The Economic Consequences of the Peace

The first chapter is a brief three-page introduction on the book’s subject, which is Keynes’s criticism of the Treaty of Versailles.

Keynes agrees with the main victors of World War I—Britain, France, Italy, and the US—that Germany was responsible for starting the war: “Moved by insane delusion and reckless self-regard, the German people overturned the foundations on which we all lived and built” (5). However, he also asserts that punishing Germany with the unfair terms of the postwar peace agreement runs “the risk of completing the ruin” (6). Continental Europe is too culturally and economically integrated, and excessive punishment of Germany would lead to dire consequences for other European nations, a fact that the US and Britain do not adequately consider:

England still stands outside Europe. Europe's voiceless tremors do not reach her. Europe is apart and England is not of her flesh and body. But Europe is solid with herself. France, Germany, Italy, Austria and Holland, Russia and Roumania and Poland, throb together, and their structure and civilization are essentially one. They flourished together, they have rocked together in a war, which we, in spite of our enormous contributions and sacrifices (like though in a less degree than America), economically stood outside, and they may fall together (6).

He views the terms of the Treaty of Versailles as an “impending catastrophe” that the other European powers cannot see because of their own preoccupation with revenge, borders, and other relatively trivial concerns (6).

At the time, World War I was referred to in Europe as the Great War. However, Keynes makes a point to call it a “European Civil War” to emphasize his argument for continental cohesion (6). He provides specific examples of this integration in the subsequent chapters, such as the way in which heavy industries, like mining, had operational components both inside and outside Germany; further partitioning of Europe and economically sanctioning Germany would interfere with production and trade.

Keynes also notes the devastation of the previous European wars, which he also characterizes as “civil wars,” such as the Napoleon Wars (1803–1815), which engulfed much of the continent. Smaller-scale wars included a series of conflicts that preceded German unification (1871), such as the Austro-Prussian War (1866), and regionally limited conflicts, like the Crimean War (1853-1856) and the Russo-Turkish War (1877-1878).

To further emphasize this point, the author references two well-known works of literature: Russian author Leo Tolstoy’s novel War and Peace and English author Thomas Hardy’s closet drama (a play not intended for performance) The Dynasts. Both works are about the Napoleonic Wars. Keynes quotes Hardy’s Act 7, Scene I, in which the Spirit of the Years and the Spirit of the Pities interact (7). “Why prompts the Will so senseless-shaped a doing?” asks the Spirit of the Pities. “I have told thee that it works unwittingly / As one possessed not judging,” the Spirit of the Years responds (7). Keynes chooses these lines because the proceedings at the Paris Peace Conference remind him of a Hegelian-inspired unfolding of a great historic process, the Spirit of History, in which the participants are disassociated from the “events marching on to their fated conclusion” (6), as if the proceedings are beyond human agency.