The Economic Consequences of the Peace · Chapter
VII: Remedies explained
Keynes proposes a program to revise the Treaty of Versailles, settle inter-Ally debts, and reform currency through an international loan, arguing that the current treaty is unsustainable and that only a change in opinion and leadership can
What happens
Keynes proposes a program to revise the Treaty of Versailles, settle inter-Ally debts, and reform currency through an international loan, arguing that the current treaty is unsustainable and that only a change in opinion and leadership can avert economic collapse in Europe.
Themes in this chapter
Reparations and Inter-Allied Debt
Keynes argues that inter-Allied debts are a menace to financial stability and must be forgiven to avoid international friction.
Political Failure and Leadership
Keynes criticizes the Council of Four and the Paris Conference, stating that replacement of existing governments is a necessary preliminary.
Social Upheaval and Revolution
Keynes warns that economic privation may lead to revolution, but notes that revolution offers no improvement for general suffering.
Carthaginian Peace
The chapter implies that the Treaty of Versailles is a Carthaginian peace that must be revised to prevent Europe's ruin.
Characters to notice
- Unknown
The narrator reflects on the missed opportunities at Paris and dedicates the book to forming future opinion.
- Wilson
President Wilson is cited regarding the League of Nations as a means for treaty revision.
- The Allies
The Allies are discussed in the context of inter-Ally indebtedness and the burden of paying each other.
- Germany
Germany is referenced as the debtor expected to pay reparations, with Keynes questioning its capacity.
- Europe
Europe is portrayed as facing bankruptcy, semi-starvation, and the need for economic reorientation.
- The French
France is mentioned in the context of its own indebtedness and the burden of paying allies.
- Italy
Italy is used as an example of a country facing crushing tribute demands.
- Great Britain
Great Britain is discussed regarding its financial position and potential protests against paying the United States.
Key passages
“The replacement of the existing Governments of Europe is, therefore, an almost indispensable preliminary.”
Keynes argues that changing the current European governments is a necessary first step.
Emphasizes the need for new leadership to implement treaty revision.
“The only safeguard against Revolution in Central Europe is indeed the fact that, even to the minds of men who are desperate, Revolution offers no prospect of improvement whatever.”
The lack of hope from revolution itself is what prevents revolution in Central Europe.
Highlights the despair and economic hopelessness of the region.
“A debtor nation does not love its creditor, and it is fruitless to expect feelings of goodwill from France, Italy, and Russia towards this country or towards America, if their future development is stifled for many years to come by the annual tribute which they must pay us.”
Debtor nations will resent creditors if debt payments hinder their development.
Keynes warns of long-term international ill-will from inter-Allied debts.
