Monetary Regime Transition – a Hypothesis – Part III
This post is the third in a series that is preceded by the following:
Part I – Message 20281952
Part II – Message 20282026
And the original hypothesis:
Message 20277691
This post discusses the context of the post-WWI Peace settlements. It makes it clear the degree to which Great Power politics, as it always is, was behind the post-WWI Peace settlements.
What this post does not do is to outline how critical issues of post-WII economic and financial organization were left unaddressed. It also does not expand upon the failure of the post-WWI negotiators to evolve a stable “balance of power” system.
This post is really just a placeholder of sorts. To suggest that post-WWI, geopolitical and economic relations were not adjusted to the emerging conditions of the 20th century, but rather much more to conditions of the 19th century.
And the real important element to be discussed in a future post is the resulting efforts at stabilizing the flows of both goods and money, significantly through manipulation of the money and credit system, but also through various tariff mechanisms. When combined with a reversion to the pre-WWI gold standard, it created the proximate conditions for a fundamental “rupture” in Capitalism in the decade of the 1930’s.
The remainder of this post is excerpted from Quigley. I have not italicized the remainder of this post for purposes of greater readability.
The Peace Settlements, 1919-1923
Treaty of Versailles with Germany, June 28, 1919
Treaty of Saint-Germain with Austria, September 10, 1919
Treaty of Neuilly with Bulgaria, November 27, 1919
Treaty of Trainon with Hungary, June 4, 1920
Treaty of Sevres with Turkey, August 20, 1920
The last of these, the Treaty of Sevres with Turkey, was never ratified and was replaced by a new treaty, signed at Lausanne in 1923.
The peace settlements made in this period were subjected to vigorous and detailed criticism in the two decades 1919-1939. This criticism was as ardent from the victors as from the vanquished. Although this attack was largely aimed at the terms of the treaties, the real causes of the attack did not lie in these terms, which were neither unfair nor ruthless, were far more lenient than any settlement which might have emerged from a German victory, and which created a new Europe which was, at least politically, more just than the Europe of 1914. The causes of the discontent with the settlements of 1919-1923 rested on the procedures which were used to make the settlements rather than on the terms of the settlements themselves. Above all, there was discontent at the contrast between the procedures which were used and the procedures which pretended to be used, as well as between the high-minded principles which were supposed to be applied and those which really were applied.
The peoples of the victorious nations had taken to heart their wartime propaganda about the rights of small nations, making the world safe for democracy, and putting an end both to power politics and to secret diplomacy. These ideals had been given concrete form in Wilson’s Fourteen Points. Whether the defeated Powers felt the same enthusiasm for these high ideals is subject to dispute, but they had been promised on November 5, 1919, that the peace settlements would be negotiated and would be based on the Fourteen Points. When it became clear that the settlements were to be imposed rather than negotiated, that the Fourteen Points had been lost in the confusion, and that the terms of the settlements had been reached by a process of secret negotiations from which the small nations had been excluded and in which power politics played a much larger role than the safety of democracy, there was revulsion of feeling against the treaties.
In Britain and in Germany, propaganda barrages were aimed against these settlements until, by 1929, most of the Western World had feelings of guilt and shame whenever they thought of the Treaty of Versailles. There was a good deal of sincerity in these feelings, especially in England and the United States, but there was also a great deal of insincerity behind them in all countries. In England the same groups, often the same people, who had made the wartime propaganda and the peace settlements were loudest in their complaint that the latter had fallen far below the ideals of the former, while all the while their real aims were to use power politics to the benefit of Britain. Certainly there were grounds for criticism, and, equally certainly, the terms of the peace settlements were far from perfect; but criticism should have been directed rather at the hypocrisy and lack of realism [again: that “unrealism” notion] in the ideals of the wartime propaganda and at the lack of honesty of the chief negotiators in carrying on the pretense that these ideals were still in effect while they violated them daily, and necessarily violated them. The settlements were clearly made by secret negotiations, by the Great Powers exclusively, and by power politics. They had to be. No settlements could ever have been made on any other bases. The failure of the chief negotiators (at least the Anglo-Americans) to admit this is regrettable, but behind their reluctance to admit it is the even more regrettable fact that the lack of political experience and political education of the American and English electorates made it dangerous for the negotiators to admit the facts of life in international political relationships.
It is clear that the peace settlements were made by an organization which was chaotic and by a procedure which was fraudulent. None of this was deliberate. It arose rather from weakness and from ignorance, from a failure to decide, before the peace was made, who would make it, how it was to be made, and on what principles it would be based. …
... to be continued.
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