From the archives of The Memory Hole |
Europe After the Treaty
This chapter must be one of pessimism. The treaty includes no
provisions for the economic rehabilitation of Europe nothing to make
the defeated Central empires into good neighbours, nothing to stabilise
the new states of Europe, nothing to reclaim Russia; nor does it
promote in any way a compact of economic solidarity amongst the Allies
themselves; no arrangement was reached at Paris for restoring the
disordered finances of France and Italy, or to adjust the systems of
the Old World and the New.
The Council of Four paid no attention to these issues, being
preoccupied with others Clemenceau to crush the economic life of his
enemy, Lloyd George to do a deal and bring home something which would
pass muster for a week, the President to do nothing that was not just
and right. It is an extraordinary fact that the fundamental economic
problem of a Europe starving and disintegrating before their eyes, was
the one question in which it was impossible to arouse the interest of
the Four. Reparation was their main excursion into the economic field,
and they settled it as a problem of theology, of politics, of electoral
chicane, from every point of view except that of the economic future of
the states whose destiny they were handling.
I leave, from this point onwards, Paris, the conference, and the
treaty, briefly to consider the present situation of Europe, as the war
and the peace have made it; and it will no longer be part of my purpose
to distinguish between the inevitable fruits of the war and the
avoidable misfortunes of the peace.
The essential facts of the situation, as I see them, are expressed
simply. Europe consists of the densest aggregation of population in the
history of the world. This population is accustomed to a relatively
high standard of life, in which, even now, some sections of it
anticipate improvement rather than deterioration. In relation to other
continents Europe is not self-sufficient; in particular it cannot feed
itself. Internally the population is not evenly distributed, but much
of it is crowded into a relatively small number of dense industrial
centres. This population secured for itself a livelihood before the
war, without much margin of surplus, by means of a delicate and
immensely complicated organisation, of which the foundations were
supported by coal, iron, transport, and an unbroken supply of imported
food and raw materials from other continents. By the destruction of
this organisation and the interruption of the stream of supplies, a
part of this population is deprived of its means of livelihood.
Emigration is not open to the redundant surplus. For it would take
years to transport them overseas, even, which is not the case, if
countries could be found which were ready to receive them. The danger
confronting us, therefore, is the rapid depression of the standard of
life of the European populations to a point which will mean actual
starvation for some (a point already reached in Russia and
approximately reached in Austria). Men will not always die quietly. For
starvation, which brings to some lethargy and a helpless despair,
drives other temperaments to the nervous instability of hysteria and to
a mad despair. And these in their distress may overturn the remnants of
organisation, and submerge civilisation itself in their attempts to
satisfy desperately the overwhelming needs of the individual. This is
the danger against which all our resources and courage and idealism
must now co-operate.
On 13 May 1919 Count Brockdorff-Rantzau addressed to the peace
conference of the Allied and Associated Powers the Report of the German
economic commission charged with the study of the effect of the
conditions of peace on the situation of the German population. 'In the
course of the last two generations,' they reported, 'Germany has become
transformed from an agricultural state to an industrial state. So long
as she was an agricultural state, Germany could feed 40 million
inhabitants. As an industrial state she could ensure the means of
subsistence for a population of 67 millions; and in 1913 the
importation of foodstuffs amounted, in round figures, to 12 million
tons. Before the war a total of 15 million persons in Germany provided
for their existence by foreign trade, navigation, and the use, directly
or indirectly, of foreign raw material.' After rehearsing the main
relevant provisions of the peace treaty the report continues: 'After
this diminution of her products, after the economic depression
resulting from the loss of her colonies, her merchant fleet and her
foreign investments, Germany will not be in a position to import from
abroad an adequate quantity of raw material. An enormous part of German
industry will, therefore, be condemned inevitably to destruction. The
need of importing foodstuffs will increase considerably at the same
time that the possibility of satisfying this demand is as greatly
diminished. In a very short time, therefore, Germany will not be in a
position to give bread and work to her numerous millions of
inhabitants, who are prevented from earning their livelihood by
navigation and trade. These persons should emigrate, but this is a
material impossibility, all the more because many countries and the
most important ones will oppose any German immigration. To put the
peace conditions into execution would logically involve, therefore, the
loss of several millions of persons in Germany. This catastrophe would
not be long in coming about, seeing that the health of the population
has been broken down during the war by the blockade, and during the
armistice by the aggravation of the blockade of famine. No help,
however great, or over however long a period it were continued, could
prevent these deaths en masse.' 'We do not know, and indeed we doubt,'
the Report concludes, 'whether the delegates of the Allied and
Associated Powers realise the inevitable consequences which will take
place if Germany, an industrial state, very thickly populated, closely
bound up with the economic system of the world, and under the necessity
of importing enormous quantities of raw material and foodstuffs,
suddenly finds herself pushed back to the phase of her development
which corresponds to her economic condition and the numbers of her
population as they were half a century ago. Those who sign this treaty
will sign the death sentence of many millions of German men, women and
children.'
I know of no adequate answer to these words. The indictment is at
least as true of the Austrian, as of the German, settlement. This is
the fundamental problem in front of us, before which questions of
territorial adjustment and the balance of European power are
insignificant. Some of the catastrophes of past history, which have
thrown back human progress for centuries, have been due to the
reactions following on the sudden termination, whether in the course of
Nature or by the act of man, of temporarily favourable conditions which
have permitted the growth of population beyond what could be provided
for when the favourable conditions were at an end.
The significant features of the immediate situation can be grouped
under three heads: first, the absolute falling off, for the time being,
in Europe's internal productivity; second, the breakdown of transport
and exchange by means of which its products could be conveyed where
they were most wanted; and third, the inability of Europe to purchase
its usual supplies from overseas.
The decrease of productivity cannot be easily estimated, and may be
the subject of exaggeration. But the prima facie evidence of it is
overwhelming, and this factor has been the main burden of Mr Hoover's
well-considered warnings. A variety of causes have produced it: violent
and prolonged internal disorder as in Russia and Hungary; the creation
of new governments and their inexperience in the readjustment of
economic relations, as in Poland and Czechoslovakia; the loss
throughout the continent of efficient labour, through the casualties of
war or the continuance of mobilisation; the falling off in efficiency
through continued underfeeding in the Central empires; the exhaustion
of the soil from lack of the usual applications of artificial manures
throughout the course of the war; the unsettlement of the minds of the
labouring classes on the fundamental economic issues of their lives.
But above all (to quote Mr Hoover), 'there is a great relaxation of
effort as the reflex of physical exhaustion of large sections of the
population from privation and the mental and physical strain of the
war'. Many persons are for one reason or another out of employment
altogether. According to Mr Hoover, a summary of the unemployment
bureaux in Europe in July 1919 showed that 15 million families were
receiving unemployment allowances in one form or another, and were
being paid in the main by a constant inflation of currency. In Germany
there is the added deterrent to labour and to capital (in so far as the
reparation terms are taken literally), that anything which they may
produce beyond the barest level of subsistence will for years to come
be taken away from them.
Such definite data as we possess do not add much, perhaps, to the
general picture of decay. But I will remind the reader of one or two of
them. The coal production of Europe as a whole is estimated to have
fallen off by 30 per cent; and upon coal the greater part of the
industries of Europe and the whole of her transport system depend.
Whereas before the war Germany produced 85 per cent of the total food
consumed by her inhabitants, the productivity of the soil is now
diminished by 40 per cent and the effective quality of the livestock by
55 per cent.(1*) Of the European countries which formerly possessed a
large exportable surplus, Russia, as much by reason of deficient
transport as of diminished output, may herself starve. Hungary, apart
from her other troubles, has been pillaged by the Roumanians
immediately after harvest. Austria will have consumed the whole of her
own harvest for 1919 before the end of the calendar year. The figures
are almost too overwhelming to carry conviction to our minds; if they
were not quite so bad, our effective belief in them might be stronger.
But even when coal can be got and grain harvested, the breakdown of
the European railway system prevents their carriage; and even when
goods can be manufactured, the breakdown of the European currency
system prevents their sale. I have already described the losses, by war
and under the armistice surrenders, to the transport system of Germany.
But even so, Germany's position, taking account of her power of
replacement by manufacture, is probably not so serious as that of some
of her neighbours. In Russia (about which, however, we have very little
exact or accurate information) the condition of the rolling-stock is
believed to be altogether desperate, and one of the most fundamental
factors in her existing economic disorder. And in Poland, Roumania, and
Hungary the position is not much better. Yet modern industrial life
essentially depends on efficient transport facilities, and the
population which secured its livelihood by these means cannot continue
to live without them. The breakdown of currency, and the distrust in
its purchasing value, is an aggravation of these evils which must be
discussed in a little more detail in connection with foreign trade.
What then is our picture of Europe? A country population able to
support life on the fruits of its own agricultural production but
without the accustomed surplus for the towns, and also (as a result of
the lack of imported materials and so of variety and amount in the
saleable manufactures of the towns) without the usual incentives to
market food in return for other wares; an industrial population unable
to keep its strength for lack of food, unable to earn a livelihood for
lack of materials, and so unable to make good by imports from abroad
the failure of productivity at home. Yet, according to Mr Hoover, 'a
rough estimate would indicate that the population of Europe is at least
100 million greater than can be supported without imports, and must
live by the production and distribution of exports '.
The problem of the re-inauguration of the perpetual circle of
production and exchange in foreign trade leads me to a necessary
digression on the currency situation of Europe.
Lenin is said to have declared that the best way to destroy the
capitalist system was to debauch the currency. By a continuing process
of inflation, governments can confiscate, secretly and unobserved, an
important part of the wealth of their citizens. By this method they not
only confiscate, but they confiscate arbitrarily; and, while the
process impoverishes many, it actually enriches some. The sight of this
arbitrary rearrangement of riches strikes not only at security, but at
confidence in the equity of the existing distribution of wealth. Those
to whom the system brings windfalls, beyond their deserts and even
beyond their expectations or desires, become 'profiteers,' who are the
object of the hatred of the bourgeoisie, whom the inflationism has
impoverished, not less than of the proletariat. As the inflation
proceeds and the real value of the currency fluctuates wildly from
month to month, all permanent relations between debtors and creditors,
which form the ultimate foundation of capitalism, become so utterly
disordered as to be almost meaningless; and the process of
wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of
overturning the existing basis of society than to debauch the currency.
The process engages all the hidden forces of economic law on the side
of destruction, and does it in a manner which not one man in a million
is able to diagnose.
In the latter stages of the war all the belligerent governments
practised, from necessity or incompetence, what a Bolshevist might have
done from design. Even now, when the war is over, most of them continue
out of weakness the same malpractices. But further, the governments of
Europe, being many of them at this moment reckless in their methods as
well as weak, seek to direct on to a class known as 'profiteers' the
popular indignation against the more obvious consequences of their
vicious methods. These 'profiteers' are, broadly speaking, the
entrepreneur class of capitalists, that is to say, the active and
constructive element in the whole capitalist society, who in a period
of rapidly rising prices cannot but get rich quick whether they wish it
or desire it or not. If prices are continually rising, every trader who
has purchased for stock or owns property and plant inevitably makes
profits. By directing hatred against this class, therefore, the
European governments are carrying a step further the fatal process
which the subtle mind of Lenin had consciously conceived. The
profiteers are a consequence and not a cause of rising prices. By
combining a popular hatred of the class of entrepreneurs with the blow
already given to social security by the violent and arbitrary
disturbance of contract and of the established equilibrium of wealth
which is the inevitable result of inflation, these governments are fast
rendering impossible a continuance of the social and economic order of
the nineteenth century. But they have no plan for replacing it.
We are thus faced in Europe with the spectacle of an extra-ordinary
weakness on the part of the great capitalist class, which has emerged
from the industrial triumphs of the nineteenth century, and seemed a
very few years ago our all-powerful master. The terror and personal
timidity of the individuals of this class is now so great, their
confidence in their place in society and in their necessity to the
social organism so diminished, that they are the easy victims of
intimidation. This was not so in England twenty-five years ago, any
more than it is now in the United States. Then the capitalists believed
in themselves, in their value to society, in the propriety of their
continued existence in the full enjoyment of their riches and the
unlimited exercise of their power. Now they tremble before every insult
call them pro-Germans, international financiers, or profiteers, and
they will give you any ransom you choose to ask not to speak of them so
harshly. They allow themselves to be ruined and altogether undone by
their own instruments, governments of their own making, and a Press of
which they are the proprietors. Perhaps it is historically true that no
order of society ever perishes save by its own hand. In the complexer
world of Western Europe the Immanent Will may achieve its ends more
subtly and bring in the revolution no less inevitably through a Klotz
or a George than by the intellectualisms, too ruthless and
self-conscious for us, of the bloodthirsty philosophers of Russia.
The inflationism of the currency systems of Europe has proceeded to
extraordinary lengths. The various belligerent governments, unable or
too timid or too short-sighted to secure from loans or taxes the
resources they required, have printed notes for the balance. In Russia
and Austria-Hungary this process has reached a point where for the
purposes of foreign trade the currency is practically valueless. The
Polish mark can be bought for about 1 1/2d and the Austrian crown for
less than 1d, but they cannot be sold at all. The German mark is worth
less than 2d on the exchanges. In most of the other countries of
Eastern and south-eastern Europe the real position is nearly as bad.
The currency of Italy has fallen to little more than a half of its
nominal value in spite of its being still subject to some degree of
regulation; French currency maintains an uncertain market; and even
sterling is seriously diminished in present value and impaired in its
future prospects.
But while these currencies enjoy a precarious value abroad, they
have never entirely lost, not even in Russia, their purchasing power at
home. A sentiment of trust in the legal money of the state is so deeply
implanted in the citizens of all countries that they cannot but believe
that some day this money must recover a part at least of its former
value. To their minds it appears that value is inherent in money as
such, and they do not apprehend that the real wealth which this money
might have stood for has been dissipated once and for all. This
sentiment is supported by the various legal regulations with which the
governments endeavour to control internal prices, and so to preserve
some purchasing power for their legal tender. Thus the force of law
preserves a measure of immediate purchasing power over some commodities
and the force of sentiment and custom maintains, especially amongst
peasants, a willingness to hoard paper which is really worthless.
The preservation of a spurious value for the currency, by the force
of law expressed in the regulation of prices, contains in itself,
however, the seeds of final economic decay, and soon dries up the
sources of ultimate supply. If a man is compelled to exchange the
fruits of his labours for paper which, as experience soon teaches him,
he cannot use to purchase what he requires at a price comparable to
that which he has received for his own products, he will keep his
produce for himself, dispose of it to his friends and neighbours as a
favour, or relax his efforts in producing it. A system of compelling
the exchange of commodities at what is not their real relative value
not only relaxes production, but leads finally to the waste and
inefficiency of barter. If, however, a government refrains from
regulation and allows matters to take their course, essential
commodities soon attain a level of price out of the reach of all but
the rich, the worthlessness of the money becomes apparent, and the
fraud upon the public can be concealed no longer.
The effect on foreign trade of price-regulation and
profiteer-hunting as cures for inflation is even worse. Whatever may be
the case at home, the currency must soon reach its real level abroad,
with the result that prices inside and outside the country lose their
normal adjustment. The price of imported commodities, when converted at
the current rate of exchange, is far in excess of the local price, so
that many essential goods will not be imported at all by private
agency, and must be provided by the government, which, in re-selling
the goods below cost price, plunges thereby a little further into
insolvency. The bread subsidies now almost universal throughout Europe
are the leading example of this phenomenon.
The countries of Europe fall into two distinct groups at the
present time as regards their manifestations of what is really the same
evil throughout, according as they have been cut off from international
intercourse by the blockade, or have had their imports paid for out of
the resources of their allies. I take Germany as typical of the first,
and France and Italy of the second.
The note circulation of Germany is about ten times(2*) what it was
before the war. The value of the mark in terms of gold is about
one-eighth of its former value. As world prices in terms of gold are
more than double what they were, it follows that mark prices inside
Germany ought to be from sixteen to twenty times their pre-war level if
they are to be in adjustment and proper conformity with prices outside
Germany.(3*) But this is not the case. In spite of a very great rise in
German prices, they probably do not yet average much more than five
times their former level, so far as staple commodities are concerned;
and it is impossible that they should rise further except with a
simultaneous and not less violent adjustment of the level of
money-wages. The existing maladjustment hinders in two ways (apart from
other obstacles) that revival of the import trade which is the
essential preliminary of the economic reconstruction of the country. In
the first place, imported commodities are beyond the purchasing power
of the great mass of the population,(4*) and the flood of imports which
might have been expected to succeed the raising of the blockade was not
in fact commercially possible.(5*) In the second place, it is a
hazardous enterprise for a merchant or a manufacturer to purchase with
a foreign credit material for which, when he has imported it or
manufactured it, he will receive mark currency of a quite uncertain and
possibly unrealisable value. This latter obstacle to the revival of
trade is one which easily escapes notice and deserves a little
attention. It is impossible at the present time to say what the mark
will be worth in terms of foreign currency three or six months or a
year hence, and the exchange market can quote no reliable figure. It
may be the case, therefore, that a German merchant, careful of his
future credit and reputation, who is actually offered a short-period
credit in terms of sterling or dollars, may be reluctant and doubtful
whether to accept it. He will owe sterling or dollars, but he will sell
his product for marks, and his power, when the time comes, to turn
these marks into the currency in which he has to repay his debt is
entirely problematic. Business loses its genuine character and becomes
no better than a speculation in the exchanges, the fluctuations in
which entirely obliterate the normal profits of commerce.
There are therefore three separate obstacles to the revival of
trade: a maladjustment between internal prices and international
prices, a lack of individual credit abroad wherewith to buy the raw
materials needed to secure the working capital and to re-start the
circle of exchange, and a disordered currency system which renders
credit operations hazardous or impossible quite apart from the ordinary
risks of commerce.
The note circulation of France is more than six times its prewar
level. The exchange value of the franc in terms of gold is a little
less than two-thirds its former value; that is to say, the value of the
franc has not fallen in proportion to the increased volume of the
currency.(6*) This apparently superior situation of France is due to
the fact that until recently a very great part of her imports have not
been paid for, but have been covered by loans from the governments of
Great Britain and the United States. This has allowed a want of
equilibrium between exports and imports to be established, which is
becoming a very serious factor, now that the outside assistance is
being gradually discontinued.(7*) The internal economy of France and
its price level in relation to the note circulation and the foreign
exchanges is at present based on an excess of imports over exports
which cannot possibly continue. Yet it is difficult to see how the
position can be readjusted except by a lowering of the standard of
consumption in France, which, even if it is only temporary, will
provoke a great deal of discontent.
The situation of Italy is not very different. There the note
circulation is five or six times its pre-war level, and the exchange
value of the lira in terms of gold about half its former value. Thus
the adjustment of the exchange to the volume of the note circulation
has proceeded further in Italy than in France. On the other hand,
Italy's 'invisible' receipts, from emigrant remittances and the
expenditure of tourists, have been very injuriously affected; the
disruption of Austria has deprived her of an important market; and her
peculiar dependence on foreign shipping and on imported raw materials
of every kind has laid her open to special injury from the increase of
world prices. For all these reasons her position is grave, and her
excess of imports as serious a symptom as in the case of France.(8*)
The existing inflation and the maladjustment of international trade
are aggravated, both in France and in Italy, by the unfortunate
budgetary position of the governments of these countries.
In France the failure to impose taxation is notorious. Before the
war the aggregate French and British budgets, and also the average
taxation per head, were about equal; but in France no substantial
effort has been made to cover the increased expenditure. 'Taxes
increased in Great Britain during the war', it has been estimated,
'from 95 francs per head to 265 francs, whereas the increase in France
was only from 90 to 103 francs.' The taxation voted in France for the
financial year ending 30 June 1919 was less than half the estimated
normal post-bellum expenditure. The normal budget for the future cannot
be put below �3880 million (22 milliard francs), and may exceed this
figure; but even for the fiscal year 1919-20 the estimated receipts
from taxation do not cover much more than half this amount. The French
Ministry of Finance have no plan or policy whatever for meeting this
prodigious deficit, except the expectation of receipts from Germany on
a scale which the French officials themselves know to be baseless. In
the meantime they are helped by sales of war material and surplus
American stocks and do not scruple, even in the latter half of 1919, to
meet the deficit by the yet further expansion of the note issue of the
Bank of France.(9*)
The budgetary position of Italy is perhaps a little superior to
that of France. Italian finance throughout the war was more
enterprising than the French, and far greater efforts were made to
impose taxation and pay for the war. Nevertheless, Signor Nitti, the
Prime Minister, in a letter addressed to the electorate on the eve of
the General Election (October 1919), thought it necessary to make
public the following desperate analysis of the situation: (1) The state
expenditure amounts to about three times the revenue; (2) all the
industrial undertakings of the state, including the railways,
telegraphs, and telephones, are being run at a loss. Although the
public is buying bread at a high price, that price represents a loss to
the government of about a milliard a year; (3) exports now leaving the
country are valued at only one-quarter or one-fifth of the imports from
abroad; (4) the national debt is increasing by about a milliard lire
per month; (5) the military expenditure for one month is still larger
than that for the first year of the war.
But if this is the budgetary position of France and Italy, that of
the rest of belligerent Europe is yet more desperate. In Germany the
total expenditure of the empire, the federal states, and the communes
in 1919-20 is estimated at 25 milliards of marks, of which not above 10
milliards are covered by previously existing taxation. This is without
allowing anything for the payment of the indemnity. In Russia, Poland,
Hungary, or Austria such a thing as a budget cannot be seriously
considered to exist at all.(10*)
Thus the menace of inflationism described above is not merely a
product of the war, of which peace begins the cure. It is a continuing
phenomenon of which the end is not yet in sight.
All these influences combine not merely to prevent Europe from
supplying immediately a sufficient stream of exports to pay for the
goods she needs to import, but they impair her credit for securing the
working capital required to re-start the circle of exchange and also,
by swinging the forces of economic law yet further from equilibrium
rather than towards it, they favour a continuance of the present
conditions instead of a recovery from them. An inefficient, unemployed,
disorganised Europe faces us, torn by internal strife and international
hate, fighting, starving, pillaging, and lying. What warrant is there
for a picture of less sombre colours?
I have paid little heed in this book to Russia, Hungary, or
Austria.(11*) There the miseries of life and the disintegration of
society are too notorious to require analysis; and these countries are
already experiencing the actuality of what for the rest of Europe is
still in the realm of prediction. Yet they comprehend a vast territory
and a great population, and are an extant example of how much man can
suffer and how far society can decay. Above all, they are the signal to
us of how in the final catastrophe the malady of the body passes over
into malady of the mind. Economic privation proceeds by easy stages,
and so long as men suffer it patiently the outside world cares little.
Physical efficiency and resistance to disease slowly diminish,(12*) but
life proceeds somehow, until the limit of human endurance is reached at
last and counsels of despair and madness stir the sufferers from the
lethargy which precedes the crisis. Then man shakes himself, and the
bonds of custom are loosed. The power of ideas is sovereign, and he
listens to whatever instruction of hope, illusion, or revenge is
carried to him on the air. As I write, the flames of Russian Bolshevism
seem, for the moment at least, to have burnt themselves out, and the
peoples of Central and Eastern Europe are held in a dreadful torpor.
The lately gathered harvest keeps off the worst privations, and peace
has been declared at Paris. But winter approaches. Men will have
nothing to look forward to or to nourish hopes on. There will be little
fuel to moderate the rigours of the season or to comfort the starved
bodies of the town-dwellers.
But who can say how much is endurable, or in what direction men
will seek at last to escape from their misfortunes?
NOTES:
1. Professor Starling's Report on Food Conditions in Germany (Cmd. 280).
2. Including the Darlehenskassenscheine somewhat more.
3. Similarly in Austria prices ought to be between twenty and thirty times their former level.
4. One of the most striking and symptomatic difficulties which faced the Allied authorities in their administration of the occupied areas of Germany during the armistice arose out of the fact that even when they brought food into the country the inhabitants could not afford to pay its cost price.
5. Theoretically an unduly low level of home prices should stimulate exports and so cure itself. But in Germany, and still more in Poland and Austria, there is little or nothing to export. There must be imports before there can be exports.
6. Allowing for the diminished value of gold, the exchange value of the franc should be less than forty per cent of its previous value, instead of the actual figure of about sixty per cent if the fall were proportional to the increase in the volume of the currency.
7. How very far from equilibrium France's international exchange now is can be seen from the following table:
Monthly | Imports | Exports | Excess of Imports (£1,000) |
1913 1914 1918 Jan.-Mar. 1919 Apr.-June 1919 July 1919 |
28,071 21,341 66,383 77,428 84,282 93,513 |
22,934 16,229 13,811 13,334 16,779 24,735 |
5,137 5,112 52,572 64,094 67,503 68,778 |
These figures have been converted at approximately par rates, but this is roughly compensated by the fact that the trade of 1918 and 1919 has been valued at 1917 official rates. French imports cannot possibly continue at anything approaching these figures, and the semblance of prosperity based on such a state of affairs is spurious.
8. The figures for Italy are as follows:
Monthly | Imports | Exports | Excess of Imports (£1,000) |
1913 1914 1918 Jan.-Mar. 1919 Apr.-June 1919 July-Aug. 1919 |
12,152 9,744 47,005 45,848 66,207 44,707 |
8,372 7,368 8,278 7,617 13,850 16,903 |
3,780 2,376 38,727 38,231 52,357 27,804 |
9. In the last two returns of the Bank of France available as I write (2 and 9 October 1919) the increases in the note issue on the week amounted to �318,750,000 and �318,825,000 respectively.
10. On 3 October 1919 M. Bilinski made his financial statement to the
Polish Diet. He estimated his expenditure for the next nine months at rather more than double his expenditure for the past nine months, and while during the first period his revenue had amounted to one-fifth of his expenditure, for the coming months he was budgeting for receipts equal to one-eighth of his outgoings. The Times correspondent at Warsaw reported that 'in general M. Bilinski's tone was optimistic and appeared to satisfy his audience'!
11. The terms of the peace treaty imposed on the Austrian republic bear no relation to the real facts of that state's desperate situation. The Arbeiter Zeitung of Vienna on 4 June 1919 commented on them as follows: 'Never has the substance of a treaty of peace so grossly betrayed the intentions which were said to have guided its construction as is the case with this treaty... in which every provision is permeated with ruthlessness and pitilessness, in which no breath of human sympathy can be detected, which flies in the face of everything which binds man to man, which is a crime against humanity itself, against a suffering and tortured people.' I am acquainted in detail with the Austrian treaty and I was present when some of its terms were being drafted, but I do not find it easy to rebut the justice of this outburst.
12. For months past the reports of the health conditions in the Central empires have been of such a character that the imagination is dulled, and one almost seems guilty of sentimentality in quoting them. But their general veracity is not disputed, and I quote the three following, that the reader may not be unmindful of them: 'In the last years of the war, in Austria alone at least 35,000 people died of tuberculosis, in Vienna alone 12,000. To-day we have to reckon with a number of at least 350,000 to 400,000 people who require treatment for tuberculosis... As the result of malnutrition a bloodless generation is growing up with undeveloped muscles, undeveloped joints, and undeveloped brain' (Neue Freie Presse, 31 May 1919). The commission of doctors appointed by the medical faculties of Holland, Sweden, and Norway to examine the conditions in Germany reported as follows in the Swedish Press in April 1919: 'Tuberculosis, especially in children, is increasing in an appalling way, and, generally speaking, is malignant. In the same way rickets is more serious and more widely prevalent. It is impossible to do anything for these diseases; there is no milk for the tuberculous, and no cod-liver oil for those suffering from rickets... Tuberculosis is assuming almost unprecedented aspects, such as have hitherto only been known in exceptional cases. The whole body is attacked simultaneously, and the illness in this form is practically incurable... Tuberculosis is nearly always fail now among adults. It is the cause of ninety per cent of the hospital cases. Nothing can be done against it owing to lack of foodstuffs... It appears in the most terrible forms, such as glandular tuberculosis, which turns into purulent dissolution.' The following is by a writer in the Vossische Zeitung, 5 June 1919, who accompanied the Hoover mission to the Erzgebirge: 'I visited large country districts where ninety per cent of all the children were rickety and where children of three years are only beginning to walk... Accompany me to a school in the Erzgebirge. You think it is a kindergarten for the little ones. No, these are children of seven and eight years. Tiny faces, with large dull eyes, overshadowed by huge puffed, rickety foreheads, their small arms just skin and bone, and above the crooked legs with their dislocated joints the swollen, pointed stomachs of the hunger oedema... "You see this child here," the physician in charge explained; "it consumed an incredible amount of bread, and yet did not get any stronger. I found out that it hid all the bread it received underneath its straw mattress. The fear of hunger was so deeply rooted in the child that it collected stores instead of eating the food: a misguided animal instinct made the dread of hunger worse than the actual pangs".' Yet there are many persons apparently in whose opinion justice requires that such beings should pay tribute until they are forty or fifty years of age in relief of the British taxpayer.