Keynes declares this chapter one of pessimism. The Treaty includes no provisions for the economic rehabilitation of Europe: nothing to make defeated Central Empires into good neighbours, nothing to stabilize new states, nothing to reclaim Russia, nor any compact of economic solidarity among the Allies. Paris reached no arrangement to restore French and Italian finance or to adjust the Old World and the New. Clemenceau sought to crush Germany's economic life; Lloyd George wanted a deal that would pass muster for a week at home; Wilson refused anything unjust. Reparation was their main excursion into economics, settled as theology and electoral chicane rather than as the future livelihood of the states they handled.
Leaving Paris, Keynes surveys Europe as the war and the peace have made it. The continent holds the densest population in history, accustomed to a relatively high standard of life, yet unable to feed itself without imports. Before the war a delicate organization resting on coal, iron, transport, and overseas food barely sustained livelihood. War destroyed that organization; emigration cannot absorb the surplus in time. The danger is rapid depression toward starvation, already reached in Russia and approximately in Austria. Starvation brings lethargy to some and hysteria to others who may overturn what organization remains.
Germany's Economic Commission warned the Peace Conference that an industrial Germany cannot be pushed back half a century without the loss of millions through famine and unemployment. Keynes says he knows no adequate answer for Germany or Austria. This, he insists, is the fundamental problem; territorial adjustments are secondary beside it.
Productivity has collapsed through disorder, casualties, exhausted soil, underfeeding, and what Hoover called the reflex of physical exhaustion: fifteen million European families were on unemployment support financed by inflation in mid-1919. Coal output fell about thirty percent; German agricultural productivity and livestock fell sharply. Even when goods exist, broken railways prevent carriage and broken currencies prevent sale. Lenin understood that debauching currency overturns society quietly; profiteers become universal enemies as real values dissolve.
Keynes's picture is rural populations without surplus for towns and industrial populations without food or materials to earn imports. Austrian children hoard bread under mattresses because hunger taught them to store rather than eat. The Treaty supplies no mechanism for recovery. Economic catastrophe visible to every expert was the one question that could not arouse the Council of Four.
Coming Up in Chapter 7
Chapter 7, Blueprints for Recovery, shifts the lens. But in so complex a phenomenon the prognostics do not all point one way; and we may make the error of expecting. Keynes moves from the argument so far into the next layer of evidence and consequence..
