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John Maynard Keynes: The Economic Consequences of the Peace, 1920



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70. John Maynard Keynes: The Economic Consequences of the Peace, 1920

John Maynard Keynes (1883-1946) was an important English economist. In his The Economic Consequences of the Peace he attacked the effects of Versailles Settlement for its effects on Germany. His remarks were probably correct, but it is also probably that discomfort among the intellectual elite of the victor countries contributed to a lack of resistance when Hitlerism took over Germany.

This chapter must be one of pessimism. The Treaty includes no provisions for the economic rehabilitation of Europe, - nothing to make the defeated Central Empires into good neighbors, nothing to stabilize the new States of Europe, nothing to reclaim Russia; nor does it promote in any way a compact of economic solidarity amongst the Allies themselves; no arrangement was reached at Paris for restoring the disordered finances of France and Italy, or to adjust the systems of the Old World and the New.

The Council of Four paid no attention to these issues, being preoccupied with others, - Clemenceau to crush the economic life of his enemy, Lloyd George to do a deal and bring home something which would pass muster for a week, the President to do nothing that was not just and right. It is an extraordinary fact that the fundamental economic problems of a Europe starving and disintegrating before their eyes, was the one question in which it was impossible to arouse the interest of the Four. Reparation was their main excursion into the economic field, and they settled it as a problem of theology, of politics, of electoral chicane, from every point of view except that of the economic future of the States whose destiny they were handling....

The essential facts of the situation, as I see them, are expressed simply. Europe consists of the densest aggregation of population in the history of the world. This population is accustomed to a relatively high standard of life, in which, even now, some sections of it anticipate improvement rather than deterioration. In relation to other continents Europe is not self-sufficient; in particular it cannot feed itself. Internally the population is not evenly distributed, but much of it is crowded into a relatively small number of dense industrial centers. This population secured for itself a livelihood before the war, without much margin of surplus, by means of a delicate and immensely complicated organization, of which the foundations were supported by coal, iron, transport, and an unbroken supply of imported food and raw materials from other continents. By the destruction of this organization and the interruption of the stream of supplies, a part of this population is deprived of its means of livelihood. Emigration is not open to the redundant surplus. For it would take years to transport them overseas, even, which is not the case, if countries could be found which were ready to receive them. The danger confronting us, therefore, is the rapid depression of the standard of life of the European populations to a point which will mean actual starvation for some (a point already reached in Russia and approximately reached in Austria). Men will not always die quietly. For starvation, which brings to some lethargy and a helpless despair, drives other temperaments to the nervous instability of hysteria and to a mad despair. And these in their distress may overturn the remnants of organization, and submerge civilization itself in their attempts to satisfy desperately the overwhelming needs of the individual. This is the danger against which all our resources and courage and idealism must now co-operate.

On the 13th May, 1919, Count Brockdorff-Rantzau addressed to the Peace Conference of the Allied and Associated Powers the Report of the German Economic Commission charged with the study of the effect of the conditions of Peace on the situation of the German population. "In the course of the last two generations," they reported, "Germany has become transformed from an agricultural State to an industrial State. So long as she was an agricultural State, Germany could feed forty million inhabitants. As an industrial State she could insure the means of subsistence for a population of sixty-seven millions; and in 1913 the importation of foodstuffs amounted, in round figures, to twelve million tons. Before the war a total of fifteen million persons in Germany provided for their existence by foreign trade, navigation, and the use, directly or indirectly, of foreign raw material." After rehearsing the main relevant provisions of the Peace Treaty the report continues: "After this diminution of her products, after the economic depression resulting from the loss of her colonies, her merchant fleet and her foreign investments, Germany will not be in a position to import from abroad an adequate quantity of raw material. An enormous part of German industry will, therefore, be condemned inevitably to destruction. The need of importing foodstuffs will increase considerably at the same time that the possibility of satisfying this demand is as greatly diminished. In a very short time, therefore, Germany will not be in a position to give bread and work to her numerous millions of inhabitants, who are prevented from earning their livelihood by navigation and trade. These persons should emigrate, but this is a material impossibility, all the more because many countries and the most important ones will oppose any German immigration. To put the Peace conditions into execution would logically involve, therefore, the loss of several millions of persons in Germany. This catastrophe would not be long in coming about, seeing that the health of the population has been broken down during the War by the Blockade, and during the Armistice by the aggravation of the Blockade of famine. No help however great, or over however long a period it were continued, could prevent these deaths en masse." "We do not know, and indeed we doubt," the report concludes, "whether the Delegates of the Allied and Associated Powers realize the inevitable consequences which will take place if Germany, an industrial State, very thickly populated, closely bound up with the economic system of the world, and under the necessity of importing enormous quantities of raw material and foodstuffs, suddenly finds herself pushed back to the phase of her development, which corresponds to her economic condition and the numbers of her population as they were half a century ago. Those who sign this Treaty will sign the death sentence of many millions of German men, women and children."

I know of no adequate answer to these words. The indictment is at least as true of the Austrian, as of the German, settlement. This is the fundamental problem in front of us, before which questions of territorial adjustment and the balance of European power are insignificant. Some of the catastrophes of past history, which have thrown back human progress for centuries, have been due to the reactions following on the sudden termination, whether in the course of nature or by the act of man, of temporarily favorable conditions which have permitted the growth of population beyond what could be provided for when the favorable conditions were at an end.


71. Benito Mussolini: What is Fascism? 1932

Benito Mussolini (1883-1945) over the course of his lifetime went from Socialism - he was editor of Avanti, a socialist newspaper - to the leadership of a new political movement called "fascism" [after "fasces", the symbol of bound sticks used a totem of power in ancient Rome].

Mussolini came to power after the "March on Rome" in 1922, and was appointed Prime Minister by King Victor Emmanuel.

In 1932 Mussolini wrote (with the help of Giovanni Gentile) and entry for the Italian Encyclopedia on the definition of fascism.

Fascism, the more it considers and observes the future and the development of humanity quite apart from political considerations of the moment, believes neither in the possibility nor the utility of perpetual peace. It thus repudiates the doctrine of Pacifism -- born of a renunciation of the struggle and an act of cowardice in the face of sacrifice. War alone brings up to its highest tension all human energy and puts the stamp of nobility upon the peoples who have courage to meet it. All other trials are substitutes, which never really put men into the position where they have to make the great decision -- the alternative of life or death....

...The Fascist accepts life and loves it, knowing nothing of and despising suicide: he rather conceives of life as duty and struggle and conquest, but above all for others -- those who are at hand and those who are far distant, contemporaries, and those who will come after...

...Fascism [is] the complete opposite of…Marxian Socialism, the materialist conception of history of human civilization can be explained simply through the conflict of interests among the various social groups and by the change and development in the means and instruments of production.... Fascism, now and always, believes in holiness and in heroism; that is to say, in actions influenced by no economic motive, direct or indirect. And if the economic conception of history be denied, according to which theory men are no more than puppets, carried to and fro by the waves of chance, while the real directing forces are quite out of their control, it follows that the existence of an unchangeable and unchanging class-war is also denied - the natural progeny of the economic conception of history. And above all Fascism denies that class-war can be the preponderant force in the transformation of society....

After Socialism, Fascism combats the whole complex system of democratic ideology, and repudiates it, whether in its theoretical premises or in its practical application. Fascism denies that the majority, by the simple fact that it is a majority, can direct human society; it denies that numbers alone can govern by means of a periodical consultation, and it affirms the immutable, beneficial, and fruitful inequality of mankind, which can never be permanently leveled through the mere operation of a mechanical process such as universal suffrage....

...Fascism denies, in democracy, the absur[d] conventional untruth of political equality dressed out in the garb of collective irresponsibility, and the myth of "happiness" and indefinite progress....

...Given that the nineteenth century was the century of Socialism, of Liberalism, and of Democracy, it does not necessarily follow that the twentieth century must also be a century of Socialism, Liberalism and Democracy: political doctrines pass, but humanity remains, and it may rather be expected that this will be a century of authority...a century of Fascism. For if the nineteenth century was a century of individualism it may be expected that this will be the century of collectivism and hence the century of the State....

The foundation of Fascism is the conception of the State, its character, its duty, and its aim. Fascism conceives of the State as an absolute, in comparison with which all individuals or groups are relative, only to be conceived of in their relation to the State. The conception of the Liberal State is not that of a directing force, guiding the play and development, both material and spiritual, of a collective body, but merely a force limited to the function of recording results: on the other hand, the Fascist State is itself conscious and has itself a will and a personality -- thus it may be called the "ethic" State....

...The Fascist State organizes the nation, but leaves a sufficient margin of liberty to the individual; the latter is deprived of all useless and possibly harmful freedom, but retains what is essential; the deciding power in this question cannot be the individual, but the State alone....

...For Fascism, the growth of empire, that is to say the expansion of the nation, is an essential manifestation of vitality, and its opposite a sign of decadence. Peoples which are rising, or rising again after a period of decadence, are always imperialist; and renunciation is a sign of decay and of death. Fascism is the doctrine best adapted to represent the tendencies and the aspirations of a people, like the people of Italy, who are rising again after many centuries of abasement and foreign servitude. But empire demands discipline, the coordination of all forces and a deeply felt sense of duty and sacrifice: this fact explains many aspects of the practical working of the regime, the character of many forces in the State, and the necessarily severe measures which must be taken against those who would oppose this spontaneous and inevitable movement of Italy in the twentieth century, and would oppose it by recalling the outworn ideology of the nineteenth century - repudiated wheresoever there has been the courage to undertake great experiments of social and political transformation; for never before has the nation stood more in need of authority, of direction and order. If every age has its own characteristic doctrine, there are a thousand signs which point to Fascism as the characteristic doctrine of our time. For if a doctrine must be a living thing, this is proved by the fact that Fascism has created a living faith; and that this faith is very powerful in the minds of men is demonstrated by those who have suffered and died for it.


72. The Beginning of World War II, 1939. Hitler Receives an Ultimatum

Hitler's aggressive acquisition of territory began in 1936 when he ordered his army to reoccupy the Rhineland district of Germany. Bordering France, the Rhineland had been designated as a demilitarized zone by the Versailles Treaty ending World War I. It was a high-risk endeavor for Hitler. The German troops were unprepared, poorly equipped and had orders to retreat if the French offered any resistance. In the end, the maneuver went smoothly without any hindrance. Encouraged by this result, Hitler went on to absorb Austria and the German dominated Sudetenland area of Czechoslovakia into the German Third Reich in 1938. In March of the next year he occupied the remainder of Czechoslovakia

Bolstered by the lack of a forceful response by Britain or France, Hitler set his sights on Poland. However, British Prime Minister Chamberlain had come to the realization that Hitler's territorial ambitions could not be tempered by submitting to his demands. In March 1939 he declared that Britain guaranteed Poland's independence and vowed to come to her aid if attacked. France soon joined Britain in support of Poland.

Hitler was undeterred. On August 23, 1939 he stunned the world with the announcement that he had signed a non-aggression treaty with the Soviet Union. The German Fuhrer was now assured that he could invade Poland without fear of Russian interference.

The assault was originally scheduled to begin in the early morning hours of August 26th. However, on August 25th, Britain announced that her guarantee of Polish independence had been formalized by an alliance between the two countries. Hitler wavered and postponed his attack to September 1.

The Germans concocted a story of Polish troops crossing their border and firing on various installations. In supposed retaliation, German tanks rolled across the Polish border during the early hours of September 1, 1939. Tensions were running high throughout Europe. Britain and France began mobilization of their armies while Italy's Mussolini desperately tired to intervene with Hitler to forestall war. The British and French representatives met with German Foreign Minister Ribbentrop warning that they would fulfill their obligation to Poland and go to war if German forces did not withdraw from Polish territory.

At 9:00 on the morning of September 3, Sir Neville Henderson, Britain's ambassador to Germany, delivered an ultimatum stating that if hostilities did not stop by 11 AM, a state of war would exist between Great Britain and Germany. Germany did not respond and at 11:15 on the morning of September 3, 1939 Prime Minister Neville Chamberlain went on the radio to announce to the British people that they were at war with Germany.

"...there was complete silence. Hitler sat immobile, gazing before him."

Paul Schmidt was a translator in the German Foreign Ministry and present at the history-making events of those last days peace in Europe. The scene is the office of the German Foreign Ministry in Berlin. It is just after midnight on September 3, 1939 and the German juggernaut continues to slam its way into Poland. The Germans have not responded to an earlier British and French demand to withdraw its troops and a message is received stating that Sir Neville Henderson, the British Ambassador to Germany, wishes to meet with German Foreign Minister Ribbontrop. It is obvious to all that the Ambassador's message will probably mean war.

We join Schmidt's story as Ribbentrop decides that the translator should meet with the British ambassador alone:

"It was after midnight when the British Embassy telephoned to say that Henderson had received instructions from London to transmit a communication from his Government at 9 a.m., and that he asked to be received by Ribbentrop at the Foreign Office at that time. It was clear that this communication could contain nothing agreeable, and that it might possibly be a real ultimatum. Ribbentrop in consequence showed not the slightest inclination to receive the British Ambassador personally next morning. I happened to be standing near him.

'Really, you could receive the Ambassador in my place,' he said to me. 'Just ask the English whether that will suit them, and say that the Foreign Minister is not available at 9 o'clock.' The English agreed, and therefore I was instructed to receive Henderson next morning - that is, in five hours time, it being now 4 o'clock in the morning.

On Sunday, September 3rd, 1939, after the pressure of work over the last few days, I overslept, and had to take a taxi to the Foreign Office. I could just see Henderson entering the building as I drove across the Wilhelmsplatz. I used a side entrance and stood in Ribbentrop's office ready to receive Henderson punctually at 9 o'clock. Henderson was announced as the hour struck. He came in looking very serious, shook hands, but declined my invitation to be seated, remaining solemnly standing in the middle of the room.

'I regret that on the instructions of my Government I have to hand you an ultimatum for the German Government,' he said with deep emotion, and then, both of us still standing up, he read out the British ultimatum. 'More than twenty-four hours have elapsed since an immediate reply was requested to the warning of September 1st, and since then the attacks on Poland have been intensified. If His Majesty's Government has not received satisfactory assurances of the cessation of all aggressive action against Poland, and the withdrawal of German troops from that country, by 11 o'clock British Summer Time, from that time a state of war will exist between Great Britain and Germany.'

When he had finished reading, Henderson handed me the ultimatum and bade me goodbye, saying: 'I am sincerely sorry that I must hand such a document to you in particular, as you have always been most anxious to help.'

I too expressed my regret, and added a few heartfelt words. I always had the highest regard for the British Ambassador.

I then took the ultimatum to the Chancellery, where everyone was anxiously awaiting me. Most of the members of the Cabinet and the leading men of the Party were collected in the room next to Hitler's office. There was something of a crush and I had difficulty in getting through to Hitler.

When I entered the next room Hitler was sitting at his desk and Ribbentrop stood by the window. Both looked up expectantly as I came in. I stopped at some distance from Hitler's desk, and then slowly translated the British Government's ultimatum. When I finished, there was complete silence.

Hitler sat immobile, gazing before him. He was not at a loss, as was afterwards stated, nor did he rage as others allege. He sat completely silent and unmoving.

After an interval which seemed an age, he turned to Ribbentrop, who had remained standing by the window. 'What now?' asked Hitler with a savage look, as though implying that his Foreign Minister had misled him about England's probable reaction. Ribbentrop answered quietly: 'I assume that the French will hand in a similar ultimatum within the hour.'

As my duty was now performed, I withdrew. To those in the anteroom pressing round me I said: 'The English have just handed us an ultimatum. In two hours a state of war will exist between England and Germany.' In the anteroom, too, this news was followed by complete silence.

Goering turned to me and said: 'If we lose this war, then God have mercy on us!' Goebbels stood in a corner, downcast and self-absorbed. Everywhere in the room I saw looks of grave concern, even amongst the lesser Party people."
73. Inside a Nazi Death Camp, 1944 (Holocaust. WW2)

Hitler established the first concentration camp soon after he came to power in 1933. The system grew to include about 100 camps divided into two types: concentration camps for slave labor in nearby factories and death camps for the systematic extermination of "undesirables" including Jews, Gypsies, homosexuals, the mentally retarded and others.

As the allied armies raced towards final victory, advancing troops liberated the camps one-by-one, revealing the horrors of the Nazi concept of establishing a "pure" society. The first liberation came in July 1944 when Soviet troops entered Maidanek, a death camp located in Poland two miles from the city of Lublin. Alexander Werth, a correspondent for the London Sunday Times and the BBC, accompanied the Soviet troops and described the camp a month after its capture.

The BBC refused to air his report of the camp as his description was so unbelievable they considered it a Soviet propaganda ploy. It was not until the later capture of Buchenwald, Dachau and other camps on the western front that his description was accepted as true.

"It looked singularly harmless."

The Maidanek camp was established by the Nazis in 1941 soon after their conquest of the then Russian occupied region of Poland. The primary purpose of the facility was the speedy extermination of new arrivals (mostly Jews) transported in from various countries including Czechoslovakia, France, Austria, and Holland. The majority of victims, however, came from the immediate area. It is estimated that 1.5 million died at the camp during its three years of operation.

Soviet troops entered the camp in July 1944. A week later, Alexander Werth joined a group of fellow reporters in a guided tour of the facility:

"My first reaction to Maidanek was a feeling of surprise. I had imagined something horrible and sinister beyond words. It was nothing like that. It looked singularly harmless from outside. 'Is that it?' was my first reaction when we stopped at what looked like a large workers' settlement. Behind us was the many towered skyline of Lublin. There was much dust on the road, and the grass as dull, greenish-grey colour. The camp was separated from the road by a couple of barbed-wire fences, but these did not look particularly sinister, and might have been put up outside any military or semi-military establishment. The place was large; like a whole town of barracks painted a pleasant soft green. There were many people around - soldiers and civilians. A Polish sentry opened the barbed-wire gate to let cars enter the central avenue, with large green barracks on either side. And we stopped outside a large barrack marked Bad und Desinfektion II. 'This,' somebody said, 'is where large numbers of those arriving at the camp were brought in.'

The inside of this barrack was made of concrete, and water taps came out of the wall, and around the room there were benches where the clothes were put down and afterwards collected. So this was the place into which they were driven. Or perhaps they were politely invited to 'Step this way, please?' Did any of them suspect, while washing themselves after a long journey, what would happen a few minutes later? Anyway, after the washing was over, they were asked to go into the next room; at this point even the most unsuspecting must have begun to wonder. For the "next room" was a series of large square concrete structures, each about one-quarter of the size the bath-house, and, unlike it, had no windows. The naked people (men one time, women another time, children the next) were driven or forced from the bath-house into these dark concrete boxes - about five yards square - and then, with 200 or 250 people packed into each box - and it was completely dark there, except for a small light in the ceiling and the spyhole in the door - the process of gassing began. First some hot air was pumped in from the ceiling and then the pretty pale-blue crystals of Cyclon were showered down on the people, and in the hot wet air they rapidly evaporated. In anything from two to ten minutes everybody was dead. . .

There were six concrete boxes - gas-chambers - side by side. 'Nearly two thousand people could be disposed of here simultaneously,' one of the guides said.

But what thoughts passed through these people's minds during those first few minutes while the crystals were falling; could anyone still believe that this humiliating process of being packed into a box and standing there naked, rubbing backs with other naked people, had anything to do with disinfection?

At first it was all very hard to take in, without an effort of the imagination. There were a number of very dull-looking concrete structures which, if their doors had been wider, might anywhere else have been mistaken for a row of nice little garages. But the doors - the doors! They were heavy steel doors, and each had a heavy steel bolt. And in the middle of the door was a spyhole, a circle, three inches in diameter composed of about a hundred small holes. Could the people in their death agony see the SS man's eye as he watched them? Anyway, the SS-man had nothing to fear: his eye was well protected by the steel netting over the spyhole...

...Then a touch of blue on the floor caught my eye. It was very faint, but still legible. In blue chalk someone had scribbled the word "vergast" and had drawn crudely above it a skull and crossbones. I had never seen this word before but it obviously meant" gassed" - and not merely "gassed" but: with, that eloquent little prefix ver, 'gassed out'. That's this job finished, and now for the next lot. The blue chalk came into motion when there was nothing but a heap of naked corpses inside. But what cries, what curses, what prayers perhaps, had been uttered inside that gas chamber only a few minutes before?..." \


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