Germany's exports reached their maximum in 1913, when the figures touched 10,097 millions of marks, excluding precious metals. Grouping exports and imports in categories, the millions of marks were distributed as follows:

Imports. Exports.

Foodstuffs 2,759 1,035 Live animals 289 7.4 Raw materials 5,003 1,518 Semi-manufactured goods 5,003 1,139 Manufactured goods 1,478 6,395

About one-fifth of the entire exports was in iron and machine products (1,337 [mil.] articles in iron, 680 machines); 722 millions from coal (as against imports of other qualities of 289), 658 millions of chemical products and drugs, 446 from cotton, 298 paint, 290 techno-electrical productions, etc.

What goods can Germany give in payment of the indemnity? We have seen how she has lost a very large part of her iron and a considerable quantity of her coal.

All the economic force of Germany was based upon:

(a) The proper use of her reserves of coal and iron, which allowed her to develop enormously those industries which are based on these two elements.

(b) On her transport and tariff system, which enabled her to fight any competition.

(c) On her potent overseas commercial organization.

Now, by effect of the treaty, these three great forces have been entirely or in part destroyed.

What goods can Germany give in payment of the indemnity, and what goods can she offer without ruining the internal production of the Entente countries? Let us suppose that Germany gives machines, colours, wagons, locomotives, etc. Then for this very fact the countries of the Entente, already suffering by unemployment, would soon see their factories obliged to shut down. Germany must therefore, above all, give raw materials; but since she is herself a country that imports raw materials, and has an enormous and dense population, she is herself obliged to import raw materials for the fundamental needs of her existence.

If we examine Germany's commerce in the five years prior to the War—that is, in the five years of her greatest boom—we shall find that the imports always exceeded the exports. In the two years before the War, 1912 and 1913, the imports were respectively 10,691 and 10,770 millions, and the exports 8,956 and 10,097 millions. In some years the difference even exceeded two milliards, and was compensated by credits abroad, with the payment of freights and with the remittances (always considerable) of the German emigrants. All this is lost.

Exported goods can yield to the exporter a profit of, let us suppose, ten, twelve, or twenty per cent. For the Allies to take an income from the Custom returns means in practice reducing the exports. In fact, in Germany production must be carried on at such low prices as to compensate for the difference, or the exports must be reduced.

In the first case (which is not likely, since Germany succeeds only with difficulty, owing to her exchange, in obtaining raw materials, and must encounter worse difficulties in this respect than other countries), Germany would be preparing the ruin of the other countries in organizing forms of production which are superior to those of all her rivals. Germany would therefore damage all her creditors, especially in the foreign markets.

In the second case—the reduction of exports, one would have the exactly opposite effect to that imagined in the programme proposed—that is, the indemnities would become unpayable.

In terms of francs or lire at par with the dollar, Germany's exportations in 1920 have amounted to 7,250 millions. In 1921 an increase may be foreseen.

If Germany has to pay in cash and kind 2,500 millions of marks at par, plus 26 per cent. of the total of her exports, then supposing an export trade of eight milliards, she will have to give 1,840 millions, or in all 4,540 millions of marks. Thus we arrive by stages at less hyperbolical figures, coming down from the twenty-five milliards a year to something less than a fifth. But to come to grips with reality, Germany in all ways, it must be admitted, cannot give more than two milliards a year, if, indeed, it is desired that an indemnity be paid.

Notwithstanding her great resources, France would not be in a condition to pay abroad two milliards a year without ruining her exchange, which would drop at once to the level of Germany's. Italy with difficulty could pay one milliard.

France and Italy are honest countries, yet they cannot pay their war creditors, and have not been able, and are not able, to pay any share of their debt either to the United States of America or to Great Britain. As a matter of fact, up till now they have paid nothing, and the interest continues to accumulate with the capital.

Why have neither France nor Italy yet started to pay some of their debt? Having won the War, France has had all she could have—fertile territories, new colonies, an abundance of raw material, and above all iron and potash. The simple explanation is that which I have given above.

Can, then, Germany, who is in a terrible condition, whose circulation promises ruin, who has no longer credits nor organization abroad, who has a great shortage in raw materials; can Germany pay four or five milliards a year?

We must also remember that Germany, in addition to the indemnity, must pay the cost of the Army of Occupation, which up to now has amounted to twenty-five milliards of paper marks a year, or more than 1,600 millions of francs at par. That is, Germany has to bear for the support of the Allied troops a charge equal to the cost of maintaining the armies of France, Italy and Belgium before the War.

No financier seriously believes that the issue of bonds authorized by the treaty for the credit of the Reparations Commission has now any probability of success. Germany's monetary circulation system is falling to the stage of assignats, and the time is not distant when, if intelligent provision is not made, Germany will not be in a position to pay any indemnity.

Obliged to pay only one milliard of gold marks, Germany has not been able to find this modest sum (modest, that is, in comparison with all the dreams about the indemnity) without contracting new foreign debts and increasing her already enormous paper circulation. Each new indemnity payment, each new debt incurred, will only place Germany in the position of being unable to make payments abroad.

Many capitalists, even in Italy, inspire their Press to state that Germany derives an advantage from the depreciation of her mark, or, in other words, is content with its low level. But the high exchanges (and in the case of Germany it amounts to ruin) render almost impossible the purchase of raw materials, of which Germany has need. With what means must she carry out her payments if she is obliged to cede a large part of her customs receipts, that is of her best form of monetary value, and if she has no longer either credits or freights abroad?

If what is happening injured Germany only, it would be more possible to explain it, if not to justify it. But, on the contrary, Germany's fall, which is also the decadence of Europe, profoundly disturbs not only the European continent, but many other producing countries. Though the United States and Great Britain partially escape the effect, they too feel the influence of it, not only in their political serenity, but in the market of goods and values. Germany's position is bound up with that of Europe; her conquerors cannot escape dire consequences if the erstwhile enemy collapses.

We must not forget that before the War, in the years 1912 and 1913, the larger part of Germany's commerce was with the United States, with Great Britain, with Russia and with Austria-Hungary. In 1913 her commerce with the United States represented alone little less than two milliards and a half of marks according to the statistics of the German Empire, and 520 millions of dollars according to the figures of America. If we except Canada, which we may consider a territorial continuation, the two best customers of the United States were Great Britain and Germany. They were, moreover, the two customers whose imports largely exceeded the exports. The downfall of Germany will bring about inevitably a formidable crisis in the Anglo-Saxon countries and consequent ruin in other countries.

Up to now Germany has given all she could; any further payment will cause a downfall without changing the actual monetary position. Germany, after a certain point, will not pay, but will drag down in her fall the economic edifices of the victorious countries of the Continent.

All attempts at force are useless, all impositions are sterile.

All this is true and cannot be denied, but at the same time it must be recognized that in the first move for the indemnity there was a reasonable cause for anxiety on the part of the Allies.

If Germany had had to pay no indemnity this absurd situation would have come about, that although exhausted, Germany would have issued from the War without debts abroad and could easily have got into her stride again, while France, Italy, and in much less degree Great Britain, would have come out of the War with heavy debts.

This anxiety was not only just and well founded, but it is easy to see why it gave ground for a feeling of grave disquiet.

France and Italy, the two big victor States of the Continent, were only able to carry on the War through the assistance of Great Britain and the United States. The War would not have lasted long without the aid of the Anglo-Saxons, which had a decisive effect.

France has obtained all she asked for, and, indeed, more than all her previsions warranted. Italy has found herself in a difficult position. She too has realized her territorial aspirations, though not completely, and the assistance of her Allies has not always been cordial.

I have had, as head of the Government, to oppose all the agitations, and especially the Adriatic adventures, which have caused an acute party division in Italy. From a sense of duty I have also assumed all responsibility. But the rigidness of Wilson in the Fiume and Adriatic questions and the behaviour of some of the European Allies have been perfectly unjustifiable. In certain messages to Wilson during my term of government I did not fail to bring this fact forward. Certainly, Jugo-Slavia's demands must be considered with a sense of justice, and it would have been an error and an injustice to attribute to Italy large tracts of territory in Dalmatia; but it would have been possible to find a more reasonable settlement for a country which has had such sufferings and known such losses during the War. In any case, when by the absurd system followed in the treaties so many millions of Germans, Magyars, Turks and Bulgarians have been handed over to States like Serbia, whose intemperate behaviour precipitated the War, or to States like Greece, which took only a small and obligatory part in it, when States like Poland have won their unity and independence without making war, when Germany has been dismembered in order to give Poland an access to the sea and the ridiculous situation of Danzig has been created, when the moral paradox of the Saar, which now becomes a German Alsace-Lorraine, has been set up, when so many millions of men have been parcelled out without any criteria, it was particularly invidious to contest so bitterly Italy's claims. I can freely affirm this inasmuch as, risking all popularity, I have always done my duty as a statesman, pointing out that solution which time has proved to be inevitable.

No one can deny that Italy is passing through a period of crisis and political ill-health. Such states of public psychology are for peoples what neurasthenia is for individuals. On what does it depend? Often enough on reasons which cannot be isolated or defined. It is a state of mind which may come to an end at any minute, and is consequent upon the after-effects of the War. Rather than coming from the economic disorder, it derives from a malady of the temperament.

I have never believed, in spite of the agitations which have been seen at certain periods, in the possibility of a revolutionary movement in Italy. Italy is the only country which has never had religious wars, the only country which in twenty centuries has never had a real revolution. Land of an ancient civilization, prone to sudden bursts of enthusiasm, susceptible to rapid moods of discouragement, Italy, with all the infinite resources of the Latin spirit, has always overcome the most difficult crises by her wonderful adaptive power. In human history she is, perhaps, the only country where three great civilizations have risen up one after another in her limited soil. If Italy can have the minimum of coal, cereals and raw materials necessary to her existence and her economic revival, the traditional good sense of the Italian people will easily overcome a crisis which is grave, but which affects in various measure all the victors, and is especially temperamental.

It cannot be denied that if all Europe is sick, Italy has its own special state of mind. Those who wished the War and those who were against it are both dissatisfied: the former because, after the War, Italy has not had the compensations she expected, and has had sufferings far greater than could have been imagined; the latter because they attribute to the War and the conduct of the War the great trials which the nation has now to face. This sickness of the spirit is the greatest cause of disorder, since malcontent is always the worst kind of leaven.

Four great countries decided the War: Great Britain, France, Italy, and the United States of America. Russia fell to pieces soon, and fell rather on account of her own internal conditions than from enemy pressure. The action of the United States arrived late, but was decisive. Each country, however, acted from a different state of mind. France had of necessity to make war. Her territory was invaded, and all hope of salvation lay in moral resistance alone. Great Britain had to wage the War out of sense of duty. She had guaranteed the neutrality of Belgium, and could not fail to keep her word of honour. Two countries alone chose freely the sorrowful way of the War: Italy and the United States. But their sacrifices, sufferings and losses have been very different. During the War the United States have been able to develop their immense resources, and, notwithstanding some crises, they have come out of it much richer than before. From being debtors to Europe they have become creditors. They had few losses in men, and a great development in wealth. Italy, who after many difficulties had developed in her famous but too narrow territory the germs of a greater fortune, has had, together with very heavy losses in men, heavy losses in her wealth.

Italy saved the destinies of France for the first time by declaring her neutrality on August 2, 1914, and letting the certainty of it be known from July 30, as the diplomatic documents have shown.

It was that sudden and unexpected declaration of neutrality which rendered it possible for France to concentrate all her forces in the north and to win the battle of the Marne. Italy for a second time saved the destinies of the Entente by entering into the War (too precipitately and unprepared), in May, 1915, thus preventing the Austrian army, which was formidable for its technical organization and for its valour, from obtaining the advantages it expected.

Why did Italy go to war?

The diplomatic documents, which are not all documents of political wisdom, demonstrate the anxiety of the Italian Government to realize its Adriatic programme and to gain secure frontiers against Austria-Hungary and its successors. But this was not the cause of the War; it was rather a means of explaining to the people the necessity for the War. Italy had been for nearly thirty-four years ally of Austria-Hungary, and the aspirations of Italy's Adriatic policy had never disturbed the relations between the two countries. The real cause of Italy's war was a sentimental movement, a form of extraordinary agitation of the spirits, brought about by the invasion of Belgium and the danger of France. The intellectual movement especially, the world of culture, partook largely in fomenting the state of exaltation which determined the War.

During the progress of the War, which was long and bitter, Italy passed through some terrible hours. Her privations during the War, and immediately after, surpassed all expectations. Italy found herself face to face with an enemy who enjoyed a superior geographical situation, a numerical superiority, as well as a superiority in artillery. After the downfall of Russia she had to support a terrible campaign. Even in 1917, after the military disaster, when allied troops came to Italy, she sent abroad more men than there came allied troops to her aid. According to some statistics which I had compiled, and which I communicated to the Allies, Italy was shown, in relation to her demographic structure, to have more men in the front line than any other country. The economic sufferings were, and are, greater than those endured by others. France is only in part a Mediterranean country, while Italy is entirely so. During the War the action of the submarines rendered the victualling of Italy a very difficult matter. Many provinces, for months on end, had to content themselves with the most wretched kind of food. Taking population and wealth into proportion, if the United States had made the effort of Italy they would have had to arm sixteen millions of men, to have lost a million and a half to two million soldiers, and to have spent at least four hundred milliards. In order to work up popular enthusiasm (and it was perhaps necessary), the importance of the country's Adriatic claims was exaggerated. Thus many Italians believe even to-day in good faith that the War may be considered as lost if some of these aspirations have not been realized or will not be realized.

But, after the War, Italy's situation suddenly changed. The War had aroused in the minds of all Europeans a certain sentiment of violence, a longing for expansion and conquest. The proclamations of the Entente, the declarations of Wilson's principles, or points, became so contorted that no trace of them could be found in the treaties, save for that ironic covenant of the League of Nations, which is always repeated on the front page, as Dante said of the rule of St. Benedict, at the expense of the paper.

For Italy a very curious situation came about. France had but one enemy: Germany. She united all her forces against this enemy in a coherent and single action which culminated in the Treaty of Versailles. France had but one idea: to make the Entente abandon the principles it had proclaimed, and try to suffocate Germany, dismember her, humiliate her by means of a military occupation, by controlling her transports, confiscating all her available wealth, by raising to the dignity of elevated and highly civilized States inferior populations without national dignity.

Austria-Hungary was composed of eleven peoples. It was split up into a series of States. Austria and Hungary were reduced to small territories and shut up in narrow confines. All the other countries were given to Rumania, to Serbia, or more exactly to the S.H.S. State, to Poland, or else were formed into new States, such as Czeko-Slovakia. These countries were considered by the Entente as allies, and, to further good relations, the most important of the Entente nations protected their aspirations even against the wishes of Italy. The Italians had found themselves in their difficult theatre of war against Galatians, Bosnians, Croats, Transylvanians, etc. But by the simple fact of their having changed names, and having called themselves Poles, Jugo-Slavs, Rumanians, they became friends. In order to favour some of these new friends, it has happened that not only have Italy's sentiments been offended, but even justice itself. Montenegro was always mentioned in the declarations of the Entente. On January 10, 1917, Briand, speaking in the name of all the Allies, united at that time pour la defense et la liberte des peuples, put forward as a fundamental programme the restoration of Belgium, Serbia and Montenegro: Montenegro was in this on an equality with Belgium. Just a year afterwards, January 8, 1918, Wilson, when formulating his fourteen points, had included in the eleventh proposition the duty of evacuating the territories of Rumania, Serbia and Montenegro, and restoring them. The exact reason for which it was established that Montenegro should be absorbed (even without plebiscite) by the S.H.S. State, thus offending also Italy's sentiments, will remain one of the most melancholy pages of the New Holy Alliance that the Entente has become, along with that poor prestigeless organism, the League of Nations. But let us hope this latter will find a means of renovating itself.

While France was ruining the German people's sources of life, the peoples who had fought most ferociously against Italy became, through the War, friendly nations, and every aspiration of Italy appeared directed to lessen the prestige of the new friends and allies.

The territories annexed to Italy have a small economic value.

For more than thirty years Italy had sold a large part of her richest agricultural produce to Germany and had imported a considerable share of her raw materials from Russia. Since the War she has found herself in a state of regular isolation. A large part of the Italian Press, which repeats at haphazard the commonest themes of the French Press instead of wishing for a more intense revival of commercial relations with Germany, frightens the ignorant public with stories of German penetration; and the very plutocracy in France and Italy—though not to the same extent in Italy—abandons itself to the identical error. So to-day we find spread throughout the peninsula a sense of lively discontent which is conducive to a wider acceptance of the exaggerations of the Socialists and the Fascists. But the phenomenon is a transitory one.

Italy had no feeling of rancour against the German people. She entered the War against German Imperialism, and cannot now follow any imperialistic policy. Indeed, in the face of the imperialistic competitions which have followed the War, Italy finds herself in a state of profound psychological uneasiness.

France worries herself about one people only, since as a matter of fact she has only one warlike race at her frontiers: Germany. Italy's frontiers touch France, the German peoples, the Slav races. It is, therefore, her interest to approve a democratic policy which allows no one of the group of combatants to take up a position of superiority. The true Italian nationalist policy consists in being against all excessive nationalisms, and nothing is more harmful to Italy's policy than the abandonment of those democratic principles in the name of which she arose and by which she lives. If the policy of justice is a moral duty for the other nations, for Italy it is a necessity of existence. The Italian people has a clear vision of these facts, notwithstanding a certain section of her Press and notwithstanding the exaggerations of certain excited parties arisen from the ashes of the War. And therefore her uneasiness is great. While other countries have an economic crisis, Italy experiences, in addition, a mental crisis, but one with which she will be able to cope.

France, however, is in a much more difficult situation, and her policy is still a result of her anxieties. All the violences against Germany were, until the day before yesterday, an effect of hatred; to-day they derive from dread. Moral ideas have for nations a still greater value than wealth. France had until the other day the prestige of her democratic institutions. All of us who detested the Hohenzollern dynasty and the insolent fatuity of William II loved France, heir of the bourgeois revolution and champion of democracy. So, when the War came, all the democracies felt a lively pang: the crushing of France meant the crushing of democracy and liberty. All the old bonds are broken, all the organization which Germany had abroad is smashed up, and France has been saved, not by arms alone, but by the potent life of free peoples.

Yet victory has taken away from France her greatest prestige, her fascination as a democratic country. Now all the democratic races of the world look at France with an eye of diffidence—some, indeed, with rancour; others with hate. France has comported herself much more crudely toward Germany than a victorious Germany would have comported herself toward France. In the case of Russia, she has followed purely plutocratic tendencies. She has on foot the largest army in the world in front of a helpless Germany. She sends coloured troops to occupy the most cultured and progressive cities of Germany, abusing the fruits of victory. She shows no respect for the principle of nationality or for the right of self-determination.

Germany is in a helpless and broken condition to-day; she will not make war; she cannot. But if to-morrow she should make war, how many peoples would come to France's aid?

The policy which has set the people of Italy against one another, the diffusion of nationalist violence, the crude persecutions of enemies, excluded even from the League of Nations, have created an atmosphere of distrust of France. Admirable in her political perceptiveness, France, by reason of an error of exaltation, has lost almost all the benefit of her victorious action.

A situation hedged with difficulties has been brought about. The United States and Great Britain have no longer any treaty of alliance of guarantee with France. The Anglo-Saxons, conquerors of the War and the peace, have drawn themselves aside. Italy has no alliance and cannot have any. No Italian politician could pledge his country, and Parliament only desires that Italy follow a democratic, peaceful policy, maintaining herself in Europe as a force for equilibrium and life.

France, apart from her military alliance with Belgium, has a whole system of alliances based largely on the newly formed States: shifting sands like Poland, Russia's and Germany's enemy, whose fate no one can prophesy when Germany is reconstructed and Russia risen again, unless she finds a way of remedying her present mistakes, which are much more numerous than her past misfortunes. Thus the more France increases her army, the more she corners raw materials and increases her measures against Germany, the more unquiet she becomes.

She has seen that Germany, mistress on land, and to a large extent on the seas, after having carried everywhere her victorious flag, after having organized her commerce and, by means of her bankers, merchants and capitalists, made vast expansions and placed a regular network of relations and intrigue round the earth, fell when she attempted her act of imperialistic violence. France, when in difficulties, appealed to the sentiment of the nations and found arms everywhere to help her. What then is able organization worth to-day?

The fluctuations of fortune in Europe show for all her peoples a succession of victories and defeats. There are no peoples always victorious. After having, under Napoleon I, humiliated Germany, France saw the end of her imperialistic dream, and later witnessed the ruin of Napoleon III. She has suffered two great defeats, and then, when she stood diminished in stature before a Germany at the top of her fortune, she, together with the Allies, has had a victory over an enemy who seemed invincible.

But no one can foresee the future. To have conveyed great nuclei of German populations to the Slav States, and especially to Poland; to have divided the Magyars, without any consideration for their fine race, among the Rumanians, Czeko-Slovaks and the Jugo-Slavs; to have used every kind of violence with the Bulgars; to have offended Turkey on any and every pretext; to have done this is not to have guaranteed the victory and the peace.

Russia sooner or later will recover. It is an illusion to suppose that Great Britain, France and Italy can form an agreement to regulate the new State or new States that will arise in Russia. There are too many tendencies and diverse interests. Germany, too, will reconstruct herself after a series of sorrows and privations, and no one can say how the Germans will behave. Unless a policy of peace and social renovation be shaped and followed, our sons will witness scenes much more terrible than those which have horrified our generation and upset our minds even more than our interests.

Meanwhile, in spite of the frightful increase of scrofula, rickets and tuberculosis, from which the conquered peoples are principally suffering, the march of the nations will proceed according to the laws which have hitherto ruled them and on which our limited action can only for brief periods cause small modifications or alterations.

Demographic forecasts, like all forecasts of social events, have but a comparative value. It is true that demographic movements are especially biological manifestations, but it is also true that economic and social factors exercise a profound influence in limiting their regularity and can disturb them very considerably. It is better therefore not to make long prophecies.

What is certain is that the French population has increased almost imperceptibly while the population of Germany augmented very rapidly. The annual average of births in the five years before the War, 1908-13, was 762,000 in France and 176,000 in Belgium. In Germany it was 1,916,000. The average of deaths was 729,000 in France, 117,000 in Belgium, and 1,073,000 in Germany. Thus, per thousand, the excess of births in France was 0.9, in Belgium 7.7, in Germany 13. The War has terribly aggravated the situation in France, whose demographic structure is far from being a healthy one. From statistics published giving the first results of the French census of 1921—without the new territory of Alsace-Lorraine—France, in the interval between the two census periods, has decreased by 2,102,864; from 39,602,258 to 37,499,394 (1921). The deaths in the War do not represent a half of this decrease, when is deducted the losses among the coloured troops and those from French colonies who fought for France. The new territories annexed to France do not compensate for the War-mortality and the decrease in births.

We may presume that if normal conditions of life return, the population of Germany and German-Austria will be more than one hundred millions, that the population of Belgium altogether little less than fifty millions, that Italy will have a population much greater than that of France, of at least forty-five million inhabitants, and that Great Britain will have about sixty million inhabitants. In the case of the Germans we have mentioned one hundred million persons, taking into consideration Germany and German-Austria. But the Germans of Poland, of Czeko-Slovakia and the Baltic States will amount to at least twenty millions of inhabitants. No one can make forecasts, even of an approximate nature, on Russia, whose fecundity is always the highest in Europe, and whose losses are rapidly replaced by a high birth-rate even after the greatest catastrophes. And then there are the Germans spread about the world, great aggregations of populations as in the United States of America and in a lesser degree in Brazil. Up to now these people have been silent, not only because they were surrounded by hostile populations, but because the accusation of being sons of the Huns weighed down upon them more than any danger of the War. But the Treaty of Versailles, and more still the manner in which it has been applied, is to dissipate, and soon will entirely dissipate, the atmosphere of antipathy that existed against the Germans. In Great Britain the situation has changed profoundly in three years. The United States have made their separate peace and want no responsibility. In Italy there scarcely exists any hatred for the Germans, and apart from certain capitalists who paint in lurid colours the danger of German penetration in their papers because they want higher tariff protection and to be able to speculate on government orders, there is no one who does not desire peace with all peoples. The great majority of the Italian people only desire to reconstruct the economic and social life of the nation.

Certain tendencies in France's policy depend perhaps on her great anxiety for the future, an anxiety, in fact, not unjustified by the lessons of the past. Germany, notwithstanding her fallen state, her anguish and the torment she has to go through, is so strong and vital that everybody is certain of seeing her once again potent, indeed more potent and formidable than ever.

Everyone in France is convinced that the Treaty of Versailles has lost all foundation since the United States of America abandoned it, and since Great Britain and Italy, persuaded of the impossibility of putting certain clauses into effect, have shown by their attitude that they are not disposed to entertain coercive measures which are as useless as they are damaging.

In France the very authors of the Treaty of Versailles recognize that it is weakened by a series of successive attenuations. Tardieu has asserted that the Treaty of Versailles tends to be abandoned on all sides: "Cette faillite a des causes allemandes, des causes allies, des causes francaises" (p. 489). The United States has asked itself, after the trouble that has followed the treaty, if wisdom did not lie in the old time isolation, in Washington's testament, in the Monroe doctrine: Keep off. But in America they have not understood, says Tardieu, that to assist Europe the same solidarity was necessary that existed during the War (p. 493).

Great Britain, according to Tardieu, tends now also to stand aside. The English are inclined to say, "N'en parlons plus" (p. 493). No Frenchman will accept with calm the manner in which Lloyd George has conceived the execution of the peace treaty. The campaign for the revision of the treaties sprang up in lower spheres and from popular associations and workmen's groups, has surprised and saddened the French spirit (p. 495). In the new developments "etait-ce une autre Angleterre, etait-ce un autre Lloyd George?" (p. 496). Even in France herself Tardieu recognizes sadly the language has altered: "les gouvernements francais, qui se sont succede au pouvoir depuis le 10 janvier, 1920," that is, after the fall of Clemenceau, accused in turn by Poincare of being weak and feeble in asserting his demands, "ont compromis les droits que leur predecesseur avait fait reconnaitre a la France" (p. 503).

Taking into consideration Germany's financial downfall, which threatens to upset not only all the indemnity schemes but the entire economy of continental Europe, the state of mind which is prevalent is not much different from that which Tardieu indicates.

It is already more than a year ago since I left the direction of the Italian Government, and the French Press no longer accused me of being in perfect agreement with Lloyd George, yet Poincare wrote on August 1, 1920:

L'autre jour M. Asquith declarait au parlement britannique: "Quelque forme de langage qu'on emploie, la conference de Spa a bien ete, en fait, une conference pour la revision des conditions du traite." "Chut!" a repondu M. Lloyd George: "c'est la une declaration tres grave par l'effet qu'elle peut produire en France. Je ne puis la laisser passer sans la contredire." Contradiction de pure forme, faite pour courtoisie vis-a-vis de nous, mais qui malheureusement ne change rien au fond des choses. Chaque fois que le Conseil Supreme s'est reuni, il a laisse sur la table des deliberations quelques morceaux epars du traite.

No kind of high-handedness, no combined effort, will ever be able to keep afloat absurdities like the dream of the vast indemnity, the Polish programme, the hope of annexing the Saar, etc. As things go there is almost more danger for the victors than for the vanquished. He who has lost all has nothing to lose. It is rather the victorious nations who risk all in this disorganized Europe of ours. The conquerors arm themselves in the ratio by which the vanquished disarm, and the worse the situation of our old enemies becomes, so much the worse become the exchanges and the credits of the victorious continental countries.

Yet, in some of the exaggerated ideas of France and other countries of the Entente, there is not only the rancour and anxiety for the future, but a sentiment of well-founded diffidence. After the War the European States belonging to the Entente have been embarrassed not only on account of the enormous internal debts, but also for the huge debts contracted abroad.

If Germany had not had to pay any indemnity and had not lost her colonies and mercantile marine we should have been confronted with the absurd paradox that the victorious nations would have issued from the War worn out, with their territories destroyed, and with a huge foreign debt; Germany would have had her territory quite intact, her industries ready to begin work again, herself anxious to start again her productive force, and in addition with no foreign debt, consequently ample credit abroad. In the mad struggle to break up Germany there has had part not only hatred, but also a quite reasonable anxiety which, after all, must be taken into consideration.

Even to-day, three years after the War, Great Britain has not paid her debt to America, and France and Italy have not paid their debts to America and Great Britain. Great Britain could pay with a great effort; France and Italy cannot pay anyhow.

According to the accounts of the American Treasury the Allies' War debt is 9,587 millions of dollars: 4,277 millions owing from Great Britain, 2,977 millions from France, 1,648 millions from Italy, 349 millions from Belgium, 187 millions from Russia, 61 millions from Czeko-Slovakia, 26 millions from Serbia, 25 millions from Rumania, and 15 millions from Greece. Up to last July Great Britain had paid back 110 millions of dollars. Since the spring of 1919 the payment of the interest on the amounts due to the American Treasury has been suspended by some European States. Between October and November, 1919, the amount of the capitalizing and unpaid interests of the European States came to 236 million dollars. The figure has considerably increased since then.

According to the Statist (August 6, 1921) the Allies' debt to the United States on March 31, 1921, amounted to ten milliards and 959 million dollars, including the interests, in which sum Great Britain was interested to the sum of 4,775 million dollars and France for 3,351 million dollars. But the Statist's figures, in variance to the official figures, include other debts than strictly war debts.

The debts of the various allied countries' to Great Britain on March 31, 1921, according to a schedule annexed to the financial statement for 1921-22, published by the British Treasury, came to L1,777,900,000, distributed as follows: France 557 millions, Italy 476 millions, Russia 561 millions, Belgium 94 millions, Serbia 22 millions, Portugal, Rumania, Greece and other Allies 66 millions. This sum represents War debts. But to it must be added the L9,900,000 given by Great Britain for the reconstruction of Belgium and the loans granted by her for relief to an amount of L16,000,000. So, altogether, Great Britain's credit to the Allies on March 31, 1921, was L1,803,600,000, and has since been increased by the interests. Great Britain had also at the same date a credit of L144,000,000 to her dominions.

France has credit of little less than nine milliard francs, of which 875 millions is from Italy, four milliards from Russia, 2,250 millions from Belgium, 500 millions from the Jugo-Slavs, and 1,250 millions from other Allies. Italy has only small credits of no account.

Now this situation, by reason of which the victorious countries of Europe are heavy debtors (France has a foreign debt of nearly 30 milliards, and Italy a debt of more than 20 milliards) in comparison with Germany, which came out of the War without any debt, has created a certain amount of bad feeling. Germany would have got on her feet again quicker than the victors if she had no indemnity to pay and had no foreign debts to settle.

France's anxieties in this matter are perfectly legitimate and must be most seriously considered without, however, producing the enormities of the Treaty of Versailles.

Assuming this, the situation may be stated in the following terms:

1. All the illusions as to the capacity of Germany being able to pay have fallen to pieces, and the indemnities, after the absurd demands which tended to consider as inadequate the figure of 350 milliards and an annual payment of from ten to fifteen milliards have become an anxious unknown quantity, as troublesome to the victors as to the vanquished. The German circulation has lost all control under the force of internal needs, and Germany is threatened with failure. The other debtors—Austria-Hungary, Turkey, Bulgaria—have need of succour, and can pay nothing. Austria has need of the most indispensable objects of existence, and everything is lacking.

2. The indemnity which Germany can pay annually in her present condition cannot, calculating goods and cash payments altogether, represent more than two or three milliards at the most.

3. The victorious countries, such as France, have won immense territories and great benefits, yet they have not been able to pay the War debts contracted abroad, and not even the interests. France and Italy, being countries of good faith, have demonstrated that, if they cannot pay, it is absurd to demand the payment of much higher sums from countries like Germany, which has lost almost all her best resources: mercantile fleet, colonies and foreign organization, etc.

4. The danger exists that with the aggravation of the situation in the vanquished countries and the weakening of the economic structure of Europe, the vanquished countries will drag the victors down with them to ruin, while the Anglo-Saxon peoples, standing apart from Continental Europe, will detach themselves more and more from its policy.

5. The situation which has come about is a reason for everyone to be anxious, and threatens both the downfall of the vanquished and the almost inevitable ruin of the victors, unless a way is found of reconstructing the moral unity of Europe and the solidarity of economic life.



VI

EUROPE'S POST-WAR RECONSTRUCTION AND PEACE POLICY

No right-thinking person has nowadays any doubt as to the profound injustice of the Treaty of Versailles and of all the treaties which derive from it. But this fact is of small importance, inasmuch as it is not justice or injustice which regulates the relations between nations, but their interests and sentiments. In the past we have seen Christian peoples, transplanted in America, maintain the necessity of slavery, and we have seen, and continue to see every day, methods of reasoning which, when used by the defeated enemy were declared to be fallacious and wrong, become in turn, when varied only in form, the ideas and the customary life of the conquerors in the War—ideas which then assume the quality of liberal expressions of democracy.

If appeals to the noblest human sentiments are not made in vain (and no effort of goodness or generosity is ever sterile), the conviction which is gradually forming itself, even in the least receptive minds, that the treaties of peace are inapplicable, as harmful to the conquerors as to the conquered, gains in force. For the treaties are at one and the same time a menace for the conquerors and a paralysis of all activity on the part of the conquered, since once the economic unity of Continental Europe is broken the resultant depression becomes inevitable.

If many errors have been committed, many errors were inevitable. What we must try to do now is to limit the consequences of these mistakes in a changed spirit. To reconstruct where we see only ruins is the most evident necessity. We must also try to diffuse among the nations which have won the War together and suffered together the least amount of diffidence possible. As it is, the United States, Great Britain, France, Italy, Japan, all go their own way. France has obtained her maximum of concessions, including those of least use to her, but never before has the world seen her so alone in her attitude as after the treaties of Paris.

What is most urgently required at the moment is to change the prevalent war-mentality which still infects us and overcomes all generous sentiments, all hopes of unity. The statement that war makes men better or worse is, perhaps, an exaggerated one. War, which creates a state of exaltation, hypertrophies all the qualities, all the tendencies, be they for good or for evil. Ascetic souls, spirits naturally noble, being disposed toward sacrifice, develop a state of exaltation and true fervour. How many examples of nobility, of abnegation, of voluntary martyrdom has not the War given us? But in persons disposed to evil actions, in rude and violent spirits (and these are always in the majority), the spirit of violence increases. This spirit, which among the intellectuals takes the form of arrogance and concupiscence, and in politics expresses itself in a policy of conquest, assumes in the crowd the most violent forms of class war, continuous assaults upon the power of the State, and an unbalanced desire to gain as much as possible with the least possible work.

Before the War the number of men ready to take the law into their own hands was relatively small; now there are many such individuals. The various nations, even those most advanced, cannot boast a moral progress comparable with their intellectual development. The explosion of sentiments of violence has created in the period after the War in most countries an atmosphere which one may call unbreathable. Peoples accustomed to be dominated and to serve have come to believe that, having become dominators in their turn, they have the right to use every kind of violence against their overlords of yesterday. Are not the injustices of the Poles against the Germans, and those of the Rumanians against the Magyars, a proof of this state of mind? Even in the most civilized countries many rules of order and discipline have gone by the board.

After all the great wars a condition of torpor, of unwillingness to work, together with a certain rudeness in social relations, has always been noticed.

The war of 1870 was a little war in comparison with the cataclysm let loose by the European War. Yet then the conquered country had its attempt at Bolshevism, which in those days was called the Commune, and the fall of its political regime. In the conquering country we witnessed, together with the rapid development of industrial groups, a quick growth in Socialism and the constitution of great parties like the Catholic Centre. Mutatis mutandis, the same situation has shown itself after the European War.

What is most urgently necessary, therefore, is to effect a return to peace sentiments, and in the manifestations of government to abandon those attitudes which in the peaces of Paris had their roots in hate.

I have tried, as Premier of Italy, as writer, and as politician, to regulate my actions by this principle. In the first months of 1920 I gave instructions to Italy's ambassador in Vienna, the Marquis della Torretta, to arrange a meeting between himself and Chancellor Renner, head of the Government of Vienna. So the chief of the conquered country came, together with his Ministers, to greet the head of the conquering country, and there was no word that could record in any way the past hatred and the ancient rancour. All the conversation was of the necessity for reconstruction and for the development of fresh currents of life and commercial activity. The Government of Italy helped the Government of Austria in so far as was possible. And in so acting, I felt I was working better for the greatness of my country than I could possibly have done by any kind of stolid persecution. I felt that over and beyond our competition there existed the human sorrow of nations for whom we must avoid fresh shedding of blood and fresh wars. Had I not left the Government, it was my intention not only to continue in this path, but also to intensify my efforts in this direction.

The banal idea that there exist in Europe two groups of nations, one of which stands for violence and barbarism—the Germans, the Magyars and the Bulgarians—while the other group of Anglo-Saxons and Latins represents civilization, must not continue to be repeated, because not only is it an outrage on truth but an outrage on honesty.

Always to repeat that the Germans are not adapted for a democratic regime is neither just nor true. Nor is it true that Germany is an essentially warlike country, and therefore different from all other lands. In the last three centuries France and England have fought many more wars than Germany. One must read the books of the Napoleonic period to see with what disdain pacificist Germany is referred to—that country of peasants, waiters and philosophers. It is sufficient to read the works of German writers, including Treitschke himself, to perceive for what a long period of time the German lands, anxious for peace, have considered France as the country always eager for war and conquest.

Not only am I of the opinion that Germany is a land suited for democratic institutions, but I believe that after the fall of the Empire democratic principles have a wider prevalence there than in any other country of Europe. The resistance offered to the peace of Versailles—that is, to disorganization—may be claimed as a merit for the democratic parties, which, if they are loyally assisted by the States of the Entente, can not only develop themselves but establish a great and noble democracy.

Germany has accustomed us in history to the most remarkable surprises. A century and a half ago she was considered as a pacificist nation without national spirit. She has since then become a warlike country with the most pronounced national spirit. Early in the seventeenth century there were in Germany more than one hundred territories and independent States. There was no true national conscience, and not even the violence of the Napoleonic wars, a century after, sufficed to awaken it. What was required was a regular effort of thought, a sustained programme of action on the part of men like Wolff, Fichte and Hegel to mould a national conscience. Fifty years earlier no one would have believed in the possibility of a Germany united and compact in her national sentiment. Germany passed from the widest decentralization to the greatest concentration and the intensest national life. Germany will also be a democratic country if the violence of her ancient enemies does not drive her into a state of exaltation which will tend to render minds and spirits favourable to a return to the old regime.

To arrive at peace we must first of all desire peace. We must no longer carry on conversations by means of military missions, but by means of ambassadors and diplomatic representatives.

1.—THE LEAGUE OF NATIONS AND THE PARTICIPATION OF THE VANQUISHED

A great step towards peace may be made by admitting at once all ex-enemy States into the League of Nations. Among the States of European civilization millions of persons are unrepresented in the League of Nations: the United States, who has not wished to adhere to it after the Treaty of Versailles sanctioned violence; Russia, who has not been able to join owing to her difficult position; Germany, Hungary, Austria and Bulgaria, who have not been permitted to join; the Turks, etc. The League of Nations was a magnificent conception in which I have had faith, and which I have regarded with sympathy. But a formidable mistake has deprived it of all prestige. Clauses 5 and 10 of its originating constitution and the exclusion of the defeated have given it at once the character of a kind of Holy Alliance of the conquerors established to regulate the incredible relations which the treaties have created between conquerors and conquered. Wilson had already committed the mistake of founding the League of Nations without first defining the nations and leaving to chance the resources of the beaten peoples and their populations. The day, however, on which all the peoples are represented in the League, the United States, without approving the treaties of Versailles, St. Germain or Trianon, etc., will feel the need of abandoning their isolation, which is harmful for them and places them in a position of inferiority. And the day when all the peoples of the world are represented, and accept reciprocal pledges of international solidarity, a great step will have been taken.

As things stand, the organism of the Reparations Commission, established by Schedule 2 of Part VIII of the Treaty of Versailles, is an absurd union of the conquerors (no longer allies, but reunited solely in a kind of bankruptcy procedure), who interpret the treaty in their own fashion, and can even modify the laws and regulations in the conquered countries. The existence of such an institution among civilized peoples ought to be an impossibility. Its powers must be transferred to the League of Nations in such a manner as to provide guarantees for the victors, but guarantees also for the conquered. The suppression of the Reparations Commission becomes, therefore, a fundamental necessity.

2.—THE REVISION OF THE TREATIES

When the public, and especially in the United States and Great Britain, become convinced that the spirit of peace can only prevail by means of an honest revision of the treaties the difficulties will be easily eliminated. But one cannot merely speak of a simple revision; it would be a cure worse than the evil. During the tempest one cannot abandon the storm-beaten ship and cross over to a safer vessel. It is necessary to return into harbour and make the transhipment where calm, or relative calm at any rate, reigns.

Inasmuch as Europe is out of equilibrium, a settlement, even of a bad kind, cannot be arrived at off-hand. To cast down the present political scaffolding without having built anything would be an error. Perhaps here the method that will prove most efficacious is to entrust the League of Nations with the task of arriving at a revision. When the League of Nations is charged with this work the various governments will send their best politicians, and the discussion will be able to assume a realizable character.

According to its constitution, the League of Nations may, in case of war or the menace of war (Clause 11), convoke its members, and take all the measures required to safeguard the peace of the nations. All the adhering States have recognized their obligation to submit all controversies to arbitration, and that in any case they have no right to resort to war before the expiration of a term of three months after the verdict of the arbiters or the report of the Council (Clause 12). Any member of the League of Nations resorting to war contrary to the undertakings of the treaty which constitutes the League is, ipso facto, considered as if he had committed an act of war against all the other members of the League (Clause 19).

But more important still is the fact that the Assembly of the League of Nations may invite its members to proceed to a fresh examination of treaties that become inapplicable as well as of international situations whose prolongation might imperil the peace of the world (Clause 19).

We may therefore revise the present treaties without violence and without destroying them.

What requires to be modified there is no necessity to say, inasmuch as all the matter of this book supplies the evidence and the proof. What is certain is that in Europe and America, except for an intransigent movement running strong in France, everyone is convinced of the necessity of revision.

It will be well that this revision should take place through the operations of the League of Nations after the representatives of all the States, conquerors, conquered and neutrals, have come to form part of it.

But in the constitution of the League of Nations there are two clauses which form its fundamental weakness, sections desired by France, whose gravity escaped Wilson.

Clause 5 declares that, save and excepting contrary dispositions, the decisions of the Assembly or of the Council are to be by the unanimous consent of the members represented at the meetings. It is difficult to imagine anything more absurd. If the modification of a territorial situation is being discussed, all the nations must agree as to the solution, including the interested nation. The League of Nations is convinced that the Danzig corridor is an absurdity, but if France is not of the same opinion no modification can be made. Without a change of this clause, every honest attempt at revision must necessarily break down.

Clause 10, by which the members of the League of Nations pledge themselves to respect and preserve from external attacks the territorial integrity and the existing political independence of all the members of the League, must also be altered. This clause, which is profoundly immoral, consecrates and perpetuates the mistakes and faults of the treaties. No honest country can guarantee the territorial integrity of the States now existing after the monstrous parcelling out of entire groups of Germans and Magyars to other nations, arranged without scruples and without intelligence. No one can honestly guarantee the territorial integrity of Poland as it stands at present. If a new-risen Russia, a renewed Germany, and an unextinguished Austria desire in the future a revision of the treaties they will be making a most reasonable demand to which no civilized country may make objection. It is indeed Clauses 5 and 10 which have deprived the constitution of the League of Nations of all moral credit, which have transformed it into an instrument of oppression for the victors, which have caused the just and profound disapproval of the most enlightened men of the American Senate. A League of Nations with Clauses 5 and 10 and the prolonged exclusion of the vanquished cannot but accentuate the diffidence of all the democracies and the aversion of the masses.

But the League of Nations can be altered and can become indeed a great force for renovation if the problem of its functioning be clearly confronted and promptly resolved.

The League of Nations can become a great guarantee for peace on three conditions:

(a) That it include really and in the shortest space of time possible all the peoples, conquerors, conquered and neutrals.

(b) That clauses 5 and 10 be modified, and that after their modification a revision of the treaties be undertaken.

(c) That the Reparations Commission be abolished and its powers be conferred upon the League of Nations itself.

As it exists at present the League of Nations has neither prestige nor dignity; it is an expression of the violence of the conquering group of nations. But reconstituted and renovated it may become the greatest of peace factors in the relations between the peoples.

3.—THE SAFETY OF FRANCE AND THE MILITARY GUARANTEES

In the state of mind in which France exists at present there is a reasonable cause of worry for the future. Since the conclusion of the War the United States of America have withdrawn. They concern themselves with Europe no more, or only in a very limited form and with diffidence. The Monroe doctrine has come into its own again. Great Britain watches the decadence of the European continent, but, girt by the sea, has nothing to fear. She is a country of Europe, but she does not live the life of Europe; she stands apart from it. Italy, when she has overcome the difficulties of her economic situation, can be certain of her future. The very fact that she stands in direct opposition to no State, that she may have competition with various peoples but not long-nurtured hatreds, gives Italy a relative security. But France, who has been in less than forty-four years twice at war with Germany, has little security for her future. Germany and the Germanic races increase rapidly in number. France does not increase. France, notwithstanding the new territories, after her war losses, has probably no more inhabitants than in 1914. In her almost tormented anxiety to destroy Germany we see her dread for the future—more indeed than mere hatred. To occupy with numerous troops the left bank of the Rhine and the bridgeheads is an act of vengeance; but in the vengeance there is also anxiety. There are many in France who think that neither now nor after fifteen years must the territory of the vanquished be abandoned. And so France maintains in effective force too large an army and nourishes too great a rancour. And for this reason she helps the Poles in their unjustifiable attempt in Upper Silesia, will not allow the Germans of Austria to live, and seeks to provoke and facilitate all movements and political actions which can tend towards the dismemberment of Germany. The British and the Italian viewpoints are essentially different. France, which knows it can no longer count on the co-operation of Great Britain, of the United States, or of Italy, keeps on foot her numerous army, has allied herself with Belgium and Poland, and tries to suffocate Germany in a ring of iron. The attempt is a vain one and destined to fail within a few years, inasmuch as France's allies have no capacity for resistance. Yet, all the same, her attempt derives from a feeling that is not only justifiable but just.

France had obtained at Paris, apart from the occupation of the left bank of the Rhine and all the military controls, two guaranteeing treaties from the United States and from Great Britain: in case of unprovoked aggression on the part of Germany, Great Britain and the United States pledged themselves to defend France. The British Parliament, as we have seen, approved the treaty provisionally on the similar approbation of the United States. But as the latter has not approved the Treaty of Versailles, and has not even discussed the guarantee treaty, France has now no guarantee treaty.

If we are anxious to realize a peace politic two things are necessary:

1. That France has security, and that for twenty years at least Great Britain and Italy pledge themselves to defend her in case of aggression.

2. That the measures for the disarmament of the conquered States be maintained, maybe with some tempering of their conditions, and that their execution and control be entrusted with the amplest powers to the League of Nations.

No one can think it unjust that the parties who provoked the War or those who have, if not the entire, at least the greatest share of responsibility, should be rendered for a certain time incapable. The fall of the military caste in Germany and the formation of a democratic society will derive much help from the abolition, for a not too brief period of time, of the permanent army, and this will render possible, at no distant date, an effective reduction of the armaments in the victorious countries.

Great Britain has the moral duty to proffer a guarantee already spontaneously given. Italy also must give such a guarantee if she wishes truly to contribute towards the peace of Europe.

As long as Germany has no fleet, and cannot put together an artillery and an aviation corps, she cannot present a menace.

Great Britain and Italy can, however, only give their guarantees on the condition that they guarantee a proper state of things and not a continued condition of violence. The withdrawal of all the troops from the Rhine ought to coincide with a clear definition concerning the fate of the Germans of Austria and the Germans detached from Germany without motive. Such a retirement must coincide with the definition of the territory of the Saar, and the assigning, pure and simple, of Upper Silesia to Germany and the end of all the insupportable controls and the indemnity regulations.

Being myself contrary to any pledge binding Italy for too long a period, I am of opinion that it is perfectly right that Great Britain and Italy should make this sacrifice for the peace of Europe.

But no guarantee is possible, either for Great Britain or Italy, until the most essential problems be resolved in the justest manner by means of straightforward and explicit understandings.

Italy's tendency towards British policy on the continent of Europe depends on the fact that Great Britain has never wished or tolerated that any continental State should have a hegemony over others. And, therefore, she has found herself at different epochs ranged against France, Germany and Russia.

England is in the Mediterranean solely to secure her passage through it, not to dominate it. She continues to follow the grand policy by which she has transformed her colonies into dominions, and, in spite of errors, she has always shown the greatest respect for the liberty of other peoples.

But Europe will not have peace until the three progressive countries of the Continent, Germany, France and Italy, find a way of agreement which can reunite all their energies in one common force.

Russia has conceived the idea of having the hegemony of Europe; Germany has indeed had the illusion of such a hegemony. Now this illusion penetrates certain French elements. Can a people of forty million inhabitants, who are not increasing, who already find difficulties in dominating and controlling their immense colonies, aspire to hegemonic action, even taking count of their great political prestige? Can France lastingly dominate and menace a country like Germany, which at no distant date will have a population double that of France?

The future of European civilization requires that Germany, France and Italy, after so much disaster, find a common road to travel.

The first step to be taken is to give security of existence and of reconstruction to Germany; the second is to guarantee France from the perils of a not distant future; the third is to find at all costs a means of accord between Germany, France and Italy.

But only vast popular movements and great currents of thought and of life can work effectively in those cases where the labours of politicians have revealed themselves as characterized by uncertainty and as being too traditional. Europe is still under the dominion of old souls which often enough dwell in young bodies and, therefore, unite old errors with violence. A great movement can only come from the intellectuals of the countries most menaced and from fresh popular energies.

4.—REGULATING INTER-ALLIED DEBTS, GERMANY'S INDEMNITY AND THAT OF THE DEFEATED COUNTRIES

These two problems are closely connected.

The victorious countries demand an indemnity from the conquered countries which, except Germany, who has a great productive force even in her hour of difficulties, are in extreme depression and misery.

Great Britain is in debt to the United States, and France, Italy and minor nations are in their turn heavy debtors to the Americans and to Great Britain.

The experience of the last three years has shown that, even with the best will, none of the countries owing money to the Entente has been able to pay its debts or even the interest. With an effort Great Britain could pay; France and Italy will never be able to, and have, moreover, exchanges which constitute a real menace for the future of each.

The fact that France and Italy, although they came out of the war victoriously, have not been able to pay their debts or even the interest on them is the proof that Germany, whose best resources have been taken away from her, can only pay an indemnity very different from the fantastic figures put forward at the time of the Conference of Paris, when even important political men spoke of monstrous and ridiculous indemnities.

The problem of the inter-allied debts, as well as that of the indemnity, will be solved by a certain sacrifice on the part of all who participated in the War.

The credits of the United States amount to almost 48 milliards of lire or francs at par, and the credits of Great Britain to 44 milliards. Great Britain owes about 21 milliards to the United States and is in turn creditor for some 44 milliards. She has a bad debt owing from Russia for more than 14 milliards, but 13 milliards are owing from France, about 12 milliards from Italy, and almost 2-1/2 milliards from Belgium. That is to say, that Great Britain could well pay her debt to the United States, ceding the greater part of her credits towards France and Italy.

But the truth is that, while on the subject of the German indemnities, stolid illusions continue to be propagated (perhaps now with greater discretion), neither France nor Italy is in a position to pay its debts.

The most honest solution, which, intelligently enough, J.M. Keynes has seen from the first, is that each of the inter-allied countries should renounce its state credits towards countries that were allies or associates during the War. The United States of America are creditors only; Great Britain has lent the double of what she has borrowed. France has received on loan the triple of what she has lent to others.

The credits of France are for almost two-thirds undemandable credits of Great Britain; more than 14 milliards being with Russia, they are for considerably more than one-third bad debts.

France and Italy would be benefited chiefly by this provision. Great Britain would scarcely either benefit or lose, or, rather, the benefit accruing to her would be less in so much as her chief credits are to Russia.

The United States would doubtless have to bear the largest burden. But when one thinks of the small sacrifice which the United States has made in comparison with the efforts of France and Italy (and Italy was not obliged to enter the War), the new sacrifice demanded does not seem excessive.

During the War the United States of America, who for three years furnished food, provisions and arms to the countries of the Entente, have absorbed the greater part of their available resources. Not only are the States of Europe debtors, but so are especially the private citizens who have contracted debts during or after the War. Great Britain during the War had to sell at least 25 milliards of her foreign values. The United States of America, on the contrary, have immensely increased their reserves.

But this very increase is harmful to them, inasmuch as the capacity for exchange of the States of Europe has been much reduced. The United States now risk seeing still further reduced, if not destroyed, this purchasing capacity of their best clients; and this finally constitutes for the U.S.A. infinitely greater damage than the renouncing of all their credits.

To reconstruct Germany, to intensify exchange of goods with the old countries of Austria-Hungary and Russia, to settle the situation of the exchange of goods with Italy and the Balkan countries is much more important for the United States and the prosperity of its people than to demand payment or not demand payment of those debts made for the common cause.

I will speak of the absurd situation which has come about. Czeko-Slovakia and Poland unwillingly indeed fought against the Entente, which has raised them to free and autonomous States; and not only have they no debts to pay, being now in the position of conquerors, or at least allies of the conquerors, but they have, in fact, scarcely any foreign debts.

The existence of enormous War debts is, then, everywhere a menace to financial stability. No one is anxious to repudiate his debts in order not to suffer in loss of dignity, but almost all know that they cannot pay. The end of the War, as Keynes has justly written, has brought about that all owe immense sums of money to one another. The holders of loan stock in every country are creditors for vast sums towards the State, and the State, in its turn, is creditor for enormous sums towards the taxpayers. The whole situation is highly artificial and irritating. We shall be unable to move unless we succeed in freeing ourselves from this chain of paper.

The work of reconstruction can begin by annulling the inter-allied debts.

If it is not thought desirable to proceed at once to annulment, there remains only the solution of including them in the indemnity which Germany must pay in the measure of 20 per cent., allocating a certain proportion to each country which has made loans to allied and associated governments on account of the War. In round figures the inter-allied loans come to 100 milliards. They can be reduced to 20, and then each creditor can renounce his respective credit towards allies or associates and participate proportionately in the new credit towards Germany. Such a credit, bearing no interest, could only be demanded after the payment of all the other indemnities, and would be considered in the complete total of the indemnities.

All the illusions concerning the indemnities are now fated to disappear. They have already vanished for the other countries; they are about to vanish in the case of Germany.

Nevertheless it is right that Germany should pay an indemnity. Yet, if the conquerors cannot meet their foreign debts, how can the vanquished clear the vast indemnity asked? Each passing day demonstrates more clearly the misunderstanding of the indemnity. The non-experts have not learned financial technics, but common sense tells them that the golden nimbus which has been trailed before their eyes is only a thick cloud of smoke that is slowly dissipating.

I have already said that the real damages to repair do not exceed 40 milliards of gold marks and that all the other figures are pure exaggerations.

If it be agreed that Germany accept 20 per cent. of the inter-allied debt, the indemnity may be raised to 60 milliards of francs at par, to be paid in gold marks.

But we must calculate for Germany's benefit all that she has already given in immediate marketable wealth. Apart from her colonies, Germany has given up all her mercantile marine fleet, her submarine cables, much railway material and war material, government property in ceded territory without any diminution of the amount of public debts, etc. Without taking account, then, of the colonies and her magnificent commercial organization abroad, Germany has parted with at least 20 milliards. If we were to calculate what Germany has ceded with the same criteria with which the conquering countries have calculated their losses, we should arrive at figures much surpassing these. We may agree in taxing Germany with an indemnity equivalent in gold marks to 60 milliards of francs at par—an indemnity to be paid in the following manner:

(a) Twenty milliards of francs to be considered as already paid in consideration of all that Germany has ceded in consequence of the treaties.

(b) Twenty milliards from the indemnity which Germany must pay to her conquerors, especially in coal and other materials, according to the proportions already established.

(c) Twenty milliards—after the payment of the debts in the second category to be taken over by Germany—as part of the reimbursement for countries which have made credits to the belligerents of the Entente: that is, the United States, Great Britain and France, in proportion to the sums lent.

In what material can Germany pay 20 milliards in a few years? Especially in coal and in material for repairing the devastated territories of France. Germany must pledge herself for ten years to consign to France a quantity of coal at least equal in bulk to the difference between the annual production before the War in the mines of the north and in the Pas de Calais and the production of the mines in the same area during the next ten years. She must also furnish Italy—who, after the heavy losses sustained, has not the possibility of effecting exchanges—a quantity of coal that will represent three-quarters of the figures settled upon in the Treaty of Versailles. We can compel Germany to give to the Allies for ten years, in extinction of their credits, at least 500 millions a year in gold, with privileges on the customs receipts.

This systematization, which can only be imposed by the free agreement of the United States and Great Britain, would have the effect of creating excellent relations. The United States, cancelling their, in great part, impossible debt, would derive the advantage of developing their trade and industry, and thus be able to guarantee credits for private individuals in Europe. It would also be of advantage to Great Britain, who would lose nothing. Great Britain has about an equal number of debits and credits, with this difference, that the debits are secured, while the credits are, in part, unsecured. France's credits are proportionately the worst and her debits largest, almost 27 milliards. France, liberated from her debt, and in a position to calculate on a coal situation comparable with that of before the War and with her new territories, would be in a position to re-establish herself. The cancellation of 27 milliards of debt, a proportionate share in 20 milliards, together with all that she has had, represent on the whole a sum that perhaps exceeds 50 milliards. Italy would have the advantage of possessing for ten years the minimum of coal necessary to her existence, and would be liberated from her foreign debt, which amounts to much more than she can possibly hope for from the indemnity.

Such an arrangement, or one like it, is the only way calculated to allow Europe to set out again on the path of civilization and to re-establish slowly that economic equilibrium which the War has destroyed with enormous damage for the conquerors and the certain ruin of the vanquished.

But, before speaking of any indemnity, the Reparations Commission must be abolished and its functions handed over to the League of Nations, while all the useless controls and other hateful vexations must be put an end to.

While the Allied troops' occupation of the Rhine costs Germany 25 milliards of paper marks a year, it is foolish to speak of reconstruction or indemnity. Either all occupation must cease or the expenses ought not to exceed, according to the foregoing agreements, a maximum of 80 millions at par, or even less.

We shall, however, never arrive at such an arrangement until the Continental countries become convinced of two things: first, that the United States will grant no credits under any formula; secondly, that Germany, under the present system, will be unable to pay anything and will collapse, dragging down to ruin her conquerors.

Among many uncertainties these two convictions become ever clearer.

If in all countries the spirit of insubordination among the working classes is increasing, the state of mind of the German operatives is quite remarkable. The workmen almost everywhere, in face of the enormous fortunes which the War has created and by reason of the spirit of violence working in them, have worked with bad spirit after the War because they have thought that a portion of their labour has gone to form the profits of the industrials. It is useless to say that we are dealing here with an absurd and dangerous conception, because the profit of the capitalist is a necessary element of production, and because production along communist lines, wherever it has been attempted, has brought ruin and misery. But it is useless to deny that such a situation exists, together with the state of mind which it implies. We can well imagine, then, the conditions in which Germany and the vanquished countries find themselves. The workmen, who in France, England and Italy exhibit in various degree and measure a state of intractability, in Germany have to face a situation still graver. When they work they know that a portion of their labour is destined to go to the victors, another part to the capitalist, and finally there will remain something for them. Add to this that in all the beaten countries hunger is widespread, with a consequent diminution of energy and work.

No reasonable person can explain how humanity can continue to believe in the perpetuation of a similar state of things for another forty years.

In speaking of the indemnity which Germany can pay, it is necessary to consider this special state of mind of the operatives and other categories of producers.

But the mere announcement of the settling of the indemnity, of the immediate admission of the vanquished nations into the League of Nations, of the settling the question of the occupation of the Rhine, and of the firm intention to modify the constitution of the League of Nations, according it the powers now held by the Reparations Commission, will improve at once the market and signalize a definite and assured revival.

The United States made a great financial effort to assist their associates, and in their own interests, as well as for those of Europe, they would have done badly to have continued with such assistance. When the means provided by America come to be employed to keep going the anarchy of central Europe, Rumania's disorder, Greece's adventures and Poland's violences, together with Denikin's and Wrangel's restoration attempts, it is better that all help should cease. In fact, Europe has begun to reason a little better than her governments since the financial difficulties have increased.

The fall of the mark and Germany's profound economic depression have already destroyed a great part of the illusions on the subject of the indemnity, and the figures with which for three years the public has been humbugged no longer convince anyone.

5.—FORMING NEW CONNEXIONS WITH RUSSIA

Among the States of the Entente there is always a fundamental discord on the subject of Russia. Great Britain recognized at once that if it were impossible to acknowledge the Soviet Government it was a mistake to encourage attempts at restoration. After the first moments of uncertainty Great Britain has insisted on temperate measures, and notwithstanding that during the War she made the largest loans to the Russian Government (more than 14 milliards of francs at par, while France only lent about 4 milliards), she has never put forward the idea that, as a condition precedent to the recognition of the Soviet Government, a guarantee of the repayment of the debt was necessary. Only France has had this mistaken idea, which she has forced to the point of asking for the sequestration of all gold sent abroad by the Soviet Government for the purchase of goods.

Wilson had already stated in his fourteen points what the attitude of the Entente towards Russia ought to be, but the attitudes actually assumed have been of quite a different order.

The barrier which Poland wants to construct between Germany and Russia is an absurdity which must be swept away at once. Having taken away Germany's colonies and her capacities for expansion abroad, we must now direct her towards Russia where alone she can find the outlet necessary for her enormous population and the debt she has to carry. The blockade of Russia, the barbed wire placed round Russia, have damaged Europe severely. This blockade has resolved itself into a blockade against the Allies. Before the present state of economic ruin Russia was the great reservoir of raw materials; she was the unexplored treasure towards which one went with the confidence of finding everything. Now, owing to her effort, she has fallen; but how large a part of her fall is as much due to the Entente as to her action during the War and since. For some time now even the most hidebound intelligences have recognized the fact that it is useless to talk of entering into trade relations with Russia without the co-operation of Germany, the obvious ally in the vast task of renovation. Similarly, it is useless to talk of reattempting military manoeuvres. While Germany remains disassociated from the work of reconstruction and feels herself menaced by a Poland that is anarchical and disorderly and acts as an agent of the Entente, while Germany has no security for her future and must work with doubt and with rancour, all attempts to reconstruct Russia will be vain. The simple and fundamental truth is just this: One can only get to Moscow by passing through Berlin.

If we do not wish conquerors and conquered to fall one after the other, and a common fate to reunite those who for too long have hated each other and continue to hate each other, a solemn word of peace must be pronounced.

Austria, Germany, Italy, France are not diverse phenomena; they are different phases of the same phenomenon. All Europe will go to pieces if new conditions of life are not found, and the economic equilibrium profoundly shaken by the War re-established.

I have sought in this book to point out in all sincerity the things that are in store for Europe; what perils menace her and in what way her regeneration lies. In my political career I have found many bitternesses; but the campaign waged against me has not disturbed me at all. I know that wisdom and life are indivisible, and I have no need to modify anything of what I have done, neither in my propaganda nor in my attempt at human regeneration, convinced as I am that I am serving both the cause of my country and the cause of civilization. Blame and praise do not disturb me, and the agitations promoted in the heart of my country will not modify in any way my conviction. On the contrary, they will only reinforce my will to follow in my own way.

Truth, be it only slowly, makes its way. Though now the clouds are blackest, they will shortly disappear. The crisis which menaces and disturbs Europe so profoundly has inoculated with alarm the most excited spirits; Europe is still in the phase of doubt, but after the cries of hate and fury, doubt signifies a great advance. From doubt the truth may come forth.



INDEX

ADRAIANOPLE, passes to the Greeks, Adriatic programme, Italy's Albania, an Italian expedition into Alexander the Great as politician Allenstein, a plebiscite for Allies, the, war debts of Alsace-Lorraine, annexation of restitution of America, and question of army of occupation her attitude on reparations result of her entry into the war (see also United States) Apponyi, Count, on the Treaty of Trianon Arabia, Turkey's losses in Armaments, reduction of the peace treaties and Armenia, movement for liberation of Armenian Republic, the Armistice terms, summary of three words change tenor of Army of Occupation, the Asia Minor, the Entente Powers and, Turkey's losses in Australasia, British possessions in Australia as part of British dominions Austria, financial position of, loses access to the sea Austria-Hungary, and the Versailles Treaty civilizing influence of pre-war army of result of Treaty of St. Germain Germain-en-Laye States of, before the war victories of Austrian army, the Azerbajan

BALKANS, the, Russia's policy in Battles, a military fact difference between war and Beethoven Belgium, acquires German territory army of financial position of population of violation of, and the consequences Bernhardi, General von Bismarck, foresight of political genius of Bolshevik Government, the fiasco of result of Bolshevism, and what it is Boxer rebellion, the Kaiser's address to his troops Briand, M., on the objects of the Entente Bridgeheads, German, occupation of, British colonies, before the war, Brussels, Conference of, Budapest, conditions in, mortality in, Bulgaria, army of, the Treaty of Neuilly and, Buelow, von

CANADA as part of British dominions, Cilicia, Civilization, evolution of, Clemenceau, M., and the military guarantees question, and the Paris Conference, and the reparations clause, as destroyer, communicates Poincare's letter to Lloyd George, fall of, his hatred of the Germans, on peace treaties, replies to Lloyd George's note, Coal fields, Germany's pre-war, Colonial rights, and the Versailles Treaty, Colonies, British, German pre-war, Germany loses her, Commune, the French, Communist system, Russian, failure of, Constantine, King of Greece, return of, Constantinople, retained by the Turks, Russia's desire for, subject to international control, the Treaty of Sevres and, Croatia and Fiume, Cyrenaica, Czeko-Slovakia, State of, added population of, army of, financial position of, Magyars in

DALMATIA, the London Agreement and, Dante, a celebrated dictum of, Danube Commission, the, Danzig, allotted to Poland, Dardanelles, the, freedom of: Versailles Treaty and, De Foville's estimate of wealth of France, Denikin, Denmark acquires North Schleswig, Disarmament conditions fulfilled by Germany, Disease, and the aftermath of war

ECONOMIC barriers, removal of, and the peace treaty, England, and the Mediterranean, war record of, Entente, the, and Germany's responsibility for war, and the Bolshevik Government, author's opinion of peace terms of, division among, as result of peace treaties, Erzeroum, Mussulman population of, Esthonia, Eupen ceded to Belgium, Europe, area of, financial difficulties of, increased armaments in

Europe, monarchies in, before the war pre-war conditions of reconstruction of, and peace policy results of world-war in States of European civilization, future of European States, war debts of (cf of War Debts)

FERENCZI, Dr., his statistics of sickness in Budapest Fezzan Fichte, and Germany Financial and economic clauses of peace treaty Finland Fiume, Italy's position regarding question of the London Agreement and Wilson and Foch, Marshal, and the military commission and the peace treaties unconstitutional action of France, acquires Saar mines alliances with and the indemnity and the old regime in Russia claims of, at Paris Conference, expenses of her navy financial position of iron industry of Italy and population of post-war army of post-war condition of presses for occupation of the Ruhr pre-war status of private wealth of, before the war purport of her action in the Conference recognizes government of Wrangel safety of, and military guarantees the political class in treaties with U.S. and Great Britain war record of Franco-Prussian War, the indemnity demanded by victors unjust terms of Prussia Frankfort, Treaty of, compared with Versailles Treaty Frederick the Great, political genius of Freedom of the seas, the peace treaties and French-American Treaty, the French-English Treaty, the French territories, liberation Frontiers, changed condition of

GEORGE, Lloyd, a memorandum for Peace Conference a truism of and question of military guarantees and reparations question and Russia and the Paris Conference and the proposed trial of the Kaiser denounces economic manifesto difficult position of, at Paris Conference on Poland's claim to Upper Silesia proposes Germany's admission to League of Nations Georgia, in Bolshevik hands Italy prepares a military expedition to German army reduced by peace terms delegates and the Paris Conference German-Austria, army of loses access to the sea plight of Germany, a country of surprises a war of reconquest by, impossible accepts armistice terms Allies' demands for indemnities and America's entry into the war and her indemnity and reconstruction of Russia and the political sense annual capitalization of commerce of, before the war cost of army of occupation to effect of peace treaty on effect of President Wilson's messages on financial position of her indemnity increased her pre-war colonies her responsibility for the war how she can pay indemnity imports and exports of is she able to pay indemnity asked? loses her colonies losses of, in Great War militarist party in military conditions imposed on population of, in and outside Europe pre-war army of pre-war coal supply of pre-war conditions of result of Versailles Treaty to revolutionary crisis in Sevres Treaty and suited for democratic principles territories and States in, before the war victories of war record of Goethe Great Britain, and the indemnity and the Treaty of Versailles army of enters the war expenses of her navy financial position of general election in insularity of population of pre-war conditions of war record of why she entered the war Great War, the, author's opinion of peace terms estimated number of dead in how it was decided post-war results of question of responsibility for Greece, acquires Bulgarian territory army of financial position of her gains by Sevres Treaty her illusion of conquering Turkish resistance her policy of greed the Entente and