Winning the War; Losing the Peace

Winning the War; Losing the Peace

Kari Andren–March 4, 2007

When the Armistice was signed in November 1918 to end the hostilities of World War I, Britain and the other Allied states declared victory over Germany, even if the Germans failed to recognize either side as winning.  John Young, in Britain and the World in the Twentieth Century, described Britain’s post-WWI position as better than most of the other European powers since there existed “no strong combination of foes yet who could threaten British security, and the country could plan on the basis that war was unlikely for at least a decade” (89).  He warns, however, that it was British prestige, wealth, and territory that made other states treat her as a leader, not her position as an all-powerful victor.  This idea of victory can, at best, only be applied to Britain’s position relative to other nations immediately following the war.  Ultimately, in economic, militaristic, and political/diplomatic arenas, Britain should not be seen as a victor in the peace settlements following the First World War.

The negative outcomes of the war and the subsequent peace settlements can be categorized broadly as economic, militaristic, and diplomatic.  Economically, the war left Britain with significant debts in 1918-approximately $3 billion owed to the United States.  This was a relatively small amount of the $16.3 billion total Allied debt, but not a trivial sum.  The high levels of borrowing to fund the war effort had greatly increased the United Kingdom’s national debt, which rose from £650 million in 1915 to around £7.83 billion in 1920 (O’Brien pars. 9,7).    By the end of the war, government spending accounted for more than half of Britain’s gross national product, which caused income tax rates to quadruple, the institution of food taxes, and higher interest rates (Young 58).

Since other Allies owed England nearly as much as she owed the United States, British Prime Minister Lloyd George suggested that debts accumulated in a common Allied cause be significantly reduced or waived altogether.  The United States, however, insisted on repayment (Clarke 101).  Because of this, Britain would be forced to collect debts of some $7 billion owed to her by France, Russia, Italy, and Belgium, among other debtors.  At the same time, France agreed to pay her debts when she was awarded reparations from Germany.  This created a delicate financial web, as Britain could not repay America until France repaid her, and France could not pay until Germany paid reparations (O’Brien 9).  American loans to revive the German economy further complicated the matter, and the Dawes Plan of 1924, which rescheduled and altered Germany’s reparation payments to France, also affected Britain’s ability to lessen her own debts (Young 78).  The British may have been on the “winning” side of WWI, but it is clear that, with her economy in disarray and owing large sums to the United States, Britain cannot so simply be termed a victor.

The implications of indebtedness led to Britain’s disarmament shortly after the war.  The British army was cut from some 5.5 million in November 1918 to only 10,000 per day the following year.  In addition, conscription was ended in response to popular opinion.  By 1922, defense spending was less than £200 million, a ninety percent decrease from 1918 (Young 70).  Militarily, disarmament was thought to be a built-in moderator by helping to prevent states from engaging in war with each other before thinking twice about entering such a conflict.  Since WWI was seen in the 1920s in part as an arms race, disarmament seemed a logical move both economically and militarily (Young 95).

The plans to disarm were made in conjunction with the ten-year rule, a British government order made by Winston Churchill in August 1919, whereby the armed forces were to scale down and draft their estimates on the basis that Britain need not expect a major war for at least a decade.  The ten-year rule and general disarmament appeared to be important restraints on defense spending and gave positive political hopes that Britain could rely on President Wilson’s idea of a “new democracy” to solve international conflicts (Young 70).  Ultimately, the plan made Britain inevitably slow to mobilize when needed and left her ill prepared when tensions began to escalate in the inter-war period leading up to the Second World War.  Although Britain’s voluntary disarmament had been a sign of victory, in the long term it put her at a severe, if unforeseen, disadvantage.

The Treaty of Versailles indirectly hurt Britain’s economy as well by magnifying the negative effects of the loss of German trade due to the reparations Germany faced on top of national debts.  Britain had wanted to keep the total amount demanded of Germany somewhat modest because she realized that Germany’s ability to pay was limited by what productivity she retained after the war (Clarke 103).  With unemployment high in London, it was good for British business to retain Germany as a commercial interest.  Germany had taken approximately eight percent of British trade in 1914, but only about two percent in 1920, hence the desire to keep German demands low enough so as not to further hinder trade (Young 77).

In the end, Britain increased her demands by including indirect war costs in Germany’s bill to enhance the amount due to the British Empire as a whole (Clarke 103).  John Maynard Keynes, the British deputy for the Chancellor of the Exchequer during the war and representative at the Paris Peace Conference, could see the problems the peace settlements were creating in Britain.  He said:  “I believe that the campaign for securing out of Germany the general costs of the war was one of the most serious acts of political unwisdom for which our statesmen have ever been responsible.”  Moreover, he asserted that the most serious problems were not political or territorial, but rather financial (Keynes 146).

Keynes argued from the beginning that too much pressure placed on Germany to pay beyond her means would have negative outcomes for Britain and the other states involved in the treaty.  Despite Britain’s being in opposition to Germany in the WWI peace settlements, it is obvious that she felt the negative impact of a crushed German economy through a distinct loss of trade.  Britain, therefore, was left economically unstable after the war.  Despite being initially labeled a victor, due to her war debts, independent and interconnected, and the loss of Germany as a trade partner, British victory was relative and conditioned.

Britain’s outlook on the diplomatic front was little better than her economy.  It can hardly be said that Britain got her way in the Peace Settlements, especially the formation of the League of Nations.  As noted previously, Britain negotiated against France for a more lenient financial settlement with Germany in the Versailles Treaty.  Keynes did not believe “that any responsible statesman had in mind the exaction from Germany of an indemnity for the general costs of the war” (116).  Here, Britain not only lost the bid to avoid full guilt and reparations charges being laid on Germany, but Anglo-French relations also began to deteriorate.

British disagreements over the formation and function of the League of Nations, particularly with France, were apparent from the onset of negotiations.  Britain viewed the League, in sharp opposition to the French, as a means of reconciliation among nations, not for the organization of restraints by one group of nations against another.  French Prime Minister Georges Clemenceau hoped the League would take on a strong role and act as a “victor’s club” to enforce the Treaty of Versailles (Young 75).  The British hoped the League would encourage Germany to reconcile with other European states by acting as a moderator for what she felt were somewhat vindictive features of the peace treaties (Northedge 205-6).  Prime Minister Lloyd George made his priorities known:  “our first task must be to conclude a just and lasting peace, and so to establish the foundations of a new Europe that occasion for further wars may be forever averted” (Keynes 139).  It was clear that Lloyd George wanted the League of Nations to be a body for adjudicating peace and bringing reconciliation to Europe, yet even as a member of the so-called “victor’s club,” he was unable to secure the kind of League he envisioned.

Some historians wonder whether the League may have been little more than a complication for British diplomacy.  It did not greatly advance British goals of international reconciliation and it threatened to draw Britain into every detail of the peace settlements, many of which British ministers disapproved in 1919 (Northedge 206).  This complication was largely a product of French influence and showed that splintering Anglo-French relations would only continue in the interwar years.

In addition to an upset of Britain’s relationship with France, the end of the war also brought about the fall of multiple empires, thus creating new territories over which the victors would argue as well as bringing a disruption to the pre-existing balance of power in Europe.  From the German Empire, Britain acquired the largest share of Germany’s former territories in East Africa.  The ability to dictate such territorial settlements showed British victory over Germany, but not unchecked victor status.  Despite achieving one of her dominant war aims, the mandates article of the League of Nations Covenant limited British colonial policy, putting a damper on her acquisition (Northedge 202).

When the Ottoman Empire fell, Britain and France clashed again on the division of the Arab portions of land, and Arab nationalism and League rules complicated the transactions further.  Britain was able to win Arab sympathy at first, but trouble arose soon after the peace settlements when the liberated Arab states refused to accept the arrangements made on their behalf by Entente Powers like Britain and France, particularly over the creation of Palestine.

F. S. Northedge in the Journal of Contemporary History argues that “had Britain never committed herself to the idea of a national home for the Jews in Palestine in 1917, her subsequent relations with the Arab states would no doubt have been smoother” (204).  Here again, although Britain accomplished her immediate goals in the peace settlements, she ultimately put herself in a worse position for the future.

The collapses of the Empires, although they may have seemed consistent with Allied war aims at the time, actually created areas of weakness on Germany’s eastern borders by turning former empires into a group of small, fledgling states (Northedge 201-4).  The new European states made little strategic or economic sense since many had indefensible borders and engaged in disputes with each other due, at least in part, to the presence of substantial ethnic minorities within the new borders.  Many of the states had no experience governing themselves and so most ended up with authoritarian governments soon after their creation (Young 73).  Although Britain and France both recognized that security in the newly created states was important, neither did much to secure them, thus they were left to fend for themselves, making them potentially susceptible to attack or economic conditions of inflation or currency depreciation

(Aldcroft pars. 12,14).  France and Britain, both victors of WWI, were worse off for their demolition of empires and creation of new European states despite the appearance of a positive change immediately following the war.

Using the term “victor” to describe Britain after the peace settlements of the First World War gives the false impression that she was triumphant in her aims and better off than she had been before the conflict.  Truthfully, although she may have been in a better position relative to Germany, British “victory” was contingent on overcoming huge challenges both at home and in the international political system-challenges which she only partly met.  War debts forced Britain into a delicate web of repayment schemes and were a major contributor to disarmament plans that effectively put Britain behind other nations in the run-up to the Second World War.  Diplomatically, Britain was unable to secure the kind of peace settlement and League of Nations she ultimately wanted.  Despite being in Clemenceau’s “victor’s club,” she found Anglo-French relations souring and the development of an unfavorable shift in the European balance of power.

Historian F. S. Northedge summarizes Britain’s position after WWI relative to the future succinctly:  “When war came again in 1939, British writers began to explain ‘how we won the war and lost the peace’.  But the truth was that the war was never won-certainly not by the Entente Powers-and hence the peace, based on a false victory, was easily lost” (194).  Northedge recognizes that Britain was a relative victor in the war, but it was in the peace settlements and their enduring effects that Britain’s, and in fact other Allies’ positions, faltered.  Britain, therefore, should not be seen as a victor after the First World War.

Works Cited

Aldcroft, Derek.  “The Versailles Legacy.”  History Today.  Dec. 1997:  8-13.

Clarke, Peter.  Hope and Glory.  London:  Penguin Books, 2004.

Keynes, John Maynard.  The Economic Consequences of the Peace. New Brunswick:  Transaction Publishers, 2003.

Northedge, F. S.  “1917-1919:  The Implications for Britain.”  Journal of Contemporary History.  Oct. 1968:  191-209.

O’Brien, Patrick.  “The Economic Effects of the Great War.”  History Today.  Dec. 1994:  22-29.

Young, John W.  Britain and the World in the Twentieth Century.  London:  Arnold, 1997.