Chapter XXXI: Unofficial Publication of "official" Information 361 (5)

The horror of the Great War seems to have unhinged the European mind. Nations do not think normally. The blood pressure is still very high. The excitement over the Ruhr does not tend to improve it. When some of the articles written and speeches delivered to-day come to be read by the diligent historian a generation hence, he will recognise there the ravings of a continent whose mental equilibrium has been upset by a great shock. The real issue involved in all this struggle is a comparatively simple one. How much can Germany pay and in what way can she pay? America, Britain, Italy and Germany are all agreed that the only way to settle that question is to appoint competent experts to investigate and report upon it. The Pope also has blessed this reasonable suggestion. France, on the contrary, says it is a question to be determined by guns and generals--both equally well fitted for that task. Germany must present her accounts to the mitrailleuse and argue her case before the soixante-quinze. It is a mad world.

Every one is interested in one question--or perhaps two. How will it all end and how soon is that end coming? Although I have nothing to fear from recalling the predictions of my early articles on this subject, I hesitate to hazard a fresh forecast. But one may review the possibilities and note the drift of the whirling currents. In assessing the chances, you must begin with some knowledge of the man who will decide the event. M. Poincaré is possessed of undoubted ability and patriotism, but he is also a man who lives in a world of prejudices so dense that they obscure facts. You have but to turn to one statement in his last note where he says the conferences and ultimatums of the past four years secured nothing from Germany. What are the facts? During the three and a half years that preceded the Ruhr invasion, Germany paid to the Allies in cash and in kind over ten milliards of gold marks,--£500,000,000 in sterling, 2,000,000,000 in dollars--a considerable effort for a country which had but lately emerged out of the most exhausting of wars and whose foreign trade was down sixty to seventy per cent. You might imagine that a man who had taken the grave step of ordering armies to invade a neighbour's territories would also have taken the trouble to ascertain the elementary facts of his case. Part of this gigantic sum went to pay for Armies of Occupation; part for Reparations, but it all came out of German assets. Will the next three and a half years bring anything approximating that figure to the Allied coffers?

It is a safe statement to make that no one in charge of the French movements anticipated a resistance approaching in its stubbornness to that which they have encountered. The friendly Press, both in France and in England, foretold a speedy collapse of the German opposition, and on this assumption all the French plans were based. During the first days of the occupation an Englishman asked a French officer how long he thought it would take. The answer is indicative of the spirit in which the venture started: "Optimists think it will take a fortnight," he said; "pessimists think it may take three weeks." A reference to the January telegrams from Paris and Düsseldorf will show that this officer accurately expressed the general sentiment of those who were responsible for the Ruhr invasion. Soldiers estimate the chances of resistance in terms of material and trained men, and statesmen too often build their hopes on the same shallow foundation. They never allow for the indomitable reserves of the human heart, which do not figure in Army Lists or Statesmen's Annuals. The resistance of Paris in 1870 was as confounding to Bismarck as the stubbornness of the Ruhr miners is to Poincaré to-day. The last regular army had been destroyed, all docketed food stores exhausted, and still the struggle of the devoted citizens went on for months. There were few men in England who thought the Boer peasants could continue their resistance for more than three months after our armies reached South Africa. The three months ran into three years and only then capitulated on honourable terms. The Northern States of America never contemplated the possibility of a five years' struggle with a blockaded, starved and overwhelmed Confederacy. The War of 1914-18 is littered with miscalculations attributable to the blind refusal of rulers and their advisers to recognise the moral element as a factor in the reckoning. The Ruhr tragedy is not the first, nor indeed may it be the last, to be initiated by facile memoranda framed by General Staffs and civilian functionaries, drawing their inspiration from pigeonholes.

Whatever may transpire in the Ruhr it is already clear that the estimates of military men, of transport officials, of intelligence departments, and of presiding Ministers, have been hopelessly falsified. Many more soldiers have been sent into the Ruhr than had been thought necessary: a great deal less coal has come out of the Ruhr than had been confidently expected. There are already as many Frenchmen in the Ruhr as Napoleon commanded at Waterloo; and they have succeeded in sending across the frontier in six months only as much coal as the Germans delivered in one month during the period of "default" which provoked the invasion. Desperate efforts have been made at great cost to increase the yield with a view to satisfying French and foreign opinion that resistance is gradually breaking down. Rubbish is shovelled into wagons in order anyhow to swell the quota. Coal is seized anywhere, even in the streets. And Monsieur Trocquer, the bluff and genial Breton in charge of the transport arrangements, breezily challenges all the critics to look at the mounting pyramids of his dustcart collection and rejoice with him in the triumph of French organisation under his control. Alas, the Celtic fire of Monsieur Trocquer, even when fed by the sweepings of the Ruhr, cannot keep going the blast furnaces of Lorraine! So we find disappointment and discontent amongst the forge-masters of France.

But there is a limit to human endurance. Either France or Germany must give way in the end. Which will it be, and when will it come--and how? In answering these questions one must remember that for France the honour of her flag is involved in success. Failure would irretrievably damage her prestige. Every Frenchman knows that. That is why French statesmen who disapprove of the invasion support the Government in all their proposals for bringing it to a successful end. And here France has a legitimate complaint against her Allies. It is useless for Italy now to counsel wisdom. Signor Mussolini was present at the "hush Conference" which sanctioned the invasion. He fixed the price of assent in coal tonnage. That price has been regularly paid. Belgium is now becoming scared at the swelling magnitude of the venture. But she committed her own honour as well as that of France to carrying it through. I regret to think that Britain is not free from responsibility in the matter. It is true that her representatives disapproved of the enterprise, but not on grounds of right or justice. On the contrary, whilst expressing grave doubt as to the ultimate success of the invasion they wished the French Government well in the undertaking on which they were about to embark. Not one of the Allies is in a position with a clean conscience to urge France to haul down her flag. There is only one course which could be urged on the French Government as being consistent with French honour, and that is the reference of the dispute to the League of Nations. Such a reference would be an enforcement of the Treaty of Versailles. That suggestion the British Government have refused to press on France. The struggle must, therefore, proceed to its destined end.

It may be assumed that the British Government will not intervene effectively. How about the ministerial declarations? Surely these strong words must be followed by strong action! Those who rely on that inference know nothing of the men who use the words or of the forces upon which they depend for their ministerial existence. It is true that some weeks ago Mr. Snodgrass took off his coat and proclaimed cryptically, but fearlessly, that unless peace was restored on his terms something would happen. The French Government, unperturbed, replied that they meant to persist in their course. So last week Mr. Snodgrass takes off his waistcoat. But do not be alarmed: there will be no blows: his friends will hold him back. Meanwhile, Mr. Winkle has left for Paris in order to lunch with one of the combatants. Next week he will be followed by Mr. Pickwick, who will call on another, and the week after Mr. Tupman proposes to pay another propitiatory visit. It will be an incalculable advantage to M. Poincaré that they each represent a different and conflicting point of view. The French have accurately taken the measure of the mind and muscle of those who indulge in these spectacular exhibitions of ball punching in Westminster with cakes and ale at Rambouillet. We may therefore assume that whatever conversations take place at these general gatherings or ensue from them, the French will not be talked out of the Ruhr.

From the emphatic declarations made by the head of the French Government it is gathered that France will insist at all costs on enforcing her will. She has put forward two demands. The first is that Germany shall abandon passive resistance as an essential preliminary to negotiation. The second is that her forces should remain in the Ruhr until the last payment is made. Will the German Government accept these conditions? A settlement on these terms is only possible on two assumptions. The first is that a German Government can be found strong enough to accept them and to survive their acceptance. The second is that there is a French Government wise enough to give a liberal interpretation to these demands. The first depends to a large extent on the second.

The events of the past few months have added immeasurably to the difficulties of negotiation. Incidents inseparable from a foreign occupation in any land have exasperated German opinion and reached depths of hatred which had never been stirred even by the Great War--the deportation of 75,000 Germans from their homes in the Ruhr area, the repression, the shooting, the starving, the holding up of food trains until essential supplies rot. The myriad insolences of unchallengeable force, the passions which make French policy so intractable are entirely attributable to the German occupation of France. Frenchmen are now sowing the same seeds of anger in the German breast. Hatreds are bad negotiators. That is why I despair of a real settlement.

But Germany may collapse. She might even break up, temporarily. The authority of the Central Government has already largely disappeared. There is practically no collection of taxes. The mark has gone down in a little over a week from 1,000,000 to the £ to 27,000,000.[3] How can any Government collect taxes in such a fugitive and attenuated currency? You might as well try to collect land taxes on the tail of a comet. The state of the currency is but a symptom of the general disintegration. Berlin has ceased to wield any influence in Bavaria, and the Monarchy might be restored in that Province at no distant date. There is a movement in the Rhineland to set up a Republic freed from the dominion of Prussia. This movement is fostered by French agencies and financed by French subventions. If it is declared Prussia will not be allowed to suppress it. We may, therefore, soon witness a Rhineland Republic whose glorious freedom and independence will be jealously guarded against internal as well as external foes by the coloured warriors of Senegal and Cochin-China. Saxony might be captured by Communists and Prussia be torn between Monarchist and Communist. These are not unlikely happenings. Is it too much to say they are not altogether out of the computation of French statesmanship? If Germany dissolves, then the Rhineland and the Ruhr would remain under the dominion of France. France would not secure reparations, but she would enjoy security, and she would, so it is conjectured, enormously enhance her power in the world. An old French dream would be realised. The work of Bismarck would be undone and the achievement of Napoleon would be restored and perpetuated. There is an old Welsh adage which says that it is easy to kindle a fire on an old hearthstone. This idea of a Rhineland under French domination is the old hearthstone of Charlemagne. Mazarin sought to relight its flames. Napoleon the First kindled on it a blaze that scorched Europe. Napoleon the Third had hopes of warming his chilling fortunes at the glow of its embers, and now the great victory of 1918 has set French ambitions once more reviving the fires on the old hearthstone of a Rhineland ruled by the Frank.

Altogether it is a bad look-out for Europe.

_London, August 6th, 1923._

FOOTNOTE:

[3] Since this was written the mark has fallen far beyond.

XIX

IS IT PEACE?

The Charleville speech[4] and M. Poincaré's reply to Lord Curzon's despatch[5] leave things exactly where they were. Rumour said the reply would be long and logical. For once rumour hath not lied. M. Poincaré regards this exchange of bolstered notes as a pillow fight which he is quite prepared to prolong in order to gain time whilst the real struggle is developing to its destined end. The prominence given in the press to the fact that this rigid reply is "courteous" is significant of the pitiable condition to which the Entente has been brought by these maladroit negotiations.

What will Mr. Stanley Baldwin and Lord Curzon do next? Much depends for Europe on that next step, and something for them also hangs upon their action or inaction. One is reminded of the answer given by Émile Ollivier to the question addressed to him as to his opinion of one of Napoleon the Third's experiments in constitutional government: "Si c'est une fin, vous êtes perdu; si c'est un commencement, vous êtes fondé." That sage comment is equally applicable to the Curzon note.

We can only "wait and see," first for the French official reply, and second for the decision of the British Government upon that note. The only new factor in the situation that may have a determining influence on events is the accession of Herr Stresemann to the German Chancellorship.[6] I know nothing of him beyond newspaper report, but he is generally supposed to be a man of energy, courage and resource. If that be true, his appointment to the official leadership of the German people may be an event of the first magnitude. We shall soon know what he is made of. Germany has suffered more from weak or misguided leadership in recent years than any great country in the world. It blundered her into the War, it blundered through the War, it blundered into the armistice, it blundered during the peace negotiations, and it has blundered her affairs badly after the peace. But no one can predict what Germany is capable of with a wise and strong leadership. Herr Stresemann has a responsibility cast upon him and an opportunity afforded him such as have not been given to any statesman since the days of Stein and his coadjutors for regenerating his country and lifting her out of the slough of despond in which she has been sinking deeper and deeper. Those who ignore the effect which powerful and magnetic personalities may have upon the fortunes of nations in despair must have forgotten their history books. The fall of Dr. Cuno and the rise of Herr Stresemann may well turn out to be a more decisive event than the despatch or the publication of the Curzon note. But if he lacks those rare qualities which alone can inspire a people in an emergency to heroic action and endurance, then there is nothing but chaos ahead of Germany. For the moment it is more important to keep a discerning eye on Herr Stresemann than to watch this endless fencing between Downing Street and the Quai d'Orsay.

It is not often I find myself in agreement with M. Poincaré, but when he states that British unemployment is not attributable to the occupation of the Ruhr I am substantially in accord with him. In July last[7] I called the attention of the House of Commons to world conditions which injuriously affected our export trade and made unemployment on a large scale inevitable in the British labour market for some time to come. We are more dependent on our overseas trade, export, entrepôt, shipping and incidental business than any country in the world. Almost half our industrial and commercial activities are associated with outside trade in all its forms. That is not a full statement of the case, for if this important section of our business were to languish, the home trade would also necessarily suffer by the consequential diminution in the purchasing capacity of our people. Before the French ever entered the Ruhr our overseas trade was down to 75 per cent. of its pre-war level. Our population has increased by two millions since 1913; our taxation has increased fourfold; our national debt tenfold; but our business is down 25 per cent. To what is this fall in our outside sales and services attributable? It is the direct consequence of the War. Our customers throughout Europe are impoverished. What is just as bad, our customers' customers are impoverished. So that neither can buy at our stalls the quantities or the qualities which they could be relied upon to purchase before the War. Until Europe can buy, Australia, Canada, India and China cannot pay, as the Prime Minister pointed out in his last speech in the House of Commons. Germany, before the War, bought Australian wool, Canadian grain, Indian jute and tea, and the proceeds as often as not went to pay for goods bought by those countries in British markets. The same observation applies to Russia, Austria, and the Levantine countries. The purchasing capacity of Europe must, therefore, be replenished, a process which will, at best, take years of patient industry. The mischief of the Ruhr lies not in the creation of bad trade, but in retarding the process of recovery. It has undoubtedly had that effect.

Before the French entered the Ruhr trade was gradually if slowly improving all round. The prices of 1922 were lower than those of 1921; therefore, the contrast in sterling was not as apparent as it became on the examination of weights and measures. The export figures, notably in manufactured goods, show a decided increase on those of the preceding year. This advance is reflected in the statistics of unemployment. During the first ten months of 1922 there was a reduction of over 500,000 in the numbers of the registered unemployed. The succeeding ten months give only a slight improvement. Something has happened to arrest the rate of progress towards better times. This is where the Ruhr comes in. Even if it is not, to quote the Prime Minister, a penknife stuck in the watch and stopping the works, it is certainly more than a grain of dust which has perceptibly slowed the action of the sensitive machinery of trade.

The effect of the Ruhr disturbance would continue for some time if the penknife were removed now. For the moment M. Poincaré is wedging it in more deeply and firmly. Even if he withdrew it now, the works would not recover their normal steadiness for a long while. During these last disturbing months Germany has become appreciably poorer. Her wealth production has been depressed throughout most of her industrial areas. To a certain extent Lorraine and Belgium have also been affected adversely. The reservoir of wealth upon which industry draws has not been filling up as it ought if the world is ever to recover.

These things are hidden from France. She is a more self-contained country than Britain--perhaps also a more self-centred country. Even after the Napoleonic wars, which drained her best manhood and exhausted her fine nervous virility, she suffered from no interval of economic depression. Her great and victorious rival across the Channel lumbered painfully through fifteen years of misery, poverty and distress. Her own population, basking in the sunshine of prosperity, regarded across the narrow waters, with a natural contentment, the dark fogs that enveloped and drenched their old enemies. Commiseration or sympathy from them at that time was not to be expected. We had fought them for twenty years with an inveterate pertinacity and at last beaten them to the ground and occupied their capital. To-day we suffer because we helped to save their capital from foreign occupation and their country from being humbled to the dust by a foreign foe. Neither in French speeches, notes, nor articles is there any appreciation shown of that cardinal fact in the situation.

All that is clear at the moment is the stubbornness of the French attitude. M. Poincaré has not so far receded one millimetre from his original position. Threats and cajoleries alike are answered by a repetition of the same formulæ, with the slight variations in word or phrase which one would expect from a practised writer. But the theme is always the same and the application is identical to the point of monotony. He is not winning much coal out of his discourses and literary exercises, but to do him justice he is getting something for his country. Last year Lord Balfour, in the note he sent to the Allies on behalf of the British Government, offered to forego all claims for debts and reparations if Britain were secured against payment of the American debt. That meant a surrender of claims aggregating over £3,000,000,000 in return for an assured £1,000,000,000. A very handsome and generous offer. The Curzon note proposes to surrender all our claims for a precarious return of £710,000,000. The Ruhr occupation has already brought down the British claim against the Allies by £290,000,000. M. Poincaré may not be able to extract reparations out of Germany, but in seven months he has succeeded in forcing £290,000,000 out of Great Britain. He will certainly ask for more--and probably receive it.

Mr. Bonar Law was right when he said that under certain conditions Great Britain would be the only country to pay a war indemnity. Those conditions have arisen under his successors.

_Criccieth, August 20th, 1923._

FOOTNOTES:

[4] M. Poincaré's speech at Charleville on August 19th, on the subject of French policy in the Ruhr.

[5] The British note was sent to France, August 13th, 1923, and M. Poincaré's reply was received on August 23rd.

[6] The German Government fell on August 13th, 1923, and Herr Stresemann succeeded Dr. Cuno as Chancellor.

[7] House of Commons, July 16th, 1923.

XX

WHAT NEXT?[8]

The pen-and-ink joust is suspended for a fortnight, whilst the figures of British unemployment are leaping upwards. When the exhausted British knights have been reinvigorated by French waters they will once more charge full tilt at the French champion--at least, they will have made up their minds by then whether they will shiver another fountain-pen against his blotting-pad.

This is the advice ponderously and pompously tendered them in inspired articles. So far, the French nation is jubilant that M. Poincaré has scored heavily on points. He is a defter penman, and, moreover, he does not delegate his draughtsmanship to a Committee of Ministers, all holding irreconcilable views as to how to proceed, when to proceed, and whither to proceed, and amongst whom there is no agreement except on one point--that no one quite knows what action to propose.

Up to this last reply they cherished the vain delusion that the French could be shelled out of the Ruhr by reproaches which were both querulous and apologetic. That is not the way to shift continental statesmanship from its purpose. The French Foreign Office is better informed as to Cabinet divisions in this country than are the British public. It knows that the Prime Minister and Foreign Secretary dare not take measures which will hamper French action in the Ruhr.

When the Tory Diehards placed co-operation with France in the forefront of their programme they honestly meant it. For them it was not a mere manoeuvre to unhorse the Coalition. They cannot, therefore, support an attitude of resistance to French pressure on Germany. A refusal to join France in squeezing Germany is to them a continuation of the evil of the Coalition they overthrew with the help of Mr. Stanley Baldwin and Lord Curzon. They will not tolerate it.

That explains the impotence of British diplomacy in a situation which is so critical to our existence as a great commercial people. The Cabinet can agree on wordy notes; they are hopelessly divided as to action. They have, therefore, dispersed far and wide to search for fortuitous guidance hither and thither--some in the tranquillity of their English country houses; some in the healing springs of France; some in the mists of Scottish moorlands. Mayhap one of them will bring home a policy acceptable to his colleagues. It is all very humiliating to the Empire that raised ten millions of men and spent £10,000,000,000 of its treasure to win the War. The net result of the voluminous correspondence on which our rulers have concentrated months of anxious wisdom and unwearying hesitancy is that the Allies whom we saved from destruction refuse to move one inch out of their road to secure our friendly companionship. They are marching resolutely in one direction, whilst we are shambling along in another.

We have travelled long distances from each other since January last, and we are now altogether out of sight of the position we held in common when we met the Germans at Cannes early last year.[9] The Entente has never been more cordial than it was then--it has never shown more promise of hopeful partnership for the peace of the world. We were on the point of securing an amicable and businesslike arrangement with Germany for the payment of reparations and of concluding an agreement for protecting the frontiers of France and Belgium against the possibility of future invasion.

From these starting-points it was proposed that Britain, France, Italy, and Belgium should advance together to a general settlement of European problems in East and West--political, financial, economic and transport. This we had agreed to do and, with the unity and goodwill which then prevailed, could have accomplished.

But M. Poincaré had no use for the dove of peace. He wanted to fly his falcon. He had trained and bred it in the French farmyard, and there it had brought down many a domestic bird successfully. When his chance came he flew it at the wounded German eagle. It is poor sport, and somewhat cruel, but it evidently gives great joy to Frenchmen of a sort. The best are ashamed of it, but their voices are drowned in the clamour of the unthinking. If the helpless bird is torn to pieces, there is nothing in that for French or Belgian larders.

Quite unintentionally the hawk has brought down the Entente also. It may not be dead, but it has made its last flight. Henceforth international arrangements will be on a less exclusive basis. France is irrevocably committed to the exploitation of the Ruhr by force. That is what "pay or stay" means. To that policy the majority in this country are definitely opposed. If the Diehards in the Cabinet were by any chance to win, and either Mr. Baldwin surrendered or resigned in favour of a Poincarist administration in this country, neither he nor any possible successors could carry the country along into the Ruhr venture.

Some of them around the Prime Minister who have so suddenly assumed pro-French sentiments as the shortest cut to higher altitudes than those to which they have yet succeeded in climbing, know full well that, although they may use the Diehards for their own ends, if they succeeded in their somewhat sinister purpose they could not carry out the Diehard policy.

They are, therefore, endeavouring to provide for contingencies by negotiating on their own a fresh understanding with France. But British Premiers are not appointed at Rambouillet nor do they draw their authority from the Quai d'Orsay. Whatever may be thought of Mr. Bonar Law or of Mr. Stanley Baldwin by political partisans, no one suggests that they derived their promotion from other than purely British sources.

But for a fortnight nothing is to happen--except the spread of unemployment in Britain and of despair in Germany. At the end of the fortnight will there be a surrejoinder to M. Poincaré's rejoinder? Or will there be another conference?

Both M. Poincaré and the present Parliamentary régime in Britain came into power on the cry of "Enough of these eternal conferences; let us return to the good old diplomatic methods that prevailed before the War"--and, they might add, "which helped to make it possible." Nevertheless, Mr. Bonar Law's administration during its short tenure of six months participated in four European conferences, and M. Poincaré, during his eighteen months' official career, has found it necessary to take part, directly, in five conferences, and directly and indirectly in eight. The French Press are urging him on to add another to a record which already beats that of M. Briand in the matter of "joy-riding"--to quote the contemptuous Diehard name for international conferences during Coalition days.

It is a suspicious circumstance that those who were once resentful and scornful of conferences should now be clamouring for one both here and in France. The reason is scarcely concealed by ardent advocates of the resumption of "picnic diplomacy." At the old conferences, so it is contended, France was invariably forced to give way. Now she can and will command the situation.

There is a new note of confidence ringing through French despatches and echoed in the French Press. France must get what she wants; Britain must take what she is given. The French share of reparations must first be assured--debts due to Britain can come out of what is left. It is rather greedy, but characteristic, of the British that they should expect to be paid what is owing to them! With their smug and hypocritical Puritan temperament and outlook they insist that contracts should be respected! France, for the sake of the Entente, will make a concession even to British cupidity and pharisaism. It will permit the British Empire to collect--not the whole of what is due to her, but a much-reduced claim out of Germany once the French demand for reparations is cashed or as good as cashed!

To me this is a new France. During my years of discussion with French statesmen I never heard this voice. I had three or four talks with M. Poincaré, and I never heard him speak in these supercilious tones. Impunity has developed them since to their present pitch of stridency.

Belgium is to suggest a meeting of the Premiers. When it comes the French minimum terms are to be rigid and unequivocal. Here they are:--

1. France must be paid her irreducible minimum of £1,300,000,000
in respect of reparations, whatever happens to any one else.

2. Belgium is also to have her priority of £100,000,000.

3. As Germany cannot raise these huge sums immediately, France
and Belgium are to hold the Ruhr until they are paid. Hints have
been thrown out by the more conciliatory French journals that the
French Government might consider an early retirement from the
Ruhr if the payment of reparations were made the subject of an
international guarantee. That implies Britain and America becoming
sureties for payment of the German indemnity!

4. As to the rest, France and Belgium have no objection, subject
to the above conditions, to Great Britain collecting £700,000,000,
_i.e._, about 23 per cent., of her international claims (debts and
reparations) from Germany. But this munificent concession is to
be made on the distinct understanding that she forgoes entirely
the remaining 77 per cent. of her bonds. The Allies and Germany
between them owe Great Britain £3,000,000,000. The French and
Belgian governments are willing that Great Britain should collect
£700,000,000 of that amount from Germany, provided the remaining
£2,300,000,000 is for ever cancelled--and always provided that the
£1,400,000,000 due to France and Belgium has been satisfactorily
guaranteed.

5. These handsome terms can only be propounded if Germany first
of all withdraws all passive resistance in the Ruhr. That is an
essential preliminary.

The French government have stated these terms with such precision and such emphasis, and repeated them with such undeviating insistence, that any departure from them on the French side seems impossible. The hope of a conference rests entirely on the confidence in a British surrender. There is a dismal "joy-ride" in prospect for the British Prime Minister and his Foreign Secretary. Is it conceivable they can contemplate such a capitulation? I do not see how the present Government, after all it has said and written, can so far submit to French dictation as to make it likely that further discussions would lead to agreement.

What is the alternative? Herr Stresemann can alone answer that question. It is not yet clear what he means to do. Perhaps he is feeling his way to a decision.

_London, August 27th, 1923._

FOOTNOTES:

[8] London, August 27th, 1923.

[9] The Cannes Conference, January, 1922.

XXI

THE BRITISH DEBT TO AMERICA

As I roll homeward along the coast of Spain a wireless message announces that the British government have accepted the American debt terms.

The details which I have received are not sufficient to enable me to form an opinion regarding the character of those terms, or their bearing on Allied indebtedness to Britain as to the terms of payment. I know nothing of the steps taken by Mr. Baldwin and the government of which he is a member to make this the first step in an all-round settlement of inter-Allied debts. That is a matter of infinite moment to us, and I assume that this is somewhere--and effectively--in the arrangement.

As to the payment of our own debt, the government represent the real sentiment of the nation as a whole. The British taxpayer is no doubt fully alive to the fact that this heavy debt was incurred by him during the war in the main in order to finance American supplies to our Allies. We could have paid for all the supplies we required for our own use without resort to any loan from the American government. Nevertheless, the money was advanced by the lender on our credit and our signature.

Our credit as a nation, therefore, demands that we should pay. Whether we can collect enough money from our own debtors to meet this charge becomes increasingly doubtful, as it is becoming increasingly needful.

Britain is alone in thinking she is under any moral obligation to pay the external liabilities incurred for the effective prosecution of the war. The attitude of the late and of the present government is identical in this respect.

Why have the British public taken a different view of their national obligations towards external war debts from that adopted by other Allies? In giving the answer I do not wish to dwell on obvious ethical considerations which must weigh whenever you consider whether you will carry out an engagement which you have entered into with another who has already performed his part of the engagement on the strength of your promise.

These ought to be conclusive; but to urge them might be deemed to be an unworthy reflection on the honour of those who take a different view of their national duty.

I have no desire to offer censure or criticism upon their decision. They, no doubt, have their reasons for the course they are adopting. We have certainly overwhelming reasons for showing an honest readiness to pay our debts.

The settling up of accounts is always an unpleasant business, especially amongst friends. Strangers expect it and prepare for it--and there is no resentment when the bill arrives. But a man hates reminding his friend at the end of a business in which both have been engaged in warm amity that there is "a little balance" to be paid up. He has been expecting the friend to mention the matter to him. So he puts off introducing the unpleasant topic from year to year. But the friend disappoints his expectations. Not a hint comes from that quarter of any realisation that there is anything due. It soon looks as if it had been forgotten altogether.

The friend is most insistent on collecting the business accounts due to himself. He is angry at all delays in payment of his own bills. But his conscience is blind on the side of the debts he himself owes. It is not an uncommon experience, and we are suffering from it to-day. The war left us a creditor nation to the extent of over 2,000 million pounds, and a debtor nation to the extent of about half that amount. We readily accepted an invitation from our creditor to discuss the repayment of the debt we owe. Our debtors have displayed an invincible reluctance to enter into a similar discussion with us.

That ought not to influence our final decision. Britain is the greatest of all international traders, and her credit rests on the reputation she has well earned--that her bond is a sacred trust which her people always honour and redeem without counting the cost in toil and treasure. I remember when war broke out the panic which seized bankers and brokers as they contemplated the obligations incurred by British firms with their support to finance world trade. These liabilities ran into hundreds of millions sterling, and the only security for repayment was represented by a bundle of flimsy paper, criss-crossed with the signatures of men most of whom no British banker had ever seen, many of them dwelling in countries with whom we were actually at war.

There was one signature, however, on each paper which was known to bankers and carried with it the good name of Britain throughout the world; and it was that of some well-known British firm. Traders in far-distant lands parted with their produce on the credit of that signature and of the country with which it was associated.

It is true that the government had no responsibility for any of these transactions; but the honour of Britain was involved in seeing that the foreign merchants should not suffer ruin because they put their trust in British commercial integrity. For that reason the British government of the day shouldered the burden, took all the risk, and although it meant a liability of between four hundred and five hundred millions sterling, not a voice was raised in protest.

The action then taken, though quite unprecedented, was not only honourable; it was wise. It saved British pride from a reproach; it also saved British credit from a blow from which it would not have recovered for a generation. During that generation this lucrative business would have passed into other hands.

As soon as the war was over the people of Britain, with an instinctive impulse that required no persuasion to stimulate its activity, set about the task of restoring their war-battered credit. Government, bankers, merchants, brokers, manufacturers, and workers of all kinds were of one mind; borrowing must come to an end; Britain must pay her way--whatever the sacrifice. Expenditure was ruthlessly cut down. The army and navy were reduced below pre-war dimensions. Other services were curtailed. Heavy taxation was imposed--taxation such as no other country bears. The budget at home must balance. Debts to other countries must be paid off. Already large sums have been paid abroad. It required courage and constancy to pursue such a policy; but the endurance of the nation was beyond praise. It is now calmly facing the liquidation of this heavy debt to the United States of America; but no party has yet arisen, or is likely to arise, to demand that the hand of the negotiators should be arrested. Britain means to pay the last of her debts without a murmur.

We are already reaping some of the reward. The purchasing value of our currency has already risen under its burdens, and, as a consequence, the cost of living has fallen steadily, while other countries who have pursued a different policy find the cost of living for their people ascending month by month.

A short time ago we were taunted in the French Chamber of Deputies by the president of the council that our unsound financial policy had been responsible for our unemployment. It is true that if we had gone on borrowing instead of paying our way--if we had defied our foreign creditors instead of paying them--we also, like many other European countries, might have fostered an artificial prosperity by means of a discredited currency. But British credit would have rapidly disappeared beyond recovery and British trade would soon have followed. Meanwhile, the cost of living in Great Britain would have been double what it is to-day. We all therefore dismissed that policy from our minds without paying it the tribute of a discussion.

Trust is the only soil in which credit flourishes. Had that trust been forfeited British buyers and consequently British consumers would to-day have been paying more for their wheat, their meat, their cotton, and their wool. The burden of repayment to the United States will be infinitely less than that of the indirect burden involved in large purchases with a discredited currency.

The government are therefore right in arranging with the American treasury without loss of time for the liquidation of a debt incurred by this country. I am taking for granted that they have made every effort to see that the agreement shall form a part of an all-round settlement of inter-Allied debts. But as to our own debt the moral obligation must remain whatever our Allies do or fail to do. Why it was incurred, the circumstances in which it was entered into, the purposes for which the money was advanced, were open to the consideration of the American government in arranging terms. That, however, was their privilege; ours is to honour our signature.

XXII

INTER-ALLIED DEBTS

A cold shiver ran down the back of England when it was announced officially that the British government had definitely agreed to pay over £30,000,000 a year for sixty years to the United States in respect of debts incurred by us on behalf of our Allies without seeking a contribution from our debtors to protect the taxpayers of this country. It is not that anyone dreamt the evil dream of repudiation. That was never woven into the texture even of the worst nightmare out of the many that have disturbed our repose since the greatest nightmare of all left the world a quivering nervous wreck.

Nor did we expect remission of our debts. Whenever we were tempted to exaggerate the bounds of human charity paragraphs appeared that reminded us of the attitude of the "Middle West." America was discovered by Europe centuries ago, but the "Middle West," as a political entity, is to untutored Europeans a discovery of the war. We were then told by returning explorers that it was the seat of the American conscience--inexorable, intractable, but irresistible when engaged in any enterprise. How potent this conscience was, as a world force, the war demonstrated. From the heights it hurled an avalanche of force against Germany that overwhelmed the last hope of resistance. Unfortunately for us when it came to debts we struck against the hard side of the Middle West conscience.

Our hope was therefore not in remission. There were, however, many other possibilities. We were not the only debtors of the American government. Other Allies had borrowed not merely indirectly through us, but directly from America. We had every confidence that the United States government would not mete out to Britain severer treatment than it was prepared to accord to our Allies. We had to contend, it is true, with legends of our inexhaustible wealth. Apart from our great coal deposits, and a climate which leaves those who endure it no alternative but activity, we have no treasure except the industry, the resources and the inherited skill of our people. We have nothing like the rich plains and the fertilising and ripening sunshine of France, which maintain sixty per cent. of its population. Our sources of wealth--apart from coal--are precarious, for they depend more largely than any other country on conditions outside our own. We are international providers, merchants and carriers. A sixty-year contract to pay large sums across the seas is in many respects a more serious consideration for us than for countries whose riches are inherent in their soil and are, therefore, more self-contained. The demoralised condition of the world markets has left us with a larger proportion of our industrial population unemployed than any other European country. I hear tales of unemployment in the United States of America, but the reports that reach us here on American unemployment are so contradictory that I can build no argument upon them. But, as to the gigantic dimensions of our unemployed problem there can be no doubt. We have 1,400,000 workmen on the unemployed register drawing unemployment pay in one form or another. The annual cost to the nation of feeding its workless population runs to over £100,000,000--almost the figure of the annuity demanded from Germany as a war indemnity.

Although there are signs of improvement the omens point to a prolonged period of subnormal trade. Continuous depression for years will mean that Britain will suffer more from the devastation to her trade caused by the war than France from the devastation of her provinces. Our country, anxious about its means of livelihood, with a million and a half of its workmen walking the streets in a vain search for work, has to bear the heaviest burden of taxation in the world. Why? Because it has not only to pay interest on its own heavy war debts, but also on £3,000,000,000 which it either advanced to the Allies or incurred on their behalf. That is why we felt hopeful that the United States would not discriminate against a nation so situated.

When I talk of debts the Allies owe to us, I want to emphasise the fact that these debts are not paper myths nor tricks of accountancy. They are onerous facts representing a real burden borne at this hour by the bent and panting taxpayer of Britain. If these loans had never been made the weight on his shoulders to-day would have been lighter by over two shillings in the pound. He is every year paying to the actual lenders--some British, some American--that proportion of his income. It is a weight he undertook to carry for his Allies during the war on the sacred pledge of those Allies that they would take it over after the war. The American government borrowed from their public to make advances to Great Britain, and have called upon the British taxpayer to redeem his pledge. We make no complaint, for the demand is a mitigation of the strict letter of the bond. But that amount is in substance part of the debt owing by the Allies to Britain. And the British taxpayer naturally feels it is hard on him to have to bear not only his own legitimate burdens but that he should in addition have to carry the debts of his less heavily taxed brethren in continental countries. He naturally inferred that if equal pressure had been administered on all debtors alike it would have forced an all-around consultation which would have terminated in an all-round settlement.

That was the real purport of the Balfour note. The true significance of that great document has been entirely misunderstood--sometimes carelessly, sometimes purposely, sometimes insolently. I guarantee that not one per cent. of its critics if confronted suddenly with an examination on its contents would secure one mark out of a hundred. It has suffered the same fate as the treaty of Versailles. Opinion is sharply divided as to both between those who rend without reading and those who read without rending. Most men have received their impressions of the Balfour note from denunciatory phrases penned by writers who received their ideas about it from men who gave instructions to condemn it without ever reading it. The men who really understood both the Versailles treaty and the Balfour note have been too busy to find time to inform, to interpret, and to explain.

But the time has come when the public attention should be once more drawn to the remarkable and far-reaching proposals of the Balfour note. They constitute an offer on the part of Britain to measure the amount of her claims against her Allies by the extent of her obligations to the United States of America. The British government even offered to include the claim of their country against Germany in this generous concession. What does that mean in reference to present conditions? That if the Allies and Germany between them found the £30,000,000 a year which Britain has undertaken to pay America, she would forgo her claim to the £3,300,000,000 due to her under contract and treaty. It was a great offer and if accepted would have produced results beneficent beyond computation. Britain, which would have been the heaviest direct loser, would have profited indirectly through the world recovery that would have ensued.

How was it received? Some criticised it because it asked too little--some because it demanded too much. Many criticised because they were determined to approve nothing that emanated from such a government, but most of its censors condemned it because they never took the trouble to understand it, and the shrillest among the street cries happened to denounce it. The government that propounded it soon after left the seat of authority, and the administration that succeeded put forward a new scheme which attracted even less acceptance. So this great project which would have settled for ever the question which above all others is vexing peace and unsettling minds in Europe was pigeon-holed where it was not already basketed.

But surely this is not the end of all endeavours to reach a settlement of the question of inter-Allied debts. We cannot rest satisfied with an arrangement which effectively binds us to pay without prospect of the slightest contribution from our debtors. What America cannot indulge in we cannot afford. The gold of Europe now lies in its coffers. Who are we--plunged in the mire of debt up to our nostrils--to give ourselves airs of generosity superior to the only golden land left in this war-stripped earth?

If there is to be a general jubilee in which all alike participate in order to give the world a new start, then I feel sure Britain will play her part bravely and nobly. But a jerry-mandered jubilee which frees France, Italy and Belgium from all their debts whilst leaving Britain sweating to pay off debts incurred for her Allies on the strength of their bond--that we cannot bear.

I trust the government will insist on an arrangement with our Allies which, even if it is not a replica of our contract with the American government, will at any rate ensure us a contribution that will safeguard us against loss under that contract. It is I fear hopeless to expect that we should be recouped the 2_s._ in the pound which interest on Allied debts costs our taxpayers, but at any rate we might be guaranteed against the 6_d._ in the pound which the American instalments involve. I feel the effort is beset with difficulties and that the outlook is not hopeful. There have of late been a few discouraging symptoms. One is the reception accorded at the recent Paris conference to the British prime minister's liberal offer regarding inter-Allied debts. It was a tactical error to open the conference with such a scheme and the effect was singularly unfortunate.