and its industries revive. Opportunities would
arise to modify or circumvent the restrictions
imposed by the ‘dictated’ Versailles Treaty. The
German public focused their anger on the ‘war
guilt’ article of the treaty. It was misunderstood
and considered out of context. It stated that
Germany had imposed war on the Allies by its
aggression and that of its allies. Today, looking at
the July crisis of 1914, there can be no real doubt
that Germany and Austria-Hungary were the
‘aggressors’. What the Germans could not be
expected to know was that this article (231) and
the one that followed represented a compromise
between the Allies on the question of reparations.
The French and British wished the Germans
to pay the ‘whole cost’ of the war. France’s
north-eastern industrial region had been devas-
tated while Germany was untouched. Britain and
France had incurred heavy war debts which the
US insisted had to be repaid. France and Britain
had to be satisfied with Article 231 whereby
Germany and its allies accepted responsibility for
causing all the loss and damage. But in Article
232 the Germans were not required actually to
pay for ‘the whole cost of the war’. The Germans
would have to pay only for losses caused to civil-
ians and their property. This represented a victory
for Wilson; Allied public opinion would be
appeased by the ‘war guilt’ clause.
Little thought was extended to German public
opinion. No agreement on a total sum was reach-
ed. This was left for a Reparations Commission
to determine by May 1921. The Germans were
presented with the treaty draft on 7 May 1919.
Their voluminous protests and counter-proposals
delivered on 29 May were considered, a small
number of concessions made. They were then
presented with the unalterable final draft in the
form of a virtual ultimatum on 16 June. Unable to
resume the war, the Germans formally accepted
and signed the treaty on 28 June 1919. A week
earlier, the German fleet, interned in Scapa Flow,
was scuttled by the crews.
Had the Allies acted wisely in their treatment of
Germany? The financial thinking of the Allies, led
by the US, lacked realism. Reparations and war
debts, the growth of trade and employment were
international and not purely German problems.
John Maynard Keynes, the distinguished econo-
mist, who had been sent to Paris to serve as one of
Britain’s financial experts, later in his famous book
on the peace treaty, The Economic Consequences of
the Peace, condemned the financial provisions.
The total amount of reparations payable by
Germany fixed in May 1921 – 132,000 million
gold marks – was actually not so excessive. But
only a prosperous, stable Germany in a relatively
free international market could contribute to gen-
eral European prosperity. Lloyd George under-
stood that to ‘punish’ Germany financially would
create a powerful competitor in export markets as
Germany sought the means to pay. If there was
to be security from Germany in the longer term,
then one way was to reduce German power by
dividing the country; but this offended prevailing
views of nationality. The other way was to ensure
that Germany’s political development would lead
to a fundamental change of attitudes: genuine
democracy coupled with a renunciation of nation-
alist aspirations. Instead, the peace weakened the
democratic movement and heightened nationalist
feelings.Besides Germany and Austria-Hungary, the other
great power defeated in war was Russia. The West
was perplexed by the Russian problem. Lenin’s120 THE GREAT WAR, REVOLUTION AND THE SEARCH FOR STABILITY
Coal including lignite, and steel production, 1920–39 (million metric tons)
Coal and lignite Steel
1920 1929 1933 1939 1920 1929 1933 1939Britain 233.0 262.0 210.4 235.0 9.2 9.8 7.1 13.4
France 25.3 55.0 48.0 50.2 2.7 9.7 6.5 8.0
Germany 220.0 337.0 237.0 400.0 7.8 16.2 7.6 23.7