Costly Peace

Costly Peace

When the Great War came to an end, the whole world breathed a collective sigh of relief. Four years of conflict, of trenches, of death had worn the participants down, and to have it all behind them was undoubtedly welcome. Some, however, were anything but relieved and happy. These exceptions saw that Europe as a whole was in a state of spiritual and financial ruin. They did not relish in the end of the war, but looked on with dismay at the wreckage of the old Europe it had left behind and wondered how it could be recovered, if such a thing were even salvageable. John Maynard Keynes, a renowned economist and a participant in the post-war reparation talks, was one of these men. In his book, The Economic Consequences of Peace, he describes the past, then-present, and future economic situations of Europe, and how the Treaty of Versailles will only make it even more battered and bruised than it already was coming out of World War One.

Keynes argues that before the war, Europe was much better off, or at least more stable, than it was after it ended. Economically, there was a splendid balance struck between nearly all the states, with each one exporting and importing a significant amount from one another and providing stimuli to their respective economies. The recently formed Germany had become a “. . . central support [that] the rest of the European economic system [wrapped] around”.[1] So great was Germany's position in the global economic stage that it was Great Britain's biggest importation and exportation partner outside of the United States and India (respectively). With Germany in its unique position, this delicate trade balance remained stable.

There was also a psychological aspect that flourished prior to the war. In the early 20th and late 19th centuries, the prosperous and wealthy had a tendency to accumulate their wealth rather than spend it recklessly on selfish extravagance. Goods were also accumulated alongside wealth, and both were then...