REPARATION IN 111/1 PEACE TREATY.*

THE Treaty of Versailles, being the work of human hands, is

open to criticism in detail. It has been bitterly attacked by the Pacifists, by the Socialists with pro-German tendencies, by the political opponents of Mr. Lloyd George and by a few professional economists whose advice had not been taken by the Allies. These attacks have made no great impression on the public mind. They would have been almost negligible if the Treaty and the way in which it was framed had been better understood. We are glad that the task of enlightening the public has at last been performed by one of the most impartial men at the Peace Conference, Mr. Baruch, who was the economic adviser to the American delegates, and who took a very active part in drafting the reparation and economic sections of the Treaty. His new book is short and concise, but it is in some respects the most illuminating comment upon the Treaty that we have seen. Mr. Baruch's main contention is that while the Conference worked under constant pressure from public opinion In the Allied countries and, in regard to reparation, "was dealing with blood-raw passions still pulsing through the people's veins," It nevertheless provided—in the Reparation Commission—a means of modifying the demands which might prove inequitable or impracticable when passions had had time to cool.

"It is a fundamental mistake to assume that the Treaty ends where it really begins. The signing of the document on June 28th, 1919, at Versailles did not complete its history ; it really began it. The measure of its worth lies in the processes of its execution and the spirit in which it is carried out by all the parties to the contract."

Mr. Baruch begins by showing that President Wilson and his colleagues imposed their definition of " reparation " on the

Conference. The Allies contended that Germany should be held liable for the costs of the war, as she had held France liable in 1870-1. But after much argument, and a sort of wireless ultimatum from the President who was on his way to America, the Allies accepted the American view that Germany should make compensation for damage "from acts clearly in violation of international law," and for "all damage to the civilian popu- lation of the Allies and their property "—this being construed to mean "direct physical damage to property of non-military character and direct physical injury to civilians." Had war costs been included, our proportional share of the total sum to be recovered from Germany would have been 40 per cent., and that of France 24 per cent., whereas under the American scheme our share was 19 per cent., and that of France 43 per cent. ; yet France supported the British contention. The Conference had next to determine the several categories of "damage," as distinct from war costs. The American delegates were divided on the question whether " damage " should include pensions and separation allowances. It was urged that, apart from these, the bill against Germany would be approximately 15,000,000,000 dollars, "which it was generally thought she could pay." France was reminded by the Americans that if she renounced the claim for pensions she would get a larger share of that sum for her devastated areas. In the end General Smuts, on March 31st, 1919, presented a lucid memorandum which convinced all parties that Germany was liable to com- pensate the Allies for all war pensions and separation allowances which they had to pay as a consequence of her action in pro- voking the world-war. Next, at the instance of America, it was agreed that Belgium should be compensated "for the entire loss to which she had been subjected," and that she should receive a preferred payment of 2,600,000,000 gold francs out of the first payments made by Germany. Further, it was arranged that all the Allies should pool their claims upon all the enemy states and share the reparation payments made by Austria- Hungary, Turkey, and Bulgaria as well as by Germany, other- wise Italy, for example, with claims upon Austria alone, would have fared badly. Mr. Baruch, in dealing briefly with com- pensation in kind, points out that the coal clauses have been much misunderstood—and, we should add, much misrepre-

sented. Germany has to deliver to France for ten years an amount of coal equal to the difference between the pre-war and post-war output of the coal-mines, especially at Lens, which the

Germans deliberately destroyed in order to prevent French industry from recovering after the war. Further, France, Belgium, and Italy are to receive as much German coal as they Imported before the war, but for this they are to pay at the rites

• The Making of the Reparation and Economic Sections of the Treaty. By Barnard M. Baruch. London: Harper. ($34 charged to Germans, and the Reparation Commission may postpone the deliveries if it thinks that Germany could not afford to export so much coal. Mr. Baruch adds that, "when Europe stops fighting and gets back to work, there will be no shortage of coal or other necessities of life." He points out that the demand for cattle from Germany was fully justified, as the Germans had stolen or killed all the good cattle and horses of Northern France and Belgium. Moreover, Germany at the end of the war had almost as many cattle as before, though she lacked cattle-food, and therefore got less milk and meat.

The American delegates, Mr. Baruch says, contended from first to last for "a fixed and reasonable sum" to be exacted from Germany by way of reparation. But there were difficul- ties. "No one knew how much Germany owed. No one yet knows how much Germany owes. No one knew how much Germany could pay. No one yet knows how much Germany can pay "—not even Mr. Keynes. Some thought that Germany

could only pay 8,000,000,000 dollars ; but "a certain great English financial expert" thought that she could pay 120,000,000,000 dollars. The Allies, Mr. Baruch continues, would not present official estimates of the damage done to them,

on the ground that such estimates at that time would be mere guesswork, "and that the least conscientious guesser would be the greatest gainer." The British delegates alone supported the American view and presented a provisional estimate of losses.

"Finally, the American delegation took the position that it could not consent to demanding any fixed sum from Germany unless satisfied of damage to at least that amount."

It was fairly obvious, says Mr. Baruch, that the total claims would exceed Germany's ability to pay, but it was important to have accurate claims so that each Ally's share of the reparation payments should be fairly adjusted. There was danger, some contended, in requiring too much of Germany lest she should become once more, and too quickly, a formidable competitor in the world's markets. Belgium took this line, but France did not. "The English were reluctant frankly to adopt a policy of moderate reparation, which, however much in the real interest of Great Britain, would have involved a direct repudia- tion of election pledges." When President Wilson and his advisers pressed their proposal for a fixed indemnity, they were met by this kind of question :—

" If you ask us to lessen our claims upon Germany for in - demnity, which she admits she owes, what will you do for the loan made to us for the prosecution of a war which was as much your war as our war, the amount of which clearly exceeds our ability to pay, unless we are allowed to get the last possible dollar out of Germany ? "

Mr. Baruch thinks that a fixed indemnity would have helped the Allies to pay their debts to America more quickly. But of the proposal that America should cancel her Allied loans

and guarantee a new loan for the rehabilitation of Europe, Mr. Baruch remarks drily :—

" To expect that these problems could receive any wise final solution at the Peace Conference itself discloses a visionary confidence that ignores the complexity of the questions and the difficulty of the conditions under which the peace negotia- tors had to labour."

As reparation had become a leading political issue among the Allies, their Governments, as Mr. Baruch admits, could not yield to America on the point. "One must be either ignorant, vicious or an impracticable idealist to contend that in the fore- going circumstances it was humanly possible to have found at the Peace Conference a sound, definitive solution of the German reparation problem that would have met with ratification." America and the Allies therefore compromised by setting up the Reparation Commission and giving it very large powers of modifying the reparation clauses of the Treaty. The critics of the Treaty, as Mr. Baruch observes, ignore these powers and the principles on which they are based. Thus, for example, "no penalty is stipulated except for the execution of those obligations which Germany can but wilfully refuses to perform." Mr. Baruch maintains that in their own interests the Allies will apply the reparation clauses with justice and wisdom. If Germany could emulate the honesty and goodwill shown by defeated France in and after 1871, she would find the Allies ready to recognize her change of temper. Suspicion of the bad faith of Prussia is still an obstacle in the path of recon-