It is difficult, Keynes says, to keep true perspective in large affairs. He has criticised Paris and painted Europe in sombre colours, and he believes that picture is true. Yet in so complex a phenomenon the signs do not all point one way, and minds rebound from a story that feels too bad to be true. Before remedies, he asks the reader to hold two contrasts: England and Russia. England's problems are serious: an adverse trade balance, a large budget deficit, shorter hours, exhausted nineteenth-century motives, and a rising real cost of food. Real wealth in 1919 may still equal 1900. He sees no catastrophe there, and no general upheaval. Russia, Turkey, Hungary, and Austria already live with famine, cold, disease, war, murder, and anarchy. British and American optimism must not be projected onto Central Europe. The chance at Paris in the six months after the Armistice was missed. Those who controlled the Conference may bow to popular gusts, but they will never lead Europe out. Keynes writes for new governments willing to revise the Treaty, and he limits himself to three changes that Europe's economic life requires: Reparation, Coal and Iron, and Tariffs. He would fix Germany's bill, including occupation costs, at ten thousand million dollars. Surrenders already taken in ships, cables, war material, state property, and claims would count as two and a half thousand million. The remaining seven and a half thousand million would carry no interest and would be paid in thirty annual instalments of two hundred and fifty million, beginning in 1923. The Reparation Commission should be dissolved or folded into the League, with German and neutral seats. Germany would meet the instalments as she saw fit. Article 260's expropriation of German interests in public utilities would go. Austria should not be charged at all.
Coal and iron come next. Allied options on German coal under Annex V should be abandoned, except Germany's duty to make good the destroyed mines of northern France, with a yearly cap, and that duty should lapse if Upper Silesia's coal districts are taken from her. The Saar arrangement could stand for ten years, then return mines and territory without payment, if France agrees to send Lorraine iron-ore in exchange for German coal. An Allied Coal Commission should sit under the League, enlarged to include Germany, Central and Eastern Europe, and the northern neutrals, with advisory authority over distribution. Under the League, a Free Trade Union should bind Germany, Poland, the new states of the old empires, and the mandated territories for ten years, with the United Kingdom hoped as an original member. Fixing a payable bill restores hope inside Germany and makes the Commission's intolerable powers unnecessary. Moderating coal clauses lets German industry continue. A Free Trade Union retrieves some of the organisation lost when four empires were partitioned among some twenty jealous authorities. Critics will call this Mittel-Europa by another name. Keynes answers that a union open to all, with privilege to none, is not an imperial scheme. If Western democracies mean to keep Germany impoverished for a generation, they should reject every proposal he now offers. If they aim at that impoverishment, he predicts, vengeance will not limp, and a civil war between Reaction and Revolution will dwarf the late German war.
Those treaty changes would not be enough. France would be a loser on paper, on paper only, he adds, because she will never collect her present claims. Fairness requires that so large a reduction be accompanied by a new split among the Allies. Areas actually invaded should have first claim. Britain never counted recovery of separation allowances among her war aims. Keynes asks Great Britain to waive her cash claims in favour of Belgium, Serbia, and France, so the seven and a half thousand million covers restoration. Only then can Britain ask with clean hands for revision, and clear her honour from the 1918 election pledge. Next he asks the United Kingdom and the United States to cancel inter-Allied war debts entirely. The tangle is nearly twenty thousand million dollars. The United States is a lender only; Britain has lent about twice what she borrowed; France has borrowed about three times what she lent. On paper, mutual forgiveness would cost the United States about ten thousand million and the United Kingdom about four and a half. Much of Britain's paper is Russian and not good. Europe can fairly ask this of America, Keynes argues, if Europe is trying to reconstitute the Continent rather than continue economic war. Hoover and the American Relief Commission, often against European obstruction, saved an immense amount of suffering in the first half of 1919. If the ten thousand million is to be repaid with compound interest, America's relative sacrifice becomes slight indeed. Without cancellation, Allies will end by paying tribute to one another, in totals likely to exceed what can be got from Germany.
Even cancellation is not enough without circulating capital. Keynes sketches an international loan of perhaps a thousand million dollars for food and materials, borrowed with the intention of full repayment, ranking ahead of reparation, inter-Allied debt, and internal war loans, with customs on a gold basis pledged to its service. A guarantee fund of like size could sit beside it. Lenders would be the neutrals, the United Kingdom, and, for the greater portion, the United States. He then turns east. Russian productivity cannot be repaired in any reasonable time except through German enterprise: Englishmen, Frenchmen, and Americans have neither the incentive nor the means to do that work on a sufficient scale. Let Germany take her place again as a creator of wealth for her Eastern and Southern neighbours, exchanging with Russia rather than competing with Britain for New World produce. If prejudice snaps that circuit, Britain will depress her own standards. The Conference would not hear this programme. The opportunity was missed in the six months after the Armistice, and the Council of Four will not retrace their steps. In this autumn of 1919, Keynes writes, we are at the dead season of our fortunes. Events are taking charge. The near destiny of Europe is no longer in any man's hands. Hidden currents will shape the coming year. The one influence still open is the assertion of truth, the unveiling of illusion, the dissipation of hate. To the formation of that future opinion he dedicates the book.
