16 - The Balance of Payments Question: Versailles and After

Summary

On June 5, 1919, the Hamburg banker Max Warburg filled an idle moment by drafting some satirical verses on the Versailles conference, which he was attending as one of the German delegation's financial experts. With characteristic black humor, he gave them the title: “The Villettiade [after the Chateau Villette, where the German delegation was initially housed], The First Part of a Tragedy” For Warburg, who had just submitted the German delegation's counterproposals to the Allied peace terms, the conference had indeed more than one tragic aspect. As one of the Jewish members of the German delegation, he was condemned - as he had anticipated - to endure vilification for years to come from anti-Semitic critics of the Schmachfrieden. His own economic interests were gravely threatened by the terms of the peace, which confiscated the assets of numerous German firms and implied a dramatic increase in direct taxation to finance reparations. Above all, he regarded the peace as a tragedy for Germany, the country to which he remained passionately attached, despite all, until his death in 1946. Shortly after the presentation of the Allied terms, he expressed his bitterness at Germany's treatment in a letter to his wife: “To announce a new era to the world, to speak of love and justice, and then to perpetrate pillage on a global scale, to sow the seeds of future conflicts and kill all hope of better times, is to commit the greatest sin in the world. To experience this at first hand is appalling.”