The Rapallo Treaty (1): Walther Rathenau
It had been a mere thirteen days since the dawn of 1922. In Cannes, a resort city on the French Riviera, the Allied delegation sought to discuss the matters derived from the previous Reparations Commission with the German representatives. I stood in for the Foreign Minister, while Walther Rathenau stepped forward as the German representative in place of the Chancellor.
The conference, which had begun on the 6th, was essentially a procedural confirmation, but the atmosphere was somewhat chaotic, given the absence of the United States from the delegation. British Prime Minister David Lloyd George continued his remarks.
"Regarding the reparations issue, the conclusion reached by the Reparations Commission was predicated on Germany's currency reform."
"We have passed the Currency Reform Act. We have now taken the first step, so I ask that you please watch over us."
"Indeed, we shall watch."
Belgian Prime Minister Georges Theunis said this with a sarcastic tone, exhaling a cloud of cigarette smoke. My expression twisted slightly, but Rathenau grabbed my wrist under the desk, signaling me to hold my temper.
"And also..."
George stared blankly at the empty seat. On the 10th, to improve the atmosphere among the delegates, we had played a light game of golf at Prime Minister George's suggestion. French Prime Minister Aristide Briand had shown abysmal skill—worse even than me, who was playing for the first time. It should have been a mere happening, but starting on the 11th, the opposition party began their criticism, and by this morning, he had resigned under the title of "the humiliated Prime Minister who can neither play golf nor conduct diplomacy."
It was an unprecedented situation where the host had disappeared due to an absurd event, and even Prime Minister George scratched his head.
'...Is this history?'
I knew that Prime Minister Briand had resigned due to pressure from the opposition over incompetent diplomacy, but I had no idea it had been triggered by such a trivial reason. The other representatives were also looking at the vacant French seat with pity.
"How about the next meeting in Genoa? As the global economy is fluctuating, we need a financial conference. Let us hold it in the beautiful resort town of Genoa."
When Prime Minister George exerted pressure—or rather, non-pressure—Italian representative Prime Minister Ivanoe Bonomi spread his hands and said,
"Then when shall we meet in Genoa?"
"April would be good. Let us conclude the consultations in the near future."
As soon as George heard the answer, he nodded and rose from his seat.
"Let us conclude the meeting here. Thank you for your hard work."
"This is Minister Walther Rathenau, who has recently taken office as Foreign Minister."
As I introduced him briefly, the staff at the Foreign Office stopped their work and applauded in welcome. In February 1922, Chancellor Joseph Wirth, who had nominally held the concurrent position of Foreign Minister, understood the difficulty of the workload and put effort into selecting a new one. Following his policy, he had searched for independent members of parliament with diplomatic experience, but failing to reach an agreement, Walther Rathenau, the leader of the Democratic Party who had been accompanying the delegation since last January, was officially appointed Foreign Minister. My long life as a "Ministerial Deputy" had finally come to an end.
"Yes, well, the congratulations are unnecessary. Everyone, please work hard, yes, I ask of you."
Rathenau, who had already experienced life in the Ministry of Finance, waved his hand dismissively as if accustomed to it and returned to his office, and the staff returned to their respective desks. I followed Rathenau into the office, carrying a stack of documents.
"There is an international conference in Genoa on April 10th. Other than that, there are no major issues."
"Thank you."
Rathenau nodded and accepted the documents.
"The main agenda is..."
"As you can see, it is the Gold Standard. However, this is a part that is difficult for us to accept."
"Certainly, that is true."
Rathenau answered briefly, but he did not take his eyes off the documents. His finger stopped on the words "Gold Standard."
"...But the demand will come."
He said calmly. I nodded.
"Are we not in a system where we cannot maintain the Gold Standard at all?"
"That is why it is a problem."
Rathenau put down his pen and leaned back in his chair.
"...Do you know exactly why the Gold Standard is a problem, Deputy?"
I thought for a moment before answering.
"I understand it as a system that guarantees the credit of the currency with gold. Stability would be secured. However, I do not have extensive knowledge in economics, so I do not know the details."
He nodded.
"That is correct. Stability is secured. The problem is whether we can afford that 'stability'."
I listened without a word. Rathenau tapped the desk lightly with his finger.
"The Gold Standard is simple. The amount of currency that can be issued is tied to gold reserves."
His gaze turned to me. I blinked at his words and gaze, then asked him cautiously.
"Does Germany currently have that gold?"
"...We do not. We are constantly paying it as reparations. Therefore, there is only one choice."
He said calmly.
"We must reduce the currency. Then what will happen?"
"...We would withdraw the money in circulation, reduce credit, block loans, and cut spending."
At my words, Rathenau nodded.
"The result is clear. Companies will collapse, and factories will stop. And unemployed people will pour out."
"Since the money supply is low, the number of people starving to death because they cannot find a single coin will also increase."
At my words, Rathenau nodded.
"If that were the only problem, it would be a relief. The German economy will simply be destroyed. No one will use the currency. We will return to a primitive barter economy."
As a former Minister of Finance, Rathenau was correctly identifying the loopholes in the problem.
"The best we can do is rely on foreign exchange. We must stop the return to the Gold Standard by any means necessary."
I nodded and asked.
"Then what do you see as the best option?"
A moment of silence passed. Rathenau did not speak for a while, looking down at the documents. Then he slowly opened his mouth.
"If you ask for my opinion, it is fundamentally wrong. I am not pleased with the part about pushing for currency reform first, but..."
"...However?"
"If we consider the current state of Germany, it might be better to rely on foreign exchange for the recovery of national credit."
I raised my eyebrows slightly at his words and asked.
"By foreign exchange, do you mean the dollar or the pound?"
"That is right. I see the dollar as more realistic. It goes without saying, but it is a method needed 'now', and it must be changed unconditionally later."
At his words, I nodded involuntarily.
"Then the Gold Standard at this conference..."
"As I kept saying before, I am unconditionally against it. It is too dangerous."
"They will not accept that."
At my words, Rathenau pondered for a moment. Then he looked at me intently and answered.
"...That is why we must find another way in case of failure."
I looked up. His finger fell from the word "Gold Standard." And it moved to another document.
"...Not the West."
He did not finish his sentence, but was pointing to the phrase "Soviet Russia" written among the participating countries. I said nothing. I had already guessed it. Rathenau tapped the document lightly with his finger.
"How much do you know about the contact with Russia, Deputy?"
I thought for a moment before answering.
"I only know that unofficial contacts are going back and forth. And that the Chancellor has it quite in mind."
He nodded.
"That is enough."
He leaned forward a little.
"They are in the same situation as us. An isolated nation."
"I know."
His gaze turned sharp.
"An isolated nation does not have many choices."
I quietly caught my breath and asked.
"...Are you suggesting we choose each other?"
Rathenau looked at me for a moment, then nodded ever so slightly.
"It is cooperation out of necessity. It is not an ideology, but a matter of survival."
I nodded quietly at his words. Historically, Germany had always pulled out the Russia card whenever the situation became unfavorable in diplomacy. It was so in the Austro-Prussian War, the Franco-Prussian War, and from the League of the Three Emperors to the Reinsurance Treaty. Although it had not happened yet, the German-Soviet Non-Aggression Pact and the Ostpolitik that would occur in the future were also part of that.
I knew it, but to probe his intentions, I said to him,
"The West will not like it."
At my words, Rathenau smirked as if he had been waiting for such words.
"There is no reason for them to like it. That is why it is more effective."
I nodded slowly. This was not a negotiation. It was a choice that would break the balance, and an escape from isolation. Rathenau said one last thing.
"Everything will not be decided in Genoa. However, 'once you have opened the wine bottle, you have no choice but to pour it into a glass.' Isn't that so?"
At his words, I smirked. He was the person I had been hoping for. A person who could hold hands even with the devil if it meant achieving his goal.
"You are right."
I said that, bowed my head, and quietly left the office. I did not know how long his term as Minister would be, but I felt a desire for it to be somewhat long. I did not know how long it would be, though.