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VINE VOICEon 8 July 2017
A first hand account of the meetings in Paris at the end of the 'European Civil War'. To describe them as peace negotiations is stretching the English language. Firstly, Germany played no part in the 'negotiations' and secondly 'peace' had already been established following Germany's sudden implosion after the Armistice.

What comes across is the need to 'punish'. In some circles, a desire to turn the clock back not just to pre-1914 but to pre-1870. Or as Mr Keynes puts it, a desire for a 'Carthaginian peace'.

The most famous aspect of this book concerns Mr Keynes forensic analysis of the economics of the peace proposals, especially the rapaciousness of the reparations and his prediction of the consequences. He doesn't just carp from the sidelines. He offers a more logical alternative based on an economic analysis of Germany's ability to pay. However, emotion, not logic, was uppermost in most people's minds after the deluge. So like a judge passing twenty life sentences on a murderer, the reparations bill grew higher. It should be noted that Mr Keynes was writing in 1919 and the final, even higher Rechnung, was not put before Germany until 1921.

Equally fascinating is the personal account of the roles and characters of the key players; Wilson, Clemenceau and Lloyd-George. This is a 'gloves off' contemporary assessment. One can labour through too many hagiographies of these protagonists and still not grasp their mettle. Mr Keynes pulls no punches in his assessment of this mixture of nascent and moribund Super Power leaders. This section of the book was compelling.

His outlook is based in economics but backed by a deeply moral Utilitarian conviction. He decribes as 'abhorrent and detestable' the policy of depriving generations of Germans the 'right of happiness' . Many historians have subsequently discussed whether the Treaty 'caused' the Second World War and countless exam questions been written on the same theme. One can take sides in this debate but it is also possible to see other less controversial predictions in this work; he foreshadows a European Economic Union based on free trade and a putative World Bank.

Most profoundly he focuses on War Debt, a topic more likely to raise yawns among many history students but of crucial importance in understanding the realpolitik of future decades. Effectively, the USA funded the 'European Civil War' using the British Empire as security for the loan.

You may approach such a dry sounding tome with trepidation but this brilliant book could deeply affect the way you interpret the world since 1919.
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on 7 January 2016
A well-written explanation of how Allied politicians should have treated Germany at the end of WW1 and of how, alas, their short-term personal and national self-interests instead set the scene for WW2.
Keynes wrote this in 1919, with the horrors of Flanders, the Somme, etc., still raw, so this cogent public argument for magnanimity on the part of the victors took courage, as did the naming of those who failed to show it and who thereby failed the next generation.
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on 19 June 2017
Keynes was absolutely right in his analysis of the consequences of the peace. He got it right for the right reasons and not many forecasters do that!
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on 6 June 2017
A good book.
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on 3 July 2011
Having read the "General Theory" many years ago as an undergraduate, I decided it was time to read "Economic Consequences of the Peace". Keynes attended much of the conference and wrote fascinating pen-portraits of the main players - Clemenceau believing in the inevitability of eternal conflict and wanting a Carthaginian Peace; Wilson having high moral principles but insufficient intellect to stand up to Clemenceau; and Lloyd George converted to an ever more oppressive treaty by the need to win an early general election in Britain. These pen-portraits alone make the book worth reading, but of much greater interest is the analysis of the terms of the Peace.

In my judgement the key observations Keynes made in this book about the state of Europe in 1919 and about the Versailles Treaty were:
1. Not only Germany but also much of Europe (excluding Britain) was in a poor economic condition and would find recovery difficult.
2. One particular factor he noted was the existence of inflation and the danger of it continuing, worsening and damaging economies. He said the problem was serious throughout Europe and particularly Germany, which already had a large budget deficit.
3. The Treaty contributed nothing towards creating a fair, functioning and integrated economic system in Europe.
4. The Treaty breached the terms of the Armistice Agreement in the level of reparations and territorial adjustment, which was morally reprehensible. Germany had not surrendered unconditionally but was treated as though she had.
5. Germany could not possibly pay the full amount of reparations on given knowledge and all reasonable assumptions about the immediate economic future. In addition reparations were unfair in that unlike an indemnity the amount was unknown and unknowable.
6. The combination of points 4 and 5 (plus the obnoxious and inaccurate "war guilt" clause) meant that Germany would feel victimized and betrayed, whereas the Treaty should have sought the reconciliation of nations. Keynes predicted a future war.

The only point on which one might conceivably say that Keynes was not fully vindicated was the first: much (but not all) of Europe boomed in the 1920s. However, it can be argued that Keynes was not fundamentally wrong even on this issue. Those who believe there were structural weaknesses in the major economies, or who follow the line of the Austrian School in arguing that the Great Depression arose from an expansion of the money supply in the 1920s that artificially inflated the economy with an inevitable slump to follow the boom, will argue Keynes was right about the fragility of European economies.

Among the dissenting voices to the view that Keynes was largely correct on almost all issues was Étienne Mantoux, who in 1945 wrote "The Carthaginian Peace, or the Economic Consequences of Mr. Keynes". Mantoux ignored almost all the six points listed above and concentrated instead on showing that German coal and iron production were higher than Keynes predicted, and that Germany was better off than he supposed. However, Mantoux's figures are all based on the actual inter-war situation, where Germany paid only one-eighth of the reparations and developed with the aid of American loans, whereas Keynes' predictions depended on the Allies squeezing Germany until the pips squeaked. In addition Keynes had stressed that predictions cannot be perfect, and changing circumstances change outcomes.

Keynes was correct in his assessment of the effect of reparations and the weakness of Germany in 1919, for when the Allies attempted to extract maximum payments in the years 1919-23 Germany suffered from economic disasters without parallel in a democracy. With a desperate economic situation and unable to pay reparations, Germany suffered the occupation of the Ruhr by the French in January 1923. It meant that Germany had no goods to trade. The result was that Germany resorted to printing (even more) money to repay reparations and loans. This led to hyperinflation. Keynes was also vindicated in his prophecy of inflation elsewhere in Europe by the inflations in Danzig, Estonia, Hungary, Latvia, Poland and Russia. Mantoux's specific points about iron and steel not only ignored the fact that the production was with the aid of US loans and the non-payment of reparations, but also ignored myriad other contrary economic indicators, including not only the 1923 hyperinflation but also the fact that Germany had 30% of its workforce unemployed in 1932.

Keynes was correct in saying that the Treaty would not bring peace. A hatred of the Treaty and the oppressive French occupation of the Ruhr helped to undermine the Weimar Republic, bringing Hitler to power and precipitating the Second World War. Keynes played a role in the settlement after the Second World War. His words of wisdom about the failures of the Versailles Treaty were heeded, and principles of cooperation and rebuilding meant a prolonged period of peace and prosperity in Europe after 1945 - a striking contrast to the failure of Versailles to achieve this.

Finally, it has been claimed that the book created (or at least encouraged) appeasement in the 1930s by convincing Britain and the US that the Treaty was unfair to Germany. This is impossible to prove. More important in creating sympathy for Germany was the French occupation of the Ruhr 1923-25, and the main causes of appeasement were anyway miscalculation and the desire for a quiet life among people who had lived through the horrors of the 1914-18 war. It should be noted that Keynes was one of the earliest and most passionate opponents of appeasement. On this too Keynes was proved right.
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on 3 September 2016
A stunning and beautiful essay - short and sharp, with moving and compelling prose. Keynes sets out (in 1919) why Brexit (sorry Versailles) is a tragedy - with a strong liberal vision of the community of nations and shared economic well-being beset by nationalism and economic ignorance.
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on 28 October 2014
Keynes's Consequences of the Peace remains a classic and is probably the best book to read on the subject of German WWI reparations. Published at the end of 1919 and after Keynes had resigned from the British peace delegation, the book was a call to limit the damage, reduce reparations, and put in place a European trade and economic structure, including free trade and the cancellation of inter-allied war debts, to allow the continent to recover. An important reason, meanwhile, for Keynes's call was that the Versailles treaty did not set the amount for German reparations: rather these were left to a Reparations Commission, which would spend another eighteen months before fixing a number. Thus Keynes's book was not just back sniping, it was programmatic.

The Versailles treaty has a bad reputation in popular memory, especially British. While historians originally also tended to be critical, the last decades have seen a reassessment, and a recognition that the peacemakers faced an imperfect job no matter what, and could not magically solve the destruction and disorders wrecked by WWI. Some historians now even argue that the reparations were not punitive, and that Germany could afford to pay them. In my view this goes too far, and Keynes's book is quite convincing in this respect. The reparations total discussed in Keynes's book, $40 billion, was of the order of the total size of pre-war German GDP, perhaps more, and more than ten times total German exports. The amount eventually proposed by the Commission, while smaller at a nominal $31 billion, remained huge in proportion to the German economy. Entirely accessible to the layman, written with complete clarity, and short, this is essential reading for anyone with even a passing interest in history and the peace of 1919.
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TOP 1000 REVIEWERon 7 September 2006
For Keynes, the Peace Treaty of Paris after World War I was a matter of life and death, of starvation and existence, and the fearful convulsions of a dying civilization.

But the negotiating politicians had absolutely no vision. Clemenceau wanted a Carthaginian peace, President Wilson was essentially a theologian and Lloyd George yielded to national electoral chicane.

The victors had no magnanimity. `The future life of Europe was not their concern; its means of livelihood was not their anxiety. Their preoccupations related to frontiers and nationalities, to imperial aggrandizements, to the future enfeeblement of a strong and dangerous enemy, to revenge and to the shifting of their unbearable financial burden on to the shoulders of the defeated.

But for Keynes, the policy of reducing Germany to servitude for a generation was abhorrent and detestable: `Nations are not authorized, by religion or natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.'

Keynes had the decency to leave the negotiations from the moment he saw the looming disastrous results.

Keynes brilliantly calculated that Germany could not pay the imposed debt. He foresaw the coming German hyperinflation. He clearly recognized the danger of `a victory of reaction' (the right) in Germany, because it would endanger the security of Europe and the basis of peace.

Eventually that's what happened with all its disastrous consequences for Europe.

His prediction of millions of dead from starvation in Germany didn't occur.

This sometimes rather technical book is still a very worth-while read. His author was a visionary.
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on 20 June 2011
This is one of the most influential economic books ever written, penned by John Maynard Keynes in the aftermath of the Treaty of Versailles of 1919 that ended the Great War. Keynes was one of the twentieth-century's greatest economists whose General Theory of Employment, Interest and Money destroyed classical liberal economics. However in this book he makes predictions which turned out to be false and, what is worse, his condemnation and criticism of the Treaty came to be generally accepted in Britain and America, with disastrous consequences.

Keynes was a liberal and was only prevented from registering as a conscientious objector during the Great War because he worked for HM Treasury. He was something of a Francophobe and at the time of writing this book was by his own admission in love with the German financial delegate at the Paris Peace Conference, Dr. Carl Melchior. (See his gushing praise in Volume Ten of his Collected Works.) Such personal factors probably influenced his views.

After its initial publication in 1919, the main arguments of The Economic Consequences of the Peace gradually came to be accepted by the British ruling class (of all political persuasions) and the population. It came to be viewed that the Treaty was extremely harsh towards Germany, was morally wicked and was driven by revenge. Therefore the best policy to pursue was appeasement; that is, to ease the burden on Germany by revising the Treaty through lowering the amount of reparations she had to pay (eventually abolishing them) and then revising the borders in Germany's favour. The roots of the morality behind the Munich Agreement can be found in Keynes' passionate denunciation of the Treaty. A natural counterpart to this argument was criticism of the French for their suspicious attitudes towards Germany, for their supposedly obsessive and preposterous belief that Germany would go to war again. We now know who was right.

Apart from its baneful influence on international relations, this book suffers from two main flaws. The first is the attack on the decision to exact reparations from defeated Germany. The second is the blinkered moralising Keynes engages in when he denounces the Treaty as a "Carthaginian peace".

The decision to make Germany pay for the damage she caused in the war was entirely reasonable and in historical terms quite mild. After the Napoleonic Wars the Duke of Wellington headed an army of occupation of France to ensure she paid an indemnity; Germany did the same to France in the aftermath of the 1870-1871 Franco-Prussian War and again to Russia in the 1918 Treaty of Brest-Litovsk. Therefore it was mild that Germany pay for the war she caused in reparations rather than suffer an indemnity imposed on a defeated enemy. It is clear that had the Allies forced Germany to, she had the capacity to pay the reparations after the Great War. The problem was that the Treaty was too lenient to Germany in that there was no extensive occupation of Germany on the scale of the successful Franco-Belgian Ruhr invasion of 1923-1925 to ensure payments.

When not discussing economic matters and delving into diplomatic affairs, Keynes goes full-flow in moral indignation and outrage at the terms imposed on Germany. (Keynes' scathing attacks on certain personalities are amusing.) Oddly for a book dealing with a peace treaty, Keynes does not look at the situation from a strategic point of view but from an emotional and internationalist one. Keynes' argument that the Treaty was a "Carthaginian peace", a peace that would destroy Germany, is essentially irrational, sentimental and false. For if one looks at the Treaty and its aftermath rationally, the strategic and economic position of Germany improved rather than declined.

Whereas in 1914 Germany had been balanced by the huge Austro-Hungarian and Russian Empires, after the Great War Russia was weakened by revolution and civil war and Germany was surrounded by small states that never had a realistic chance of resisting a Germany still largely intact. Instead of undoing Bismarck's work by partitioning Germany into smaller states that could not overwhelm their neighbours, as the French realistically demanded, the Treaty deprived Germany of only a few territories and provided for an occupation of the Rhineland for a few years. This did not dent Germany's strength.

Despite Keynes' warnings, the Treaty did not cripple Germany economically. At a time when Britain's traditional Victorian industries collapsed after a post-war boom and when France's population was declining, Germany's exports between 1924 and 1929 doubled; her GDP per capita in 1929 was 12% higher than it was in 1913; and her net investment reached the high average figure of nearly 12% (Michael Balfour, West Germany, pp. 85-86). Germany was investing in her industries not just for exports but also for those industries needed to wage war. She never disarmed her Army but through the machinations of General von Seeckt she was able to contravene the Treaty's limitations on her armed forces.

For a more rational and factual discussion of the Treaty of Versailles than what Keynes provides, I recommend Étienne Mantoux's The Carthaginian Peace; Or The Economic Consequences of Mr. Keynes (Oxford University Press, 1946). Mantoux had the added benefit that he was writing twenty years after it was signed and could therefore look at the Treaty and its effects using much useful statistical information that proves Keynes' predictions wrong and demonstrates that Germany had the capacity to pay reparations.

Mantoux shows that whereas Keynes predicted that the production of iron in Europe would decline, iron production by 1929 was 10% higher than in 1913. When it came to those industries which are the basis of national power, iron and steel, Keynes predicted that Germany's iron and steel industry would decline; in actual fact by 1927 German iron production increased by 30% and German steel production increased by 38% on the 1913 figures. Whereas Keynes claimed that Germany would be unable to export coal in the post-Treaty future, infact Germany exported a net total of 15 million tons in the first year of the Treaty and by 1926 this had increased to 35 million tons, an astonishing feat. Keynes said Germany would struggle to achieve national savings of 2 billion marks because of the Treaty; in 1925 German national savings were 6.4 billion marks; two years later they were valued at 7.6 billion marks. Mantoux also shows that Keynes was wrong to claim that Germany would struggle to pay 2 billion marks per annum in reparations: German rearmament in each year between 1933 and 1939 was seven times as much.

The fact that under Hitler Germany was able to pursue a massive rearmament programme and then wage successful war against France and Britain in 1940 only twenty years after the Treaty completely debunks Keynes' claim that Germany would be fatally weakened. Also the Germans, when they occupied territories, made sure they extracted the wealth of the countries they defeated and made sure that war did pay (see Gotz Aly, Hitler's Beneficiaries).

Now that it is clear that Keynes' predictions of the effects of the Treaty have been conclusively disproved, this book is only useful as an example of the liberal, internationalist mindset and the type of thinking that led to the appeasement of Germany.
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on 12 July 2015
A really interesting and eye-opening book by a man who was far, far more fascinating and interesting than I had ever expected. It is unexpectedly easy to read, despite the habit of using five or six adjectives or phrases when one (sometimes none) would do. A must read if you are interested in the end of WW1 and some of the real reasons for WW2. I was actually astounded in places!
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