Grand unified books thread

[The Minsky Moment]

Stevenson in "1914 - 1918" argued that the Versailles treaty was not unduly harsh, especially compared to previous peace treaties (including the one in 1871), and that its failure mostly stemmed from a lack of will to enforce it from the allies (except France who was left alone with it).

Common argument.  The same arguments have been made back and forth since 1919.
As it happens, that one is wrong.

[The Brain]

Versailles was just Caudine Forks all over again.

[Valmy]

Versailles was just Caudine Forks all over again.

I completely agree. It is amazing how often that mistake is made.

[Malthus]

Versailles was just Caudine Forks all over again.

I completely agree. It is amazing how often that mistake is made.

Well, as an example, arguably the Germans made a similar mistake after the Franco-Prussian War. They left the French hankering for revenge but not fatally weakened - just determined that, in the rematch, they would make sure to have useful allies.

[The Brain]

They came to a Caudine Fork in the road and took it.

[Valmy]

Well, as an example, arguably the Germans made a similar mistake after the Franco-Prussian War. They left the French hankering for revenge but not fatally weakened - just determined that, in the rematch, they would make sure to have useful allies.

Yeah that was a poison pill. Germany needs France as its friend. Really every country should be friends with France but Germany in particular.

[The Minsky Moment]

Interesting fact about the 1871 indemnity.  It was paid off via public bond issuance.  About 1/3 of the subscribers were from Germany.

The victors at Versailles drew all the wrong conclusions from the prior experience in 1871.

[Admiral Yi]

Common argument.  The same arguments have been made back and forth since 1919.
As it happens, that one is wrong.

How do you respond to the argument that the French indemnity was larger as % of GDP than Germany's?

[crazy canuck]

Interesting fact about the 1871 indemnity.  It was paid off via public bond issuance.  About 1/3 of the subscribers were from Germany.

The victors at Versailles drew all the wrong conclusions from the prior experience in 1871.

That is an interesting fact.  Languish is still good at giving these nuggets everyone now and then. 

[Malthus]

Interesting fact about the 1871 indemnity.  It was paid off via public bond issuance.  About 1/3 of the subscribers were from Germany.

The victors at Versailles drew all the wrong conclusions from the prior experience in 1871.

Interesting indeed.

I'll bite: what conclusions did the victors draw? I would have thought the obvious one they ought to have drawn was 'don't set yourself up for a vengeful re-match'. 

[The Minsky Moment]

The 1871 indemnity was a fiasco; it didn't really harm France - in the short run it arguably helped develop French capital markets in fact - but it did significant economic damage to Germany and is regarded by many economic historians as a contributing factor to the start of the "Long Depression" of the late 19th century.  So really not the most attractive precedent.

The other false conclusion is the one that still refuses to die - that because France could easily pay of the indemnity in 1871, that is somehow proof of Germany's ability to pay in 1919.   But France in 1870 was financially very robust and despite the disaster of the Commune the war was pretty short.  During the Second Empire, the Bank of France increased gold stocks from about 3.5 metric tons in 1850 to over 200 tons by 1870.   The indemnity basically involved increasing the prewar debt-GDP ratio from around 55% to around 75-80% - high but manageable.

The financial situation of Germany in 1919 of course was quite different - the country was financially exhausted after a brutal 4 year total war, had huge losses of manpower and significant losses of territory and resources, and had already reached debt levels well in excess of 100% of GDP.  The situations are not remotely comparable.

[Malthus]

Given that the actual outcome was about as bad as it could be, I wonder what the victors ought to have done. I suppose 'almost anything other than what they did'. 

[jimmy olsen]

Interesting fact about the 1871 indemnity.  It was paid off via public bond issuance.  About 1/3 of the subscribers were from Germany.

The victors at Versailles drew all the wrong conclusions from the prior experience in 1871.

What were the right conclusions?

[Eddie Teach]

Edwin Starr knew them.

[Razgovory]

Interesting fact about the 1871 indemnity.  It was paid off via public bond issuance.  About 1/3 of the subscribers were from Germany.

The victors at Versailles drew all the wrong conclusions from the prior experience in 1871.

What were the right conclusions?

If you are going to impose impossible economic conditions on a country, make sure it's a small one with a tiny army that nobody likes.