A DARK FUTURE.

Taihape Daily Times, Volume XI, Issue 3473, 29 April 1920, Page 7

A DARK FUTURE.

EC(j).\'OMIC STATE OF EUROPE‘

MR J. M. KEYNES AND THE

PEACE TREATY

REVLSION OR PARTIAL ENFORCEMENT?

M ‘Mr J. M. Keyne:-: spoke at the Manehester College of Technology on “The Economic. State of Europe Resulting from the Peace Treaty.” "Until his resignation in June, 1919, he was chief representative of the British. Treasury at the Peace Conference, and acted as the Chancellor of the Exchequel"s deputy on the Supreme Economic Council. Mr I{e‘§'fi"cs dealt with three main aspects of The present state of Europe—the coal and iron situation in Germany, the food >'itu:ltion in Europe, and the tarifl? situation.

L ‘Mr Keynes pointed out that the great industrial development of Germany since 1870 was built up On‘ a fabric of iron ahd coal. That fabric had been largely destroyed by the Peace Treaty. Before the war 75 per cent of (iel‘many’s iron ore came from l.orraine, which, however, was notrthe greatest centre of the blast furnaces (containing only 25 per cent), or of coal. A great. part of the ore of Lorraine was carried into Germany to be worked up. Now that Lorraine had ceased to be German, the problem {II'iSCS whether the iron ore was to form the foundation of a great steel trade for France, or, as formerly, was to be sent into ‘Ge,l'm:ll)y proper. So far the French had refused to agree to any exchange arrangements, and the result, in his judgment, was to reduce enormously the effective productive ‘capacity of Europe. France now had the ore; Germany had the blast furnaces and the coal, and there was no effective arrangement for the interchange of the two. France, of course,‘ made great efforts in the Treaty to; secure that she should get coal as well as iron, and shamelessly took the Sarre I eoalfields. But, unfortunately——it was unknown to President. '\Vilson in Paris ‘ —the Sarre coal is not really blastt'urnaee coal at all, and Fl-gmfie would! need Westplialian coal for her fur-. 3;;1(:(-S. The difliculty might have been adjusted, if it was not that under another part. of the Treaty Germany was to 1959; 511bj9(?l' t 0 :1 plebiscite, Upper Silesia. from which about 2.". per (gent of the coal of (-iel'lmmV came. Conse'ill“!lHl~' G“l‘m?Hl.\' wonlul be unable to S“PI’I.Y the coal required by Lorraine,’

except -at the cost almost of closing down her manufacturing industry. GERMANY LosEs HALF HER COAL. 1110 eilkct of the ’l‘re-aty was to take from Gennuny 11 third of hel' coalfields, out out of what 1'e:11ai11eél she ha(T first or’ 3.11 to make good the loss of'f)roduciron in the North of France, through injury to the French mines (which was reasonable and proper),_ and in addition had to furnish a tribute of 25,000,000 tons a year to France, Belgium, and Italy. On the’ basis of pre-war production the efiect of this Would be to reduce the amount available for Ge:-m:uly’s internal uses from 139,000,000 tons to 73,000,000. But the output of the mines had fallen by 30 per cent, and the result was that, it‘ the clause of the Treaty was c:lrl‘ied out G~el'nlun_v would be left an output of 100,000,000, with only 55,000,000 for her o\\'n'uses, considel'ubl_\' less than half hel' pre-'w:i'l‘ needs. This would mean that she could have no substantial inanufacturing industry at all;

there would be no surplus for indust.r_v after meeting the needs of household and railway requirements. Of course, the Treaty was not, in efiect; being put, into force, for it was obviously impos; sible to obtain this quantity of coal,’ and the _'~\_llies were taking month by month, only a trifling amount. ‘ But the Treaty was there. It W-as not merely a German question. A poli-i tical frontier was now drawn between ‘ coal and iron that would not matter under a regime of free trade, which, of course, there was not. The likelihood was that. in the near future France would not be in a. position to make use of her iron ore, and Germany ‘would not be in a position to use her a blast furnaces, and the"fotal would be ’greatly less. Gerinany would be crippled and have no iron for export—one of the facts which led her to expect a great boom in the iron and steel industries of this country. Mr Keynes pointed out how the neighbouring neutral countries were dependent on Germany for coal (33,000,000 were exported before the wa.r), and they would be forced now to strain every nerve to make commercial arrangements with Germany to get coal in exchange .Ifor ‘thleir goods. There would be friction when the Allies found Germany sending coal to Holland in exchange for foodstuffs.‘ “If,” they would say, "Germany is able to send coal to Holland, she can send it to us.” The situationdwas even more acute in Austria, who drew her coal from Czecho-Slovakia, and was unable to pay for it except by the exchange of goods, which under the re-

pznution clauses of the Treaty would be supplied to the Allies. “There is on this one issue of iron and coal.” Ml‘ KC_\fll(‘s said, “~a. vol'_\' greaf. d:mgcx~ to the whole (‘(10110-mic lift‘ of the Continent, so far as it depends on _t}l(‘:SL‘ ‘mine:'als, being dumped down." THE GRAVE FOOD OUTLOOK. The food situation in Europe, Mr Keynes anticipated, was likely to be increasingly worse from the 1920 harvest onwards. German)/' Was Suffering from a great lack of manures and from greatly diminished output from the land. The proportion of food she imported (15 per cent.) would be much increased. -She had no money

at present to pay for these imports,l unless we of our grace provided her: to obtain or keep the nrcney neces-5 sary for her imports, she Would then? come into precisely the -same world: markets as we ourselves were in. ..and would be liable to drive up prices and ' make an acute world shortage every-; where. After this year the guaran-é teed price of-Wheat in. the. United States came to an end; we could noT rely on bumper harvests there; Ame-i; rican consumption was likely tc rise because of the illcl-eased population there would be no exportable surplus l_ from Australia If Germany came in ito the world food supply to any con‘siderable enxtent there was grave prospect :of everybody being in diniculties for the necessaries of life. There was only one way out-—«that §Gerln:lny should go to Russia. By ‘our blockade we not only blockaded

Russia but ourselves, because Russia was not in dependence :cn us for her economic necessities as we were on her. Even with the release of Russia it would be long before WllF.‘ut could be-exported, but it could be done by Gerlnan effort directed towards the organisation of the transport systein of Russia‘ and by getting the economic motive at work again there. Unless

we were in a position to save the Russian supplies the prospects, of the food situation in Europe were going to be much more serious in 1921 than they had ever been.

l The life of Europe was inenaced by ‘a fall in the productive capacity, ibut that lack was likely to be made much éworse by the splitting up of the three great more or less self-subsisting Em’pires——Russia, Germany, ‘Austria-Hlln—-;gary———into twenty different States in :the hands of immature, rather in-_ 'conlpetent governments, very 's':iort of ‘revenue, very hbstile to‘ their neigh-bo-urs, set up on 9. natipnalistic basis, and if we could judge from What was ‘already happening, determined to put

up tariff walk; against one‘ another. They had been created on racial and not economic lines, with political and not economic frontiers. The old economic unifies had been broken up; each one of the new units by itself was inccmplete. Austria, for instance was unable to live, for she was unable

to get. food, and unable to get work because there was no coal. She was simply left there to die. .

The only way of remedying this was to make the setting-up of these neiv nationalities contingent upon their entering a sort of free trade union of all those countrie-s that formerly made some sort of economic unity. He would like to see it made a condition of financial assistance that the new States carved out of the Russian, Austro-Hungarian, Tlll-kish, and German Einpires, and all mandated States. should be compelled to join a free trade union for at least. ten years, a union which it would ?be open to any other country to join. They inight form a nucleus out of which could be constructed a free trade union that might embrace almost the whole of Europe, Asia, and Africa.

l , THE I-31-‘.IL»\K "UP or SOCIETY‘. Mr Keynes went on to emphasise {the serious political results of withgclrawing the means of livelihood from fimndl-eds of millions of people. It ‘was evident the Treaty as it stood iwoulrl never be carried out, and the Iproblem would be how far it was .openly and dra.-tically revised, and lhow far it was allowed to drag on, land was for-(ted by the compulsion of ',even:'s to be only partially operative. }“There are two alternative policies in {front of us——either revision of the {'l‘reaty opelll_V and frankly, or the lmaintenance of the Treaty and its llmoclilication in practice. Personally, 51 am very strongly in favour -of the :fil-st alternative, because only by that l shall we be able to get back to any .?degree of truth and sincerify in these matters, and have ‘any proper basis for the economic future. If we keep the Treaty in being, and take as much ;§coal and money as we are aible year by ‘year, we shall always be keeping the fflevel of life of the German population ldo-wn to the lowest conceivable, and gremove from them an incentive 3:0 lfurther efi‘ort, because anything more fthey (lo will simply be taken from 1 them. .

! “Quite apart from any reparation ‘Germany may be in a position to ‘make, the future of Europe is dark indeed. The effect of the Peace iTi-eaty is to carry into peace the ;methods of war. It does everything }that human ingenuity can to make t'ilrther ruin, and to coinplete the destructiou of the means of livelihood in those countries which the fortunes of war have already gravely reduced and impaired. It is surely very shortsightetl to believe you can deprive this complicated European system of its livelihood without extremely farreaching consequences, The moment will come when despair will seize all their hearts. If this method is proposed. and we persevere with the deliberate (ii-‘i.=tl‘uCtiCll of the economic life of 2-1 great part of Europe. it seenis to me certain that society there will break ‘down, that the extremist forces in Germany will join

hands with those in Russia. ‘ If economic life breaks down, if the social system of the past hundred years is destroyed over the greater part of the European continent, France and Italy certainly will not escape from the results, nor shall we.”