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 Pamphlet No. 19 
 Series of 1923 -24 
 
 Europe In 1923 
 
 A SURVEY 
 
 by 
 
 James G. McDonald 
 
 Report of an address 
 at the 
 
 HOTEL ASTOR 
 
 NEW YORK 
 
 NOVEMBER 3, 1923 
 
 Foreign Policy Association 
 
 NINE EAST FORTY-FIFTH STREET 
 
 NEW YORK 
 
Europe In 1923: A Survey 
 
 THE FIRST of the 1923-2U Series of N. Y. Luncheon 
 Meetings of the F. P. A. departed from the long-established 
 custom of presenting two or three widely divergent points 
 of view on one given situation. Mr. James G. McDonald, 
 the Chairman of the Executive Committee of the F. P. A., 
 spent three and a half months in Europe this summer on 
 behalf of the Association. His address is in the nature of 
 a report to members and is reprinted in response to a num¬ 
 ber of requests. 
 
 Mr. Charles P. Howland presided at the luncheon. 
 
 MR. HOWLAND 
 
 npHE FOREIGN POLICY ASSOCIATION, whose conductor 
 | for the nonce has laid down the baton in order to appear 
 A as a solo performer, bids you welcome on the first of these 
 luncheons. Rather should you welcome yourselves, for the 
 greatest factors in the success of these occasions are the num¬ 
 bers, the intelligence and the non-partisanship of the audience. 
 In a world where prejudice plays so large a part in the deter¬ 
 mination of domestic politics and international affairs, it is 
 highly important that there should be an organization of this 
 character and audiences such as you furnish, to make dispas¬ 
 sionate examination of the facts, and, so far as possible, to 
 adjust their ideas in accordance with the development of the 
 facts. We don’t all of us escape prejudice. Mr. Robertson* says 
 “prejudice, the preference of our habits to others’, tempered 
 more or less, and susceptible to magnetisms, is the primary or 
 natural state of every one of us; and the only difference is that 
 some try more or less to reduce their ideas to consistency, while 
 others more or less completely abstain from the attempt.” 
 
 The members of this audience doubtless have their own 
 prejudices which arise out of sympathies or associations with 
 particular groups, or out of larger experiences in the world. 
 But I trust, so far as it is possible for the human intelligence 
 to do so, we are prepared to adjust our ideas to conform to the 
 facts which are here developed. And, in particular, we try to 
 avoid—and the speakers here try to avoid—that sort of impres¬ 
 sion upon the mind which comes from the use of catch-words 
 bearing connotations established in other connections. You 
 are all familiar with the words which do duty in stump speaking 
 and in legislative halls in place of ideas. As Professor Robinson 
 points out, the word “Bolshevik” has come to mean in Wall 
 Street little more than a man who does not know how to applaud 
 
 * An English essayist. 
 
 2 
 
at the right moment; and good internationalists like ourselves 
 try to avoid the use of those phrases which are merely the ex¬ 
 pression of natural sympathies. Indeed, your minds are open 
 to the appeal which Cromwell made, addressing the Kirk: “I 
 beseech you in the bowels of Christ, think it possible you may 
 be mistaken.” (Laughter.) 
 
 The general theme of the afternoon’s discussion is a pano¬ 
 ramic survey of the European situation, which will be a proper 
 approach to more particular items of that situation to be espe¬ 
 cially assigned for the luncheons throughout the year. In that 
 situation there has taken place within the last month the most 
 radical of changes. We are no longer alone discussing, as if it 
 were the crux of the whole situation, the struggle focussed in 
 the particular geographical locality of the Ruhr, or even the 
 wider question of reparations. We now realize the discussion to 
 have an entirely different scope, and we find that we are in the 
 presence of a clash of titanic forces which represent the struggle 
 of great nations to improve their positions relative to each 
 other in the world, or to hold the positions which they at present 
 occupy. We can no longer confine the discussion to the 
 technique or the legality of the invasion of the Ruhr or to the 
 immediate profits to be had from that particular adventure; 
 we now have to consider and to discuss the position and the 
 future'of each of the great nations relative to the world at large 
 and relative to their opponents in the great debate. 
 
 The great center of that discussion, or the point from which 
 we start, is almost always the relations of France to Germany. 
 In those relations, so far as the question of reparations is con¬ 
 cerned, it has been more or less assumed in public discussion 
 that the facts are ascertainable by dispassionate experts, that 
 a consideration of the facts by dispassionate experts will solve 
 the problem, that the European equilibrium will then be restored, 
 Europe will go to work, and the peace of the world will be 
 reasonably assured. I venture to submit that there is one 
 question, a cardinal one, that no commission of experts can solve 
 and upon which they can throw practically no light because it 
 is a question of fundamental policy—and that is the question, 
 applying as well to interallied debts as to the particular question 
 of reparations, how long can it reasonably be expected by the 
 world at large, or by one of the conquering nations, by one of 
 the creditor nations if you please, that a debtor nation will 
 continue to work without the earnest will of the mass of the 
 people in order to pay a debt of enormous magnitude to the 
 creditor nation. 
 
 To make a specific application of my suggestion, it is assumed 
 on the French side that there is no reason for reducing the 
 amount of reparations fixed by the London conference in May, 
 1921, at 132 milliard gold marks, because Germany within X 
 years can pay off that amount of reparations. On the other 
 hand, it is assumed that an examination by experts of the 
 present economic situation of Germany will disclose that Ger¬ 
 many can pay Y marks in reparations in some number of years 
 not yet determined, and that that will be the amount upon which 
 
the Reparation Commission will fix its award of reparations. 
 Neither of those assumptions takes account of the fact that 
 nobody as yet, no body of experts and no governments in public 
 debate, have directed their minds to the question how long one 
 country can reasonably be expected, expected from the point 
 of view of creditors, expected from the point of view of the 
 debtor, expected from the point of view of the world, to work 
 unwillingly to pay an indebtedness to another: when I say “ex¬ 
 pected,^” I mean for what period of time is it feasible to arrange 
 for and to go on compelling such payments, without a damage 
 to the world's political order or the world's economic organiza¬ 
 tion that we should not be asked to suffer in order that, one 
 country may derive a particular benefit ? There never has existed 
 in the world before a situation in which one country imposed 
 upon another country the burden of working unwillingly in 
 order to pay a debt for a long period of years. It may be that 
 Germany can be made to work as people say she should be made 
 to work for fifty years; and it may be that she can be made to 
 work for not more than twenty years, and that boys now com¬ 
 ing to manhood will not work the rest of their lives in order to 
 pay their whole surplus earnings to a foreign creditor. 
 
 It is impossible to say what the period of financial subordina¬ 
 tion should be until that problem has stood the test of public dis¬ 
 cussion. That is a problem of the highest political order. It is 
 also an economic problem so complicated and speculative that 
 any economist might well shrink from expressing his opinion 
 on it; what Germany will be “able" to pay to France in the year 
 1963 or the year 1973 will depend upon political, industrial and 
 social events happening in the meantime in every part of the 
 world which no man can confidently predict. If that be, as I 
 believe, the crux of the reparations problem, it will not be solved 
 by experts, American, British and French, determining the 
 present economic situation of Germany, nor will it be solved by 
 arbitrarily determining that Germany can in the course of time 
 pay a certain number of gold marks, and ignoring the question 
 whether or not it will be possible to make her work that long. 
 The experts can give us this much help: they can advise how to 
 get her economic system going again, when she can begin to 
 pay more reparations and approximately how much, and on the 
 economic side of the question can tell us for how long a period 
 of time in the remote future and in what amounts reparations 
 can be fixed against her without seriously diminishing her pro¬ 
 ductive capacity; but the main factor in that productive capacity 
 of the remoter future, remains a political and social question of 
 incalculable difficulty. For this reason, and for other reasons 
 of a more directly political character in the international field, 
 it may be that the reparations question will receive less atten¬ 
 tion in the future than it has in the past, and that purely 
 political questions—chief among them the relations of France 
 and Germany in all their aspects—will occupy practically the 
 whole of the field. 
 
 4 
 
In the panoramic survey that we are to have this afternoon, 
 the first speaker is the leader, chief and chairman of this Asso¬ 
 ciation, Mr. McDonald. It would be impertinent to give you 
 an introduction to him. (Applause.) 
 
 MR. JAMES G. MCDONALD 
 ITH THE permission of the Chairman, I shall today vio¬ 
 
 late two highly regarded F. P. A. luncheon principles. I 
 
 ? ' expect to speak somewhat longer than the usual time al¬ 
 lotment and to cover a broader scope than is usually assigned at 
 any single luncheon-discussion. I shall attempt to sketch in very 
 rough outline some of the chief facts and relationships of inter¬ 
 national importance as they exist in Europe today—five years 
 after the close of the war which was to make the world safe 
 for democracy — the war for the rights of small states — the 
 war to end war. 
 
 I am more than conscious of the rashness of any effort to 
 present a unified or clear picture of Europe today. I know only 
 too well that it is almost impossible to be entirely sure of one's 
 judgment of even a single phase of that situation. Moreover, I 
 see in the audience and at this table here many men and wo¬ 
 men who on each aspect of the European situation are much 
 more expert than I. 
 
 Rash in any event, my effort would be completely absurd, 
 were I to assume to base it primarily on personal observation. 
 No one can see more than an infinitesimal portion of Europe 
 even in a much longer visit than that which I enjoyed this sum¬ 
 mer. My conclusions, therefore, are not those primarily of a 
 traveler, but are rather the residuum of some traveling, much 
 reading and constant contacts with men and women from all 
 parts of the world and of the most diverse points of view. In 
 this survey I hold no preconceptions as sacred and no dogmas 
 as incontestable which conflict with facts as they exist today. 
 I do not speak for the Foreign Policy Association, but for my¬ 
 self alone, and for myself today only, reserving the right to 
 change my opinions tomorrow, if shifting circumstances and 
 changing conditions make today's conclusions untenable. 
 
 Russia 
 
 Any survey of Europe today must begin with Russia, that 
 vast territory with its more than one hundred millions of people 
 which for three centuries has been an enigmatic and portentous 
 factor in European politics. The events of the last seven 
 years have confuted the prophets both to the right and to 
 the left. Bolshevik control has continued, despite daily predic¬ 
 tions of its fall. The Communist dictatorship seems as secure 
 today, if not more secure, than at any time since the November 
 revolution of 1917. But Bolshevism is no longer Bolshevism. 
 Maintaining its hold on the government, it has lost its soul, 
 It has steadily, under the pressure of stern necessity, fallen 
 away more and more from pure Marxian dogmas. It has 
 not achieved, nor does it now give promise of achieving the 
 Communist millennium. World revolution was an empty dream, 
 
 5 
 
but the restoration of Czarist reactionaries or even democratic 
 emigres has been just as futile a hope. Instead, a form of state 
 capitalism and peasant proprietorship, in fact if not m theory, 
 appears to be the basis of the present slow and painful economic 
 
 revival of Russia. , 
 
 Internationally, Russia is not today of the first importance, 
 
 for two reasons: J . J .... 
 
 (1) She has by force of arms shown that interventionist ac¬ 
 tivities are futile and result only in strengthening Communism 
 by enabling it to associate itself with Russian nationalism. 
 
 (2) Deeply involved in solving their own urgent economic 
 and political problems, Russia’s rulers are not inclined now, nor 
 are they able to play a decisive role abroad. 
 
 Ultimately Russia must, of course, again be a decisive force 
 in international affairs, either for sordid and unscrupulous im¬ 
 perialism, as before the war, or, as we hope, for enlightened and 
 generous international co-operation. Already through the repu¬ 
 diation of Czarist imperialism, Communist Russia has increased 
 the chance of peace in the Near and Far East, and through the 
 disclosures of the intrigues of pre-war diplomacy has strength¬ 
 ened the forces of peace everywhere. 
 
 Turkey 
 
 Turkey, resurgent, homogeneous and united, gives the lie to 
 the reiterated tales of generations that the Turk is unable to 
 cope with modern political forces. Utilizing to the full the petty, 
 as well as the fundamental jealousies of the Allied powers, that 
 able leader Mustapha Kemal has built up a quickened and jeal¬ 
 ous nationalism. The skill of Ismet Pasha at Lausanne secured 
 for the Angora pact—the Turkish Declaration of Independence 
 
 _international recognition. The declaration of a republic only 
 
 this week, with Kemal as President and Commander in Chief, 
 completes one of the most startling reversals of fortune in 
 modern times. Five years ago a subservient and pliant Sultan 
 signed the humiliating Treaty of Sevres dismembering the 
 Turkish Empire. Today Kemal, controlling a smaller but stronger 
 Turkey, deals as an equal with the Great Powers. 
 
 The hundreds of thousands of Greeks, Armenians and other 
 Christians in Asia Minor are either to be deported or absorbed 
 into the Turkish life about them. But was it not too much to 
 expect that the Christian powers of Europe would put Christian 
 lives and property above national self-interest? We, as Amer¬ 
 icans, had by our complete repudiation of responsibility in post¬ 
 war Europe set them a perfect example of national selfishness. 
 Yet, after all, as many competent students believe, the peace of 
 the Near East may be more secure after the painful process 
 of interchange of populations has been completed. 
 
 Greece 
 
 The Balkans, as always, present a confusing picture of a 
 situation full of possibilities of strife. Greece was successful 
 beyond her strength at the Peace Conference. The high abilities 
 of Yenizelos and his close personal relations with the chief fig¬ 
 ures at Paris secured for his country more than it could hold 
 
 6 
 
through its own efforts. The Greek military expeditions be¬ 
 yond Smyrna, encouraged by Great Britain, the return of Con¬ 
 stantine, the falling away of British support, are some of the 
 factors which led to the disastrous debacle last year. The en¬ 
 suing revolution and the execution of the Ex-Ministers have sup¬ 
 plied the excuse, if not the reason, for the continued non-recogni¬ 
 tion of the new Greek government by the United States and 
 most of the Great Powers. It is frequently alleged that the real 
 reason for non-recognition by Washington is the unwillingness 
 on the part of our government to pay over to the Greeks the 
 balance of the 1918 loan said to be due her and to amount to 
 about 38 millions of dollars. 
 
 Bulgaria 
 
 Bulgaria, defeated in the war, denied direct access to the 
 Aegean and with her other frontiers “rectified,” is today in the 
 throes of a reactionary movement away from the former peasant 
 dictatorship of the picturesque and courageous but. ruthless 
 Stamboulisky. Under these circumstances, Bulgaria is an un¬ 
 stable and uncertain neighbor. 
 
 Roumania 
 
 Roumania, inflated by the peace treaties at the expense of 
 her neighbors Hungary, Russia and Bulgaria, is striving to con¬ 
 solidate her gains. Ill-treatment of her enlarged numbers 
 of alien peoples has greatly complicated the always difficult 
 political situation. Also, as in Bulgaria and Russia, the de¬ 
 mand of the peasants for a position of effective, if not legal own¬ 
 ership of the soil is changing the nature of the state. 
 
 Jugo-Slavia 
 
 Jugo-Slavia, struggling with the difficult, though not neces¬ 
 sarily insuperable task of reconciling the clashing interest and 
 aspirations of Croatians, Slovenes, Serbs and Montenegrins, is 
 forced constantly to concern herself with unsettled and aggra¬ 
 vating boundary disputes with Italy. 
 
 Austria 
 
 Austria, the mutilated and dismembered, given up as a hope¬ 
 less derelict three years ago because the Allies would not consent 
 to her union with Germany, today enjoys a degree of stability, 
 economic and political, unequalled except by Czechoslovakia, in 
 all Middle Europe. Of course, the League of Nations’ experi¬ 
 mental receivership may, as the cynics insist, prove to.be only 
 a temporary measure of relief. But the prevailing sentiment in 
 Vienna is that only serious disorganization in Germany can pre¬ 
 vent Austria, under the enlightened leadership of the Catholic 
 Chancellor Seipel and the League Commissioner, Dr. Zimmer¬ 
 man, working her way to a permanently satisfactory position in 
 the economic life of southeastern Europe. 
 
 Hungary 
 
 Hungary, with which Austria shared, due to the peacemak¬ 
 ers, the distinction of being the most dismembered state in Eu¬ 
 rope, has been slower than her former associate to recognize 
 that the pains of defeat, though bitter, must be borne, at least 
 
 7 
 
until an opportunity for redressing the issue arises. Hungary 
 is only now beginning to be ready for the application of the same 
 receivership principle, which has, temporarily at least, saved 
 Austria. 
 
 Dr. Benes, the moderate and intelligent Foreign Minister of 
 Czecho-Slovakia, working with Sir Arthur Salter, Director of 
 the Economic and Finance Section of the League of Nations 
 Secretariat, has cleared away some of the political difficulties. 
 Two or three weeks ago the Reparation Commission, as in the 
 case of Austria, agreed to waive the reparation claims against 
 Hungary for a period of twenty years on condition that the 
 League of Nations effect economic and financial reforms similar 
 to those carried out in Austria. The next step, and not an easy 
 one if the Austrian precedent is followed, will be an international 
 loan, preferably guaranteed by a number of creditor states. 
 
 Unfortunately, as the presence in this country now of Count 
 Albert Apponyi and Professor Oscar Jaszi illustrate, Hungary is 
 torn by two rival political groups — the conservative and reac¬ 
 tionary group headed by the dictator Horthy, for which the dis¬ 
 tinguished and brilliant Apponyi is an apologist, and the demo¬ 
 cratic group, many of whose leaders, like Dr. Jaszi, are in exile. 
 
 Czecho-Slovakia 
 
 Czecho-Slovakia, the favorite child of the peacemakers, 
 dowered with vast industrial and adequate agricultural re¬ 
 sources, has had the equally great but more unusual good for¬ 
 tune of being led since its independence by two statesmen of* 
 singular moderation and wisdom — President Masaryk and For¬ 
 eign Minister Benes. The former has done much to soften the 
 inevitable animosities of political factions and has tried, but so 
 far with slight success, to lighten the disabilities of the large 
 German minority. He has dared, too, to expropriate the estates 
 of many of the larger land-owners. Benes, the creator of the 
 Little Entente, has done more perhaps than any single man 
 towards the re-establishment of sane and normal political and 
 economic relationships among the states of southeastern Europe. 
 Czecho-Slovakia, though doubtless grateful to France and though 
 probably closely allied to her, is not, I believe, a mere satellite of 
 the Quai d’Orsay. The Corfu crisis showed that when her inter¬ 
 ests are directly at variance with those of France, Czecho-Slo¬ 
 vakia dares to take her own line. Under leadership such as she 
 enjoys today, Czecho-Slovakia should continue to be a force for 
 reasonableness and genuine international co-operation. 
 
 Poland 
 
 Poland, a vast sprawling blotch on the map, has a much more 
 difficult task than any of the other new states. Divided for 
 many generations between Germany, Russia and Austria-Hun¬ 
 gary, Polish industrial, political, economic and even cultural re¬ 
 lations have grown fixed in three sharply divergent directions 
 — drawn as they were inevitably towards three different capi¬ 
 tals, Petrograd, Vienna and Berlin. Acute problems of land 
 tenure and class privileges, a tendency towards intolerant treat¬ 
 ment of minorities, and the always delicate relations with 
 
 8 
 
Russia add to the difficulties which only Polish statesman¬ 
 ship of the very highest order can overcome. Poland, much 
 more than Czecho-Slovakia, seems to be an unquestioning sup¬ 
 porter of French Continental policies. 
 
 Italy 
 
 Italy, rich in man power, but poor in those raw materials 
 essential to modern industry — coal and iron — weakened by a 
 corrupt bureaucracy and an inefficient parliamentarianism, 
 threatened by extreme and impractical communism, believing 
 herself duped, if not betrayed, by her fellow Allies at the Peace 
 Conference, on the verge of serious internal strife, has thrown 
 herself unreservedly into the arms of the man who promised to 
 heal all her wounds and to give to her unity and power to enable 
 her to expand until she shall again assume her rightful place 
 among the nations of the earth. Fascismo is a religion rather 
 than a political party. It is exalted nationalism. It demands 
 unselfish devotion to the state. It condemns weakness and 
 exalts strength. It despises democracy, ignores liberty and 
 deifies its leader. In international affairs Mussolini is a mer¬ 
 curial and uncertain factor. Cynical about the professions of 
 unselfishness of the Great Powers, Mussolini preaches Italy’s 
 manifest destiny as the dominant Mediterranean power. 
 
 Spain 
 
 Spain, too, has long enjoyed the doubtful privilege of a mere¬ 
 ly nominal democracy. Parliamentarianism has there been as 
 sterile and bureaucracy as corrupt as in Italy. Sectionalism, 
 whose roots go back centuries beyond 1492, when the Catholic 
 kings unified the Peninsula, has never ceased to weaken the 
 state. Expensive and disastrous military adventures in Mo¬ 
 rocco, were only the last blows which destroyed a sham democ¬ 
 racy and replaced cabinet government by a military despotism. 
 
 Thus throughout southern and eastern Europe, the new, as 
 well as the old states, are struggling with many of the same 
 problems. The peasants everywhere are demanding, and in many 
 countries securing, effective ownership of the soil. Feudal land¬ 
 lordism has received a blow from which it will probably not re¬ 
 cover. International Socialism is everywhere weakened by in¬ 
 ternal dissensions and factious dogmatisms. Parliamentarian¬ 
 ism and democracy are generally discredited, even where not 
 openly displaced by dictatorships. The normal recuperative 
 forces of agricultural industrial and commercial life are every¬ 
 where cramped, sometimes by the inequities of the peace set¬ 
 tlement and more often by the artificial restraints and barriers 
 set up by ultra-nationalists. None the less, the chief obstacle 
 to the maintenance of peace, stability and orderly progress in 
 southern and eastern Europe lies in the unsettlement of eco¬ 
 nomic and political relations in western Europe. The storm 
 center is not the Balkans, Russia or even Italy. It is in the 
 Rhineland and the Ruhr. 
 
 9 
 
Why Is There No Peace? 
 
 Why? Why have Great Britain and France steadily drifted 
 apart since 1918 until today the Entente Cordiale is a mere name 
 to hide the faint shadow of what was once an effective alliance ? 
 Why is the relationship between France and Germany much 
 more embittered than on Armistice Day? Why is the problem 
 of reparations no nearer a solution than four and a half years 
 ago when President Wilson made his fateful decision to permit 
 the inclusion of Allied pensions and separation allowances? Why 
 has Germany been reduced to the point where for the immediate 
 present at any rate she can make no cash reparation payments 
 at all ? Why is the Reich today facing the prospect of political 
 dismemberment and economic demoralization? Why has the 
 peace for which the world fought given place to danger of even 
 greater wars? 
 
 At the risk of differing with all the experts who are gathered 
 here today, I venture to answer my own questions. The fol¬ 
 lowing are in my judgment some of the reasons for the unhappy 
 state of Europe today: 
 
 (1) The inclusion in the bill of damages against Germany 
 of items which the clear intent and meaning of the pre-armistice 
 agreement precluded—pensions and .separation allowances.* 
 
 (2) The failure to fix a definite sum for Germany’s obliga¬ 
 tions at the Peace Conference. 
 
 (3) The final fixation, May, 1921, by the Reparation Com¬ 
 mission of a sum ($33,000,000,000) which neutral, as well as 
 British and American opinion has declared to be fantastic. 
 
 (4) The failure of the United States to take its place in the 
 Reparation Commission and play its role of moderator outlined 
 for it in the minds of the American peacemakers. 
 
 (5) The failure of the United States and. Great Britain to 
 guarantee France against external aggression through the 
 triple alliance, and the resulting French fear of overwhelming 
 revenge from Germany. 
 
 (6) The rapid demobilization by the United States and 
 Great Britain and the literal withdrawal of the former and the 
 virtual withdrawal of the latter from Europe. 
 
 THESE conditions in effect authorized and empowered 
 France under the plausible plea of security and reparations to 
 destroy Germany, if, as was inevitable, the latter proved unable 
 to pay an impossible debt. Only the united and energetic moder¬ 
 ating efforts of Britain and the United States could have pre¬ 
 vented the treaty being used as a tyrannous and destructive 
 
 * These items are the capitalization, estimated on the French scale of pensions and al¬ 
 lowances, of payments made and to be made by the allied governments to the families and 
 dependents of allied soldiers because of death, physical disability or absence from home 
 during mobilization. General Smuts as legal adviser to the British Government at the 
 Peace Conference argued that these expenditures could legally be included in the bill against 
 Germany under the pre-Armistice agreement. His brief is sometimes said to have been the 
 chief influence which decided Wilson to accept their inclusion. However, there is reason 
 to believe that the American delegation was convinced that even without pensions and sep¬ 
 aration allowances, the legal reparation bill against Germany would be larger than that 
 government’s capacity to pay and that, therefore, the inclusion of these additional items 
 would not add to Germany’s real burden but would be merely a means of re-apportioning the 
 German payments among the Allies—a matter which solely concerned the Allies—and that, 
 therefore, the question of the legality of these items was really academic. As a matter of 
 fact. France’s share was thereby reduced from approximately 7 5 per cent to 52 per cent. 
 
 10 
 
weapon. Only an effective British and American pledge of se¬ 
 curity for France would have left her no reason nor excuse for 
 her uncompromising utilization of the destructive power of the 
 Treaty. 
 
 Has Germany Shirked? 
 
 But has not Germany flagrantly shirked? Have not her 
 industrialists sabotaged the efforts of any Chancellor who, like 
 Rathenau, tried sincerely to meet Germany’s obligations? Has 
 not the inflation of the mark to the point of worthlessness been 
 a part of a deliberate plot to avoid reparation payments ? Have 
 not vast building enterprises been carried on throughout Ger¬ 
 many while payments to the Allies have been refused? Are 
 there not billions of dollars of German credits abroad available 
 for indemnity payments? 
 
 No informed and impartial observer will give an unquali¬ 
 fied denial to all these charges. Germany has, in fact, probably 
 not done her utmost. Why should she? At no time since the 
 Armistice has a fulfillable and comprehensive program been of¬ 
 fered her. Yet despite this handicap, the Reparation Commis¬ 
 sion has itself credited Germany with payments amounting to 
 more than a billion and a half dollars, while American experts 
 like Moulton and McGuire in their recent volume “Germany’s 
 Capacity to Pay,” issued under the auspices of the Institute of 
 Economics, estimate that Germany has turned over values to 
 the extent of more than five billions of dollars. Keynes in an 
 independent investigation arrives at a figure almost identical 
 with that of the Institute of Economics. 
 
 How does this effort compare with that made by France in 
 1871-73? Keynes estimates that, allowing for the changing 
 value of money and the relative population and wealth of France 
 and Germany in 1871 and 1919, the German payment of five 
 billions of dollars represents a per capita burden on the German 
 people of more than double that imposed on the French people 
 by their payment of a billion dollars. Nor should we forget that 
 the French indemnity was paid after a war which was not much 
 more than a skirmish, which left French resources, save Alsace- 
 Lorraine, almost intact, while the larger payment of Germany 
 has followed an exhausting struggle of more than four years 
 in which she lost the bulk of her foreign assets. Under these 
 circumstances, it is obvious that Germany has made an effort 
 to pay which compares most favorably with that of France and 
 under conditions incomparably more difficult. 
 
 Inflation 
 
 But what of inflation? American and British experts on the 
 Reparation Commission with whom I talked, say that they do 
 not believe it was deliberate. Moreover, while a few adventur¬ 
 ous speculators and gigantic manipulators have made enormous 
 profits as a result of the depreciation of tlje mark, the bulk of 
 the German people has been impoverished. Though the German 
 government has frequently been weak and inefficient in imposing 
 financial reforms and has never been able effectively to curb the 
 rapacity of industrialists typified by Stinnes, the flight of the 
 
 11 
 
mark has been primarily the result of conditions beyond that 
 governments control. 
 
 Buildings 
 
 It is true that in Germany there has been considerable build¬ 
 ing of new factories, business blocks, canals, etc., but the 
 amount has been vastly exaggerated and in any event such 
 developments were paid for by paper mark profits which would 
 have been almost worthless for reparation payments. More¬ 
 over, should Germany not be encouraged to improve her indus¬ 
 trial plant and equipment so that she may be able to manufac¬ 
 ture more advantageously for the world market and thus to 
 secure the necessarily enormous excess of exports over imports, 
 if the Allies really want her to be put in a position to pay even 
 greatly reduced reparations? 
 
 German Balances Abroad 
 
 But has not Germany huge gold balances abroad? Undoubt¬ 
 edly there are German balances abroad. How much no one can 
 tell exactly. Estimates range all the way from that of Keynes 
 of approximately half a billion dollars, through that made some 
 months ago by McKenna, a former Chancellor of the British 
 Exchequer, of about a billion dollars, to those of other students 
 up to an amount of two billions of dollars. Of course, there are 
 still larger estimates, but I think no serious student of the 
 problem has put the figure higher. Even if there were two 
 billions of German credits abroad, what would it signify? In 
 any event a large percentage of such balances must be left 
 intact if Germany’s foreign trade is to continue at all. Unless 
 a German manufacturer is permitted to accumulate credits 
 abroad, he cannot possibly pay for the raw materials essential 
 for his industry. As to the percentage of the balances not 
 necessary for essential purchases abroad, there seems no practi¬ 
 cable way by which any German government could, if it would, 
 against the will of the owners, put its hands on these surplus 
 funds. As Reginald McKenna has aptly said, only by making 
 Germany so prosperous that German business men will them¬ 
 selves prefer to use their surplus balances in their own busi¬ 
 nesses at home can these sums be made available even in this 
 indirect way for reparation payments. 
 
 France’s Attitude Towards Germany 
 
 Germany then has not been guilty of the extreme charges 
 of shameless evasion and chicanery. How have her efforts at 
 fulfillment been answered by the Allies, and more particularly 
 by France? The record is too plain to be mistaken—not by a 
 spirit of helpful co-operation, but rather by ultimatum after 
 ultimatum, culminating in the occupation of the Ruhr. This 
 seizure of the industrial heart of Germany was of doubtful 
 legality and in clear violation of the intent of the Treaty as 
 understood by Germany, by the present British government and 
 by those Americans with whom I have talked who had most to 
 do with framing that particular section of the Treaty. It set 
 an example of violence which has weakened seriously the moral 
 basis of the Treaty. But when after nine months the Germans, 
 
 12 
 
unable longer to supply food and clothing to the inhabitants in 
 the Ruhr, surrendered passive resistance, did Poincare as he had 
 promised, make the occupation invisible? He did not. Did he 
 move an iota to save the face of the Chancellor who had dared 
 to take on himself the odium of an unconditional surrender? 
 He did not. Instead of listening to Stresemann's appeal that 
 consideration be given to Germany's latest reparation offer, 
 France answered by flagrant and open encouragement of the 
 Separatists in the Rhineland and this at the very moment when 
 food and unemployment riots in the German industrial centers, 
 communism in Saxony and reaction in Bavaria were testing the 
 Berlin government to the uttermost. 
 
 Hughes' Proposal 
 
 Then came Secretary Hughes' skillfully phrased and very 
 significant acceptance of Lord Curzon's suggestion of an inter¬ 
 national conference on Germany's capacity to pay. Poincare 
 immediately announced his acceptance, but now he so qualifies 
 this acceptance, so hedges it about with reservations and limita¬ 
 tions as seriously to lessen the conference's scope and its oppor¬ 
 tunity for real usefulness. Indeed the Paris press, openly 
 cynical of the whole proposal, joyfully declared that their gov¬ 
 ernment had achieved a distinct diplomatic victory by accepting 
 the conference suggestion merely as a means of avoiding com¬ 
 plete isolation and with no intention of permitting the conferees 
 to modify Germany's total obligations or to lessen France's 
 stranglehold on German industrial life. The latest news from 
 Washington contains the plain intimation from the Administra¬ 
 tion that they are so concerned by the Poincare reservations 
 that they are beginning to question whether the conference 
 should be held at all. 
 
 Britain 
 
 Where does Britain stand today? Slowly but steadily Brit¬ 
 ish opinion has during the last five years moved towards a policy 
 of conciliation and moderation. Lloyd George, a veritable weath¬ 
 ercock in his instinctive and always ready response to the shift¬ 
 ing winds of public opinion, has forgotten his khaki election, his 
 slogans, “Hang the Kaiser," “Make Germany Pay the Cost of the 
 War." Just as then he capitalized and voiced all the hatreds and 
 passions of four years of strife, so now he is capitalizing and 
 voicing Britain's utter longing for a real peace, for an opportun¬ 
 ity to work, for an opportunity to resume the normal course of 
 international trade. Now, as then, he sounds a note which 
 awakens ardent response and the deepest feelings of his country¬ 
 men. Similarly, Stanley Baldwin and Lord Curzon in differing 
 tones, as befits their personal predilections and their official posi¬ 
 tions, voice opinions essentially similar to those of our departing 
 guest. 
 
 Why then does not Britain take effective steps to carry out its 
 changed policy on the Continent? The answer is simple, though 
 three-fold: 
 
 (1) France is clearly within her legal rights when she re¬ 
 fuses to consider any reduction of the German debt. Britain 
 
 13 
 
cannot deny this. On this point it is not France which has 
 changed. It is the British and neutral opinion of the world. 
 France stands where she stood at Paris m the spring of 1919- 
 The world has moved beyond her, while she continues to ask tor 
 
 the letter of her bond. 
 
 (2) France has the military power — as witness her separa¬ 
 tist activities and the occupation of the Ruhr — to insist on her 
 interpretation of her rights under the Treaty, even though Ger¬ 
 many be broken as a result. Britain has no effective answer to 
 the superb French army, aeroplanes and submarines. 
 
 (3) British opinion is not sufficiently unanimous to permit 
 the British government to move directly towards a rapproche¬ 
 ment with Germany. Extreme protectionists and mercantilists 
 who believe that Britain would profit by the destruction of her 
 best customer have joined hands with those who still assess it 
 a virtue to hate the Hun, and together they demand through the 
 thunderous tones of the Rothemere press that the Entente be 
 maintained. In a less democratic age, before the force of or¬ 
 ganized governmental war-time propaganda had reached its 
 present appalling efficiency, a British government would long 
 ago have much more radically shifted its policy to harmonize 
 
 with its obvious material interests. # 
 
 Because, therefore, of French legal rights, because of French 
 military power and because of a lack of British unity, the Brit¬ 
 ish government confesses to impotence on the Continent. Yet, 
 despite these handicaps only the blind will deny that Britain is 
 drifting steadily away from her late ally towards her recent 
 enemy But does a British policy of drifting towards an open 
 breach with France and towards a new alignment mean peace 
 or merely increased bitterness and ultimately new wars ? No 
 one can tell. If Britain were prepared to move promptly and de¬ 
 cisively the force of disintegration might be checked. If we, 
 as a people, were prepared to do more than to offer our advice 
 and emphasize our disinterestedness, Britain could and would, 
 I am convinced, go almost any length to work out with us a com¬ 
 mon program. Such a program achieved, an irresistible appeal 
 could be made to the better judgment of the French people. 
 
 Yet Britain is not ready to move effectively. We are not 
 ready to help substantially. Poincare alone knows his mmd. He 
 alone sees his path clear before him. He alone has the courage 
 and the singlemindedness of purpose to follow his chosen way 
 to its logical end. 
 
 French Opinion 
 
 But is it possible that any considerable body of French opin¬ 
 ion looks with equanimity upon the political and economic dis¬ 
 organization of Germany? Yes. French traditional claims to 
 the Rhine as the natural frontier have not been forgotten. Some 
 French leaders look forward to a Germany as weak and decen¬ 
 tralized as in 1848. American and British talk of the need for 
 restoring the economic equilibrium of Europe falls on deaf 
 French ears. Many French leaders do not believe that the re¬ 
 storation of Germany to her pre-war economic position in Eu¬ 
 rope is inevitable, necessary or desirable. If modern industrial 
 
 14 
 
and political Germany was created by Bismarck, it can be disin¬ 
 tegrated by Foch. Realists in French politics remember that if 
 Germany invaded France in 1914, Louis Napoleon plotted the 
 weakening of the half-formed German Empire in 1870; that 
 Napoleon Bonaparte, Louis the Fourteenth and Richelieu have 
 all had as their aim the prevention of a united and strong Ger¬ 
 many. 
 
 I make no charges. I do not know the mind of Poincare. ^ I 
 merely state that in my judgment the logical end of Poincare’s 
 present policy, as evidenced by his actions and his speeches is, 
 if unchecked, the political and economic disintegration of the 
 German Reich. 
 
 A Suggestion 
 
 Is there no practicable way to check this policy or to modify 
 it in the common interest of mankind and in the interest of 
 France itself? I am one of those who believe that the present 
 policy of France will, if unchanged, end in disaster, not only for 
 middle Europe, but also for France. Does the League of Na¬ 
 tions offer a way? I wish I could say “yes.” The League has 
 not been able to ameliorate, as President Wilson hoped, the 
 rigors and the injustices of the peace settlement. It has not 
 been able to exert its jurisdiction over the most flagrant source 
 of danger to world peace. Whatever the League’s ultimate ca¬ 
 pacity may be, we must confess that today, it can do nothing 
 which France is not willing for it to do. 
 
 You may answer, “had the United States been there, the is¬ 
 sue would have been different.” Perhaps, but we were not there 
 and candor again requires the confession that we seem further 
 from the League today than at any time since 1919. 
 
 We turn then to Secretary Hughes’ suggestion of an interna¬ 
 tional conference to determine Germany’s capacity to pay. In¬ 
 complete, because Mr. Hughes refused to permit the discussion 
 of inter-Allied debts, his proposal has been further weakened by 
 Poincare’s emasculating reservations. None the less, the 
 Hughes idea in its present or some other form, seems to be the 
 only immediately practicable step towards breaking the deadlock 
 which is devastating Europe. Our public opinion should de¬ 
 mand that the Administration insist on the proposed investiga¬ 
 tion, even if there should not be that unanimity of opinion 
 among the Allies which Mr. Hughes desired. Only the fixation 
 of Germany’s capacity on the basis of proved fact can offer a 
 rational basis for the settlement of the reparations problem and 
 that of inter-Allied debts. Even France should not be permitted 
 to stand in the way of such a solution. 
 
 Let us also urge our government to take the lead in educat¬ 
 ing our people to a willingness to be generous in the treatment 
 of our Allied debtors, if that can be made the price of an orderly 
 and genuinely peaceful Europe. Let us recognize that disinter¬ 
 estedness and impartiality is not enough. We must be prepared 
 to bear our share of responsibility. Above all things, let us get 
 into the habit of looking the facts of our international relations 
 in the face. Let us deal with them as realities and not cloud our 
 
 15 
 
thinking by sentimental or romantic visions. America can and 
 will once more when it sees the way, rise to the heights of en¬ 
 lightened and unselfish leadership. Let us, whatever our own 
 particular panacea or formula may be, unite in as thoroughgoing 
 a study of the facts of our problem as lies within our power. 
 
 This study is the F. P. A.’s primary task. It is worthy of 
 our utmost strength. 
 
 FOREIGN POLICY ASSOCIATION 
 
 For a Liberal and Constructive American Foreign Policy 
 
 NATIONAL HEADQUARTERS 
 9 East Forty-fifth Street, New York City 
 
 What it is: 
 
 —“one of the most active agents in the political 
 education of the people of the United States in 
 respect to foreign affairs.” — New Republic 
 
 —“an influence for constructive thinking ” 
 
 —Herbert Adams Gibbons 
 
 —“one of the few living cells in the great corpse 
 of public opinion” —R. L. 
 
 —A N D why: 
 
 “A democracy which undertakes to control its own 
 foreign relations ought to know something about 
 the subject” — Elihu Root 
 
 EXECUTIVE COMMITTEE 
 
 JAMES G. McDONALD, Chairman 
 
 BRUCE BLIVEN 
 COURTENAY CROCKER 
 HUGHELL FOSBROKE 
 ROBERT H. GARDINER 
 CARLTON J. H. HAYES 
 CHARLES P. HOWLAND 
 PAUL U. KELLOGG 
 
 GEORGE M, La MONTE 
 MRS. HENRY GODDARD LEACH 
 MISS RUTH MORGAN 
 RALPH S. ROUNDS 
 MRS. V. G. SIMKHOVITCH 
 MRS. WILLARD D. STRAIGHT 
 MRS. CHARLES L. TIFFANY 
 MISS LILLIAN D. WALD 
 
 CHRISTINA MERRIMAN, Secretary GEORGE M. La MONTE, Treasurer 
 
 ESTHER G. OGDEN, Membership Secretary 
 
 181