A Revision of the Treaty: A Sequel to the Economic Consequences of the Peace

by John Maynard Keynes. New York: Harcourt, Brace and Company. 1922, pp. viii+202, with appendix of documents and index. $2.00.
IN describing his new book as ‘a sequel, I might almost have said an appendix’ of The Economic Consequences of the Peace, Mr. Keynes is at once too modest and too complacent. It is much more than a mere collection of the new ‘facts and materials,’though the layman, bewildered by the succession of international conferences since 1919, each with its complete and final ‘solution,’ will be particularly grateful for the compact and lucid summary of events from the Treaty down through the London Settlement of May 5, 1921.
The most valuable part of the book is the chapter of ‘The Burden of the London Settlement,’ wherein, having reduced the rather complicated terms of the reparations agreement of last May to its essential working part, — an annual payment by Germany, in quarterly installments, of 2,000,000,000 gold marks plus 26 per cent of her annual exports, — he demonstrates Germany’s inability to meet these terms, and predicts a default, at the latest, between February and August, 1922. The default came in January. Though brief and in general terms, Keynes’s analysis of the foreign trade, the budget, and the national income of Germany, whereon this prediction is based, is clear-cut and convincing.
He is not so happy in his chapter on ‘The Interallied Debt.’ His summary analysis of the balance of international payments of the United States is superficial, to say the least, in the light of the attention which has been given to the subject by American economists in recent years. His advocacy of complete cancellation of the Allied debts, particularly those owed to this country, adds nothing to what has repeatedly been said this past year, on both sides of the Atlantic, by its proponents, and ignores entirely the arguments which have been brought forward on the other side of the question. In the present state of world opinion it is idle to argue for anything so sweeping; and it may at least be asked of those who choose to do so that they take cognizance of their opponents’ case. I have little sympathy, moreover, with Keynes’s view that, though statesmen may be constrained by the practical difficulties which beset them when they engage in world reconstruction, the scholar may consider himself unfettered in his search for ideal solutions. Solutions so arrived at are not likely to result in practical benefit.
In general, however, the present volume is an excellent performance, more judicial in tone than the Economic Consequences of the Peace, and more closely confined to the economic issues involved — though to some readers, who recall particularly the racy characterizations of the ‘ Big Four ’ in the earlier book, these very merits may make the present work seem tame by comparison. To the student, the disappointing feature of an otherwise illuminating and suggestive book will be the author’s very patent complacency with his earlier work. It was unnecessary for Mr. Keynes to go out of his way, as he does repeatedly, to prove that in The Economic Consequences he was right from first to last, and that in two eventful years he has had no occasion to alter his views or predictions in any particular. No writer, however judicious, could hope in such times as these for such a degree of infallibility.