The Economic Consequences of the Peace by John Maynard Keynes

Author:John Maynard Keynes [Keynes, John Maynard]
Language: eng
Format: azw3, epub, pdf
ISBN: 9781627559416
Publisher: Wilder Publications, Inc.
Published: 2015-06-09T16:00:00+00:00

British Empire $7,000,000,000 [106]

France 12,000,000,000 [106]

Italy 2,500,000,000

Others (Including United States) 3,500,000,000

Total $25,000,000,000

I feel much more confidence in the approximate accuracy of the total figure[107] than in its division between the different claimants. The reader will observe that in any case the addition of Pensions and Allowances enormously increases the aggregate claim, raising it indeed by nearly double. Adding this figure to the estimate under other heads, we have a total claim against Germany of $40,000,000,000.[108] I believe that this figure is fully high enough, and that the actual result may fall somewhat short of it.[109] In the next section of this chapter the relation of this figure to Germany's capacity to pay will be examined. It is only necessary here to remind the reader of certain other particulars of the Treaty which speak for themselves:

1. Out of the total amount of the claim, whatever it eventually turns out to be, a sum of $5,000,000,000 must be paid before May 1, 1921. The possibility of this will be discussed below. But the Treaty itself provides certain abatements. In the first place, this sum is to include the expenses of the Armies of Occupation since the Armistice (a large charge of the order of magnitude of $1,000,000,000 which under another Article of the Treaty—No. 249—is laid upon Germany).[110] But further, "such supplies of food and raw materials as may be judged by the Governments of the Principal Allied and Associated Powers to be essential to enable Germany to meet her obligations for Reparation may also, with the approval of the said Governments, be paid for out of the above sum."[111] This is a qualification of high importance. The clause, as it is drafted, allows the Finance Ministers of the Allied countries to hold out to their electorates the hope of substantial payments at an early date, while at the same time it gives to the Reparation Commission a discretion, which the force of facts will compel them to exercise, to give back to Germany what is required for the maintenance of her economic existence. This discretionary power renders the demand for an immediate payment of $5,000,000,000 less injurious than it would otherwise be, but nevertheless it does not render it innocuous. In the first place, my conclusions in the next section of this chapter indicate that this sum cannot be found within the period indicated, even if a large proportion is in practice returned to Germany for the purpose of enabling her to pay for imports. In the second place, the Reparation Commission can only exercise its discretionary power effectively by taking charge of the entire foreign trade of Germany, together with the foreign exchange arising out of it, which will be quite beyond the capacity of any such body. If the Reparation Commission makes any serious attempt to administer the collection of this sum of $5,000,000,000 and to authorize the return to Germany of a part it, the trade of Central Europe will be strangled by bureaucratic regulation in its most inefficient form.

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