The Economic Consequences of the Peace

This prescient book displays the keen insights of a genius observing a process and result with a devestating prediction later coming to fruition on schedule. It should serve as not only history and foresight but also as an invaluable lesson and warning for those who desire to dictate to defeated or weak nations from a position of obtained military might or success.

For Keynes, the Peace Treaty of Paris after World War I was a matter of life and death, of starvation and existence, and the fearful convulsions of a dying civilization. But the negotiating politicians had absolutely no vision. Clemenceau wanted a Carthaginian peace, President Wilson was essentially a theologian and Lloyd George yielded to national electoral chicane. The victors had no magnanimity. `The future life of Europe was not their concern; its means of livelihood was not their anxiety. Their preoccupations related to frontiers and nationalities, to imperial aggrandizements, to the future enfeeblement of a strong and dangerous enemy, to revenge and to the shifting of their unbearable financial burden on to the shoulders of the defeated. But for Keynes, the policy of reducing Germany to servitude for a generation was abhorrent and detestable: `Nations are not authorized, by religion or natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.' Keynes had the decency to leave the negotiations from the moment he saw the looming disastrous results. Keynes brilliantly calculated that Germany could not pay the imposed debt. He foresaw the coming German hyperinflation. He clearly recognized the danger of `a victory of reaction' (the right) in Germany, because it would endanger the security of Europe and the basis of peace. Eventually that's what happened with all its disastrous consequences for Europe. His prediction of millions of dead from starvation in Germany didn't occur. This sometimes rather technical book is still a very worth-while read. His author was a visionary.

This book gave economist John Maynard Keynes a huge influence on perceptions of the peace treaty signed after World War I -- an influence that has been controversial ever since. Critics still argue over whether Keynes exaggerated the deleterious effects of the treaty on Germany's economy. Some also contend that the account, which was widely read during the 1920s, encouraged both German intransigence to overturning the treaty and Allied acquiescence in allowing it to be overturned -- two key factors in the rise of Hitler and the reconsolidation of German military power before World War II.Keynes' book remains highly readable in many sections. He was not only a brilliant economist, but a superb writer with a keen eye for the foibles of the great men of his time. However, some sections of the text, such as the one dealing with reparations, are abstruse and less suitable to the modern audience. These are still brilliantly told, but unless you are a grad student or a scholar with a particular interest in the many details of Germany's economy in the early part of the century as well as the demands put on it by the treaty, you are not likely to find these sections as gripping as the others.The book must be read by those interested in the Versailles Peace Treaty and the aftermath of its signing. Even today, the power of Keynes' argument is evident. I've just recently finished reading Margaret MacMillan's "Paris, 1919," and while I enjoyed the book, I found her arguments against Keynes to be unconvincing. MacMillan says the actual collection of economic claims against Germany was rather modest, less, for example, than Germany collected from France in the aftermath of the 1870 war. But Keynes admitted the allies might not hold Germany to all the economic terms of the treaty. He still felt strongly that many of those terms - whether enforced or not - discouraged sound planning by German investors, companies, and its government, and unnecessarily impoverished the German people. This he felt was bad for not just Germany, but all of Europe.

The Economic Consequences of the Peace was written in 1920 by Keynes, who was not already recognized as the most influential economist of the 20th century, a condition he would only attain when he wrote his famous General Theory some years later, and can be interpreted as a personal outburst against the heads of state of the four countries who participated in the Group of Four (France, Italy, UK and the USA) and decided the fate not only of the defeated countries (Germany and Austria) but also of the whole world, in a way that Keynes was adamantly against and which led to his resignation of his capacity of an important negotiator in the British delegation. One has also to remember that Keynes had always been against the war and lost some important friends in the conflict. The portrait he gives of the different negotiating abilities of French's Clemenceau, United States' president Wilson and British Prime Minister Lloyd George is a devastating picture of the different motives each one of them had at the time: the aim of Clemenceau was to exact revenge to French's traditional enemy and to debilitate Germany as much as possible, thus postponing her return to prosperity and to menace again France. WIlson's, portrayed as a good man but lacking any negotiating feature a man of his stature should have, was a frail man only to save his face in the moral stances he took in his preliminary 14 points Armistice proposal, which led to the initial surrender of the Germans to the Allied forces. The British Lloyd George was only worried about upcoming elections in his country and was playing all the cards (good or bad) he had to save himself from an humiliating defeat to the Liberals. The outcome of it all was a Peace Treaty who despised each and every point of reality, representing a burden Germany would not be able to pay, thus leading to the dismantling of an economic European system that led famine, social disturbance and finally to the World War II. The book is a best-seller ever since and very easy to read and should be also recommended to every one interested in the power broker skills one has to have to succeed (Clemenceau) or fail (Wilson) in negotiation as hard as this one.

Great British economist John Maynard Keynes second book recounts his assessment of the economic consequences of the Treaty of Versailles, where he was a member of British delegation as an economic expert. Keynes starts with providing a dazzling psychological analysis on how the treaty came to be."When President Wilson left Washinghton he enjoyed a prestige and a moral influence throughout the world unequalled in history ... Never had a philosopher help such weapons wherewith to bind the princes of this world. How the crowds of the European capitals presses about the carriage of the President! With what curiosity, anxiety, and hope we sought a glimpse of the features and bearing of the man of destiny who, coming from the West, was to bring healing to the wounds of the ancient parent of this civilization and lay for us the foundations and the future"Alas, this was not to be. American idealism, French quest for security and British distaste for alliances and hypocrisy created an unworkable solution. Soul of the treaty was sacrificed to placate domestic political process, and as the result put Germany in the position of defiance and economic insolvency; the position which at the bottom drew sympathy from the former Allies and as the result contributed to brutality of the second conflict. Keynes draws a picture of pan-European economy which was destroyed by the treaty and rightfully predicted that not only Germany will not be able to pay, but will be obligated to pursue the expansionist policy at the expense of her weak Eastern neighbors. Treaty did not contain any positive economic programme for rehabilitation of the economic life of Central powers and Russia. One just could not disrupt the economic position of the greatest European land power, at the same time strengthening it geo-politically and suffer no horrible retribution. ""The Peace Treaty of Versailles: This is not Peace. It is an Armisticefor twenty years." - said Foch about such a agreement.