ABSTRACT
In writing his denunciation of the Treaty of Versailles Keynes achieved one of his finest, most comprehensive judgements. ‘Round Germany’, he wrote, ‘as a central support the rest of the European economic system grouped itself, and on the prosperity and enterprise of Germany the prosperity of the rest of the Continent mainly depended.’1 For a man born and brought up at the height of Britain’s imperial power it was a percipient remark whose accuracy has been amply borne out by all subsequent research. From the 1880s onwards Germany was the pivot of the continent’s international trade and payments and the driving force in its technological advance. Production costs, prices, wages and social conditions there were becoming determinants of those elsewhere. The failure of the Treaty of Versailles to come to terms with these facts soon gave rise to a proliferation of alternative schemes involving attempts to link French and German industry by government agreements, to encourage French investment in German reconstruction in return for some French control over German output, or, alternatively, by a more extensive framework of private cartelization.2 These ideas were only interrupted by the French occupation of the Ruhr, which could neither achieve the enforcement of the Versailles treaty nor harmonize French and German economic interests. Until 1924 no framework which offered any hope of such a harmonization could be found. The fragile framework then provided by the Dawes plan survived only until the first major cyclical downturn and the history of the continent was subsequently dominated first by the catastrophic depression and afterwards by the attempts of the Nazi government to reaffirm the realities of Germany’s position in Europe by refashioning the society and economy of the continent to conform to their own views.
