The Great Illusion · Chapter
VI: The Indemnity Futility explained
This chapter dissects the economic aftermath of the Franco-German War of 1870-71, challenging the notion that the war was financially profitable for Germany due to the indemnity exacted from France.
What happens
This chapter dissects the economic aftermath of the Franco-German War of 1870-71, challenging the notion that the war was financially profitable for Germany due to the indemnity exacted from France. Angell argues that simplistic balance-sheets, like Sir Robert Giffen's, ignore the massive indirect costs borne by the conqueror, such as increased military expenditures, loss of markets, and social and political difficulties. He contends that the direct and indirect costs of preparing for and guarding against war will always exceed any extractable indemnity, making war a commercially preposterous venture.
Themes in this chapter
Economic Futility of War
The chapter's central argument is that even the most 'successful' war in history, the Franco-German War, was not economically profitable for the conqueror when all direct and indirect costs are accounted for.
Critique of Militarism
The chapter critiques the militarist assumption that war can be a profitable commercial venture, showing that the costs of preparation and guarding against retribution inevitably exceed any potential gains.
Characters to notice
- Sir Robert Giffen
His 1872 article summarizing the Franco-German War's financial outcome is cited as a starting point, but his reservations are noted as being disregarded by critics.
- Prince Bismarck
Mentioned in the context of the disillusionment following the Franco-German War, implying his perspective on the war's outcome.
Key passages
“In politics it is unfortunately true that ten dollars which can be seen bulk more largely in the public mind than a million which happen to be out of sight but are none the less real.”
People are more impressed by a small, visible sum than by a much larger, hidden cost.
This introduces the core problem of public perception regarding war's profitability.
“In order to avoid repaying, with interest, the indemnity drawn from France, Germany has had to expend upon armaments a sum of money at least equal to that indemnity.”
Germany spent as much on its military to protect its gains as it received from France, negating the financial benefit.
This is a key piece of evidence in Angell's argument that the indemnity was not a net gain.