The Financial Reckoning
The exactions put upon their nation by the terms presented on May 7 surpassed the worst fears of responsible German moderates. The banker Warburg deemed the proposed settlement to be "world piracy ... under the flag of hypocrisy," and Simons, the general commissioner of the German delegation, thought the terms, insofar as they were dictated by Anglo-Saxons, to be "the work of a capitalist policy of the cleverest and most brutal kind." 1. Yet some retained a measure of faith in the good will of Wilson, and the German delegates at Versailles urged that the government and press at Berlin refrain from direct attacks upon the American president. The disappointment of Germans in Wilson's hardening attitude was as great as their incomprehension of the refusal of the American government to make loans to underwrite the reconstruction of Europe. 2.
Hope for a revision of the economic terms had arisen from constructive thinking by the financial experts on both sides. On May 20 the American financial advisers welcomed a German request for informal conversations, and the next day Wilson proposed in the Supreme Council that certain clauses of the treaty be explained orally by their specialists in talks with the Germans. He asked whether such an exchange would not make it easier for "sensible" men like Melchior, who Wilson hoped would speak for a German policy, to persuade their countrymen to accept the treaty. Clemenceau insisted, however, that contact with the enemy must be limited to diplomatic notes.
Wilson's confidence in Melchior was not misplaced. The German banker and his colleague, Warburg, elaborated on a compromise that they had presented early in April at Château Villette. 3. They now proposed that Germany meet its obligation for reparation by assuming a debt comparable in amount to the highest estimate of the American experts—125 billion gold marks—to be interest-free for the most part and payable in installments over a long period of time, each annual payment to be limited to a certain percentage of the national income. Warburg envisioned "international economic agreements" that would "ultimately reduce ethnic and national borders to matters of relative insignificance and ... lead to the formation of a 'supreme parliament' to which the individual nations [would] send their delegates by way of the League of Nations" and where "noble minds" could solve the world's financial and economic problems. The immediate task of such a world organization would be to create a clearing procedure that would re-establish credit where it was lacking. 4.____________________