Financial History Issue 131 (Fall 2019) - Page 29

fruitless negotiations over the terms of a possible armistice. Unfortunately, after Kaiser Wilhelm II abdicated on November 9, it was not President Wilson who dictated the terms of the agreement that stopped the hostilities, but the Commander-in- Chief of the Allied Armies, Field Marshall Ferdinand Foch. Foch forced a weakened German nation to avoid further destruc- tion and sign the November 11 armistice that included terms he knew were harsher than those that would have been included in a document drafted by the Allies’ politi- cal leaders. Among other things, the armi- stice called for an unspecified amount of reparations, the continuation of a naval blockade of Germany and the surrender of hundreds of pieces of German war mate- riel. President Wilson’s “Fourteen Points” ideas of open diplomacy, freedom of the seas, the removal of economic barriers and impartial adjustments of colonial claims did not appear in the text. In January 1919, hundreds of diplomats, politicians and advisers from more than two dozen countries convened for the Paris Peace Conference. While they were there to craft peace treaties between all the warring parties, their most impor- tant task was to write the one ending the war between Germany and the Allies. It quickly became apparent that President Wilson, British Prime Minister David Lloyd George and French Prime Minister George Clemenceau would be the domi- nant figures in handling that challenge. It also became apparent that the British and French leaders did not share President Wilson’s idea of a peace without victory. Having witnessed unprecedented levels of death and destruction to their economies and their populations, they wanted to punish Germany and reap the traditional rewards of conquest. Clemenceau pushed for reparations for damages and wanted to weaken Germany militarily, economically and territorially. Lloyd George did not oppose reparations, but he recognized the need for an eco- nomically viable Germany if the European economy was ever to regain its strength. President Wilson acknowledged the need to seek justice for the mayhem committed by Germany in starting the war. But his most important objectives involved the creation of a League of Nations that would help ensure a long-lasting peace. As a member of the British delegation to the peace conference, John Maynard Portrait of Economist John Maynard Keynes, circa 1925–1930. Keynes tried to counter the Allies’ ini- tial demands for punitive reparation payments by circulating his analysis of Germany’s limited ability to pay more than a small fraction of a British cabinet committee’s estimate of total war costs of £24 billion. He also formalized his earlier thoughts on another economic issue by suggesting that the Allied and Associated Powers cancel all debts among themselves. Those countries freely admitted they would be using the anticipated reparation payments from Germany to repay their inter-Allied loans. Keynes concluded that  |  Fall 2019  |  FINANCIAL HISTORY  27