The peace discussions at Paris continued, as we have seen, throughout the year 1919. The Paris Conference had begun with an imposing array of statesmen from all over the world. Heads of governments and ministers of foreign affairs were the principal delegates of their respective countries. After the signing of the Treaty of Versailles the big fry went home. It was manifest that they could not stay away from their duties indefinitely, even if there were some of the most important matters affecting the peace settlement still undecided. But when December came and the Christmas holidays approached, it was also manifest that the questions still under discussion were too complicated and too vital to the political fortunes of the Entente Cabinets for a conference of subordinates to pass upon. Agreement, it was recognized, could be reached only by the same method that had prevailed in drafting the German and Austrian treaties, i.e., direct and secret bargaining among the heads of governments. The Peace Conference lost its importance when the “Big Four” departed at the end of June. It petered out—there is no other way of expressing it—at the end of November, leaving unsolved the problem of the relations of the victors to Russia. The unfinished business on the conference agenda has been bothering the world ever since. The principal questions upon which the conference had failed to pass were: (1) settlement of the total sum Germany was to pay for reparations; (2) measures to apply if Germany proved unable or unwilling to do the bidding of the Reparations Commission; (3) apportioning among the victors the cash and the deliveries in kind received from Germany; (4) what should constitute German disarmament and how this was to be brought about; (5) how Upper Silesia could be detached by a plebiscite from Germany; (6) the future of Memel; (7) the status of Eastern Galicia, Bessarabia, Albania, and Montenegro; (8) how the eastern frontiers of Poland were to be determined; (9) the relations of the League of Nations toward mandated territories; and (10) the terms of the treaty with Turkey, which involved the claims of Greece and the northern frontiers of the French and British mandates. Later the question of interallied debts was raised by France and Italy, who insisted that the indebtedness of the victors to one another was inseparably linked with the indebtedness of Germany to the victors.

Had the victors possessed common interests in Europe and the Near East, most of these questions could have been left to experts, whose compromises would have been accepted as reasonable by the common sense of the governments and peoples concerned. Foreign policies of the Entente Powers, however, were hopelessly divergent, and governments had to take into consideration not only the defense of national interests abroad but also the retention of power when hostile parties at home were ready to seize upon any pretext to oust them. At the best, when governments have simply domestic issues to face, keeping the confidence of parliaments is a difficult task. In passing judgment upon the statesmen of the Entente Powers and the United States, whose efforts at constructive peace-making failed so signally, we must remember that they were not free agents, but that they had to be thinking constantly of currents of public opinion that threatened to sweep them at any moment from their high positions.

The necessity of continuation conferences arose from the lack of common interest in enforcing, and therefore of power to enforce, the terms of the peace settlement which all seemingly accepted in the first flush of victory. Statesmen and peoples alike soon discovered that the treaties contained provisions which, if literally interpreted, did not satisfy their real or fancied interests, nor the ambitions the attainment of which they believed the victory should have made possible. The League of Nations came into existence at the beginning of 1920. The United States refused to join it. The Entente Powers, for the reasons given above, did not feel that they could use it except as a convenient and amenable agency to further their own policies. Until the world-wide status quo was definitely settled by the harmonizing of British, French, and Italian interests, it was deemed better to continue to use the Supreme Council, a conference of ambassadors, and, best of all, meetings of Entente premiers. Continuation conferences, therefore, in which both the first and last words were spoken by the premiers of the three big powers, have been attempting for nearly four years to grapple with the unfinished business of the Paris Conference.

These conferences have been large and small, formal and informal, some lasting months and others merely week-ends, but all have been dominated—even those called for other purposes and dealing ostensibly with other questions—by what has come to be known as the reparations issue. The reparations issue, in turn, has never been discussed on its merits, as a problem of economics. Security for France, through the permanent crippling of Germany, has lurked in the background of every discussion in these international gatherings.

The first of these conferences, held in London and Paris in January and February, 1920, were too near the exchange of the ratifications of the Treaty of Versailles for reparations to be at the front. Italy secured from France and Great Britain consent to make Fiume a free state, in exchange for a modification of Italian “rights” in Dalmatia, as provided for by the 1915 treaty, and the recognition of her paramount interests in Albania. The United States protested against the decision of the Paris meeting to change Albanian frontiers in favor of Serbia and Greece. The Albanian question, as we have seen in another chapter, was finally solved by the ability of the Albanians to defend their independence against Serbians and Italians. The Adriatic question was left to direct negotiations between Rome and Belgrade.

The first continuation conference to attract public attention was that of San Remo, whose important decisions in regard to the treaty with Turkey have been commented upon in earlier chapters. It is not generally realized that on the agenda of San Remo the Ottoman Empire occupied third place. The first subject was the execution of the Treaty of Versailles, which was beginning to cause serious difficulties, and the second subject Russian affairs, which had been going very badly, indeed, for the Entente Powers owing to the collapse of counter-revolutionary movements.

San Remo marked the first difference of opinion between Great Britain and France on the reparations question. Lloyd George, seconded by Nitti, laid down the thesis to which the British and the Italians (until Mussolini) adhered with more or less consistency in succeeding conferences. The French began to realize that British and Italian interests were going to conflict with their purpose to use reparations claims to prevent the economic rehabilitation of central Europe. France was able to induce the other two powers to agree in principle upon coercive measures against Germany in return for yielding to Lloyd George’s proposals for the Near East and Nitti’s contention that trade relations would have to be resumed with Russia, even though the Soviet did remain in control. At San Remo, also, a secret oil arrangement was concluded between France and Great Britain, against which the United States later protested, and also a new delimitation of spheres of influence in the Near East. On two points, however, the French yielded to the Anglo-Italian view as to method in enforcing the Treaty of Versailles. France agreed to take no punitive steps without consulting her allies, and—very reluctantly—to have German delegates invited to confer with representatives of the Entente on deliveries in kind and other means of making reparations payments. For this purpose it was arranged that the Entente Powers should meet at Hythe on May 15 to discuss the schedule of German payments and should then summon the Germans to come to Spa with definite, concrete proposals for fulfilling their obligations under the treaty.

Between Hythe and Spa two additional conferences were necessary, at Boulogne-sur-Mer and Brussels, to fix the amount of the indemnity and decide how it should be apportioned. Raymond PoincarÉ, president of the Reparations Commission, resigned in protest against what he called an infraction of the treaty, which had stipulated that the amount of reparations should be determined by the commission, after they had examined the extent of Germany’s resources. One of the most important functions of the commission, declared M. PoincarÉ in a public statement, was being usurped by the Entente premiers. All the world knew, however, that the pro rata distribution schedule was dependent upon the total sum the victors hoped to receive. Hythe, Boulogne, and Brussels revealed serious divergence of views among the victors, large and small. Italy especially felt that the improbability of ever getting any money out of Austria should be made up to her by a larger proportion of the German indemnity.

It was not until the delegates had actually come together at Spa that the proportionate shares in the German indemnity were determined as follows: France, 52 per cent.; Great Britain, 22; Italy, 10; Belgium, 8; Serbia, 5; the other states, 3. In addition, Belgium was allowed to transfer her entire war debt to the account of Germany and was given priority in the first gold payments. No amount of talking could bring agreement upon the total sum to be demanded, and the schedule of annuities.

The Spa Conference, convened on July 5, 1920, gave the Germans their first chance to discuss in open meeting the Treaty of Versailles. But this did not do them much good. On the contrary, after heated debates, threats were used to back arguments. An agreement was added to the Treaty of Versailles, defining the monthly amount of indemnities in kind, and reaffirming the right of the victors to insist upon the punishment of war criminals and the surrender of arms in the possession of German civilians and security police. Later in the summer new differences of opinion between British and French were revealed in conferences at Lympne and over the aid that should be given to Poland and to the new counter-revolutionary movement of General Wrangel in Russia.

At Spa the Entente Powers had promised Germany credits for food and raw materials to make possible the resumption of German production: for it was evident that Germany’s ability to transfer wealth abroad in the form of gold payments was exceedingly limited; that if a serious beginning of large-scale indemnity payments was to be made, Germany would have to sell manufactured articles in foreign markets; and that the factory-workers and miners could not produce effectively unless they were properly fed. At the suggestion of British economists, who had the ear of Lloyd George, a conference of experts met at Brussels on December 16, 1920, to make recommendations to the Entente governments to guide them in granting Germany the credits necessary to render practicable reparations demands. This conference reported that a total indemnity of 100,000,000,000 gold marks was possible, provided Germany received extensive credits for food and raw materials purchased abroad, and that the annual scale of payments be flexibly arranged to meet whatever economic situation might develop.

The French press and public opinion did not receive in a kindly fashion the recommendations of the experts. It was pointed out that some months earlier, at Lympne, the British had subscribed to a joint declaration to the effect that “the suffering and economic ruin resulting from the war should not be borne by the nations who did not cause it.” By extending credits to Germany France would be paying to Germany more than she would receive for a long time, and it was preposterous that Germany be allowed to regain her old economic prosperity while the north of France was still in ruins. This was the French attitude when the conference of Paris opened on January 24, 1921, to fix the reparations bill and the method by which it should be paid. The discussion was removed from economic to political ground, and it has remained there since that day. In the beginning, both Great Britain and France had regarded the reparations problem from a political standpoint. In 1920 the British shifted to an economic standpoint. This caused the divergence that was evident at Paris in January, 1921, and in all the conferences that have followed. In 1921 the British remonstrated, but in the end they yielded. After two years, in 1923, they finally felt that it was necessary to break with France on the ground that persistence in demanding the impossible would wreck the economic structure of Europe and create an impasse, resulting in irreparable harm to victors as well as vanquished.

It will be remembered that the treaty gave until May 1, 1921, for the total amount of indemnity to be fixed. Germany bound herself in advance to accept whatever sum the victors decided upon, to agree to make payments in the way they demanded, and not to consider as an act of war any punitive measure they might take to enforce their will. Stipulations of this kind, which had never before been written into a treaty, placed Germany completely at the mercy of her conquerors. They could make upon her any demands they saw fit, however impossible to fulfil, and could undertake reprisals if what could not be done was not done. The only protection to Germany, now that she was disarmed, lay in the fact that her creditors were several, who might not all agree that her permanent ruin would be to their best interests.

The Paris Conference met on January 24, 1921. On the first day Marshal Foch declared that Germany had failed to fulfil the disarmament clauses of the Treaty of Versailles, and that the danger was so great that France would be justified, as a military precaution alone, in occupying the Ruhr Valley. This proposal, although tentative in form, as if to try out the Allies, brought an immediate and strenuous protest from British and Italians. The two delegations stood together also in rejecting France’s demand that the indemnity be fixed at 400,000,000,000 gold marks. There was a lively argument between Lloyd George and Doumer. When the latter said that it was reasonable to expect 17,000,000,000 marks per annum from German exports, of which 12,000,000,000 could be taken by the Reparations Commission, Lloyd George retorted that the calculation was absurd. How could Germany pay for raw materials, coal, labor, etc., on the basis of retaining five billions out of seventeen billions? After five days of acrimonious debate, in which British and Italians pleaded for a practicable total sum, a compromise was effected. It was decided that Germany should pay in forty-two annual installments 226,000,000,000 gold marks, and for the same period an annual tax of 12 per cent on her exports. At the first default the Allies should have the right to take any measures, financial or military, that they saw fit. The German Government was summoned to send a delegation to London, after four weeks, “to agree to the decisions of the Paris Conference.”

At the London Conference, on March 1, Dr. Simons, the German foreign minister, declared that Germany never could pay any such sum, whose annual instalments were far beyond her total surplus wealth in the years of her greatest prosperity before the war. He made a counter-offer of 50,000,000,000 gold marks, less 20,000,000,000 already paid (according to German figures), but pointed out that even this sum was possible only if the decision in regard to Upper Silesia did not go against Germany. Dr. Simons suggested that if the value of payments already made was disputed, a joint commission should be appointed to determine it. Lloyd George delivered a long speech to the German delegation on March 3, in which he ridiculed their proposals and described them as “simply provocative.” Lloyd George two years later was taken to task in Parliament for his attitude at this London Conference. He frankly admitted that he knew the absurdity of the Entente program, but that it was insisted upon in order to force from Germany a counter-offer up to her real capacity to pay, and also that other factors entered into the decision of the British Cabinet to stand with the French. These other factors were, as we have seen in other chapters, the desire to keep France from opposing the British plan in the Near East by supporting French plans on the Rhine.

France, Great Britain, Italy, and Belgium sent a joint note to Germany, threatening to levy an import tax of 50 per cent on German goods entering their countries, and to force Germany to pay the tax, which would be pooled and divided as indemnity. The German Cabinet was firm in its refusal to pay down 12,000,000,000 gold marks on account before May 1 and to agree to the London program. Lloyd George himself proposed an ultimatum in which military occupation of the Ruhr Valley was threatened if Germany did not accept without reservation the indemnity schedule fixed at Paris on January 29. On May 5 Lloyd George told Parliament that he was sure of Germany’s yielding, for “with the Ruhr gone industrial Germany withers: it cannot exist.” With Marshal Foch on the Rhine and ready to march in, the German Government agreed to the Paris program. It was the only means of preventing the Ruhr occupation.

An economic conference met at Brussels on September 24, at the suggestion of the League Council, to take steps to prevent financial and economic chaos in Europe. Although invited, the United States refused to participate in the Brussels Conference, declaring that it was useless to do anything for European rehabilitation until old scores were marked off and a spirit of solidarity was developed. The Dutch expert, M. ter Meulen, proposed to establish in the countries on the verge of collapse a reservoir of collateral to be drawn upon if necessary to cover credits for imports, under the supervision of financial experts appointed by the League of Nations. At the end of the year French and British financiers met at Paris to discuss the organization of a corporation to finance the restoration of Europe, in which the United States and Germany would have a part. Because political conditions and not economic theories dominated in Europe, the conferences attended by economists and bankers had no result. These non-political gatherings looked at the reparations question on its merits, and therefore made recommendations in regard to Germany, Poland, Austria, and other smaller countries which, if adopted, would have infringed upon the treaties of the Paris settlement. The experts and bankers were accused of trying to upset the treaties. They could not free themselves from this accusation; for they were practical men, living in a world of realities, and not politicians, gambling on futures.

On January 6, 1922, the Entente premiers met with the Reparations Commission at Cannes. The Germans were asked to come to Paris and to hold themselves in readiness to be summoned to Cannes if needed. Lloyd George offered France a defensive alliance in return for modifying the French attitude toward Germany, which he said would keep Europe indefinitely in turmoil. Premier Briand was inclined to accept the British offer, which would have replaced in substance the defunct Anglo-American understanding to come to the defense of France in case of a new German aggression. But bitter opposition developed in the Chamber of Deputies. Briand hurried back to Paris to explain the Cannes negotiations and defend his decision to meet Great Britain half-way. He called for a vote of confidence, which was refused. Former President PoincarÉ, leader of the opposition to concessions to Germany, succeeded Briand.

The change in government in France put an end to the hope of Entente solidarity and foreshadowed the military occupation of the Ruhr. PoincarÉ agreed, however, to another conference, proposed by the Italians, which was to meet at Genoa in the first week of March, “of an economic and financial nature, of all the European powers, Germany, Austria, Hungary, Bulgaria, and Russia included.” In the meantime, the Reparations Commission was to allow a temporary delay in indemnity payments, without considering Germany in default, contingent upon the turning over of 31,000,000 gold marks every ten days. The United States declined an invitation to participate in the Genoa Conference, on the ground that the matters it would consider were of purely European concern.

The new PoincarÉ Cabinet asked for a month’s delay in convening the Genoa Conference, and stipulated that revision of the Treaty of Versailles should not be discussed, and also that Soviet Russia must acknowledge the foreign indebtedness of Czarist Russia before the question of recognizing the Moscow Government was brought before the conference.

For the first time the vanquished and the Russians met together with the victors, when delegates from all the European countries assembled at Genoa on April 10, 1922. This fact seemed to augur well for the success of the conference. Up to this time the Entente Powers had failed to reËstablish peace in Europe because they had outlawed half of Europe. Whether Germany and Russia deserved to be put in Coventry is not to the point. None disputed the justice of insisting that Germany live up to the obligations she had assumed in order to escape the overrunning of her territory (as she had overrun for four years the territory of other nations) and the disagreeable consequences of defeat in a war in which she had been the challenger. None was inclined to receive Soviet Russia with open arms into the councils of the nations of whose political and social institutions she was the outspoken enemy. On the other hand, the purpose for which the conference had been called could not succeed without the coÖperation of Germany and Russia. The statesmen of the Entente Powers could not hope to ameliorate economic and political conditions in Europe unless they possessed and were willing to use the means of coercing Germany and Russia or unless they intended to treat these other two great powers on the basis of give and take, as they treated each other.

Because neither alternative was considered, the Genoa Conference was a complete failure. The Entente Powers began wrong. They held preliminary meetings to decide upon their program, assuming that the rÔle of the German and Russian delegations would be simply that of acquiescence. The two outcast powers retaliated in a startling way. They signed a treaty at Rapallo, whose terms were published, reËstablishing diplomatic relations with each other and settling war claims and financial obligation by reciprocal cancelation. The Treaty of Rapallo torpedoed the conference. The Entente Powers were not prepared to waive reciprocally their claims against one another, much less treat with vanquished Germany and faithless Russia on any such basis. After several weeks of futile debate, during which the Entente Powers maintained the attitude they had adopted in the beginning, the conference broke up.26 Further negotiations concerning minor matters in which agreement might be reached were laid over for a conference to meet at Amsterdam in June. The principal questions upon which the rehabilitation of Europe depended seemed impossible of solution.

Despite its failure, the Genoa Conference was a useful meeting; for it cleared up a number of misapprehensions, and served as a warning and indication of the general tendencies of the policies of the participating nations. For instance, behind Russia’s intractability and truculence was evident her anxiety to make concessions to world-wide public opinion. Her leaders no longer gloried in her isolation, and they frankly admitted the failure of some of their theories and the very limited success of others. After four years they began to show themselves sensitive. This proved that they were beginning to recognize the dependence of Russia upon the rest of the world. When put to the test, the Germans were as unwilling as the Turks later showed themselves at Lausanne to break with the Occidental powers and throw in their fortunes unreservedly with Russia. The intention of Belgium to pool her interests with France was also revealed. But the most striking lesson of the Genoa Conference was the coming to the front of the theory that reparations could not be considered apart from interallied debts, and that France and Italy saw in future bargaining over a reduction of their reparations claims the possibility of being freed from their indebtedness to Great Britain and the United States.

It had long been sensed by the American State Department that French and Italian statesmen had this idea in mind. Fear of walking into a trap or being put in an awkward and ungracious position had much to do with the American decision to remain aloof from these conferences, a policy which had first been stated by our unofficial representatives at the Brussels Conference. The British Government determined to anticipate bargaining on any such basis. Two days before PoincarÉ came to London to confer with Lloyd George in August, Secretary Balfour issued a statement on interallied debts in which he skilfully tried to “pass the buck” to the United States. He declared that it would be impossible for Great Britain to entertain any proposition to reduce or cancel the sums owed her by her European allies so long as the United States insisted upon the repayment of the British war debt. Had not Great Britain been a borrower from the American Government in 1917 and 1918 because of the necessity imposed upon her of furnishing credits to an almost equal amount to European countries?

The Balfour note was issued on August 5. On August 7 PoincarÉ, accompanied by several of his colleagues, arrived in London to confer with the British Cabinet on coercive measures to be taken against Germany. The French premier was unmistakably disconcerted by the unexpected declaration of British policy on interallied indebtedness. He knew very well that American public opinion was against forgiving any of the debts and that the comment of the American press had been sarcastic and vehement. Uncle Sam did not intend to pay the German war indemnity! Lloyd George and PoincarÉ found themselves in more hopeless disagreement than after the Cannes Conference. It was only for a moment that the Russo-German treaty had thrown them into each other’s arms. Things were approaching a crisis in the Near East. Fascismo was preparing to oust the Government in Rome. The London Conference accomplished nothing.

In the autumn of 1922 the startling events in the Near East and the uncertainty as to what foreign policy for Italy would grow out of the coup d’État of Mussolini postponed for a few months the Anglo-French rupture over reparations. PoincarÉ’s mind was made up. But the negotiations with Turkey and the assembling of the Lausanne Conference were coupled with the downfall of Lloyd George and the consequent General Election. When the British electorate returned a Conservative majority, it was believed that the new Government, presided over by Mr. Bonar Law, would be more amenable to the French arguments. Lord Curzon, who remained as foreign secretary, was showing himself very friendly to France at Lausanne. PoincarÉ believed that the time had come to have the Reparations Commission declare Germany in default. But opposition developed as strong as under the Lloyd George Government. Bonar Law had failed to recall Lord d’Abernon from Berlin, and Sir John Bradbury was not superseded in the Reparations Commission. The British ambassador to Berlin and the British member of the Reparations Commission had been considered “creatures of Lloyd George,” and their retention came as a blow to French public opinion.

In view of British opposition to going into the Ruhr, M. PoincarÉ might have postponed this fateful action had it been in his power to do so. But this was the program for carrying out which he had been put in power just a year earlier. The break had been as imminent with the British then. Public opinion was growing impatient, and it is beyond doubt that the Chamber of Deputies, after the Christmas recess, would have refused a vote of confidence if the PoincarÉ Cabinet had held back any longer. In judging the responsibility for what followed, we must remember that it was with PoincarÉ what it frequently is with a leader in a crisis: go ahead or get out. The policy adopted in such a case does not represent the sober judgment of the statesman, but only the determination of the politician to remain in power.

In December PoincarÉ had conferred with Bonar Law and Mussolini in London. He knew what was ahead of him. He conferred with his Cabinet, who agreed that the Chamber of Deputies would give the Government a free hand only if the course of action France intended to take in the matter of reparations was definitely stated. PoincarÉ appeared before the Chamber on December 16 and declared that France was determined upon measures of coercion against Germany, as authorized by the Treaty of Versailles, with or without the coÖperation of Great Britain. A vote of confidence was accorded by an overwhelming majority.

The last continuation conference assembled at Paris on January 2, 1923, and was attended by three premiers, those of France, Great Britain, and Belgium, and by a substitute for the Italian premier. Its outcome was never in doubt; for the irreconcilable points of view of Great Britain and France toward the problem of reparations had long been evident. Already, on December 26, the Reparations Commission had decided, against the vote of Great Britain, that Germany was in voluntary default in wood deliveries for 1922. The British press for a long time had been pointing out that there was little hope of getting any money out of Germany if a default should be declared, followed by punitive measures.

PoincarÉ and Bonar Law stated in detail their proposals for dealing with Germany. Both suggested reducing the amount to 50,000,000,000 gold marks, and agreed that if this were done the concession should be accompanied by a demand for comprehensive financial control of Germany. The difference of opinion was over the method of guarantees. Bonar Law asserted that Great Britain would consent to the further occupation of German territory only if Germany defaulted after the revised schedule went into effect, and then only if the Allies were unanimous. This meant, of course, a flat refusal to admit the wisdom of the occupation of the Ruhr Valley. France wanted to pay her debts to Great Britain with reparation bonds issued by the Reparations Commission. Great Britain retaliated by proposing that the French and Italian gold deposited in London during the war as security for advances be now turned over to Great Britain in partial payment of debts due to her. Italy presented again the suggestions made by Mussolini at London three weeks earlier. Mussolini had been in sympathy with the PoincarÉ program, both as to productive guarantees through occupying more German territory and as to the method by which debtor allies should acquit their obligations to the creditor ally; but the Italian Government was opposed to military action and would not pledge itself to coÖperate with France and Belgium in occupying the Ruhr.

On the second day of the conference PoincarÉ tried in vain to get the British to agree to use the French plan instead of theirs as the basis of discussion, and to admit as an accepted principle, which it was not necessary to discuss, the French contention that any moratorium should be accompanied by the seizure of productive guarantees. Bonar Law retorted that granting these two demands would be equivalent to accepting the French program. In the debate that followed, only two facts emerged clearly: that Great Britain did not believe that the Ruhr occupation would force immense sums of money out of Germany, while France did; and that France had made up her mind to go ahead and take measures against Germany, not only without Great Britain’s aid, but despite Great Britain’s advice. The British premier bowed to the inevitable. He had failed to dissuade PoincarÉ; PoincarÉ had failed to persuade him. So they agreed to disagree.

The net result of three years of continuation conferences is well summed up in the comment of a mysterious anonymous writer in the Paris “Figaro,” who wrote on March 31, 1923:

Since the Treaty of Versailles, where is the Entente? Where was the Entente in the ten conferences which ten times had diminished our proper share, and in the shabby dealings which the British have repeatedly resorted to against us? Where is the Entente when the British confiscate our gold, when they keep Mr. Bradsbury [sic] on the Reparations Commission to check our demands, when they establish Lord d’Abernon at Berlin to strengthen the resistance of the Germans?