The Economic Consequences Of The Peace, Keynes - A*

                                         This is one of the seminal masterpieces of the 20th century, written by Keynes in 1919 upon his return to London from the Paris Peace Conference. In a modern introduction, Paul Volcker compliments the author for being the visionary who saw how foolish the Treaty was, and more importantly, for seeing where Europe should have been headed.  Keynes envisioned the mutually dependent continent we have almost a hundred years later. I have long known that this book opposed the mistakes the victors were in the process of making when it was written.  I had no concept of how sharp and critical of Clemenceau, Wilson and George he was. He referred to Clemenceau as an old man and one whose vision of Europe was a perpetual prizefight. "Thus a magnanimous Peace based on the Fourteen Points would simply shorten the interval before Germany recovered and hasten the day she would once again hurl at France her great numbers."  The French wanted a Carthaginian peace. Referring to Wilson, Keynes said, "This blind and deaf Don Quixote was entering a cavern where a swift and glittering blade was in the hands of an adversary. There can seldom have been a statesman of the first rank more incompetent than the President in the agilities of the council chamber." Of the three heads of state, he says that "the future life of Europe was not their concern"; it was all about "enfeeblement" and "revenge".  He then turns to the Treaty and pounds away at its complete inconsistency with the  Fourteen Points and the terms upon which Germany signed the Armistice. He points out that many of its provisions (for example, confiscating overseas private German property) were inconsistent with international law.  He turns to the requirement that Germany allocate a huge percentage of it's coal to Italy and France and suggests that "the industrial future of Europe is bleak and the prospects of revolution very good."  He then turns to the reparations issue and spends one-half the book dismantling the thought process behind them, pointing out that Germany can't pay them. "The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable, abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe."  He reminds his audience that the governments of Europe were doing Lenin's bidding. Lenin preached "debauching" capitalism's currencies and Keynes predicts that the treaty will lead to inflation.  He says that inflation is "a continuing phenomenon of which the end is not yet in sight."  "An inefficient, unemployed disorganized Europe faces us, torn by internal strife and international hate, fighting starving, pillaging, and lying.  What warrant is there for a picture of less somber colors?"  This extraordinary book is only 133 pages long and is amazingly prescient in its painting of the bleak turn Europe was about to make. I suspect that somewhere along the way someone has made a series of economic or geo-political predictions more accurate than these. But it is hard to imagine any set of advice or prognostications that we can say about with such certainty: what a tragedy that they were ignored.