The Economic and Financial Conference was a formal conclave of representatives from 34 European countries held in the ancient Palazzo San Giorgio of Genoa, Italy, from 10 April to 19 May 1922.
Unlike the previous international economic conference in Brussels (1920), the Genoa conference was attended by heads of government and not only experts,[1]:9 which enhanced its authority but also the risks of politicization and grandstanding, at a time of contention on the unresolved issue of German war reparations.
The conference was intended by British Prime Minister David Lloyd George to resolve the major economic and political issues facing Europe and to address the pariah status of Germany and the Soviet Union, both of which had been excluded from the Paris Peace Conference of 1919. The conference was particularly intended to develop a strategy to rebuild a defeated Germany, as well as Central and Eastern European states, and to negotiate a relationship between European capitalist economies and the Bolshevik regime in Moscow. Germany and the Soviet Union predictably expressed loud dissent and stole the limelight by negotiating a separate bilateral agreement on the conference's sidelines, the Treaty of Rapallo.
Even so, the conference further cemented the policy consensus on principles formed at the Brussels gathering two years before. The Economic and Financial Organization of the League of Nations (EFO) presented a report to the conference, which provided the first official articulation of the gold exchange standard,[2] and also tackled novel fields for international financial cooperation such as capital flight, tax evasion, and double taxation.[1]:11 The conference also found agreement on the principle that financial stability must come first before trade restrictions could be beneficially lifted, even though no convergence was achieved on trade liberalization measures as the EFO had recommended.[1]:12
Background
British Prime Minister David Lloyd George (1863-1945) designed the 1922 conference in Genoa, Italy.
The idea for a general economic and financial conference of European nations had roots in a January 1922 session of the Supreme War Council, held in Cannes.[3] With Europe facing an economic catastrophe brought about by the half-decade First World War, marked by millions of deaths, shattered infrastructure and vast sums of squandered economic resources, British Prime Minister David Lloyd George sought an authoritative international gathering to set Europe's political and financial house in order and to establish his leadership firmly at home.[4]
The formal proposal was made at Cannes on 6 January 1922 in the form of a draft resolution calling for such a conference that was presented by Lloyd George and was approved unanimously the same date.[5]
Lloyd George told the British Parliament that the primary intent of the conference was to provide for the "reconstruction of economic Europe, devastated and broken into fragments by the desolating agency of war".[6] The economy of Europe was at the point of collapse, as Lloyd George noted:
If European countries had gathered together their mobile wealth accumulated by centuries of industry and thrift on to one pyramid and then set fire to it, the result could hardly have been more complete. International trade has been disorganized through and through. The recognized medium of commerce, exchange based upon currency, has become almost worthless and unworkable; vast areas, upon which Europe has hitherto depended for a large proportion of its food supplies and its raw material, completely destroyed for all purposes of commerce; nations, instead of cooperating to restore, broken up by suspicions and creating difficulties and new artificial restrictions; great armies ready to march, and nations already overburdened with taxation having to bear the additional taxation which the maintenance of these huge armaments to avoid suspected dangers renders necessary.[6]
Lloyd George controversially sought the inclusion of Germany and Soviet Russia to the international conference as equal members, which was met by particular opposition of France, which sought to neutralise and to isolate the two pariah nations of Europe by including them only in an inferior capacity.[7] Any softening in the hardline stance towards Germany was perceived by France as a weakening of the Treaty of Versailles of which France was a prime beneficiary and to which it was immutably committed.[8]
Reparations and recognition
French Prime Minister Aristide Briand (1862-1932), whose government fell shortly before the convocation of the Genoa Conference.
Two great issues lay as impediments to convocation of a multilateral convention to plan the economic reconstruction of Europe. One was the issue of reparations, which was regarded as the primary matter of contention between the Triple Entente powers of France and Britain in the postwar era.[9] At issue was whether the terms of economic reparations in the Treaty of Versailles, which ended the war, were to be enforced or amended. The British thought that massive reconstruction costs laid upon Germany would undermine European economic recovery and the market for British exports of manufactured goods. The French believed that if Germany was allowed to skirt the severe financial obligations detailed in the peace treaty, its economic rise would be massively accelerated, and its political and military hegemony on the continent would be rapidly restored.[9]
France, among the main battlegrounds of the European conflagration, was particularly hard-hit and in need of external funds for reconstruction. Germany was seen as having largely escaped the destruction of infrastructure and economic capacity during the war and currently engaged in the systematic underestimation of its ability to pay.[10] The political and economic weakness of Germany was emphasized by its new Weimar government, which effectively made the argument that it would be unable to maintain the specified payment schedule.[11]
Germany's position came to be regarded as reasonably correct by British, American and other policymakers despite quiet indications from even some German authorities that some substantial portion of the reparations bill could be safely managed. German politicians sought to minimise their country's tax burden by the acquisition of foreign loans and the reduction of the overall reparations bill.[12] British, American and Swiss bankers were adamant that necessary loans would not be available until a final achievable reparations bill and repayment schedule could be agreed upon by all of the main parties in the dispute.[13]
In the meantime, German authorities attempted to raise the foreign currency necessary for reparations by dumping paper currency unbacked by gold on the market. That triggered a hyperinflation paralyzing the country's economy, which had a desired subsidiary effect of helping to make the case that the current schedule of reparations was untenable.[13] It was hoped by Germany, the United Kingdom and the United States and feared by France that the Genoa Conference would provide an opportunity for downward revision of the reparations schedule that had been set forth by the treaty.[14]
The apparent softening the economic terms of the peace, which had taken place at Cannes, had led to the toppling of the government of the French Prime MinisterAristide Briand and threatened the conference by leaving his successor, Raymond Poincaré, with little appetite for participation.[15] It was only through a dedicated diplomatic offensive by Lloyd George towards the French government in February 1922 that its participation at the April conference was won, under terms that had been agreed to by the Briand government.[16] Although antagonism between France and Britain had festered in the months immediately after the war, France found itself in the uncomfortable position of having to submit to British desires on the matter of an economic conference since without British support, France would have had little chance of collecting reparations from Germany or joining any potential strategic military alliance.[17]
The second potential hurdle to holding the Genoa Conference surrounded participation of the new Bolshevik government of Russia, as the United States and most of Europe did not maintain formal diplomatic relations with the regime and harboured economic claims against it. That inconvenient situation had been effectively set aside by the Supreme Council itself, which approved a formal resolution at its meeting of 10 January 1922 that invited Soviet participation and called upon the Bolsheviks to submit a list of delegates and support staff seeking to attend so that safe-conduct passes for travel and accommodation could be arranged.[18]
Opening
Interior view of the main hall of the Palazzo di San Giorgio, location of plenary meetings of the Genoa Conference of 1922.
The opening ceremony of the Genoa Conference took place at 3 pm on 10 April 1922 at the Palazzo di San Giorgio, one of the oldest palaces in the city.[19] Delegations entered at one end of the palace and ran a gauntlet of news photographers from around the world. At the opposite end, guests, journalists and members of the delegations' support staffs disembarked from a column of automobiles to go inside the building.[20] Admission to journalists was through tickets distributed ahead of the event, which were strictly limited.[20]
The entrance of Lloyd George was met with a great ovation from those assembled in the hall as he took his seat to the left of the chairman's seat at the front of the room.[20] As the chief architect of the gathering, he effectively dominated the conference's public sessions.[20]
Return to gold standard
Among the propositions formulated at the conference was the proposal that central banks make a partial return to the gold standard, which had been dropped to print money to pay for the war. Central banks wanted a return to a gold-based economy to ease international trade and facilitating economic stability, but they wanted a gold standard that "conserved" gold stocks, with the gold remaining in the vaults and day-to-day transactions being conducted with representative paper notes.[21]
The partial return to the gold standard was accomplished by permitting central banks to keep part of their reserves in currencies, which were themselves directly exchangeable for gold coins. However, citizens would not receive gold coins of the realm in exchange for their notes, unlike the prewar gold standard.
Citizens of European countries had to redeem their banknotes in large gold bars, which were unsuitable for day-to-day transactions and largely achieved the goal of keeping the gold in the vaults.
On 16 April 1922 on the sidelines of the Genoa Conference, Russia and Germany signed the Treaty of Rapallo. Ratifications were exchanged in Berlin on 31 January 1923. The treaty did not include secret military provisions, but secret military co-operation soon followed.[22]
Conclusion and assessment
With the Treaty of Rapallo pulling Russia and Germany out of the main picture, the conference lapsed into a stalemate. The major powers at first agreed on a contingency package of financial aid to Russia, but the Allies could not agree on the final plan and so nothing was offered. The issue of German reparations went nowhere after Poincaré threatened to invade Germany unilaterally if Berlin defaulted on its next round of payments. Lloyd George was increasingly undercut by heavy attacks from the London newspapers but offered a final series of linked proposals, which would reduce Germany's liabilities for reparations, increase the French share of payments and float an international loan to finance German payments, with the money from the loan going directly to France. However, nothing was approved, Germany was expelled, France and Belgium withdrew and the final draft communiqué to Russia was signed only by Britain, Italy, Japan, Poland, Romania, Switzerland, and Sweden and left out the key world powers except Britain itself. Russia, in turn, rejected this final document. The last decision was to set up another conference at The Hague to take up the same issues.
Genoa was a watershed in international diplomacy.... Never again would such a large, rambling assembly, on the lines of Paris in 1919, be convened, until San Francisco in 1945.... There was too little detailed preparation, too much generalized optimism, too many disparate issues muddled up with one another. In many ways, it was a parody of summit diplomacy at its worst.[23]
Despite its ending in failure, the Genoa Conference has been assessed as having a lasting intellectual impact. It cemented a consensus on the need for a stable value of money to support Europe's economic reconstruction, building on the prior debates at the Brussels conference of 1920. Its resolutions represent the first official endorsement of the need for international cooperation among central banks, paving the way for the creation several years later of the Bank for International Settlements.[24]:20
The Treaty of Versailles was a peace treaty signed on 28 June 1919. As the most important treaty of World War I, it ended the state of war between Germany and most of the Allied Powers. It was signed in the Palace of Versailles, exactly five years after the assassination of Archduke Franz Ferdinand, which led to the war. The other Central Powers on the German side signed separate treaties. Although the armistice of 11 November 1918 ended the actual fighting, and agreed certain principles and conditions including the payment of reparations, it took six months of Allied negotiations at the Paris Peace Conference to conclude the peace treaty. Germany was not allowed to participate in the negotiations before signing the treaty.
Following their defeat in World War I, the Central Powers agreed to pay war reparations to the Allied Powers. Each defeated power was required to make payments in either cash or kind. Because of the financial situation in Austria, Hungary, and Turkey after the war, few to no reparations were paid and the requirements for reparations were cancelled. Bulgaria, having paid only a fraction of what was required, saw its reparation figure reduced and then cancelled. Historians have recognized the German requirement to pay reparations as the "chief battleground of the post-war era" and "the focus of the power struggle between France and Germany over whether the Versailles Treaty was to be enforced or revised."
Walther Rathenau was a German industrialist, writer and politician who served as foreign minister of Germany from February to June 1922.
The Treaty of Rapallo was an agreement signed on 16 April 1922 between the German Republic and Soviet Russia under which both renounced all territorial and financial claims against each other and opened friendly diplomatic relations. The treaty was negotiated by Russian Foreign Minister Georgi Chicherin and German Foreign Minister Walther Rathenau. It was a major victory for Russia especially and also Germany, and a major disappointment to France and the United Kingdom. The term "spirit of Rapallo" was used for an improvement in friendly relations between Germany and Russia.
The Paris Peace Conference was a set of formal and informal diplomatic meetings in 1919 and 1920 after the end of World War I, in which the victorious Allies set the peace terms for the defeated Central Powers. Dominated by the leaders of Britain, France, the United States and Italy, the conference resulted in five treaties that rearranged the maps of Europe and parts of Asia, Africa and the Pacific Islands, and also imposed financial penalties. Germany, Austria-Hungary, Turkey and the other losing nations were not given a voice in the deliberations; this later gave rise to political resentments that lasted for decades. The arrangements made by this conference are considered one of the great watersheds of 20th-century geopolitical history.
Raymond Nicolas Landry Poincaré was a French statesman who served as President of France from 1913 to 1920, and three times as Prime Minister of France.
The Little Entente was an alliance formed in 1920 and 1921 by Czechoslovakia, Romania and the Kingdom of Serbs, Croats and Slovenes with the purpose of common defense against Hungarian revisionism and the prospect of a Habsburg restoration in Austria or Hungary. France supported the alliance by signing treaties with each member country. The rapid growth of German power caused its collapse in 1938, and it never went into wartime operation.
Wilhelm Carl Josef Cuno was a German businessman and politician who was the chancellor of Germany from 1922 to 1923, for a total of 264 days. His tenure included the episode known as the Occupation of the Ruhr by French and Belgian troops and the period in which inflation in Germany accelerated notably, heading towards hyperinflation. Cuno was also general director of the Hapag shipping company.
Events from the year 1922 in France.
Rapallo is a comune (municipality) in the Metropolitan City of Genoa, in the Italian region of Liguria.
Article 231, often known as the "War Guilt" clause, was the opening article of the reparations section of the Treaty of Versailles, which ended the First World War between the German Empire and the Allied and Associated Powers. The article did not use the word guilt but it served as a legal basis under which Germany was to pay reparations for damages caused during the war.
The Occupation of the Ruhr was a period of military occupation of the Ruhr region of Germany by France and Belgium from 11 January 1923 to 25 August 1925.
The Economic Consequences of the Peace (1919) is a book written and published by the British economist John Maynard Keynes. After the First World War, Keynes attended the Paris Peace Conference of 1919 as a delegate of the British Treasury. At the conference as a representative of the British Treasury and deputy to the Chancellor of the Exchequer on the Supreme Economic Council he had publicly urged and secretly arranged on behalf of 'Rosie' Wemyss for a discontinuing of the food blockade of Germany but became ill and on his return found that there was 'no hope' of an economically sustainable settlement, and so resigned. In this book, he presents his arguments for a much less onerous treaty for a wider readership, not just for the sake of German civilians but for the sake of the economic well-being of all of Europe and beyond, including the Allied Powers, which the Treaty of Versailles and its associated treaties endangered.
The Lausanne Conference of 1932, held from 16 June to 9 July 1932 in Lausanne, Switzerland, was a meeting of representatives from the United Kingdom, France, Italy, Belgium, Japan and Germany that resulted in an agreement to lower Germany's World War I reparations obligations as imposed by the Treaty of Versailles and the 1929 Young Plan. The reduction of approximately 90 per cent was made as a result of the difficult economic circumstances during the Great Depression. The Lausanne Treaty never came into effect because it was dependent on an agreement with the United States on the repayment of the loans it had made to the Allied powers during World War I, and that agreement was never reached. The Lausanne Conference marked the de facto end of Germany's reparations payments until after World War II.
Konstanty Skirmunt was a Polish politician.
The Heavenly Twins was the name assigned to two British delegates, the Judge Lord Sumner and the Banker Lord Cunliffe, during the 1919 Treaty of Versailles negotiations who were to set the terms of the peace to be imposed on Germany following the end of World War I. The two lords, together with the Prime Minister of Australia Billy Hughes, were responsible for presenting the British and British Dominions' case concerning the amount of compensatory payments, or war reparations, that were to be extracted from Germany.
Edward Frank Wise CB was a British economist, civil servant and Labour Party politician. He served as a Member of Parliament (MP) from 1929 to 1931.
International relations (1919–1939) covers the main interactions shaping world history in this era, known as the interwar period, with emphasis on diplomacy and economic relations. The coverage here follows the diplomatic history of World War I and precedes the diplomatic history of World War II. The important stages of interwar diplomacy and international relations included resolutions of wartime issues, such as reparations owed by Germany and boundaries; American involvement in European finances and disarmament projects; the expectations and failures of the League of Nations; the relationships of the new countries to the old; the distrustful relations between the Soviet Union and the capitalist world; peace and disarmament efforts; responses to the Great Depression starting in 1929; the collapse of world trade; the collapse of democratic regimes one by one; the growth of economic autarky; Japanese aggressiveness toward China; fascist diplomacy, including the aggressive moves by Fascist Italy and Nazi Germany; the Spanish Civil War; the appeasement of Germany's expansionist moves toward the Rhineland, Austria, and Czechoslovakia, and the last, desperate stages of rearmament as another world war increasingly loomed.
The German–Polish Convention on Upper Silesia, also known as the Geneva Convention of 15 May 1922, dealt with the constitutional and legal future of Upper Silesia, part of which became Polish territory after the 1921 Upper Silesia plebiscite.
1 2 Sally Marks, "Reparations in 1922," in Carole Fink, Axel Frohn, and Jürgen Heideking (eds.), Genoa, Rapallo, and European Reconstruction in 1922. Cambridge, England: Cambridge University Press, 1991; p. 66.
↑ Manfred Berg, "Germany and the United States: The Concept of World Economic Interdependence," in Carole Fink, Axel Frohn, and Jürgen Heideking (eds.), Genoa, Rapallo, and European Reconstruction in 1922. Cambridge, England: Cambridge University Press, 1991; p. 82.
↑ Gordon H. Mueller, "Rapallo Reexamined: A New Look at Germany's Secret Military Collaboration with Russia in 1922," Military Affairs (1976) 40#3 pp 109-117 in JSTOR
↑ Morgan, Consensus and Disunity: The Lloyd George Coalition Government 1918-1922 (1986) p, 314, quote on p. 315.
↑ Gianni Toniolo (2005). Central Bank Cooperation at the Bank for International Settlements, 1930-1973. Cambridge University Press.
Sources
Jane Degras (ed.), Soviet Documents on Foreign Policy. London: Oxford University Press, 1951.
David Lloyd George, "The Genoa Conference and Britain's Part," Advocate of Peace through Justice, vol. 84, no. 4 (April 1922), pp.131–137. In JSTOR —Speech to Commons of 3 April 1922.
Further reading
Ádám, Magda. "The Genoa Conference and the Little Entente," in Carole Fink, Axel Frohn, and Jürgen Heideking (eds.), Genoa, Rapallo, and European Reconstruction in 1922. Cambridge, England: Cambridge University Press, 1991; pp.187–200.
Chossudovsky, Evgeny. "Genoa Revisited: Russia and Coexistence," Foreign Affairs, vol. 50, no. 3 (April 1972), pp.554–577. In JSTOR
MArks, Sally. "Reparations in 1922," in Carole Fink, Axel Frohn, and Jürgen Heideking (eds.), Genoa, Rapallo, and European Reconstruction in 1922. Cambridge, England: Cambridge University Press, 1991; pp.65–76.
Meyer, Richard. Bankers' Diplomacy: Monetary Stabilization in the 1920s. New York: Columbia University Press, 1970.
Pasvolsky, Leo, "The Gold Standard before and after the War," Annals of the American Academy of Political and Social Science, (Jan. 1933), pp.171–175. In JSTOR
Schuker, Stephen A. "American Policy Toward Debts and Reconstruction at Genoa, 1922," in Carole Fink, Axel Frohn, and Jürgen Heideking (eds.), Genoa, Rapallo, and European Reconstruction in 1922. Cambridge, England: Cambridge University Press, 1991; pp.95–130.
Silverman, Dan P. Reconstructing Europe After the Great War. Cambridge, MA: Harvard University Press, 1982.
White, Stephen. The Origins of Detente: The Genoa Conference and Soviet-Western Relations, 1921-1922. Cambridge, England: Cambridge University Press, 2002.
Williams, Andrew. "The Genoa Conference of 1922: Lloyd George and the Politics of Recognition,” in Carole Fink, Axel Frohn, and Jürgen Heideking (eds.), Genoa, Rapallo, and European Reconstruction in 1922. Cambridge, England: Cambridge University Press, 1991; pp.29–48.
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