PARIS 1919 (32 page)

Nor was it easy to determine the Allied bill. “In my poor country France,” said the French minister of the liberated regions, “there are hundreds of villages into which no one has yet been able to return. Please understand: it is a desert, it is desolation, it is death.” The American army engineer and his team of assistants who made what was probably the most detailed study of the war-torn parts of France and Belgium estimated in January 1919 that it would take at least two years to come up with a reliable estimate of the costs of repairing the damage. The British unkindly suspected their allies of inflating their claims, in Belgium's case for more than its total prewar wealth and in France's for about half. “Almost incredible,” said Lloyd George sternly. The more his allies claimed, of course, the less there would be for Britain.
¹⁵

There was also much disagreement over what counted as damage. Wilson had said firmly that he would consider only restitution for damage done by unlawful acts of war and not for war costs themselves. His Fourteen Points had talked merely of “restoration” of invaded territories, and he had promised that there would be “no annexations, no contributions, no punitive damages.” When Germany had signed the armistice agreement, it had done so on that understanding. Germany would thus be liable for repairing the battlefields in France and Belgium but not for the money Allied governments had spent on, for example, munitions or feeding their soldiers. When Lloyd George tried to blur the line between reparations and indemnities, Wilson would have none of it: “Bodies of working people all over the world had protested against indemnities, and he thought the expression reparations would be sufficiently inclusive.”
¹⁶

Lloyd George, optimistic as always, told his colleagues that he did not really think Wilson had ruled out indemnities. The British were concerned that, if Wilson stuck to his guns, the British empire would end up with compensation largely for ships sunk by the Germans. France would get the lion's share, which, in the British view, it would probably waste with its usual inefficient financial management. The British also suspected that France was not trying very hard to repay its debts to Britain. As Churchill said severely, “France was going bankrupt as a nation, but the French were growing wealthy as individuals.”
¹⁷

Lloyd George tried persuasion with Wilson and then he tried threats. He might not be able to sign the treaty, he told him at the end of March 1919, unless some of Britain's costs were included. Fortunately, Smuts had come up with an ingenious solution. He pointed out that, when the armistice had been arranged, the European Allies had stated, and the Americans had accepted, that Germany was liable for all damage done to civilians by its aggression. Therefore, reparations must include separation allowances for soldiers' families, as well as pensions for widows and orphans. The effect was to double the potential bill. And this came from the same Smuts who four months earlier had warned Lloyd George against excessive claims, and who was to protest vigorously a month later that reparations would cripple Germany. High-minded, moralistic and clever, Smuts persuaded himself that he had not been inconsistent. In his own defense, he claimed that he had simply expressed an opinion shared by most of the legal experts at the Peace Conference. More revealingly, he wrote that, if pensions had been excluded, France would have got most of the reparations.
¹⁸

Wilson listened to Smuts where he would not have listened to Lloyd George. The American experts thought the argument absurd and illogical. “Logic! Logic!” Wilson told them. “I don't give a damn for logic. I am going to include pensions!”
¹⁹
His decision in the end affected only the distribution of reparations, because the final figure was to be determined by what Germany could actually pay.

Although Wilson has been blamed for backing down, Lloyd George has been blamed even more for, as Keynes would have it, bamboozling the Americans and allowing the British public to dream of exacting huge sums from Germany. At best, he has been seen, as he was by many at the time, as a liberal who did not have the courage to be true to his principles. Certainly, he was not consistent. When Hughes of Australia first talked in terms of millions of pounds, Lloyd George pointed out that Germany could raise the sum only by expanding its manufacturing and dumping cheap goods on world markets. “It would mean that for two generations we would make German workmen our slaves.” What was more, it would damage British and imperial trade. Yet Lloyd George then turned around and made Hughes chairman of a committee packed with known hard-liners to draw up a preliminary estimate for the British government of Germany's capacity to pay. The group—“altogether it was the oddest committee I ever served upon,” said Sir George Foster, of Canada—made little attempt to collect evidence but relied on personal impressions and wishful thinking; as Foster put it, “to make the Hun pay to the utmost, whether it leads to a generation of occupancy and direction, or not, and forgetful of the results otherwise.”
²⁰

As the weeks went by and the numbers floated around, Lloyd George continued to vacillate. He argued for high reparations with Wilson and Clemenceau but then talked of moderation in his famous Fontainebleau Memorandum at the end of March. He opposed putting a fixed figure in the treaty on the grounds that it might be too low; then he swung round in June after the Germans complained and said perhaps the Allies ought to set an amount. He appeared to listen sometimes to Keynes and Montagu, both of whom were moderates, at other times to Lord Cunliffe, a former governor of the Bank of England, and a judge, Lord Sumner. The Heavenly Twins, as Keynes nicknamed them, were widely seen as the two bad men of the conference; “they always go about together and are always summoned when some particularly nefarious act has to be committed.” Lloyd George named the Twins as British representatives to the reparations commission but, when a special committee was set up in March to try to resolve the impasse, he chose Montagu. “When he meant to do business,” said an American, “he brought along Montagu and Keynes; when he was going to hedge he brought in Sumner and Cunliffe.” Keynes loathed his rivals. Lloyd George later claimed that he too was appalled by their lack of judgment. During the Peace Conference he disingenuously intimated to the Americans that, while he would prefer lower reparations, he could not get the Twins to agree.
²¹

Both Cunliffe and Sumner believed they should get as good a deal as possible for their own country, but they were prepared to compromise— and to take direction from their prime minister. “We ought to act here like statesmen,” Sumner told his colleagues on the reparations commission, when he argued against piling on the costs. Both would have gone for a fixed amount in the treaty, and a lower figure, if Lloyd George had told them to do so. Why did he not? His vacillation damaged his reputation and caused much trouble with his colleagues in Paris. “I wish,” said Lamont, the American expert, “Mr. Lloyd George could tell us just what he finally wants, so that we could determine whether his ideas, and the President's as we understand them to be, are in reality far apart or close together.” By exasperating the Americans, from Wilson on down, Lloyd George was putting at risk a relationship he considered of supreme importance. The problem was that he was not sure himself what he, or the British public, wanted.
²²

There was a side of him that wanted to see Germany punished. At his moral core—and he had one, despite what his enemies said—Lloyd George deplored war, and Germany had unleashed the worst one the world had ever seen. He also saw the issue as a lawyer. “By every principle of justice,” he told the British empire delegation, “by the principles of justice which were recognized as applicable between individuals, the Germans were liable for the whole of the damages and the cost of recovering them.” Since he was acting, in a sense, for Britain, he had to make sure that Germany's other creditors did not inflate their claims. “That is an old device when claiming against a bankrupt estate.”
²³

He was also, however, a statesman. He had been chancellor of the exchequer before the war, and he understood finance and trade. He knew that sooner or later the British would have to sell their goods to the Germans again. He did not want to destroy Germany. At the beginning of March, while the president was still in the United States, Lloyd George discussed reparations with House over lunch. He needed to provide, he told the American, “a plausible reason to his people for having fooled them about the question of war costs, reparations and what not. He admitted that he knew Germany could not pay anything like the indemnity which the British and French demanded.” Wilson, when he heard this on his return, was unsympathetic. He urged Lloyd George to resist demands for high reparations. “Nothing would be finer,” he said, “than to be put out of office during a crisis of this kind for doing what was right.” Lloyd George would have the consolation of knowing that posterity would think well of him. “I could not wish,” Wilson told him, “a more magnificent place in history.”
²⁴

Lloyd George did not take this noble, and barren, way out. He was a politician, obliged to weigh what was just against what was practical. He also had to function in a world where the democratic voice of the people had to be heeded. The pressures on him in Paris were considerable. Parts of the liberal press were starting to talk of reconciliation, but the conservative papers were loudly demanding large reparations. Northcliffe had taken it upon himself to keep Lloyd George up to the mark. The press baron hinted darkly to the editors of the
Daily Mail
and
The Times
that the prime minister was under the sway of pro-German forces.
²⁵

Lloyd George also found himself hemmed in, to a certain extent, by the December 1918 election. Promises to squeeze Germany hard—in one memorable phrase, “until the pips squeaked”—went over very well. He had produced ever larger notional bills for Germany. “We will,” he said, “search their pockets for it.” The last coalition manifesto before the vote stated simply: “1. Punish the Kaiser 2. Make Germany pay.” Many of the Conservatives who were elected in the resulting landslide were new to politics. “Hard-faced men who look as if they had done very well out of the war,” in the words of a leading Conservative, they saw their mission primarily as making the German pips squeak. In April, as he was arguing with Wilson, Lloyd George received a telegram signed by 370 members of Parliament asking him to remain true to his election speeches and “present the bill in full.” He rushed back to London and on April 16 demolished his critics with a tremendous speech in the House of Commons. He had no intention, he told his audience, of breaking his promises. They must not listen to an embittered, madly vain man—here he tapped his forehead significantly—but must trust to the world's statesmen to do the best for humanity and peace. He left to loud cheers. Back in Paris he told the faithful Frances Stevenson that he had won “complete mastery of the House, while telling them absolutely nothing about the peace conference.”
²⁶

Pressure came as well from the empire. While the Canadians, as on much else, took the American position, the Australians were for getting the maximum from Germany. Hughes loathed the Germans, whom he, like most of his compatriots, had long seen as the chief threat to Australia, and he thought the American objection to high reparations unprincipled and self-serving. As he told Lloyd George, a neutral United States had made great profits in the early stages of the war, while the British empire poured out its blood and treasure. Without a huge settlement from Germany, Britain would lose in the coming competition with the United States for world economic supremacy.
²⁷

Lloyd George's handling of the reparations issue was actually more successful than it appeared. By persuading Wilson to include pensions in reparations, he increased Britain's share. By not mentioning a fixed sum in the treaty (for which there were sound technical reasons), he managed to keep public opinion at home and in the empire happy. (The impact on German opinion was another matter.) He also took out insurance of another sort when he privately urged a prominent European socialist to whip up a public outcry against treating Germany too harshly.
²⁸
Finally, he managed to cast the French as the greedy ones, a role they have generally played ever since, with Louis-Lucien Klotz, the minister of finance, as chief villain.

Klotz, described by Clemenceau as “the only Jew I knew who knew nothing of finance,” is supposed to have said in answer to all questions about France's future, “Germany will pay.” (In fact, he warned that German reparations should not be expected to pay for everything.) Clemenceau treated him contemptuously, as he did so many of his colleagues. Lloyd George found him merciless: “His mind and heart were so stuffed with bonds that he had no room left for the humanities.” Even Wilson was moved to a little joke about Klotz on the brain. Keynes has left a characteristically cruel sketch: “a short, plump, heavy-moustached Jew, well groomed, well kept, but with an unsteady, roving eye, and his shoulders a little bent in an instinctive deprecation” who tried to hold up food shipments to a starving Germany. Whatever Klotz did, though, he did as Clemenceau's subordinate. If Klotz stood publicly for high reparations, that kept the French right from attacking Clemenceau for not being tough enough on Germany. In private, Clemenceau admitted that France would never get what it hoped for and he sent Louis Loucheur, his most trusted economic adviser, to talk to the Americans in confidence about more moderate terms. In their conversations, Loucheur made it clear that he personally saw no long-term advantage for France in driving Germany into bankruptcy.
²⁹

Like Lloyd George, Clemenceau had to worry about public opinion. Most French took a straightforward view. Germany had invaded Belgium, violating its own solemn undertaking to protect its neutrality, and France, not the other way around. And almost all the fighting had been on Belgian and French soil. “Who Ought to Be Ruined?” asked a headline in the conservative Le Matin, “France or Germany?”
³⁰
Surely the aggressor and not the victim should pay for setting the damage right. The Americans might talk of the new diplomacy without indemnities or fines, but the old traditions where the loser customarily paid still ran strong. France had paid up in 1815, when Napoleon was finally defeated, and it had done so again after 1871. Both times Germany had collected; now it was going to pay out.