Reparations agreements

Out of the exhaustion of France and Germany after the Ruhr struggle and the desire of American bankers and British diplomats to promote their reconciliation, the period 1924–26 finally produced agreements on reparations, security, and industrial cooperation. An interim reparations plan, the Dawes Plan, emerged from the London conference of July–August 1924. Expecting to join Ramsay MacDonald, Britain’s first Labour prime minister, in Socialist brotherhood, Herriot instead found himself a supplicant whose bargaining points were few and feeble. France was obliged to evacuate the Ruhr (by August 1925), to end sanctions on the Rhine, and to promise never again to impose sanctions on Germany without the unanimous agreement of the Reparations Commission. The United States would lend $200,000,000 to Germany to “prime the pump,” and Germany would pay from 1,000,000,000 to 2,500,000,000 marks in reparations for five years. The French government, by contrast, issued bonds worth 44,000,000,000 francs from 1919 to 1925 to finance reconstruction of its devastated regions. In the end, Germany received more money in loans than it ever paid in reparations, so that the cost of repairing war damage was borne ultimately by the taxpayers, investors, and consumers of the Allied nations and the United States.

The influx of American capital through the Dawes Plan nevertheless broke the postwar spiral of inflation, default, and hostility and made possible a return to the gold standard. Germany stabilized its currency in 1924, Britain followed in 1925, and France did so in 1926 (officially in 1928). The smaller countries of Europe and Latin America, in turn, pegged their currencies against either the dollar, the pound, or the franc. Finally, the French government agreed in the Mellon–Berenger Accords (April 20, 1926) to fund its war debts at the favourable rates offered by the United States. The new gold standard and the cycle of international transfers, however, depended on a continuous flow of American capital. Should that flow ever cease, the normalcy so painfully achieved would quickly be imperiled.

Security and the League of Nations

With respect to security, France had achieved nothing. Of course, the Versailles restrictions on German armaments were still in force, as was France’s rear alliance system, but in striving for collective security the French suffered a series of disappointments. The League of Nations Assembly Resolution XIV of September 1922 endorsed the disarmament commission’s recommendation for a treaty on collective security. The Czechoslovakian delegation, led by Edvard Beneš, quickly rose to a position of leadership in security matters, with the support of French and British proponents of the League such as Lord Robert Cecil, whose Draft Treaty of Mutual Assistance came under discussion in 1923. Beneš rightly criticized the Draft Treaty for requiring unanimity on the League Council to declare sanctions against an aggressor, for only in rare cases was the accused party’s guilt obvious to all, as the 1914 case itself illustrated. Beneš also wanted a mechanism for pacific settlement of disputes before resort to arms. More telling, however, was opposition to the concept of collective security in British opinion. Canada, Australia, and other dominions especially opposed an instrument that might involve them in war over some obscure conflict in eastern Europe. In July 1924 London rejected the Draft Treaty.

Beneš submitted an improved Geneva Protocol (or Protocol for the Pacific Settlement of International Disputes) in October. Under the protocol, states would agree to submit all disputes to the Permanent Court of International Justice, any state refusing arbitration was ipso facto the aggressor, and the League Council could impose binding sanctions by a two-thirds majority. France enthusiastically supported the Geneva Protocol, but British Foreign Secretary Austen Chamberlain rejected it in March 1925.

Herriot had made it known that France would not proceed with the first partial evacuation of the Rhineland, scheduled for January 1925, unless he could show the French people some guarantee of security. Chamberlain suggested to Stresemann in February 1925 that the Germans themselves reassure France through a regional security pact. Stresemann took up the idea, seeing in it a way to head off a bilateral Anglo-French alliance. Herriot’s government fell in April, but Aristide Briand stayed on as foreign minister to carry through negotiations. Stresemann and Briand met and embraced at Locarno, swore to put the war behind them once and for all, and signed five treaties (October 16, 1925) designed to pacify postwar Europe. Locarno seemed truly a second peace conference and was greeted with cheers and relief in world capitals. The main treaty, the Rhineland Pact, enjoined France, Belgium, and Germany to recognize the boundaries established by the Treaty of Versailles as inviolate and never again to resort to force in an attempt to change them. Moreover, the pact was guaranteed by Britain and Italy, who pledged to resist whatever country violated the demilitarized Rhineland. Germany also signed arbitration agreements with France, Belgium, Poland, and Czechoslovakia, agreeing to submit future disputes to international authority.

Locarno seemed a giant step forward. Rather than a Diktat, it was a voluntary recognition by Germany of the 1919 borders in the west. Britain had been brought in to guarantee not only France but also demilitarization of the Rhineland. Italy’s adherence was a bonus. Germany had negotiated as an equal and looked forward to further abridgement of the Versailles restrictions. Above all, Briand hoped, Locarno was the start of the “moral disarmament” of Germany. But some contemporaries, and many historians, criticized Locarno for being an incomplete system, as dangerous as it was seductive. By way of granting German equality, Britain had guaranteed Germany against French attack as much as France against Germany. “England,” said Poincaré, “becomes the arbiter of Franco-German relations.” To be sure, France still promised to help Poland and Czechoslovakia in case of German attack, but, after Locarno, Prague and Warsaw discounted the French commitment. What was more, Locarno all but invited German revisionism in the east by explicitly providing not for recognition but for arbitration on Germany’s eastern borders. Changes in French military policy also boded ill for eastern Europe. Since 1919, Foch and Pétain had quarreled over whether to adopt an offensive or defensive contingency plan for the French army. In the wake of Locarno the Pétain faction won, and France began to design an imposing system of concrete fortresses along the border with Germany. This Maginot Line (after Minister of War André Maginot) was not meant to preclude offensive action by the French army but was in effect (in Foch’s words) a “Great Wall of China” that would breed a false sense of security and weaken France’s will to take the offensive on behalf of her eastern allies.

Finally, the aftermath of the Ruhr episode provided French and German industry with a chance to normalize their relations. The evacuation of the Ruhr restored Germany’s coal leverage, and Berlin recovered tariff sovereignty in 1925 under the Treaty of Versailles, but the French inflation of 1924–26 shifted the export price advantage from Germany to France. Long and complicated four-way negotiations (French and German public and private sectors) produced a Franco-German steel syndicate in 1926 providing for coal-for-iron exchanges and an international committee to fix production quotas quarterly. The latter awarded France a 31 percent share compared to 43 percent for Germany, a marked improvement over the 1 to 4 ratio France had suffered before 1914. Franco-German commercial treaties followed in 1926–27.

The agreements of mid-decade ended the bickering and uncertainty of the immediate postwar years and made Germany a partner in the new Europe. In every case, however, the compacts replaced French rights under Versailles with voluntary agreements dependent on both Anglo-American support and German goodwill.