Part 7

He was only an observer. Colonel Haskell and his little band of officers were the organisation and the administration in the field of action, of a great campaign of rescue which flowed out from America. They had to contend with the inertia of Russian character, with the suspicion of Soviet officials who feared a political purpose behind the work of charity, with a broken-down railway system, with no material for printing or packing, with immense distances and lack of transport, with the Russian language and bad interpreters, with Russian labour weakened by being under-nourished, and with millions of starving and disease-stricken people who had hardly the strength or will to help themselves or co-operate with others for their own rescue. It was a formidable adventure in which the young officers of the A.R.A.—like those of our British relief societies—risked their lives by disease and were strained to the utmost of nervous energy. And they brought the food to Russia and distributed it to the starving folk. Millions died—Dr. Nansen reckons four millions—but eleven million people were fed every day by the A.R.A. for nearly a year. In addition to that mass relief, millions of food packages addressed to individuals in Russia by relations and friends in the United States reached the starving and distressed people outside the area of actual famine, and gave new hope of life to those who had been reduced to misery and despair in Petrograd, Moscow, and other cities. When we think of the organisation and labour required in time of war to feed our armies in the field, it is almost miraculous that eleven million Russian peasants could be supplied at a distance of 6,000 miles, after the breakdown of the very machinery of their life. History will record it as the greatest campaign of relief and international charity ever attempted or achieved.

It is only right to say that, after the first suspicions had been overcome, the Soviet Government and its officials played fair and did all they could to facilitate this work. The food did reach the starving children and their parents. The railways and engines were repaired. Trucks were built. A new hope dawned in Russia, which learnt something from American methods of efficiency. The Reign of Terror had worn itself out, the actual practice of Communism was abandoned, the rights of private property and private trading were, to some extent, restored, a great shadow passed from the spirit of the people, and in many ways life became endurable after the years of agony. The utter failure of the Communist experiment was acknowledged by Lenin within Russia itself, though its propaganda and revolutionary doctrines were still used to stir up trouble in the outside world. Slowly the life of the Russian people staggered up from misery, and although there is still great distress in many districts and a new threat of famine, the ninety million peasants, controlled by a small body of Communists whose economic philosophy has no appeal for them, are getting a bare life out of the soil, with now and then a surplus of grain for export in return for manufactured goods. Even Russia is on the road to recovery.

Other countries revived, at least to the extent of providing their own means of subsistence, in peasant states like those of the new Baltic nations. Even international trade recovered some of its old activity in countries, like Czecho-Slovakia, newly carved out of the old Austrian Empire and successors to its sources of industrial energy. But it was impossible to hope for any general and complete recovery of trade conditions in Europe so long as there was no stability in the value of monetary exchange and no political peace. The printing presses in many countries were issuing paper money which had no reality behind it, and the time came when it proved worthless either for internal commerce or for foreign business. Russian roubles had long ceased to have any purchasing power. A million roubles brought from Moscow would not buy a glass of schnapps in Riga.

THE RELIEF OF AUSTRIA

In Austria money went the same way. The Austrian kronen, unsupported by gold or goods, became a mockery in the markets of the world and in Vienna itself. The professional classes were dying of starvation, the middle classes were reduced to an extreme destitution; labour, paid false wages, had no heart to work. Several loans granted by the British Government and others, after abandoning all immediate claims to “reparations,” withered away in supporting crowds of needy officials and struggling with financial chaos. Austria declared itself a bankrupt State, appealing to the world for help, and at last her immense distress was recognised by all other States, and the League of Nations was entrusted with the task of administering a new loan of something like fifteen millions sterling, with a strict control of Austrian revenue, expenditure, taxation, and financial measures.

It was a lesson to the world of what may be done by good will and commonsense rather than by political hatred and international hostility. As a foster child of the League of Nations, Austria recovered in a way which seemed beyond hope. As soon as her money was stabilised to a fixed value, because of its gold backing, trade began to flow back a little, capital came to the rescue, with a sense of security. The Austrian people were able to buy food in return for their merchandise at prices which no longer fluctuated wildly according to the downfall of paper money. They were able to accept contracts for future work and to fulfil them with a certainty that the money they received would not melt in their hands like summer snow. They recovered hope, worth more than gold, and physical strength restored their mental and moral health. The nightmare lifted. The city of Vienna to-day, in spite of much poverty and a disappearance of its former luxury among the old classes who dwelt in the splendour of Imperial Courts, is as different from Vienna in 1920 as the day from the night. The Viennese, once the gayest people in Europe, have learnt to laugh again. There is music in the cafés once more. The streets are lighted again. The children are no longer weak with rickets. The bitter cup has passed from them, except for those who remember their former state and the old world of the Austrian Empire that has gone down with all its pride.

THE PROBLEM OF GERMANY

Germany remained the great problem of Europe and the great peril.

After the war, when “something seemed to break in them,” as a German wrote to me, they were for a time stunned and dazed by defeat. To German pride of race it seemed incredible, even in the face of dreadful facts, that they had lost everything for which they had fought and struggled with such desperate and stubborn will-power. After all their victories! After all that slaughter! “_Deutschland über Alles!_” Now they were in chains, hopeless and helpless, disarmed, under the heel of France, Britain, Belgium—done and down!

The military chiefs hid themselves in their castles—sullen, broken. They put all the blame on the German people. It was they who had blundered and had been defeated. The invincible German armies had never been defeated. Never! Only Ludendorff in an incautious book confessed the truth that he had not been able to hold the line against the overwhelming assault of the Allies. But his argument was the same. It was German will-power that had broken behind the lines. It was Bolshevism and Pacifism that had let down the fighting men. When the Peace Treaties were published the German people gasped and, for a time, despaired. They were confronted with conditions which would crush them for all time. However hard they worked, all the profits of their labour would be seized by their enemies. However much they pinched, more would be demanded. There was no fixed sum which they could wipe out by stupendous effort, but only sums rising higher in fantastic figures for ever and ever. They were the bondslaves of the world.

That mood did not last, though it came back again. A new mood followed and buoyed them up for a year or two. They had lost the War, but they would show the world that they could win the peace. German genius, organisation, and industry would rise above even the monstrous penalties exacted by their enemies. They would capture the markets of the world, smash all competitors by an industrial war, regain their liberty and commercial power. The Krupp works which had made great guns and all the monstrous machinery of war converted their plant to the instruments of peace, produced ploughs, steam-engines, safety razors, cash registers, everything that is made of metal for the use of life. Every factory in Germany got to work again. There were no unemployed as in England, because the workers accepted low wages, and desired work almost as much as bread in a fever of industrial energy, to wipe out the War and build up the prosperity of a peace. Defeat was better than victory in its moral effect upon the German people. At least they did not fall into that idleness, that craving for gaiety, that moral lassitude and indiscipline of spirit which overcame the victorious peoples. When I went to Germany, several times after the War, I was amazed at its energy and industry. There were no scenes in Berlin like those in London, with processions of unemployed and innumerable beggars and crowds of loungers round the Labour Exchanges. There was an air of activity in Germany, startling and rather splendid. The whole nation was working full steam ahead, and the products of its industry were being offered in the markets of the world at less than the cost price of similar goods in England. It steadied them and gave them a purpose in life.

And yet beneath this superficial appearance of renewed prosperity and industrial power there was, as I could see, something rotten. Misery was not to be seen in the open, as in London, but it was there, in middle-class homes and mean streets. The whole of this new industrial adventure in Germany was based upon underpaid and under-nourished labour, upon cut-throat prices, and upon the temporary advantage of a falling exchange.

The German Government was tinkering with its money, speeding up the printing presses, issuing notes beyond the backing of real securities. The illusion of a Germany capturing the world’s markets had no great basis of truth. The world markets had lost their purchasing power, however cheap were German goods. Russia was not buying much from Germany, nor Austria, nor Poland, nor Hungary, nor Turkey. Looking into the figures given me by experts—English as well as German—it seemed certain that there was an adverse trade balance against Germany when her national expenditure was reckoned with her revenue. The reparations she was beginning to pay, the deliveries in kind she was making to France, Belgium, and Italy, the costs of the Armies of Occupation on the Rhine, were eating into her capital wealth and swallowing up her last gold reserves. She had to pay her indemnities by buying foreign money—dollars, sterling, francs—and after each payment her own money depreciated by irresistible economic laws.

THE ADVENTURE OF INFLATION

The financial advisers of the German Government used the method of inflation to keep the German people working on cheap money to avoid a revolution which they feared would happen if unemployment prevailed, to wipe out their internal debt, and to dupe the world. At first, no doubt, they believed that they could control this system of postponing the evil day of reckoning, but, once having started the ball rolling, it increased with frightful velocity down hill. Every time the mark fell in value more marks had to be printed. When its purchasing power fell so far below the real value of wages that the workers clamoured for increased pay, the printing presses had to be turned again to provide the additional money which again fell in the foreign exchange while more slowly prices rose in Germany. The German financiers never checked this wheel in its mad revolutions. They protested that they were unable to check it. To some extent it was a gamble with loaded dice. They were bound to win—up to a point. As long as foreign money was paid for worthless paper—whatever the figure of exchange—they would be taking good money for bad, which is excellent business. As long as by increasing the quantities of paper they could enable their industrialists to employ cheap labour, it was good business. As long as the paper itself and the labour of printing were not more costly than the purchase value represented by fantastic numbers on the note, they could carry on the economic life of the country and at the same time abolish all their internal debts. People who had invested all their savings in war loans found that their income had withered away. Industrial companies who had borrowed real capital could pay it back in false notes. And private individuals who were ruined by this means could at least recoup themselves a little at the expense of the foreigner by selling German paper for pounds, dollars, or francs, and gambling on the exchange. It was a great game, which absorbed the interest of large numbers of the German people. Waiters in hotels, clerks in offices, vendors of newspapers, middle-class housewives, did their little bit of daily speculation, and secreted foreign money for rainy days. The great industrialists and professional financiers speculated on a large scale and made enormous profits, while the game lasted. But it was a game bound to fail in the long run. It was bound to fail when no other country would buy German marks at any rate of exchange, and when those who possessed real things, such as potatoes, meat, milk, or manufactured articles, refused to part with them for any number of German notes. That time came during the occupation of the Ruhr, when, to subsidise the passive resistance of the workers, the German Government poured out a vast tide of paper money, and when the German nation was cut off from its chief source of real wealth in that great industrial region.

I saw from time to time the progress along the road to ruin. Although it enabled a minority to get rich quick, it caused intense suffering among the mass of the German people. The wages of the workers never kept pace with the fall in the purchasing power of their wages, although they were raised week by week on an ascending scale. What five marks would buy in 1913 a million marks would not buy in 1923. It made trade impossible, because no sooner were prices adjusted to the new note issues than a fresh burst of inflation made them less than the cost price of the goods a week before. It was futile to save when thrift was mocked by this depreciation and disappearance of money values. German people had to spend quickly in food or drink or foolish things, because what they had to-day would be worthless to-morrow. The German housewife despaired. She could not keep pace with these rising prices. Some of them went crazy over millions of marks that had no meaning. Germany, apart from its profiteers, stinted, scraped, and toiled, without decent reward for its labour, and with certain ruin ahead.

Looking back on that amazing adventure of inflation, one must ask oneself the question what would have happened in Germany if its Government had endeavoured to stabilise its finances by not issuing money beyond its real backing, and trying to balance its Budget according to sound methods. It is my opinion that the illusion of German prosperity would have been more rapidly dispelled and that their default in the payment of reparations would have happened earlier. Foreign speculators would not have been “bitten in the ear,” German speculators would not have made profits over exchange gambles; but the Allies would not have received more payments, and there would have been widespread unemployment and revolt among the German people. They were between the devil and the deep sea, and though they chose the devil of inflation, it postponed the plunge into the deep sea for a year or two more.

In fairness to Germany, it must be remembered that she did make very heavy payments in money and kind, amounting all told to more than £400,000,000 sterling—that is to say, nearly half the amount of the British debt to the United States of America, which the British people, richer than Germany at the present time, find an almost intolerable burden, although they are paying only £30,000,000 a year to reduce it. In Germany’s post-War state it was a drain upon her dwindling capital which she could not sustain at anything like that rate, and with or without inflation it crippled her. The Dawes Report was an acknowledgment of that fact, although it took into account the immense sums of money secreted abroad. Previous default had caused the French occupation of Düsseldorf, Duisburg, and Frankfurt, arousing a flame of hostility in German minds. But when France marched into the Ruhr against the will of the British, and without their co-operation, the whole of the German people, without difference of class or political opinion, denounced it as a violation of the Peace Treaty, and as a sentence of ruin, not only to Germany herself, but to the whole of Europe.

THE OCCUPATION OF THE RUHR

It was this occupation of the Ruhr—the threat of its happening, the entry of the French troops, and the results of it—which poisoned the relations between England and France, flung Germany back into the arms of her Nationalists, and thwarted all efforts of international good will in the spirit of the League of Nations. It kept the wounds of war open and salted in Central Europe. It checked the economic recovery of all nations dependent upon Germany as buyers and sellers. France failed to get her reparations, and instead of building up security the policy of Poincaré made a future war between the two nations almost inevitable by stirring a cauldron of boiling pitch. It turned the justice of the War into an injustice of peace, with the Germans as the victims of injustice. For how could they pay reparations if their industrial heart was strangled? And how could they submit to a military tyranny over their great working population from an enemy which had professed to fight the war for liberty and democracy? How could any peace be justified which enabled a foreign army, after war, to hold up the chief industries of a great country, to destroy the machinery of its life, to coerce its workers at the point of the bayonet, to expel them when they refused to work under their military command, to take their money, to fling out their furniture, to imprison their working chiefs, to cut off their food supplies, to prevent their intercourse with their own folk, to deal with the passive resistance of proud and hungry men as though it were a crime against France, to use their whips in German theatres, to terrorise the inhabitants of a great district, to break their spirit by a thousand tyrannies, insults, humiliations and brutalities? That was how the Germans argued, and the argument stands in the soul of Germany as a memory that must one day be wiped out in blood. I think France under Poincaré was unwise in giving to Germany that sense of injustice and that cause of vengeance. I think France under Herriot thinks so too, although it cannot forget, as none of us can forget, the abominable acts of German officers and men during time of war in France and Belgium.

The argument on the French side was logical enough, to a certain point, where its logic broke abruptly. France, as its mind was expressed by Poincaré, said: “These people have not paid us. They are not trying to pay us. They are in wilful and flagrant default.”

They paid no attention to the German reply that they had paid all they could—enormous sums—and could pay no more without utter ruin. In any case, they did not yet know the fixed sum of their debt, and the figures France demanded were beyond the capacity of any nation on earth.

“Very well,” said the French, “we will take pledges for future payment. We will send the bailiff into the house; we will hold the Ruhr until Germany realises the inevitable and makes better arrangements to pay. Meanwhile, whether she pays or not, we shall weaken her power of recovery, postpone the time when she is able to challenge us again, and hold her by the throat for the security of France. Excellent plan, both ways! Perfectly justified in law and equity.”

Where France failed in logic was in the combination of two ideas which were mutually destructive. She might gain military security (for a time) by weakening Germany and keeping a grip on her jugular vein, but she could not gain reparations at the same time and by the same method. Above all, her logic on the point of security would fail at some future date—twenty years, forty years, sixty years, when the German people would be strong enough to fight for the liberty of their life, by the mere weight of increasing population inspired by passion and armed with new weapons. France would have done better to seek the security of world opinion in support of her just claims instead of risking this lonely adventure against the judgment of her friends. That, I think, was the verdict of the Dawes Report. It was certainly the verdict of British opinion among moderate-minded folk, long before the Ruhr episode had ended in the financial downfall of Germany and explosive passion.

THE GERMAN SEPARATISTS

What further excited the bitter hatred of the Germans was the effort of French generals and political agents to detach the loyalty of the Rhineland from the German Empire by encouraging bodies of “Separatists,” who proclaimed a Rhineland Republic. Led by a very doubtful but plausible gentleman named Dr. Dorten, whom I met in the early days of the British occupation, these “Separatists” were mostly youths of the disorderly class and men of criminal type supported by a few sincere fanatics. Many of them were in the pay of the French. Their movement was regarded as black treachery by patriotic Germans, and when the French troops stood by the Separatists while they seized public buildings and murdered German police, previously disarmed by French orders, fury was unrestrained among the German people. French policy, in this matter at least, was a blunder, because from the first the Separatist movement had no basis of reality nor any chance of success. It was an illusion of French politicians who let their wish be father to their thoughts.

“THE BLACK HORROR”