Punishment and prescience at Versailles

John Kane-Berman writes on the warnings that went unheeded

Within a year of the armistice whose centenary will be commemorated on 11th November this year, the victorious Allied powers had imposed upon Germany the Treaty of Versailles. That its punitive terms helped to lay the foundations of the Second World War is now widely believed among historians. Fewer people predicted that outcome at the time.

But among them were JC Smuts, soon to replace Louis Botha as South African prime minister, and John Maynard Keynes, the British economist. Keynes was part of the British treasury's delegation at the Versailles conference, but he resigned when he failed to get the terms of the treaty made less onerous. His book The Economic Consequences of the Peace made him a global celebrity, but it was not until the end of the Second World War that his ideas were followed with the introduction of the Marshall Plan to rebuild the devastated German and other European economies with American money.

Smuts signed the treaty because he welcomed the promised destruction of Prussian militarism and the establishment of the League of Nations, and because he wanted formally to close the war. But he wrote to the British prime minister, David Lloyd George, and the American president, Woodrow Wilson, warning them that "under this treaty Europe will know no peace".

Among the provisions to which Smuts and Keynes objected were reparations payments demanded of Germany that they regarded as excessive. When Germany failed to meet some of her payments, the French army occupied her industrial heartland, the Ruhr, in 1923, striking a crippling blow at the German economy and uniting the German people against the entire Versailles settlement.

One of the consequences of Allied policy was the hyperinflation of the early 1920s, fuelled by the printing of money. Savings were wiped out, along with faith in the Weimar Republic, while profiteers and speculators thrived. Eventually the debt was rescheduled with the help of an American loan, and the economy was somewhat stabilised until the Great Depression struck in 1929.  

But by then Adolf Hitler, a veteran of the First World War who had been decorated and wounded, had found his calling. He had graduated from failed artist and social dropout to racist demagogue able to whip mass meetings into a frenzy with his hate-filled message against the "November criminals" who had signed the armistice.

Put on trial in 1924 for his abortive Munich beerhall putsch the previous year, he turned the courtroom into a theatre and became a national figure and a hero to many. His nine months in Landsberg prison gave him the time to write Mein Kampf, and to refine his strategy for the assumption of dictatorial power. This included co-option of the Church, business, and the army.

In the election in 1928, Hitler's Nazi party won 810 000 votes and 12 seats in the Reichstag. But Hitler was able to exploit the depression (and unemployment) just as he had exploited hyperinflation. In the 1930 election the Nazis won 6.4 million votes and 107 seats, and had grown from the smallest to the second largest party in the Reichstag. In January 1933 Hitler became chancellor.

His first military success was the occupation of the Rhineland in 1936. Although this was a violation of Versailles, the British and French had no stomach to act against him, partly because they had had second thoughts about the treaty. Thus emboldened, Hitler soon swallowed up Austria and Czechoslovakia, supposedly to unite with their homeland all the ethnic Germans excluded from it by Versailles.

Keynes showed that Germany could afford to pay only about a quarter of the £8000 million demanded of her. But he added that there was more at stake than "economic facts", for some defended the treaty "in the name of Justice". Wrote Keynes: "In the great events of man's history, in the unwinding of the complex fates of nations, Justice is not so simple. And if it were, nations are not authorised, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers."            

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823. Each SMS costs R1. Ts and Cs apply.