§ THE EARL OF BIRKENHEADMy Lords, I beg to ask His Majesty's Government the Question of which I have given Notice—namely, whether, before any definite commitments in relation to Reparations are made at the Paris Conference, an opportunity will be given to Parliament 387 to discuss the policy of His Majesty's Government upon this matter. The noble Marquess who is leading the House was considerate enough to communicate with me last night, and to inform nee that my noble friend, Lord Grey, desired to make some general observations on the question of payment of war debts, that he was unable to be in his place in the House to-morrow, and therefore that in the opinion of the noble Marquess the Question which I have put down would provide the most suitable occasion for such general observations as noble Lords might desire to make.
I have sonic few, not extensive, observations on the whole subject which I desire to make, and I therefore take advantage of the opportunity which the decision of the Government affords me to deal very briefly with the subject of Reparations, for which I and my colleagues in the last few years have held so large a responsibility. It is hardly necessary to say that no one who has had to deal in a responsible capacity with this most difficult subject in the last few years would willingly say a word which could add to the embarrassments of the Government, at the moment when they are actually dealing with this question. The position of the noble Marquess is even unusually difficult, because the Minister specially responsible for this Department is engaged elsewhere upon public business and cannot deal with the issue himself. If the noble Marquess, therefore, finds any observation or question which I put embarrassing or inconvenient to answer, he will, of course, say so and that is an end of the matter.
But I observe that M. Poincaré, according to the French Press of to-day, intends on Friday to make a full statement of what happened in London. If that be true, and it is repeated in many of the more influential organs of the Press in Paris, today, it is plain that no disadvantage can possibly follow if we are made aware from this side of that which took place at the last meeting, and if we are informed, as generally as the Government find themselves in a position to inform us, of what is the policy of the Government upon this question at this moment. I may recall here that it was the almost unbroken practice of the late Government, when Conferences of this kind were in progress or were contemplated, to make at least general statements of the policy which it was intended to carry out. Nor will your 388 Lordships need any reminder that the present occasion is one of somewhat unusual anxiety, for the reason that the renewed Conference is to take place on January 2. At that date Parliament will not be sitting, and the decisions that are to be taken there will therefore, unless the unusual course be adopted of inviting Parliament to meet prematurely, be taken, and it is presumed irrevocably taken, before we shall have an opportunity of considering them in this House. I hope, therefore, subject to any overriding consideration of the public interest, to which one will of course gladly surrender, the Government I may find themselves in a position to give us information upon this subject with some freedom to-night.
I find myself, as I understand it, in very general agreement with the indications of policy which have been made by the Prime Minister hr another place, but there are one or two questions which I should like to ask. The Prime Minister says, and here I think all must agree, that "it would not be right that the settlement should be fixed in such a way that we only, of all the Allied countries, would be virtually paying an indemnity." Now the Prime Minister has expressed in this phrase, and not for the first time, a profound truth. If we in this country are to pay, as we must and intend to pay, our indebtedness to the United States of America, and if at the same time we are to remit the Reparations from Germany, and the debts which are owing by France and Italy to ourselves, it would be literally true that we who did not provoke the war, and we who won the war, would be the only nation in the world that would in truth be paying any substantial indemnity at the close of the war. Such a proposal would, in my judgment, be extremely difficult to recommend to the people of this country.
What is the position of this country at the present moment? Your Lordships are more heavily taxed, as are other persons not in this House but in the same station of society and with the same means, than any class in any belligerent country in the world, with the possible exception (but even that requires qualification) of a comparable class in the United States of America. Not only is that the case, not only is it most cruelly embarrassing to every one of us in our private lives, but it has in its reactive effects upon the general 389 prosperity of the nation an even greater consequence, because it is to-day hampering our merchants, most vitally impairing our competitive power and resources, and, more than any other circumstance, is impeding the restoration of our prosperity and our capacity for procuring employment for our people. To this must be added that while we have math, these sacrifices in the direction of taxation other nations have not felt themselves called upon to do so, and it is certainly true that sonic of those nations, who are at this moment our debtors, have either not felt themselves called upon to make, or have not been prepared to make, demands upon the citizens of their countries comparable to those which we have made upon the citizens of our country.
Nor is it an adequate explanation to say that those Governments are, in fact, unable at this moment to make their Budgets balance, and that therefore they cannot support the burden which the loans of the war imposed upon them. That is not a sufficient explanation for this reason—although the Governments of those countries at the present moment are unable, having regard to their unwillingness to tax their citizens, to balance their Budgets, it is not in the least true to say that there does not exist in those countries great wealth. There is very great wealth in those countries. It is not for me, in dealing with communities of which I am not a member, to offer any criticism of the capacity which they feel to impose sufficient burdens of taxation upon their citizens to balance their Budgets, but am repeating what financially and economically is almost a commonplace when I say that there exists in those countries all the elements by which, in ordinary economic terms, men have measured wealth in the history of the economic development of the world.
We who have imposed these burdens upon ourselves to our great suffering in the last four years, but with immensely advantageous results upon our credit and upon the value of our currency, have at the same time, and partly in consequence of that which we have done, been face to face with an immense and perhaps a chronic burden of unemployment. What in that matter is the present situation? We in this country, almost alone of the countries of Europe, have at the very time at which I address your Lordships, as we have bad for the last three years, vast numbers of deserving citizens who ask nothing better 390 than to work and who have not been able during the whole of that time, and may not be able for the next three or four years, to procure the means of maintaining a decent subsistence for themselves and their families. They have been thrown upon the assistance of the State, which of course can never be adequate in such a case and is always a poor substitute for actual employment. We in this country have been face to face with this grave problem to which none of the nations who are indebted to us have been exposed. There is no unemployment in Germany; there is no unemployment in France; there is practically no unemployment in Italy. If the view which the Government have rejected were to prevail we in this country would be asked, while paying the whole of our own debts, to remit the debts owed to us by other nations, although those other nations are less highly taxed than we are, and although they are not compelled to support the grave and almost intolerable burden of unemployment which we must at this moment support.
I rejoice greatly that the Prime Minister has made it plain that, while he is prepared to make concessions upon this point, the Government has no intention of surrendering everything which this country is entitled to claim. The policy of the Government was stated by him in, I think, extremely reasonable language. He said that if we saw some chance of a complete settlement with a prospect of finality, we would be prepared to run the risk of not receiving in the end as much from the Allies and Germany as we might have to pay to America. But the Prime Minister made it plain also that it would be foolish to make such concessions if the whole question were to be opened again. I am, if I may say so, in complete agreement with that conclusion, and with the implication of that conclusion. The imlication, of course, is that, if we are prepared to run the risk of not receiving in the end as much from the Allies and Germany as we might have to pay to America, we were none the less of the opinion that it was proper, in all the circumstances of the case, that, just as we should have to repay our obligations to America, so we should receive something from those to whom we advanced money, or on whose behalf we guaranteed money in the course of the war.
What is the basic fact of the present Reparations position, which I do not 391 propose, as I have made it clear, to argue at length, but on which I would desire to make a few very brief observations? The basic fact, indisputable and undisputed by any one, is that Germany cannot at this moment pay the amount that is due under the Reparation Agreement. No one, so far as I am aware, in any country in the world, pretends that at this moment Germany can pay. If she cannot pay it is obvious that there must be a moratorium, and to that conclusion, as I understand it, all the parties concerned assent. The French Prime Minister, M. Poincare, if I understand him aright, has said that he does not dispute this conclusion, but that the interests of France indispensably require what he calls fruitful securities. I have analysed the existing position as closely as I can. I have had, as others have had, to give attention to it in the last few years, and I know of only three possible securities. If there are others I am bound to say they have escaped my attention.
The first possible security is that of the occupation of the Ruhr district. If the Government feel a difficulty about expressing their views upon that subject it is certainly not for me to press them, but I may be allowed, I hope, in cautious language to indicate one or two most grave possibilities, which in my judgment would arise if that course were decided upon and adopted. It is not, indeed, true to say that there exists in Germany to-day the capacity for military resistance to such an attempt. Unless the situation has wholly changed from the time when I had sources of reliable information upon this subject your Lordships may wholly disregard the statements, which appear in alarmist sections of the Press, to the effect that German officers in large numbers are instructing the flying formations of Bolshevist troops.
Your Lordships stay completely disregard the statements, made with so much appearance of particularity, that at the present moment there are secret formations in Germany; that there exists all the mechanism of a great army, which, once again, may be swiftly forged to spring -upon the liberties of Europe. Such predictions and such warnings are the delusions of ignorance. I speak with a knowledge, which I thick, on this subject, will not be denied, of the opinions of those who have 392 represented us, and do represent us at the present moment, in Germany, when I say that it is the undoubted truth that in the circumstances in which, and in which alone, the weapons of modern war can be forged, this country, or any country in Europe, need not apprehend that for five years there can be any military menace in Germany, nor could any such menace be effectively developed without its being so developed in the sight of, and to the knowledge of, every one of the countries whichex hypothesi at that moment would be in a situation of overwhelming military superiority, and so could prevent and suppress it.
No, that is not the peril which I apprehend. The peril which I apprehend, if there were an occupation of the Ruhr district, is of a different and a more insidious character. After all, the Germans are still, and they always must be, a great and a formidable people, and there ought to be, if the humiliations can be avoided, a limit to the humiliations which it is wise to put upon them. I am not measuring in scales as to whether they have deserved it or not. I am attempting to argue this question on the simple ground of expediency, and I am most apprehensive of the mischiefs that might arise if control were assumed over an immensely populous industrial district in Germany in circumstances which they would consider to be circumstances of profound humiliation to themselves. And I am at least most deeply concerned that, whoever else runs those risks, this people should in no way be partakers of them. I need only indicate, as one possibility, the grave risk that there might be a national strike in Germany when some other Power had assumed the responsibility for conducting the business of the coalfields. I say no more of that, which is the first productive security which has been very freely mentioned in responsible quarters in France.
The second security, which has been equally recommended, is that of setting up a Customs barrier along the Rhine; and, in the alternative, that proposal is sometimes made in another shape. It is that there should be a Customs barrier thrown round the Ruhr district. I cannot conceive that that method is likely to be in any way a successful one. Here again I do not urge, and I have no right to urge, that a definite answer should he given to me now. On that point I would call attention to 393 this circumstance. The Allies have already tried for a brief period the method of Customs. What happened? All that was collected was paid in paper marks, and I am informed that the Reparation Commission at this moment has, in innumerable elitists, countless stacks of German paper marks. The precise value of this commodity at the present time as the result of a Customs barrier is, I think, open to the very greatest doubt.
The third course that has been proposed—and I am aware of no other—is that we, or that some of the Allies, should seize, for the purpose of obtaining money, the forests, or some of the forests, of Germany, and perhaps sonic of the mines of Germany. I would only say of that proposal that it is quite impossible that you should assert control over either forests or mines without forces of occupation to protect those who are in charge of them. Incidents that have happened in many German towns in the last few weeks have shown the dangers to which those are exposed, or may be exposed, who undertake intervention of this kind in such towns. If there be any resort to any proposal of this kind, I hope that here again the view may be taken by the Government of this country that the results which are likely to be attained will not be commensurate with the risks and the expenditure that will be involved.
Let me add an almost final word upon the question: What is the true situation of Germany to-day? I do so because we are bewildered by conflicting views. One authority gives us the view that Germany can readily pay whatever we demand; while others are convinced that she cannot. The first fact which is indisputable is that at this moment and as the direct consequence of the inflation that Las taken place, the mark is travelling that road of ruin along which the kroner and the rouble have already marched. The inflation which has taken place and which is, from one point of view, and even from the German point of view, sheer financial insanity, has nevertheless been, in my judgment, in some degree deliberate. The German Government, which has, undoubtedly, made itself responsible for this inflation to some extent consciously, though in other ways she has been driven whether she wished it or not along the road of inflation, has run terrible risks in so far as the adoption of that course has been a voluntary one.
394 Let there be no delusion as to the facts. At the present moment Germany is printing notes as fast as the presses can work and as fast as the men who are engaged in the task can produce those notes. Germany has gained Some to advantage by this inflation. I do not think the advantage comparable to the disadvantage; but it is very great. What she has done by her policy of inflation in the last font years is virtually to wipe out as with a stroke of the pen the whole of her domestic war debt. Had we in this country undertaken a policy of inflation comparable with that which has taken place in Germany, we should have sustained many disagreeable results. The pound sterling would not have challenged that comparison with time dollar in America which is a source of pride at this moment to everybody who values the credit and stability of English commerce. But it would have had this compensating advantage—that we could have paid the war debt which was advanced and lent at the crises of the history of this country. We could have paid that in deflated and almost worthless paper.
This advantage, for what it is worth, Germany has enjoyed; but observe the risks which must be set upon the other side of the account. There is no man living, however experienced, who can tell us at this moment whether Germany is not, as the result of this inflation, on the brink of a complete economic collapse. And what would that collapse mean? I do not deal with the tragedy—for it has already happened; it has not only happened, but it has exhausted its cruel effects—I do not deal with the tragedy of the bruising and destruction of the middle classes in Germany. They have disappeared almost as completely from the social and economic life of the nation as the middle classes have disappeared from the life of Bolshevist Russia. But supposing that the collapse took place, what would be the effect upon Europe, and what would be the effect upon the creditor nations of Germany?
As to the effect on Europe I need not speak. Many of your Lordships have thought deeply upon this subject and know well the folly of supposing that you can strike out from that complex and artificial international structure which in the days before the war we knew, somehow or other and very vaguely as a homogeneous geographical and political entity—that you can strike out from the centre one 395 virile, highly sophisticated, and highly trained nation that at the moment is the greatest consumer in one sense of our products and, on its other side, one of the greatest producing areas of raw materials (I mean Russia)—and that both those two great entities can be subtracted from the elements which, working together, before the war made the prosperity of Europe and, in making the prosperity of Europe, established the security of employment for the working classes of this country. That you can do such a thing as that and retain any hope for the restoration of our national prosperity within the lifetime of anybody living is, believe me, impossible.
What, then, is the hope at this moment? What is the prospect for the future? Let me in my concluding observation make the best contribution which I can to that subject. The most able document unquestionably which has been published in the whole course of this difficult discussion is the Report on the Stabilisation of the Mark which was issued by the International Committee of experts, of whom Mr. Brand was the American representative and Mr. Keynes the British representative. Not very long ago they prepared a masterly Report which was summarised inadequately in the French Press, and of which some brief but insufficient account appeared in the English Press. I should welcome a decision that this masterly document, so fruitful suggestion, so coldly analytical in its examination of the existing difficulties, should be printed and published as a Parliamentary Paper.
May I quote very briefly three or four of the outstanding passages of this Report? The signatories say—
We are deeply impressed by the vital need of an immediate stabilisation of the German mark. It is an essential condition of saving Germany from the threat of complete collapse.Your Lordships will observe that, in the opinion of these gentlemen, I did not exaggerate when I said that you cannot save Germany from complete collapse unless you can stabilise the mark. The document continues—It is equally essential in the interests of her creditors whose claims will otherwise become valueless. Granted certain concessions from these creditors which we indicate below, stabilisation is possible.The Report in a later place continues—As regards external business, we are of opinion that, so long as Germany is not relieved for a 396 period from payments under the Treaty of Versailles, any attempt to stabilise the mark would be futile and could only result in the useless dissipation of Germany's ultimate reserves. Such relief is, therefore, an indispensable prior condition.… The essential principle is that payments must not begin again until they can be made out of a real surplus and not out of proceeds of a fresh inflation. We believe that the period must now be fixed at two years at least.The underlying truth of that conclusion will not be disputed by any one.It is of no use saying to Germany in her existing financial situation: "You must pay the instalment of your debt." They will say: "How are we to pay it?" And you wilt say, "You borrow more money or you print more notes." It is, of course, the vicious circle in full swing. I cannot do more than quote one or two more salient and most instructive passages—
In the long run the success of stabilisation must depend on the equilibrium of the Budget. On the other hand, stabilisation is in itself a necessary condition for the recovery of equilibrium.We have been informed from the German Treasury that, if the mark were stabilised and if the Budget were relieved of the present extraordinary charges, it would be possible to balance normal revenue and expenditure at an early date. Present conditions have thrown the statistics of the Budget into confusion. But we see no reason to doubt the accuracy of this expression of opinion as to what is possible.Then there is one most, remarkable paragraph to which I draw the special attention of the House.The signatories say—
We conclude that in the conditions we postulate an immediate stabilisation is possible by means of Germany's own efforts. Indeed, we go further. Certain technical conditions are now present—the large gold reserve, the scarcity of currency, the margin between external depreciation on the one hand and the degree of international inflation and internal depreciation on the other—which render the position unusually susceptible to control.I ask your Lordships to be good enough to listen to this—At the rate of 3,500 marks to the dollar the gold in the Reichsbank now amounts to about twice the value of the note issue.I confess that statement did amaze me. I was not aware of it till I closely studied this Report. At the rate of 3,500 marks to the dollar, so amazing has been the paper depreciation, so large has been the gold reserve, that at the existing rate to the dollar the gold in the Reichsbank now amounts to twice the value of the note issue. "It is," say the signatories, as well 397 they may, "an unprecedented situation. No other currency has fallen into decay with so great a potential support still unused."They then give their recommendations. I will summarise them in a moment for your Lordships. These are the outlines of a plan for stabilising the mark which surely is the only way to avert utter collapse. They say—
In return for a suspension of payments under the Treaty of Versailles for a period of two years the German Government should offer to the Reparation Commission the following definite guarantees—I am not able to inform your Lordships—it would be imposing an undue demand upon the patience and forbearance of the House—of all the qualifications which must necessarily be made or of all the difficulties examined and then dismissed by the signatories of this able and remarkable document.
- "(a) That an independent Board of Exchange control would be constituted as a special department within the organisation of the Reichsbank and that the Reichsbank would hold adequate gold from their reserves at the service of the Board.
- "(b) That so long as any part of such gold is unpledged, paper marks shall be purchased by the Board of Exchange, on demand, at a fixed rate to the dollar; this fixed rate to be determined on the principles outlined in the first part of our Report.
- "(c) That the aggregate value of the net floating debt shall not be increased beyond a defined figure; all other Government requirements for credit to be covered by funded loans."
It must be the hope of every one that our successors will be more fortunate than we were in dealing with this grave and difficult matter. They carry with them to the attempt, which is to be resumed on January 2 in Paris, the good wishes of all sections in this country. I hope it will not have been unwelcome to them, having had thrown upon me, as it was also thrown on my late colleagues, the burden of these problems for many years, that I have offered to them an expression of good will and a word or two of caution on points which seem to me of the first importance. I am sorry to have inflicted my observations at such length upon your Lordships, but the gravity of this question, the risk of taking a false step, may perhaps be accounted sufficient justification of one who bore a full share of these anxieties and these burdens for four years.
§ VISCOUNT GREY OF FALLODONMy Lords, I approach this subject of inter- 398 Allied debts from rather a different stand-point from that of the noble Earl who has just spoken, but I do not propose to dwell upon that difference. What moves me at the moment is an intense anxiety that if the Conference which has now adjourned results eventually in failure it must mean that Europe takes a further step towards collapse, and it will probably mean that our relations with France are greatly imperilled. It is now more than four years since the Armistice, and it seems to me that the danger of political disturbance in Europe, and the prospect of still further economic collapse, instead of getting less is really becoming greater. The noble Earl, Lord Birkenhead, spoke of the risk of taking a false step. That is a risk, undoubtedly. I think the risk of taking no step, and making no progress, is a still greater one, and I would like to deal with this question of inter-Allied debts from that point of view.
The policy of saying that so long as we pay our debts to the United States we cannot remit debts owed to us by European Allies is a very obvious one. I am not sure that it is quite so logical as appears on the surface, but no doubt, if it is departed from, it lends itself to the sort of criticism which the noble Earl who has just spoken indicated. The objection to it is that it is a policy which, though obvious, though superficially at any rate logical, though in appearance fair, is perfectly sterile, and with it no progress can be made. I think, on the question of the debts owed to us, there are one or two things to be borne in mind. First of all, the policy of making the remission of those debts dependent on whether the United States remit our debt to them, does not bring us an atom nearer to any prospect of recovering money from these European Allies who owe us money. We gain nothing by it. Financially, we do not improve our prospect of getting any of the cash paid which is owed us.
In the next place, I would observe that we have more interest in this country in seeing political security in Europe, and economic recovery in Europe, than we have even in getting cash payment of debts owed to us. Even if France and Italy were in a position to begin payment to us of the debts owed by them, and if we could begin to receive the money from them to-morrow, yet, if receiving that money and holding them to their debts meant perpetuating the present state of 399 Europe, or delaying recovery in Europe from the present state of unrest and economic distress, we should be the losers. If, by remitting not cash payments but the prospect of getting some cash payments in the future, we could do anything substantial to promote security of peace and economic recovery in those countries in Europe which are the customers for our trade, we should be immensely the gainers. I admit that if we remit those debts without doing anything to promote the prospect of such recovery, the Government that does it will undoubtedly be exposed to criticism that will be very difficult to answer.
Therefore, I think the Government should take a broad view and have a perfectly free hand with regard to the principle of remitting the debts owed to us; and I should like to state some of the conditions on which I think a remission, even a total remission, of those debts would be amply justifiable and beneficial in the interests of the true economic prosperity of this country. It is, of course, too much to say that by a remission of those debts we could secure that political appeasement and economic recovery which are essential if collapse is to be avoided and prosperity restored to Europe. But it will be worth while considering—and I want to take a broad view—what are at the moment the real barriers which prevent any start being made towards an improved condition of things in Europe.
The Reparations question is only one. The noble and learned Earl has shown how difficult it is to settle the Reparations question. I will not dwell upon it, but part of the difficulty is that the question in only part of the whole question of greater security in Europe. It might become easier, less impossible, of settlement if it were considered as part of the whole rather than if it were continuously discussed at Conferences by itself. Undoubtedly, inter-Allied debts and the Reparations question are so closely connected that they may be made the subject of a definite bargain and agreement, making the remission of inter-Allied debts a condition of bringing the question of Reparations within practical limits.
I think the noble and learned Earl did good service in drawing attention to the Report, which is not so familiar to me as it is to him, of the experts on the question of Reparations. One of the great mistakes 400 in dealing with Reparations was that the International Commission of hankers, which met at Paris in June, and which so far as we can gather from the Press, did see its way, on certain conditions, to getting the German exchange stabilised and eventually to recovering substantial sun is in the way of Reparations, was so discouraged that it adjourned. That circumstance, so far as I know, conveys no reflection upon the late Government here. I think it was the French Government., not the late Government here, which was responsible for that International Commission of bankers discontinuing its work. If you are to advance towards a settlement of the Reparations question the French Government ought to have in view the desirability of summoning another such International Commission of bankers, on which the United States was represented. Although that may not be the main way of solving the Reparations question, for there must be agreement between Governments first, at any rate, it y; ill be a most useful instrument in rendering practical whatever general principles the Governments agree upon.
But the Reparations question is not the only one which has prevented the economic recovery of Europe. You will not really get economic recovery in Europe unless you also get greater political security. The two things are not the same, but they go hand in hand. I regard the development and strengthening of the League of Nations as the best means—in my own opinion it is, indeed, the only sound means—of restoring political security. I am not going to dwell upon the League of Nations more than appears to be absolutely relevant to this question. It has done exceedingly well with all the work it has had to do and the opportunities it has had. But it is quite obvious that unless the League of Nations becomes more comprehensive Europe will again drift presently into two armed camps. I think the next and most important step is that when the Reparations question is settled Germany should declare herself willing to be admitted, and the other Powers should declare themselves willing to see Germany admitted, to the League of Nations. I would like to see that a consequence, an agreed consequence, of any settlement of the Reparations question. That is the second point.
The third point I would make with regard to the remission of inter-Allied debts is this. One of the things which weighs upon 401 the economic condition of Europe as well as upon its sense of political security is the expenditure upon armaments, or perhaps I ought to say, the feeling that there is no certainty that there will not again grow up in Europe competition in the expenditure on armaments. At the present moment the Washington Treaty is the one thing which stands between the world and a renewed competition in expenditure on naval armaments. We have ratified that Treaty. The United States, I believe, has ratified it. Japan has ratified it. It has not been ratified by France and Italy. I read the other day in a French newspaper a statement by one individual, which I am sure does not represent. the real view of the French Government or people, that not only would France not ratify the Treaty but, after having declared she would not ratify it, she would declare that she intended to build no more capital ships hut a new kind of navy, a more modern kind, more formidable than a navy of capital ships. I quote that not with any implication that it represents the views of the French Government. I do not believe it can. But it does open a prospect not only of a failure to ratify the Washington Treaty, but in the future of a competition in naval armaments. It would be too crude, too provocative to the French Government, to say that we cannot consider the question of remitting inter-Allied debts unless you are prepared to ratify the Washington Treaty. You cannot do things that way.
But there is all the same a connection, though not a direct connection, between them. I long to see these inter-Allied debts, as far as we are concerned, remitted and completely remitted, because I long to see conditions produced which I think would justify their being remitted. If, after they have been remitted—even if this had secured a settlement, though in that case it could be only a temporary settlement, of the question of Reparations—if then one of the countries to whom we had remitted that debt. were to begin forcing expenditure on armaments, there would be great feeling and very great criticism in this country. I agree that it is possible to connect the two questions too closely together, but I give it as an illustration of how, if we are to remit inter-Allied debts, there might be, if not direct consequences of remitting them, at any rate indirect consequences which would make us feel that, though no great actual progress might yet have been made, 402 the risks and dangers of increased political disturbance in Europe in the future had been at any rate greatly diminished and that the barriers which at the present moment prevent any actual progress being made had been thrown down.
There is a fourth point with which I wish to deal. It is, I think, more important still. My object is to try to regard this question as a whole, and though the particular parts with which I am dealing may not all seem very relevant to this question, I believe they really are relevant, because I believe that you cannot deal with any of these particular parts unless you have in mind a comprehensive view of what are the real causes which are keeping Europe in the state in which it is found to-day. In my opinion one of the chief causes of all the political trouble, the difficulty of making any political progress, since the Armistice, has been the fact that there were two Treaties most important to France included in the Peace settlement—not parts of the Treaty of Versailles, but as much parts of the Peace settlement as the Treaty of Versailles itself. I mean the Franco-British and the Franco-American Treaties, which guaranteed to France that, should there in the future be German aggression against her, she would have for her support the whole strength of the British Empire and of the United States. Those Treaties were as much part of the Peace settlement as the Versailles Treaty itself.
Those Treaties have absolutely disappeared; they are gone; and would ask people in this country, who are very apt to criticise France as having been restless, or aggressive, or contemplating strong separate action in these last years, perhaps even at the present moment—I would ask them to hear in mind what would be their feelings had they been Frenchmen, seeing this Peace concluded, and regarding those two Treaties as indirectly part of that Peace, regarding the great object of that Peace for France as not so much mere cash payment to indemnify her for the war (though that was really important) as that she should have security against the recurrence of the terrible position in which she was placed for so many years before the last war. What must have been the feelings of Frenchmen when, after a Peace was concluded which they regarded as a, whole, those two Treaties, which did far more 403 for the future security of France than the Versailles Treaty itself, suddenly disappeared?
This is, of course, no reflection on the late Government. When they had signed the Franco-British Treaty and secured its immediate ratification, it failed. The reasons for that failure are perhaps imperfectly understood outside the United States, anti if we did understate] them no good purpose would be served by dwelling upon them. There are people, I know, who even at the time considered that those Treaties were not very wise policy. But even they, I think, must agree that the fact that, after these Treaties had been made, they should then have failed and been withdrawn, is a most disastrous one. They were part of the Peace—to France they roust have appeared almost as the greatest part of the Peace—and their collapse has knocked the bottom out of the Peace. I think the failure of those Treaties does account for a great deal of what has seemed to many people an aggressive spirit in France, and, I believe, really accounts to a great extent for the risk of France taking these measures, of the inadvisability of which the noble Earl who preceded me spoke with some force.
Imagine what would have been the situation had those two Treaties remained. I know they cannot be revived; I know there is no chance of the Franco American Treaty being revived, but I dwell upon what might have been the course of events had they remained, simply in order to help people to realise how great a difference has resulted from their having collapsed. Had they remained, the United States, ourselves and France would have been partners in policy. Not only would there have been no chance of French aggressive action towards Germany with that partnership in being, but there would have been no cause for it. I am sure that if those Treaties had remained and we three had been partners in policy, the Reparations question would have been taken in hand in the very earliest years after the war. The first thing would have been to settle that the amounts estimated as possible by the Versailles Treaty had been greatly overestimated, and that they must be reduced. The next step would be by common agreement to find out and settle what Germany could actually pay. The third step, no doubt, would have been to stabilise the German exchange long ago, to prevent the collapse of the German mark.
404 The result would have been that by this time Germany would have paid to France far more than she has yet paid, because the amounts would have been reduced within possible limits, the collapse of the mark would have been prevented, and the whole condition of Europe might have been very different from what it is. That, I think, is what would have happened had those Treaties remained. They collapsed. Now Mr. Lloyd George, early last January, I believe, was aware that, with regard to Reparations and the questions outstanding with France, if you wished to come to an agreement with the French Government upon them you would only come to that agreement by finding some means of giving, back to France that sense of security with regard to the future which she thought she had obtained in the Peace Treaty and which she has lost. Early in January last Mr. Lloyd George was discussing the question of making some sort of pact with the French Government to take in some way the place of the Franco-British Treaty.
I was so impressed with the subject at the time that:1 made a speech at Bristol, I think, on January 10, in which I endeavoured to be friendly and helpful to what I understood Mr. Lloyd George's policy then to be. I made certain reservations about which I will say something in a moment. The result was very curious. In some quarters which supported Mr. Lloyd George, I am told, my support of that particular point of his policy was made a subject of attack and complaint, although the part he was taking in it passed without criticism. That is one of the illogical things which sometimes happen in politics and upon which it is no good to dwell.
But I would like to give my view for what it is worth, and it is the same view as it was then. I do not believe you can get security in Europe by making exclusive agreements with particular Powers. I think you can only get security by making them in a form that is not exclusive, and inside the League of Nations, and what I had in my mind then was an agreement with France under which if either of us was in a dispute with another Power, and that other Power would not agree in the last resort to refer that dispute to the League of Nations, we should support each other, and having it in a form in which other members of the League of Nations, including Germany, if she were then a member, could join. In that way you would make the League and each nation who was 405 a member of the League of Nations a party, inside the League of Nations, to such an agreement, and each nation would feel that the League of Nations was a party to it and that it had a security which at present it does not possess.
If the Government find the French Government difficult to deal with on the question of Reparations, and find the French Government too easily disposed to take strong measures and occupy more German territory, I believe the real reason, although perhaps the French Government may not admit it themselves, is not so much that they are anxious to get cash from Germany in payment of the Reparations. I do not believe that those strong measures will produce the cash. They are much more likely to produce the collapse of Germany, which will he a disaster to Europe. I believe the reason is much more that, left insecure, as they think, by the terms of Peace, they desire to get that security which they thought they had for the future, and which they think they have lost, by occupying more German territory and weakening Germany. I do not believe that security is to be gained in that way. I do not believe that any nation makes itself more secure in the long run, however much it may acquire security for the moment, by occupying large tracts of territory inhabited by a different people from its own.
It would be an undoubted disaster if the Conference, which is to be resumed in January, were to result in measures which I do not think would really help Reparations, and which I think would only intensify the political unrest of Europe, without promoting economic recovery. But I do not anticipate, and I hope the Government will tell us we need not yet anticipate, that the Conference will not result in agreement. What I do want to bring out is this. Although the French seem to make little of it themselves, I am sure that what they want most of all is security in Europe. As long as you deal with these questions of Reparations solely by themselves, and deal with them as if they were purely economic things, without facing the facts, I do not believe progress can be made. I think it is very easy, if you take this question of getting greater security for France, to point out the objections to any suggestions which will be made. It is easy, if you deal with the questions of armaments alone, to point out objections. It is easy, as the noble Earl who preceded me 406 said, to point out the difficulties of making any settlement, it is regard to Reparations. I dare say that at this Conference which is to be resumed it will be impossible to deal with the questions which really affect the future of Europe on the broad lines on which I have been endeavouring to deal wit It them in my speech this evening. I dare say that may be impossible, but, if so, I hope that at any rate it will do something to persuade people that these things must be dealt with as a whole.
The object of my remarks this evening has been to try to explain that if these things fail one by one when dealt with separately, it is because they are not dealt with as parts of a whole. If any one, taken by itself, seems to be insuperably difficult, it is because it is not regarded as part of the whole great question. If we could only see oar way to deal with any one of these questions as if it was going to be part of a settlement which was going to produce real peace and the economic recovery of Europe, then I think the difficulties would disappear. It is a very great question, and I have dealt with it inadequately, because it really requires a mind of enormous grasp to deal with the question as it should be dealt with, but I do feel that we are in a moment of great anxiety, and I would like to make, and I thank your Lordships for having enabled me to make, what contribution I can, not with a view of extracting an answer from the Government by asking from them an explanation of their policy, but simply in the hope that somehow or other out of the general consultation of people's minds, some better way may come of saving Europe from the course in which it is now going than has yet been found.
§ THE MARQUESS OF SALISBURYMy Lords, I am sure your Lordships will agree that in making arrangements so that the noble Viscount could make what he has described as his contribution—his great contribution—to the discussion of this subject, we have been very wisely advised. At the end of his speech he said he was conscious that it was a very big question, and as I listened to his remarks as they were unfolded, and to the infinite implications and complications which most legitimately he referred to, I felt how very inadequate I should be in saying anything in this discussion. I wish my noble friend the Leader of the House had been here, and if anything can add to my feeling 407 of diffidence it would be the knowledge, which is the knowledge also of your Lordships, that I speak in a moment of great international delicacy, in the middle of a Conference which has been adjourned, and which is therefore only half completed, and with the prospect that other speeches, delivered both in this country and elsewhere by people of great importance, will immediately succeed in the next few days what I am about to try to say. I am quite sure that in these circumstances your Lordships will realise the very difficult conditions in which I address the House.
A great part of the speech of the noble Viscount was, very naturally, addressed to the position of France, and her difficulties and her policy. But there is no one who listened to the noble Viscount, no one who reads what he says, but will realise that he spoke throughout as a convinced and profound friend of France.
§ VISCOUNT GREY OF FALLODONHear, hear.
§ THE MARQUESS OF SALISBURYHe was most anxious to show that he fully realised French difficulties, and that he very fully sympathised with French efforts to find a solution. I cannot help saying that I hope that when French statesmen read what he has said and recognise that it comes from a friend, they will weigh well the advice which he has in so friendly a spirit given to them, for I am sure that, if they do so, nothing but good will result.
And not only the noble Viscount, but the noble and learned Earl also, referred at some length to French policy and even to German policy. I do not propose to follow these two distinguished speakers in their analysis of the French position: that would evidently be the last thing which I ought to do. But I should like to make one remark upon the Report of the experts, to which the noble and learned Earl referred. I must admit that, like many others, I am not as familiar with that very important document as is the noble and learned Earl. In the course of his speech he said that he hoped it might be laid before Parliament. I can assure him that, if he presses that point, he will not find any difficulty, so far as we are concerned. But what, that Report emphasised, what indeed was contained in the speech of the noble and learned Earl, was that the immediate danger we have to fear is not 408 the re-awakening of the forces of war, but, the much more serious dangers of financial disaster. That is, of course, the fact. That is the moral of this Report to which the noble and learned Earl referred, and it is that, danger—that very imminent danger—which it was, and is, the business of the Conference to do its best to avoid. As to the particular methods which the noble and learned Earl described as being contained in the Report, I would rather not say anything about them. They come from very high authority, and they deserve most respectful consideration, but it would not be right for me to deal with such details as that.
The noble and learned Earl and the noble Viscount mentioned the position which we occupy both as a debtor and as a creditor in this Conference. Neither of them criticised the declaration of my right hon. friend, the Prime Minister, last night, and therefore I do not think it necessary to go into that any further. The declaration is in your Lordships' hands, and I think it will be recognised, and the noble Viscount will recognise, that it is in the direction at any rate of preventing the relation being any longer a cast-iron relation as between the three parties, Great Britain, America, and the debtors on the Continent; there is an element now of elasticity which has been admitted. That is, in the noble Viscount's view, at any rate a step in the right direction. I am sure it is a step in the right direction. One hopes that it will have as much effect upon the general mind as it evidently did upon the Italian Government.
I was glad when the noble Viscount, in his own distinguished way, dealt with this aspect from the broader aspect. It is really from the broader aspect that we ought to regard it. The policy of the Government—that which makes the foundation of the policy—is to increase the stability and sense of confidence of the world in these matters. That seems to me what is fundamental. We want, as it were, to knit together once more the innumerable bonds which united society before the catastrophe of the great war. We want to restore, if we can, that sense of confidence. And I need not say that it is very important in that connection that, most of all, we should maintain the close relations which exist between this country and France and Italy. It would be a very bad way to begin this policy of stability if we had allowed the divergence of which I spoke 409 on the first day of the session to continue as between ourselves and France, and had not done our best to eliminate it.
I think your Lordships will recognise that the fruits of that close relationship with France and Italy are already showing themselves in the Conference at Lausanne. You must take foreign policy as a whole, and the causes which go to make common action at Lausanne are intimately connected with the course of policy which is pursued between England and France in other parts of the diplomatic field. And I think we may congratulate ourselves most sincerely upon the wholesome effect which the close relationship between our country and France and Italy has already had at Lausanne under the skilful management of my noble friend the Secretary of State for Foreign Affairs. I do not mean to say for a moment that in that relationship with France we ought to accept a subordinate position, or subordinate our policy entirely to France; but that we should try to work on parallel lines, and in conformity with French wishes, seems to us to be elementary. We must bear in mind always the British point of view, British interests, the convictions of British public opinion; but at the same time, in so far as we can work hand in hand with France, we shall find a solution both at Lausanne and elsewhere.
I do not know that I can usefully add anything to what I have said. I should immensely deprecate, and the Government would immensely deprecate, any language to the effect that the Conference which has been held in London had broken down; that would be a very untrue account of it. It is in truth and in fact an adjournment and not an end, and I think we may confidently hope that when this Conference re-assembles in January we shall, in the broad spirit which the noble Viscount has indicated, be able to arrive at some proposals which I hope may be at once to the interest, and may command the assent, of the French Government. It is in that hope that the Government will meet the Conference again on January 2.