.

The Grand Vizier of Turkey, in April, 1920, presented a note to the ambassadors of the Entente to revindicate the rights on certain vilayets of the Turkish Empire. According to this note, in Western Thrace there were 522,574 inhabitants, of which 362,445 were Mussulmans. In the vilayet of Adrianople, out of 631,000 inhabitants, 360,417 were Mussulmans. The population of the vilayet of Smyrna is 1,819,616 inhabitants, of which 1,437,983 are Mussulmans. Perhaps these statistics are biased, but the statistics presented by the opposing party were even more fantastic.

After having had so many territorial concessions, Greece—who during the War had enriched herself by commerce—is obliged, even after the return of Constantine, who did not know how to resist the pressure, to undertake most risky undertakings in Asia Minor, and has no way of saving herself except by an agreement with Turkey. In the illusion of conquering the Turkish resistance, she is now obliged to maintain an army twice as big as that of the British Empire! The dreams of greatness increase: some little military success has given Greece the idea also that the Treaty of Sevres is only a foundation regulating the relationship with the Allies and with the enemy, and constituting for Greece a title of rights, the full possession of which cannot be modified. The War determines new rights which cannot invalidate the concessions already given, which, on the contrary, are reinforced and become intangible, but renders necessary new concessions.

What will happen? Whilst Greece dreams of Constantinople, and we have disposed of Constantinople and the Straits, Turkey seems resigned to Constantinople itself, to-day a very poor international city rather than a Turkish city. The Treaty of Sevres says that it is true that the contracting States are in agreement in not offending any of the rights of the Ottoman government on Constantinople, which remains the capital of the Turkish Empire, always under the reserve of the dispositions of the treaty. That is equivalent to saying of a political regime that it is a controlled "liberty," just as in the time of the Tsars it was said that there existed a Monarchie constitutionnelle sous un autocrate. Constantinople under the Treaty of Sevres is the free capital of the Turkish Empire under the reserve of the conditions which are contained in the treaty and limit exactly that liberty.

The force of Turkey has always been in her immense power of resistance. Win by resisting, wear out with the aid of time, which the Turks have considered not as an economic value, but as their friend. To conquer the resistance of Turkey, both in the new territories of Europe and in Asia Minor, Greece will have to exhaust the greater part of her limited resources. The Turks have always brought to a standstill those who would dominate her, by a stubborn resistance which is fanaticism and national dignity. On the other hand, the Treaty of Sevres, which has systematized in part Eastern Europe, was concluded in the absence of two personages not to be unconsidered, Russia and Germany, the two States which have the greatest interest there. Germany, the War won, as she could not give her explanations on the conclusions of peace, was not able to intervene in the solutions of the question of the Orient. Russia was absent. Worn out with the force of a war superior to her energies, she fell into convulsions, and is now struggling between the two misfortunes of communism and misery, of which it is hard to say whether one, or which of the two, is the consequence of the other.

One of the most characteristic facts concerns Armenia. The Entente never spoke of Armenia. In his fourteen points Wilson neither considered nor mentioned it. It was an argument difficult for the Entente in so far that Russia was straining in reality (under the necessity of protecting the Christians) to take Turkish Armenia without leaving Russian Armenia.

But suddenly some religious societies and some philanthropic people instituted a vast movement for the liberation of Armenia. Nothing could be more just than to create a small Armenian State which would have allowed the Armenians to group themselves around Lake Van and to affirm their national unity in one free State. But here also the hatred of the Turks, the agitation of the Greeks, the dimly illuminated philanthropy, determined a large movement to form a great State of Armenia which should have outlets on the sea and great territories.

So that no longer did people talk of a small State, a refuge and safe asylum for the Armenians, but of a large State. President Wilson himself, during the Conference of San Remo, sent a message in the form of a recalling to mind, if not a reproof, to the European States of the Entente because they did not proceed to the constitution of a State of Armenia. It was suggested to bring it down to Trebizond, to include Erzeroum in the new Armenia, a vast State of Armenia in which the Armenians would have been in the minority. And all that in homage to historical tradition and for dislike of the Turks! A great Armenia creates also a series of difficulties amongst which is that of the relations between Armenia, Georgia and Azerbajan, supposing that in the future these States cut themselves off definitely from Russia. The great Armenia would include the vilayet of Erzeroum, which is now the centre of Turkish nationalism, and contains more Mussulmans than Armenians. As a matter of fact the vilayet of Erzeroum has 673,000 Mussulmans, 1,800 Greeks and 135,000 Armenians.

When it was a question of giving Greece territories in which the Greeks were in a minority it was said that the populations were so badly governed by the Turks that they had the right to pass under a better regime, whatever it might be. But for a large part of the territory of the so-called Great Armenia it is possible to commit the error of putting large majorities of Mussulman people under a hostile Armenian minority.

The Armenians would have to fight at the same time against the Kurds and against Azerbajan; they are surrounded by enemies on all sides.

But the whole of the discussion of giving the vilayet of Erzeroum to Armenia or leaving it to Turkey is entirely superfluous, for it is not a question of attributing territory but of determining actual situations. If it is desired to give to the Armenians the city of Erzeroum, it is first of all necessary that they shall be able to enter and be able to remain there. Now since the Armenians have not shown, with a few exceptions, a great power of resistance, and are rather a race of merchants than warriors, it would be necessary for others to undertake the charge of defending them. None of the European States desired a mandate for Armenia, and no one wished to assume the serious military burden of protecting the Armenians; the United States, after having in the message of Wilson backed a great Armenia, wished even less than the other States to interest themselves in it.

Probably proposals of a more reasonable character and marked by less aversion for the Turks would have permitted the Turks not only to recognize, which is not difficult for them, but in fact to respect, the new State of Armenia, without the dreams of a sea coast and the madness of Erzeroum.

If the condition of the conquered is sufficiently serious the situation of the peoples most favoured by the Entente in Europe—Poland and Greece, who have obtained the greatest and most unjust increases in territory, having given for a diversity of reasons extremely little during the War—is certainly not less so. Each of these countries are suffocating under the weight of the concessions, and seek in vain a way of salvation from the burdens which they are not able to support, and from the mania of conquest which are the fruits of exaltation and error.

Having obtained much, having obtained far more than they thought or hoped, they believe that their advantage lies in new expansion. Poland violates treaties, offends the laws of international usage, and is protected in everything she undertakes. But every one of her undertakings can only throw her into greater discomfort and augment the total of ruin.

All the violences in Upper Silesia to prevent the plebiscite going in favour of Germany were not only tolerated but prepared far ahead.

When I was head of the Italian Government the representative of the German Government in Rome, von Herf, gave documentary evidence on what was being prepared, and on April 30, 1920, in an audience which I gave him as head of the Council he furnished me with proofs of what was the Polish organization, what were its objects and the source of its funds.

As everyone knows, the plebiscite of March 20, 1921, in spite of the violence and notwithstanding the officially protected brigandage, resulted favourably to Germany. Out of 1,200,636 voters 717,122 were for Germany and 483,514 for Poland. The 664 richest, most prosperous and most populous communes gave a majority for the Germans, 597 communes gave a majority for Poland. The territory of Upper Silesia, according to the treaty, according to the plebiscite, according to the most elementary international honesty, should be immediately handed over to Germany. But as they do not wish to give the coal of Upper Silesia to Germany, and the big interests of the new great metallurgical group press and trick, the Treaty of Versailles has here also become a chiffon de papier.

Instead of accepting, as was the first duty, the result of the plebiscite, people have resorted to sophism of incomparable weakness: Article 88 of the Treaty of Versailles says only that the inhabitants of Upper Silesia shall be called to designate by means of a plebiscite if they desire to be united to Germany or to Poland.

It was necessary to find a sophism!

The Addendum of Section 8 establishes how the work of scrutiny shall be carried out and all the procedure of the elections. There are six articles of procedure. Paragraph 4 says that each one shall vote in the commune where he is domiciled or in that where he was born if he has not a domicile in the territory. The result of the vote shall be determined commune by commune, according to the majority of votes in each commune.

This means then that the results of the voting, as is done in political questions in all countries, should, be controlled commune by commune: it is the form of the scrutiny which the appendix defines. Instead, in order to take the coal away from Germany, it was attempted, and is being still attempted, not to apply the treaty, but to violate the principle of the indivisibility of the territory and to give the mining districts to Poland.

The violation of the neutrality of Belgium was not an offence to a treaty more serious than this attempt; the Treaty of 1839 cannot be considered a chiffon de papier more than the Treaty of Versailles. Only the parties are inverted.

It is not France, noble and democratic, which inspires these movements, but a plutocratic situation which has taken the same positions, but on worse grounds, as the German metallurgists before the War. It is the same current against which Lloyd George has several times bitterly protested and for which he has had very bitter words which it is not necessary to recall. It is the same movement which has created agitations in Italy by means of its organs, and which attempt one thing only: to ruin the German industry and, having the control of the coal, to monopolize in Europe the iron industries and those which are derived from it.

First of all, in order to indemnify France for the temporary damages done to the mines in the North, there was the cession in perpetuo of the mines of the Saar; then there were the repeated attempts to occupy the territory of the Ruhr to control the coal; last of all there is the wish not to apply the plebiscite and to violate the Treaty of Versailles by not giving Upper Silesia to Germany, but giving it abusively to Poland.

Germany produced before the War about 190,000,000 tons of coal; in 1913 191,500,000. The consumption of these mines themselves was about a tenth, 19,000,000 tons, whilst for exportation were 83,500,000 tons, and for internal consumption were 139,000,000.

Now Germany has lost, and justly, Alsace-Lorraine, 3,800,000 tons. She has lost, and it was not just, the Saar, 13,200,000 tons. She is bound by the obligations of the treaty to furnish France with 20,000,000 tons, and to Belgium and Italy and France again another 25,000,000 tons. If she loses the excellent coal of Upper Silesia, about 43,800,000 tons per year, she will be completely paralysed.

It is needless to lose time in demonstrating for what geographic, ethnographic and economist reason Upper Silesia should be united with Germany. It is a useless procedure, and also, after the plebiscites, an insult to the reasoning powers. If the violation of treaties is not a right of the victor, after the plebiscite, in which, notwithstanding all the violences, three-quarters of the population voted for Germany, then there is no reason for discussion.

The words used by Lloyd George on May 18, 1921, in the House of Commons, are a courteous abbreviation of the truth. From the historical point of view, he said, Poland has no rights over Silesia. The only reason for which Poland could claim Upper Silesia is that it possesses a numerous Polish population, arrived there in comparatively recent times with the intention of finding work, and especially in the mines. That is true and is more serious than would be an agitation of the Italians in the State of San Paulo of Brazil, claiming that they had a majority of the population.

"The Polish insurrection," said Lloyd George justly, "is a challenge to the Treaty of Versailles, which, at the same time, constitutes the charter of Polish Liberty." Poland is the last country in Europe which has the right to deplore the treaty, because Poland did not conquer the treaty. Poland did not gain her liberty, and more than any other country should respect every comma of the treaty. She owes her liberty to Italy, Great Britain and France.

In the future [said the English Prime Minister] force will lose its efficiency in regard to the Treaty of Versailles, and the maintenance of the undertakings on the part of Germany on the basis of her signature placed to the treaty will count increasingly. We have the right to everything which she gives us: but we have the right also to leave everything which is left to her. It is our duty of impartiality to act with rigorous justice, without taking into account the advantages or the disadvantages which may accrue therefrom. Either the Allies must demand that the treaty shall be respected, or they should permit the Germans to make the Poles respect it. It is all very well to disarm Germany, but to desire that even the troops which she does possess should not participate in the re-establishment of order is a pure injustice.

Russia [added Lloyd George] to-day is a fallen Power, tired, a prey to a despotism which leaves no hope, but is also a country of great natural resources, inhabited by a people of courage, who at the beginning of the War gave proof of its courage. Russia will not always find herself in the position in which she is to-day. Who can say what she will become? In a short time she may become a powerful country, which can say its word about the future of Europe and the world. To which part will she turn? With whom will she unite?

There is nothing more just or more true than this.

But Poland wants to take away Upper Silesia from Germany notwithstanding the plebiscite and against the treaty, and which has in this action the aid of the metallurgical interests and the great interests of a large portion of the Press of all Europe. Poland, which has large nuclei of German populations, after having been enslaved, claims the right to enslave populations, which are more cultured, richer and more advanced. And besides the Germans it claims the right to enslave even Russian peoples and further to occupy entire Russian territories, and wishes to extend into Ukraine. There is then the political paradox of Wilna. This city, which belongs according to the regular treaty to Lithuania, has been occupied in an arbitrary manner by the Poles, who also claim Kowno.

In short, Poland, which obtained her unity by a miracle, is working in the most feverish manner to create her own ruin. She has no finance, she has no administration, she has no credit. She does not work, and yet consumes; she occupies new territories, and ruins the old ones. Of the 31,000,000 inhabitants, as we have seen, 7 millions are Ukranians, 2.2 Russians, 2.1 Germans, and nearly half a million of other nationalities. But among the eighteen or nineteen million Poles there are at least four million Jews—Polish Jews, without doubt, but the greater portion do not love Poland, which has not known how to assimilate them. The Treaty of Versailles has created the absurd position that to go from one part to the other of Germany it is necessary to traverse the Danzig corridor. In other terms, Germany is cut in two parts, and to move in Prussia herself from Berlin to one of the oldest German cities, the home of Emanuel Kant, Konigsberg, it is necessary to traverse Polish territory.

So Poland separates the two most numerous people of Europe: Russia and Germany. The Biblical legend lets us suppose that the waters of the Red Sea opened to let the Chosen People pass: but immediately afterwards the waters closed up again. Is it possible to suppose that such an arbitrary arrangement as this will last for long?

If it has lasted as long as it has, it is because it was, at least from the part of one section of the Entente, not the road to peace, but because it was a method of crushing down Germany.

If a people had conditions for developing rapidly it was Czeko-Slovakia. But also with the intention of hurting Germany and the German peoples, a Czeko-Slovak State was created which has also its own tremendous crisis of nationality. A Czeko-Slovakia with a population of eight to nine million people represented a compact ethnical unity. Instead, they have added five and a half million people of different nationalities, amongst whom about 4,000,000 Germans, with cities which are the most German in the world, as Pilsen, Karlsbad, Reichenberg, etc. What is even more serious is that the 4,000,000 Germans are attached to Germany, and, having a superior culture and civilization, will never resign themselves to being placed under the Czeks.

Czeko-Slovakia had mineral riches, industrial concerns and solid agriculture, and a culture spread among the people—all the conditions for rising rapidly. All these advantages risk being annulled by the grave and useless insult to the Germans and Magyars.

Not only is the situation of Europe in every way uncertain, but there is a tendency in the groups of the victors on the Continent of Europe to increase the military budgets. The relationships of trade are being restored only slowly; commerce is spoken of as an aim. In Italy the dangers and perils of reopening trade with Germany have been seriously discussed; customs duties are raised every day; the industrial groups find easy propaganda for protection. Any limitation of competition is a duty, whether it be the enemy of yesterday or the enemy of to-day, and so the greatest evils of protection are camouflaged under patriotism.

None of the countries which have come out of the War on the Continent have a financial position which helps toward a solid situation. All the financial documents of the various countries, which I have collected and studied with great care, contain enormous masses of expenses which are the consequences of the War; those of the conquering countries also contain enormous aggregations of expenses which are or can become the cause of new wars.

The conquered countries have not actually any finance. Germany has an increase of expenses which the fall of the mark renders more serious. In 1920 she spent not less than ninety-two milliards, ruining her circulation. How much has she spent in 1921?

Austria and Hungary have budgets which are simply hypotheses. The last Austrian budget, for 1921, assigned a sum of seventy-one milliards of crowns for expenses, and this for a poor country with 7,000,000 inhabitants.

A detailed examination of the financial situation of Czeko-Slovakia, of Rumania, and of the Serbo-Croat States gives results which are at the least alarming. Even Greece, which until yesterday had a solid structure, gallops now in a madness of expenditure which exceeds all her resources, and if she does not find a means to make peace with Turkey she will find her credit exhausted. The most ruinous of all is the situation of Poland, whose finance is certainly not better regulated than that of the Bolsheviks of Moscow, to judge from the course of the Polish mark and the Russian rouble if anyone gets the idea of buying them on an international market.

The situation of the exchange since the War has not sensibly bettered even for the great countries, and it is extraordinarily worse for the other countries.

In June, 1921, France had a circulation of about thirty-eight milliard of francs, Belgium six milliard of francs, Italy of about eighteen milliards; Great Britain, between State notes and Bank of England notes, had hardly L434,000,000 sterling. Actually, among the continental countries surviving the War, Italy is the country which has made the greatest efforts not to augment the circulation but to increase the duties; also because she had no illusions of rebuilding her finance and her national economy on an enemy indemnity.

But the conquered countries have so abused their circulation that they almost live on the thought of it—as, in fact, not a few of the conquering countries and those come out from the War do. Germany has passed eighty-eight milliards, and is rapidly approaching one hundred milliards. Now, when one thinks that the United States, after so many loans and after all the expenses of the War, has only a circulation of 4,557,000,000 dollars, one understands what difficulty Germany has to produce, to live, and to refurnish herself with raw materials.

Only Great Britain of all the countries in Europe which have issued from the War has had a courageous financial policy. Public opinion, instead of pushing Parliament to financial dissipation, has insisted on economy. If the situation created by the War has transformed also the English circulation into unconvertible paper money, this is merely a passing fact. If the sterling loses on the dollar—that is, on gold—given the fact that the United States of America alone now have a money at par, almost a quarter of its value, this is also merely a transitory fact.

Great Britain has the good sense to curtail expenses, and the sterling tends always to improve.

France and Italy are in an intermediate position. Their money can be saved, but it will require energetic care and great economies, stern finance, a greater development of production, limitation of consumption, above all, of what is purchased from abroad. At the date of which I am writing, expressed on a percentual basis, the French franc is worth 47 centimes of the sterling and 36 of the dollar—that is to say, of gold. The Italian lira is worth 28 centimes of the sterling and 21 of the dollar.

Here are still two countries in which tenacious energy can save and with many sacrifices they can arrive at good money. France has a good many more resources than Italy; she has a smaller need of importations and a greater facility for exportations. But her public debt has reached 265 milliards, the circulation has well passed thirty-eight milliards, and they still fear to calculate amongst the extraordinary income of the budget the fifteen milliards a year which should come from Germany.

Italy, with great difficulty of production and less concord inside the country, has a more true vision, and does not reckon any income which is not derived from her own resources. Her circulation does not pass eighteen milliards, and her debt exceeds by a little one hundred milliards.

With prudence and firmness France and Italy will be able to balance their accounts.

But the financial situation and the exchanges of the conquered countries, even that of Germany, may be called desperate.

If expressed in percentages, the German mark is worth 5.11 per cent. in comparison with the pound sterling and 3.98 per cent. of the dollar. What possibility is there of systematizing the exchange?

Germany was compelled this year to carry her expenses to 130 milliards of marks. As her circulation has exceeded eighty-eight milliards, how can she straighten out her money?

As for the Austrian and Hungarian crowns, the Jugo-Slav crowns, the Rumanian lei, and all the other depreciated moneys, their fate is not doubtful. As their value is always descending, and the gold equivalent becomes almost indeterminable, they will have a common fate. As for the Polish mark, it can be said that before long it will not be worth the paper on which it is printed.

There is, then, the fantastic position of the public debts! They have reached now such figures that no imagination could have forecasted. France alone has a debt which of itself exceeds by a great deal all the debts of all the European States previous to the War: 265 milliards of francs. And Germany, the conquered country, has in her turn a debt which exceeds 320 milliards of marks, and which is rapidly approaching 400 milliards. The debts of many countries are only recorded by feats of memory, because there is no practical interest in knowing whether Austria, Hungary, and especially Poland, has one debt or another, since the situation of the creditors is not a situation of reality.

The whole debt of the United States of America is, after so much war, only 23,982,000,000 dollars; but the United States are creditors of the Entente for 9,500,000,000 dollars. Also England, against a debt of L9,240,000,000 sterling, has a credit of L1,778,000,000.

These serious figures, whilst they increase the condition of discomfort rendered even more serious by the scarcity of commercial exchanges, indicate also what necessity may be superior to all in every country to preserve internal peace: produce more, consume less, put the finances in order, and reconquer the credits.

Instead, the conquered countries are going downwards every day and the conquering countries are maintaining very big armies, exhausting their resources, whilst they are spreading the conviction that the indemnity from the enemy will compensate sufficiently, or at least partially, for the work of restoration.

In fact, the causes of discontent and diffidence are augmenting. Nothing is more significant than the lack of conscience with which programmes of violence and of ruin are lightly accepted; nothing is more deplorable than the thoughtlessness with which the germs of new wars are cultivated. Germany has disarmed with a swiftness which has even astonished the military circles of the Entente; but the bitter results of the struggle are not only not finished against Germany, not even to-day does she form part of the League of Nations (which is rather a sign of a state of mind than an advantage), but the attitude towards her is even more hostile.

Two years after the end of the war R. Poincare wrote that the League of Nations would lose its best possibility of lasting if, un jour, it did not reunite all the nations of Europe. But he added that of all the conquered nations—Austria, Hungary, Bulgaria, Turkey and Germany—the last-mentioned, by her conduct during the War and after the peace, justified least a near right of entry. It would be incontestablement plus naturel (of how many things does nature occupy herself!) to let Austria enter first if she will disavow the policy of reattachment—that is, being purely German, renounce against the principle of nationality, in spite of the principle of auto-decision, when she cannot live alone, to unite herself to Germany; Bulgaria and Turkey as long as they had a loyal and courteous attitude towards Greece, Rumania and Serbia. The turn of Germany will come, but only after Turkey, when she will have given proof of executing the treaty, which no reasonable and honest person considers any more executable in its integrity.

The most characteristic facts of this peace which continues the War can be recapitulated as follows:

1. Europe on the whole has more men under arms than before the War. The conquered States are forced to disarm, but the conquering States have increased the armaments; the new States and the countries which have come through the War have increased their armaments.

2. Production is very tardily being taken up again because there is everywhere, if in a different degree, a lesser desire for work on the part of the working classes joined with a need for higher remuneration.

3. The difficulties of trade, instead of decreasing in many countries of Europe are increasing, and international commerce is very slowly recovering. Between the States of Europe there is not a real commerce which can compare with that under normal conditions. Considering actual values with values before the War, the products which now form the substance of trade between European countries do not represent even the half of that before the War.

As the desire for consumption, if not the capacity for consumption, has greatly increased, and the production is greatly decreased, all the States have increased their functions. So the discredit of the paper money and the Treasury bills which permit these heavy expenses is in all the countries of Europe, even if in different degrees, very great.

The conquering countries, from the moment that they had obtained in the treaties of peace the acknowledgment of the conquered that the War was caused by them, held it to be legitimate that they should lose all their disposable goods, their colonies, their ships, their credits and their commercial organization abroad, but that the conquered should also pay all the damages of the War. The War, therefore, should be paid for by the conquered, who recognized (even if against their will) that they were alone responsible. That forms henceforth a certain canon of foreign politics, the less a thing appears true the more it is repeated.

Although the treaties oblige Austria, Hungary, Bulgaria and Turkey to pay the damages of the War, it is, however, certain that they are not able to pay anything and not even the expenses of the victors on their territory. "Cantabit vacuus coram latrone viator," said Juvenal ("Who has nothing can give nothing"), and Austria, for her part, instead of giving is imploring food succour.

So the problem remains limited to Germany. Can she pay the indemnity indicated in the treaty? Can she pay for the damages and indemnify the victors? After having given up her colonies, her ships, her railway material, all her disposable credits abroad, in what form can she pay?

The fundamental controversy reduces itself henceforth only to this point, which we shall try if possible to make clear, since we desire that this matter shall be presented in the clearest and most evident form.

From now on it is not the chancelleries which must impose the solutions of great problems; but it is the mass of the public in Europe and America.



V

THE ANXIETIES OF THE VICTORS

We have seen the process by which the idea of the indemnity for damages, which was not contained either in the peace declaration of the Entente, nor in the manifestations of the various parliaments, nor in the first armistice proposals, nor in the armistice between Italy and Austria, was introduced in the armistice with Germany, out of pure regard for France, without taking heed of the consequences. Three words, said Clemenceau, only three words need be added, words which compromise nothing and are an act of deference to France. The entire construction of the treaties, after all, is based on those three words.

And how fantastic the demands for compensation have become!

An old Italian proverb says, "In time of war there are more lies than earth." Ancient and modern pottery reproduce the motto, which is widespread, and whose truth was not understood until some years ago. So many foolish things were said about the almost mysterious manoeuvres of Germany, about her vast expansion, her great resources and accumulated capital, that the reality tended to become lost to sight.

These absurd legends, formed during the War, were not forgotten, and there are even now many who believe in good faith that Germany can pay, if not twenty or twenty-five milliards a year, at least eight or nine without any difficulty.

France's shrewdest politicians, however, well knew that the demand for an enormous and unlimited indemnity was only a means of putting Germany under control and depressing her to the point of exhaustion. But the others maintained this proposal more out of rancour and hatred than from any actual political concept. It may be said that the problem of the indemnity has never been seriously studied and that the calculations, the valuations, the procedures, have all formed a series of impulsive acts co-ordinated by a single error, the error of the French politicians who had the one aim of holding Germany down.

The procedure was simple.

In the first phase the indemnities came into being from three words inserted almost by chance into the armistice treaty on November 2, 1918, reparation des dommages. It was merely a matter of a simple expression to content public feeling: Je supplie le conseil de se mettre dans l'esprit de la population francaise.... It was a moral concession, a moral satisfaction.

But afterwards, as things went on, all was altered when it came to preparing the treaties.

For a while the idea, not only of a reparation of damages, but of the payment of the cost of the War was entertained. It was maintained that the practice of making the vanquished reimburse the cost of the War was permitted by international law. Since Germany had provoked the War and lost it, she must not only furnish an indemnity for the losses, but also pay the cost.

The cost was calculated roughly at seven hundred milliards of francs at par. Further, there was the damage to assess. In the aggregate, war costs, damage to property, damage to persons, came to at least one thousand milliards. But since it was impossible to demand immediate payment and was necessary to spread the sum over fifty years, taking into consideration sinking funds and interest the total came to three thousand milliards. The amount was published by the illustrated papers with the usual diagrams, drawings of golden globes, length of paper money if stretched out, height of metal if all piled up together, etc. etc.

These figures were discussed for the first few months by a public accustomed to be surprised at nothing. They merely helped to demonstrate that an indemnity of 350 milliards was a real sacrifice for the Allies.

Thus a whole series of principles came to be established which were a contradiction of reality.

A great share in the responsibility in this matter lies with Great Britain, who not only followed France's error, but in certain ways made it worse by a number of intemperate requests. Italy had no influence on the proceedings owing to her indecisive policy. Only the United States, notwithstanding the banality of some of her experts (lucus a non lucendo), spoke an occasional word of reason.

When Lloyd George understood the mistake committed in the matter of the indemnity it was too late.

The English public found itself face to face with the elections almost the day after the conclusion of the War. In the existing state of exaltation and hatred the candidates found a convenient "plank" in promising the extermination of Germany, the trial of the Kaiser, as well as of thousands of German officers accused of cruelty, and last, but not least, the end of German competition.

The Prime Minister of Australia, William Morris Hughes, a small-minded, insensitive, violent man, directed a furious campaign in favour of a huge indemnity. Lord Northcliffe lent the aid of his numerous papers to this campaign, which stirred up the electors.

Lloyd George, with his admirable intelligence, perceived the situation clearly. He did not believe in the usefulness or even in the possibility of trying the Kaiser and the German officers. He did not believe in the possibility of an enormous indemnity or even a very large one.

His first statements, like those of Bonar Law, a serious, honest, well-balanced man, an idealist with the appearance of a practical person, revealed nothing. On the eve of the dissolution of Parliament, Lloyd George, speaking at Wolverhampton, November 24, 1918, did not even hint at the question of the reparations or indemnity. He was impelled along that track by the movement coming from France, by the behaviour of the candidates, by Hughes's attitude, and by the Press generally, especially that of Northcliffe.

A most vulgar spectacle was offered by many of the English candidates, among whom were several members of the War Cabinet, who used language worthy of raving dervishes before crowds hypnotized by promises of the most impossible things.

To promise the electors that Germany should pay the cost of the War, to announce to those who had lost their senses that the Kaiser was to be hanged, to promise the arrest and punishment of the most guilty German officers, to prophesy the reduction to slavery of a Germany competing on sea and land, was certainly the easiest kind of electoral programme. The numerous war-mutilated accepted it with much enthusiasm, and the people listened, open-mouthed, to the endless series of promises.

Hughes, who was at bottom in good faith, developed the thesis which he afterwards upheld at Paris with logical precision. It was Germany's duty to reimburse, without any limitation, the entire cost of the War: damage to property, damage to persons, and war-cost. He who has committed the wrong must make reparation for it to the extreme limits of his resources, and this principle, recognized by the jurists, requires that the total of the whole cost of the War fall upon the enemy nations. Later on, Hughes, who was a sincere man, recognized that it was not possible to go beyond asking for reparation of the damages.

Lloyd George was dragged along by the necessity of not drawing away the mass of the electors from the candidates of his party. Thus he was obliged on December 11, in his final manifesto, to announce not only the Kaiser's trial and that of all those responsible for atrocities, but to promise the most extensive kind of indemnity from Germany and the compensation of all who had suffered by the War. Speaking the same evening at Bristol, he promised to uphold the principle of the indemnity, and asserted the absolute right to demand from Germany payment for the costs of the War.

In England, where the illusion soon passed away, in France, where it has not yet been dissipated, the public has been allowed to believe that Germany can pay the greater part, if not the entire cost, of the War, or at least make compensation for the damage.

For many years I have studied the figures in relation to private wealth and the wealth of nations, and I have written at length on the subject. I know how difficult it is to obtain by means of even approximate statistics results more or less near to the reality. Nothing pained me more than to hear the facility with which politicians of repute spoke of obtaining an indemnity of hundreds of milliards. When Germany expressed her desire to pay an indemnity in one agreed lump sum (a forfait) of one hundred milliards of gold marks (an indemnity she could never pay, so enormous is it), I saw statesmen, whom I imagined not deprived of intelligence, smile at the paltriness of the offer. An indemnity of fifty milliards of gold marks, such as that proposed by Keynes, appeared absurd in its smallness.

When the Peace Conference reassembled in Paris the situation concerning the indemnity was as follows. The Entente had never during the War spoken of indemnity as a condition of peace. Wilson, in his proposals, had spoken only of reconstruction of invaded territories. The request for reparation des dommages had been included in the terms of the armistice merely to afford a moral satisfaction to France. But the campaign waged in France and during the elections in England had exaggerated the demands so as to include not only reparation for damage but reimbursement of the cost of the War.

Only the United States maintained that the indemnity should be limited to the reparation of the damages: a reparation which in later phases included not only reconstruction of destroyed territories and damage done to private property, but even pensions to the families of those dead in the War and the sums in grant paid during it.

When Prussia beat France in 1870 she asked for an indemnity of five milliards. The Entente could have demanded from the vanquished an indemnity and then have reassumed relations with them provided it were an indemnity which they could pay in a brief period of time.

Instead, it being impossible to demand an enormous sum of 300 or 400 milliards, a difficult figure to fix definitely, recourse was had to another expedient.

From the moment that the phrase reparation des dommages was included in the armistice treaty as a claim that could be urged, it became impossible to ask for a fixed sum. What was to be asked for was neither more nor less than the amount of the damages. Hence a special commission was required, and the Reparations Commission appears on the scene to decide the sum to demand from Germany and to control its payment. Also even after Germany was disarmed a portion of her territory must remain in the Allies' hands as a guarantee for the execution of the treaty.

The reason why France has always been opposed to a rapid conclusion of the indemnity question is that she may continue to have the right, in view of the question remaining still open, to occupy the left bank of the Rhine and to keep the bridgeheads indicated in the treaty.

The thesis supported by Clemenceau at the Conference was a simple one: Germany must recognize the total amount of her debt; it is not enough to say that we recognize it.

I demand in the name of the French Government, and after having consulted my colleagues, that the Peace Treaty fixes Germany's debt to us and indicates the nature of the damages for which reparation is due. We will fix a period of thirty years if you so wish it, and we will give to the Commission, after it has reduced the debt to figures, the mandate to make Germany pay within these thirty years all she owes us. If the whole debt cannot be paid in thirty years the Commission will have the right to extend the time for payment.

This scheme was agreed. And the thesis of the compensation of damages, instead of that for the payment of the cost of the War, prevailed for a very simple reason. If they proposed to demand for all integral reparations, and therefore the reimbursement of the cost of the War, the figures would have been enormous. It became necessary to reduce all the credits proportionally, as in the case of a bankruptcy. Now, since in the matter of the indemnities France occupied the first place (to begin with, she asked sixty-five per cent. of all sums paid by Germany), she took the greater part of the indemnities, while on the sums paid for reimbursement of cost of war, she would only have got less than twenty per cent.

Germany has therefore been put under control for all the time she will be paying the indemnities—that is, for an indefinite time.

The valuation of the expenses for the reconstruction of the ruined territories had to be carried out according to the regulations of the treaty, and, the prices having increased, the French Government presented in July, 1920, a first approximate valuation: damages, 152 milliards; pensions, 58 milliards; in all, 210 milliards. In November, 1920, the damages had increased to 218 milliards.

Even these figures represent something less absurd than the first demands and figures.

On September 5, 1919, the French Minister of Finance, speaking in the French Chamber, calculated the total of the German indemnities arising from the treaty at 375 milliards, whose interest would accumulate until 1921, after which date Germany would begin to pay her debt in thirty-four annual rates of about 25 milliards each, and 13,750 milliards a year would go to France.

Again, in November, 1920, Ogier, Minister of the liberated regions, put before the Reparations Commission in the name of France a detailed memorial which made the value of the territories to be reconstructed only for the cases of private individuals come to 140 milliards, not including the pensions, damage to railways and mercantile marine, which totalled 218 milliards, of which 77 milliards were for pensions and 141 milliards for damages.

Of late the sense of reality has begun to diffuse itself. The Minister Loucheur himself has laughed at the earlier figures, and has stated that the damages do not exceed eighty milliards.

But the French public has been accustomed for some time to take the figures of Klotz seriously, and to discuss indemnities of 150, 200 and 250 milliards. The public, however, is not yet aware of the real position, and will not be able to arrive at a just realization of it without passing through a serious moral crisis which will be the first secure element of the real peace.

Setting aside all questions of indemnities from Austria-Hungary, Turkey and Bulgaria (they have nothing to give, can give nothing; on the contrary, they ask and merit assistance), it is clear that all the indemnities must be paid by Germany.

The French totals of the material damage claims in the invaded districts have been absolutely fantastic and more exaggerated than in the case of Belgium, whose indemnity claims would lead one to suppose the total destruction of at least the third part of her territory, almost as if she had undergone the submersion of, say, ten thousand square metres of her small territory.

This problem of the indemnities, limited to the reparation of damages, and in accordance with the costs contemplated in the Treaty of Versailles, has never been seriously tackled. One may even say it has not been seriously examined. And it is deplorable that there has been created among the public, or among a large part of it, the conviction that Germany will repair the damage of the War by her own effort. This idea, however, finds no acceptance in England among serious persons, and in Italy no one believes in it. But in France and Belgium the idea is widely diffused, and the wish to spread the belief is lively in several sections of opinion, not because intelligent people believe in the possibility of effective payment, but with the idea of putting Germany in the light of not maintaining the clauses of the peace, thus extending the right to prolong the military occupation and even to aggravate it. Germany, thereby, is kept out of the League of Nations and her dissolution facilitated.

John Maynard Keynes, ever since the end of 1919, has shown in his admirable book the absurdity of asking for vast indemnities, Germany's impossibility of paying them, and the risk for all Europe of following a road leading to ruin, thus at the same time accentuating the work of disintegration started by the treaty. That book had awakened a wide-sounding echo, but it ought to have had a still wider one, and would have done but for the fact that, unfortunately, the Press in free countries is anything but free.

The great industrial syndicates, especially in the steel-making industry, which control so large a part of the Press among the majority of the States of Europe, and even beyond Europe, find easy allies in the inadequate preparation of the major part of the journalists to discuss the most important problems, and the indisposition on the part of the public to examine those questions which present difficulties, and are so rendered less convenient for discussion.

I knew Keynes during the War, when he was attached to the British Treasury and chief of the department charged to look after the foreign exchanges and the financial relations between Great Britain and her allies. A serious writer, a teacher of economics of considerable value, he brought to his difficult task a scrupulousness and an exactness that bordered on mistrust. Being at that time Chancellor of the Exchequer in Italy, in the bitterest and most decisive period of the War, I had frequent contact with Mr. Keynes, and I always admired his exactness and his precision. I could not always find it in myself to praise his friendly spirit. But he had an almost mystic force of severity, and those enormous squanderings of wealth, that facile assumption of liabilities that characterized this period of the War, must have doubtless produced in him a sense of infinite disgust. This state of mind often made him very exigent, and sometimes unjustifiably suspicious. His word had a decisive effect on the actions of the English Treasury.

When the War was finished, he took part as first delegate of the English Treasury at the Peace Conference of Paris, and was substituted by the Chancellor of the Exchequer in the Supreme Economic Council. He quitted his office when he had come to the conclusion that it was hopeless to look for any fundamental change of the peace treaties.

His book is not only a document of political uprightness but the first appeal to a sense of reality which, after an orgy of mistakes, menaces a succession of catastrophes. In my opinion it merits a serious reconsideration as the expression of a new conscience, as well as an expression of the truth, which is only disguised by the existing state of exasperation and violence.

After two years we must recognize that all the forecasts of Keynes have been borne out by the facts: that the exchange question has grown worse in all the countries who have been in the War, that the absurd indemnities imposed on the enemies cannot be paid, that the depressed condition of the vanquished is harmful to the victors almost in equal measure with the vanquished themselves, that it menaces their very existence, that, in fine, the sense of dissolution is more widespread than ever.

The moment has come to make an objective examination of the indemnity question, and to discuss it without any hesitation.

Let us lay aside all sentiment and forget the undertakings of the peace treaties. Let us suppose that the Entente's declarations and Wilson's proposals never happened. Let us imagine that we are examining a simple commercial proposition stripped of all sentiment and moral ideas.

After a great war it is useless to invoke moral sentiments: men, while they are blinded by hatred, recognize nothing save their passion. It is the nature of war not only to kill or ruin a great number of men, not only to cause considerable material damage, but also, necessarily, to bring about states of mind full of hate which cannot be ended at once and which are even refractory to the language of reason.

For a long time I myself have looked upon the Germans with the profoundest hatred. When I think of all the persons of my race dead in the War, when I look back upon the fifteen months of anguish when my first-born son was a prisoner of war in Germany, I am quite able to understand the state of mind of those who made the peace and the mental condition in which it was made. What determined the atmosphere of the peace treaties was the fact that there was a conference presided over by Clemenceau, who remembered the Prussians in the streets of Paris after the war of 1870, who desired but one thing: the extermination of the Germans. What created this atmosphere, or helped to create it, was the action of Marshal Foch, who had lost in the War the two persons dearest to him in life, the persons who attached him to existence.

But now we must examine the question not in the light of our sentiments or even of our hatreds. We must see quite calmly if the treaties are possible of application without causing the ruin of the vanquished. Then we must ask ourselves if the ruin of the vanquished does not bring in its train the ruin of the victors. Putting aside, then, all moral considerations, let us examine and value the economic facts.

There is no question that the reparation problem exists solely in the case of Germany, who has still a powerful statal framework which allows her to maintain great efforts, capable not only of providing her with the means of subsistence, but also of paying a large indemnity to the victors. The other vanquished States are more in need of succour than anything else.

What are the reparations?

Let us follow the precis of them which a representative of France made at the signing of the Treaty of Versailles. They are as follows:

1. Germany is responsible for the total of the losses and damages sustained by her victors inasmuch as she caused them.

2. Germany, in consideration of the permanent diminution of her resources, resulting from the Peace Treaty, is only obliged (but is obliged without restitutions or reserves) to reimburse the direct damages and the pensions as precised in Schedule I of Clause viii of the treaty.

3. Germany must pay before May 1, 1921, not less than twenty milliards of gold marks or make equivalent payment in kind.

4. On May 1 the Reparations Commission will fix the total amount of the German debt.

5. This debt must be liquidated by annual payments whose totals are to be fixed by the Commission.

6. The payments will continue for a period of thirty years, or longer if by that time the debt is not extinguished.

7. Germany will issue one hundred milliards of gold marks of bearer bonds, and afterwards all such issues as the Reparations Commission shall demand, until the amount of the debt be reached in order to permit the stabilization of credit.

8. The payments will be made in money and in kind. The payments in kind will be made in coal, live stock, chemical products, ships, machines, furniture, etc. The payments in specie consist of metal money, of Germany's credits, public and private, abroad, and of a first charge on all the effects and resources of the Empire and the German States.

9. The Reparations Commission, charged with seeing to the execution of this clause, shall have powers of control and decision. It will be a commission for Germany's debt with wider powers. Called upon to decide, according to equity, justice and good faith, without being bound by any codex or special legislation, it has obtained from Germany an irrevocable recognition of its authority. Its duty is to supervise until the extinction of the debt Germany's situation, her financial operations, her effects, her capacity for production, her provisioning, her production. This commission must decide what Germany can pay each year, and must see that her payments, added to the budget, fall upon her taxpayers at least to the extent of the allied country most heavily taxed. Its decisions shall be carried out immediately and receive immediate application, without any other formality. The commission can effect all the changes deemed necessary in the German laws and regulations, as well as all the sanctions, whether of a financial, economic or military nature arising from established violations of the clauses put under its control. And Germany is obliged not to consider these "sanctions" as hostile acts.

In order to guarantee the payments an inter-allied army—in reality a Franco-Belgian army—occupies the left bank of the Rhine, and is stationed at the bridgeheads. Germany is completely helpless, and has lost all the features of a sovereign State inasmuch as she is subject to "controls" in a way that Turkey never was. In modern history we can find no parallel for this state of things. These are conditions which alter the very bases of civilization and the relations between peoples. Such procedure has been unknown in Europe for centuries. The public has become accustomed in certain countries to consider responsible for the War not the government that wished it or the German people, but the future generations. Thus the indemnities are to be paid—were such conditions possible—in thirty years and for at least twenty years afterwards by people still unborn at the time of the War. This cursing of the guilty people has no parallel in modern history. We must go back to the early ages of humanity to find anything of the kind.

But even the most inhuman policies, such as Germany has never adopted in her victories, although she has been accused of every cruelty, can find at least some justification if they had a useful effect on the country which has wished and accepts responsibility for them. The conqueror has his rights. Julius Caesar killed millions of Germans and retarded perhaps for some centuries the invasion of Rome. But the practices established by the Treaty of Versailles are in effect equally harmful to victors and vanquished, though maybe in unequal measure, and in any case prepare the dissolution of Europe.

I had my share in arranging at San Remo the Spa Conference, in the hope and with the desire of discussing frankly with the Germans what sum they could pay by way of indemnity without upsetting their economy and damaging severely that of the Allies. But the ministerial crisis which took place in June, 1920, prevented me from participating at the Spa Conference; and the profitable action which Great Britain had agreed to initiate in the common interest, ours as well as France's, could not be proceeded with. The old mistakes continued to be repeated, though many attenuations have come about and the truth begins to appear even for those most responsible for past errors.

We shall have to examine with all fair-mindedness if Germany is in a position to pay in whole or in part the indemnity established or rather resulting from the treaty. France especially believes, or has said on several occasions she believes, that Germany can pay without difficulty 350 milliards.

After many stupidities and many exaggerations which have helped considerably to confuse the public, in face of the new difficulties which have arisen, new arrangements for the payment of the indemnity have been established. On May 11, in face of the situation which had arisen, the Allies proposed and Germany accepted a fresh scheme for the payment of the reparations. Germany is constrained to pay every year in cash and in kind the equivalent of 500 million dollars, plus 26 per cent. of the total of her exports.

The rest of the accord refers to the procedure for the issue of bonds guaranteed on the indicated payments, to the constitution of a guarantee committee, and to the date of payment. Probably Germany will have been able to get through the year 1921 without insurmountable difficulties.

At Spa, on April 27, 1921, the proportionate sums assessed for each of the conquering powers were established on a total indemnity notably reduced in comparison with the earlier absurd demands.

But leaving alone the idea of an indemnity of 250, 150, or even 100 milliards of gold marks, it will be well to see in a concrete form what Germany can be made to pay, and whether the useless and elaborate structure of the Reparations Commission which, with its powers of regulating the internal life of Germany for thirty years or more, ought not to be substituted by a simpler formula more in sympathy with civilized notions.

Shortly before the War, according to successive statistics, the private wealth of France did not amount to more than 250 milliards.

The wealth of France, according to successive valuations, was calculated at 208 milliards of francs in 1905 (de Foville), at 214 milliards in 1908 (Turquan), at about 250 milliards according to other authors. The wealth of Belgium, according to official statistics published by the Belgian Ministry of Finance in 1913, amounted to rather less than 30 milliards of francs. The estimate is perhaps a trifle low. But this official figure must not be considered as being a long way from the truth. At certain moments Belgium's demands have surpassed even the total of her national wealth, while the damages have not been more than some milliards.

The value of the land in France was calculated before the War at between 62 and 78 milliards; the value of the buildings, according to l'Annuaire Statistique de la France, at 59-1/2 milliards. The territory occupied by the Germans is not more than a tenth of the national territory. Even taking into consideration the loss of industrial buildings it is very difficult to arrive at the figure of 15 milliards. At the same time it is true that the Minister Loucheur declared on February 17, 1919, in the French Chamber that the reconstruction of the devastated regions in France required 75 milliards—that is, very much more than double the private wealth of all the inhabitants of all the occupied regions.

In all the demands for compensation of the various States we have seen not so much a real and precise estimate of the damages as a kind of fixing of credit in the largest measure possible in order that in the successive reductions each State should still have proportionally an advantageous position.

Making his calculation with a generosity which I assert to be excessive (and I assert this as a result of an accurate study of the question, which perhaps I may have occasion to publish), Keynes maintains that the damages for which Germany should be made to pay come to 53 milliards for all losses on land and sea and for the effects of aerial bombardments—53 milliards of francs all told, including the damages of France, Great Britain, Italy, Belgium, Serbia, etc.! I do not believe that the damages reach 40 milliards of gold marks, unless, of course, we calculate in them the pensions and allowances.

But these figures have but small interest, since the demands have been almost entirely purely arbitrary.

What we must see is if Germany can pay, and if, with a regime of restrictions and violence, she can hand over, not the many milliards which have been announced and which have been a deplorable speculation on the ignorance of the public, but a considerable sum, such as is that which many folk still delude themselves it is possible to have.

Germany has already consigned all her transferable wealth; the gold in her banks, her colonies, her commercial fleet, a large and even the best part of her railway material, her submarine cables, her foreign credits, the property of her private citizens in the victorious countries, etc. Everything that could be handed over, even in opposition to the rights of nations as such are known in modern civilized States, Germany has given. She has also hypothecated all her national goods. What can she give now?

Germany can pay in three ways only:

1. Merchandise and food products on account of the indemnity: coal, machines, chemical products, etc.

2. Credits abroad coming from the sale of merchandise. If Germany exports, that is sells eight milliard marks' worth of goods abroad, she pays two milliards to the Reparations Commission.

3. Property of private citizens. Germany can enslave herself, ceding the property of her private citizens to foreign States or citizens to be disposed of as they wish.

Excluding this last form, which would constitute slavery pure and simple, as useless, as impossible, and calculated to parallel the methods in use among barbarous peoples, there only remain the first two methods of payment which we will examine briefly.

It must be remembered that Germany, even before the War, was in difficulties for insufficient avenues of development, given the restricted nature of her territory and the exuberance of her population. Her territory, smaller than that of France and much less fertile, must now nourish a population which stands to that of France as three to two.

If we have had gigantic war losses, Germany, who fought on all the fronts, has had losses certainly not inferior to ours. She too has had, in larger or smaller proportion, her dead and her mutilated. She has known the most atrocious sufferings from hunger. Thus her productive power is much diminished, not only on account of the grave difficulties in which her people find themselves (and the development of tuberculosis is a terrible index), but also for the lowered productive capacity of her working classes.

The statistics published by the Office of Public Health of the Empire (Reichsgesundheitsamt) and those given in England by Professor Starling and laid before the British Parliament, leave no doubt in the matter.

Germany has had more than 1,800,000 dead and many more than 4,000,000 of wounded. She has her mass of orphans, widows and invalids. Taken altogether the structure of her people has become much worse.

What constituted the great productive force of the German people was not only its capacity to work, but the industrial organization which she had created with fifty years of effort at home and abroad with many sacrifices. Now Germany has not only lost 8 per cent. of her population, but 25 per cent. of her territory, from which cereals and potatoes were produced, and 10 to 12 per cent. of her live stock, etc. We have already seen the enormous losses sustained by Germany in coal, iron and potash.

The most intelligent and able working classes, created by the most patient efforts, have been reduced to the state of becoming revolutionary elements. By taking away from Germany at a stroke her mercantile marine, about 60,000 sailors have been thrown on the streets and their skill made useless.

Germany, therefore, impoverished in her agricultural territory, deprived of a good part of her raw materials, with a population weakened in its productive qualities, has lost a good part of her productive capacity because all her organization abroad has been broken, and everything which served as a means of exchange of products, such as her mercantile fleet, has been destroyed. Moreover, Germany encounters everywhere obstacles and diffidence. Impeded from developing herself on the seas, held up to ridicule by the absurd corridor of Danzig, whereby there is a Polish State in German territory, she cannot help seeking life and raw materials in Russia.

In these conditions she must not only nourish her vast population, not only produce sufficient to prevent her from falling into misery, but must also pay an indemnity which fertile fantasies have made a deceived Europe believe should amount even to 350 milliards of gold marks, and which even now is supposed by seemingly reasonable people to be able to surpass easily the sum of a hundred milliards.

Could France or Italy, by any kind of sacrifice, have paid any indemnities after ending the War? Germany has not only to live and make reparation, but to maintain an inter-allied army of occupation and the heavy machinery of the Reparations Commission, and must prepare to pay an indemnity for thirty years. France and Italy have preserved their colonies (Italy's do not amount to much), their mercantile fleets (which have much increased), their foreign organization. Germany, without any of these things, is to find herself able to pay an indemnity which a brazen-faced and ignorant Press deceived the public into believing could amount to twenty or twenty-five milliards a year.

Taking by chance Helferich's book, which valued the annual capitalization at ten milliards, the difference between an annual production of forty-three milliards and a consumption of thirty-three milliards, inexpert persons have said that Germany can pay without difficulty ten milliards, plus a premium on her exports, plus a sufficient quantity of goods and products.

One becomes humiliated when one sees newspapers of serious reputation and politicians deemed not to be unimportant reasoning in language so false.

The estimates of private wealth, about which the economists make experiments, and on which I myself have written much in the past, have a relative value. It may be argued that before the War the total of all private patrimony in Germany surpassed but by little three hundred milliards of marks; and this is a valuation made upon generous criteria.

But when it is said that the annual capitalization of Germany was ten milliards, that is not to say that ten milliards of capital is deposited in the banks ready to be transferred at will. Capitalization means the creation of instruments of production. The national capital increases in proportion as these are increased. Therefore the best way of examining the annual capitalization of a country is to see how many new industries have arisen, to what extent the old ones have been improved, what improvements have been introduced into agriculture, what new investments have been made, etc.

If the capitalization of Germany before the War was scarcely ten milliards of marks, it was too small for an Empire of some 67,000,000 persons. I believe that in reality it was larger. But even if it came to fifteen milliards, it represented a very small figure.

The population in the progressive countries augments every year. In Germany, before the War, in the period 1908-1913, the population increased on an average by 843,000 persons a year, the difference between the people born alive and the dead. In other words, the annual increase of the population per annum was at the rate of 13.0 per thousand.

As in certain districts of Italy the peasants plant a row of trees on the birth of every son, so among nations it is necessary to increase the national wealth at least in proportion to the newly arrived. Supposing that the private wealth of the German citizens was from 300 to 350 milliards of marks (an exaggeration, doubtless), it would mean that the wealth increased each year by a thirteenth part or rather more. The difference between the increase in population and the increase in wealth constituted the effective increase in wealth, but always in a form not capable of being immediately handled. To plant trees, build workshops, utilize water-power: all this stands for the output of so much force. One may undertake such works or not, but in any case the result cannot immediately be given to the enemy.

This is so obvious as to be banal.

To seek to propagate the idea that Germany can give that which constitutes her annual capitalization either wholly or in great part is an example of extreme ignorance of economic facts.

It is positively painful to listen to certain types of argument.

A French Minister has said that the success of the war loans for 151 milliards in Germany, and the increase of bank deposits for a sum of 28 milliards, coinciding with an increase of capital of 45 milliards in limited companies, demonstrate that Germany has saved at least 180 milliards in four years. Leaving aside the exactness of these figures, it is really sad to observe reasoning of this type. How can the public have an idea of the reality?

Let us apply the same reasoning to France. We must say that inasmuch as France before the War had a public debt of 32 milliards, and now has a debt of 265 milliards, without calculating what she owes to Great Britain and the United States, France, by reason of the War, has immensely enriched herself, since, leaving aside the debt contracted abroad and the previous debt, she has saved during the War 200 milliards, quite apart from the increase in bank deposits and the increase in capital of limited companies. The War has therefore immensely enriched her. In reality we are face to face with one of the phenomena of the intoxication brought about by paper money, by means of which it has been possible at certain times for the public to believe that the War had increased wealth. Other features of this phenomenon we have in the wretched example of the capitalist classes, after which it was not unnatural that the people should give way to a great increase in consumption, should demand high wages and offer little work in return at the very time when it was most necessary to work more and consume less. There is small cause for wonder that certain erroneous ideas are diffused among the public when they have their being in those very sophisms according to which the indemnity to be paid by the beaten enemy will pay all the debts and losses of the conquering nations.

We are told that Germany, being responsible for the War, must impose on herself a regime of restrictions and organize herself as an exporting nation for the payment of the reparation debts.

Here again the question can be considered in two ways, according as it is proposed to allow Germany a free commerce or to impose on her a series of forced cessions of goods in payment of the reparations. Both hypotheses can be entertained, but both, as we shall see, lead to economic disorder in the conquering States, if these relations are to be regulated by violence.

It is useless to dilate on the other aphorisms, or rather sophisms, which were seriously discussed at the Paris Conference, and which had even the honour of being sustained by the technical experts:

1. That it is not important to know what Germany can pay, but it is sufficient to know what she ought to pay.

2. That no one can foresee what immense resources Germany will develop within thirty or forty years, and what Germany will not be able to pay will be paid by the Allies.

3. That Germany, under the stimulus of a military occupation, will increase her production in an unheard-of manner.

4. The obligation arising from the treaty is an absolute one; the capacity to pay can only be taken into consideration to establish the number and amount of the annual payments; the total must in any case be paid within thirty years or more.

5. Elle ou nous. Germany must pay; if she doesn't the Allies must pay. It is not necessary that Germany free herself by a certain date; it is only necessary that she pay all.

6. Germany has not to discuss, only to pay. Let time illustrate what is at present unforeseeable, etc. etc.

If we exclude the third means of payment Germany has two ways open to her. First of all she can give goods. What goods? When we speak of goods we really mean coal. Now, as we have seen, according to the treaty Germany must furnish for ten years to Belgium, Italy, and France especially quantities of coal, which in the first five years run from 39-1/2 to 42 millions of tons, and in the following five years come to a maximum of about 32 millions. And all this when she has lost the Saar coalfields and is faced with the threatening situation in Upper Silesia.