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By Root 1092 0

for their reparations, but those bonds would be guaranteed by both enemy and Allied nations. The financial rivers would start to flow again and Europe’s nations would be linked together to their common benefit. Ultimately, all depended on the participation of the United States. While on paper Britain was still a creditor nation, and France had an overall debt of $3.5 billion, the reality was rather different. Both France and Britain had lent large amounts to Russia, which had defaulted on its debts, and to other Allies such as Italy and Rumania, which were in no position to start paying them back. Britain owed the United States $4.7 billion, and France owed it $4 billion as well as $3 billion to Britain. “The economic mechanism of Europe is jammed,” Lloyd George told Wilson in April 1919, when he forwarded Keynes’s memorandum. “A proposal which unfolds future prospects and shows the peoples of Europe a road by which food and employment and orderly existence can once again come their way, will be a more powerful weapon than any other for the preservation from the danger of Bolshevism of that order of human society which we believe to be the best starting point for future improvement and greater well-being.”8

The idea that the United States should use its financial resources to get Europe going again after the war had been around for some time in various forms. The French, deeply in debt to their allies and facing huge repair bills, were particularly enthusiastic about prolonging and strengthening Allied wartime economic cooperation. Their minister of commerce and industry, Etienne Clémentel, a hardworking, earnest man from a farming family, drew up an elaborate plan for a “new economic order,” where organization and coordination would replace wasteful competition, resources would be pooled and shared out as needed, and the whole would be directed by clever technocrats. When Germany had put its own political house in order, it too could be part of the new order, safely enmeshed in a strong organization. The scheme languished because of active opposition from the United States and indifference from Britain and was finally turned down by the Allies in April 1919. The effort bore unexpected fruit after the Second World War, when Jean Monnet, who had been Clémentel’s assistant in 1919, founded the economic organization that grew into the European Union.9

The British preferred to hint that the United States should cancel the interest on its loans for a few years. Alternatively, the whole expense of the war could be added up and the United States could take a large proportion. Lloyd George, with his enthusiasm for big ideas, preferred an even more dramatic solution, that of simply canceling all intra-Allied debts outright. The Americans, however, were determined not to let that happen. “I realize the efforts that are being made to tie us to the shaky financial structure of Europe,” wrote Wilson to the financier Bernard Baruch, who was one of his main advisers, “and am counting upon your assistance to defeat the efforts.” Most of his experts agreed, as did the Treasury in Washington. It was up to the Europeans to sort out their own problems; the more the United States helped them, the less likely they were to stand on their own feet. In any case, there was not much chance of Congress, dominated as it now was by Republicans, approving massive financial support for the Europeans. Keynes’s scheme was turned down flat like all the others, and he watched with increasing gloom as the peacemakers tried to move ahead on reparations.10

“There is no doubt,” said Lloyd George in reply to a worried query from a member of his cabinet in April, “it would be better to fix a sum if we could agree on the figure. The difficulty is first of all to ascertain it; the next is to secure agreement amongst the Allies as to the amount, and in the third place to secure an arrangement as to the proportions in which it is to be distributed. If you have any plan that will meet these three difficulties you will have solved the most baffling problem in the Peace