Teresa May knows that her Brexit deal will be rejected. Many of her colleagues want Britain to remain in the European Union and feel that with Mrs May subsequently offering them a rejection of ‘No Deal’ there is every likelihood of their wish being achieved. However, to a historian this sounds like a most dangerous exercise because we are putting our trust in the European Union’s most powerful state, Germany, and she has let us down in the past.
Modern historians are increasingly visiting the 1920s again and deciding that Germany had a much stronger industrial economy than Britain in 1929. Industrial production stood at 117.3 in comparison to 1913, while in Britain it only stood at 100.3.
Germany was also given a lower World War I reparations bill than Britain had to pay in war debts to America under the terms of the 1929 Young Plan. She also had the highest gold holdings in her history amounting 2,729,345,000 in the Reichsbank in January that year and a 40.1 cover for each bank note during her banking crash in 1931.
Yet American and British bankers could not accept that they had been taken for a ride when Germany defaulted on her debts in the 1930s. It took the German economic historian, Albrecht Ritschl to declare that Germany was ‘the biggest debt transgressor of the 20th century’ after the latest banking crisis in the 21st century.
Between the 1960s and 1990s West Germany was a model state. Before reunification she encouraged Britain to join the ERM but Mrs. Thatcher defied her experts and refused. Unfortunately, when the Berlin Wall came down, Mrs Thatcher reluctantly changed her mind, only to find that Germany subsequently raised her interest rates to 9%, necessitating Britain to have to raise hers to 15%. Bankruptcies erupted up and down the High Street before Britain made an ignominious exit from the ERM.
As many people still believe that Germany was wrongly charged with being solely responsible for the First World War, they have decided against looking too deeply at whether Germany bore any responsibility for the 1929 stock market crash, which occurred after all the restrictions had been removed from the German economy to ensure payment. So no-one has made any comparisons with the 2008 banking crash.
However, those who share Ritschl’s belief that Germany was the ‘biggest debt transgressor in the 1930s’ are beginning to have the anxieties about the future. Germany regarded Britain as her greatest enemy during the First World War and between the wars every German school child was taught that Britain had been the evil genius planning the war against Germany in 1914.
It was advantageous for Germany to put money on the London market before German reunification in 1990. Now it no longer is. Running empires is very expensive. If we go crawling back to the EU are we sure that we will receive the same yearly bill as before Brexit vote long-term? I doubt it.
If we are not sure, might it not be cheaper in the long run to insist on ‘no deal’? The world is awash with goods. What countries want is customers. We have been the European Union’s customers up to date but if it does not want our custom, plenty of other countries do.
And what about the economic principles governing the European Union? After the Lehman crash the German newspaper Die Welt commentated: ‘Any economics student in his first semester could see that the American model is not tenable.’ Donald Trump’s advocacy of tariffs may encourage Germany to adopt the economic model that she espoused till the end of the Second World War, a ‘closed bloc’ economy, with cartels and syndicates.
Indeed, the only comprehensible explanation of the European Union’s fixation with keeping the ‘Backstop’ is that sooner or later she wants to change the terms of trade in the European Union into a ‘Closed Bloc’ economy. If that is what she wants to do, NO DEAL is by far the best option for us. If the EU wants to create a Wall between Northern and Southern Ireland to enforce her ‘Closed Bloc,’ that is her privilege. But don’t ask us to pay for it!
