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.But if this is the budgetary position of France and Italy,that of the rest of belligerent Europe is yet more desperate.InGermany the total expenditure of the empire, the federal states,and the communes in 1919-20 is estimated at 25 milliards ofmarks, of which not above 10 milliards are covered by previouslyexisting taxation.This is without allowing anything for thepayment of the indemnity.In Russia, Poland, Hungary, or Austriasuch a thing as a budget cannot be seriously considered to existat all.(10*)Thus the menace of inflationism described above is not merelya product of the war, of which peace begins the cure.It is acontinuing phenomenon of which the end is not yet in sight.All these influences combine not merely to prevent Europefrom supplying immediately a sufficient stream of exports to payfor the goods she needs to import, but they impair her credit forsecuring the working capital required to re-start the circle ofexchange and also, by swinging the forces of economic law yetfurther from equilibrium rather than towards it, they favour acontinuance of the present conditions instead of a recovery fromthem.An inefficient, unemployed, disorganised Europe faces us,torn by internal strife and international hate, fighting,starving, pillaging, and lying.What warrant is there for apicture of less sombre colours?I have paid little heed in this book to Russia, Hungary, orAustria.(11*) There the miseries of life and the disintegrationof society are too notorious to require analysis; and thesecountries are already experiencing the actuality of what for therest of Europe is still in the realm of prediction.Yet theycomprehend a vast territory and a great population, and are anGet any book for free on: www.Abika.com THE ECONOMIC CONSEQUENCES OF THE PEACE109extant example of how much man can suffer and how far society candecay.Above all, they are the signal to us of how in the finalcatastrophe the malady of the body passes over into malady of themind.Economic privation proceeds by easy stages, and so long asmen suffer it patiently the outside world cares little.Physicalefficiency and resistance to disease slowly diminish,(12*) butlife proceeds somehow, until the limit of human endurance isreached at last and counsels of despair and madness stir thesufferers from the lethargy which precedes the crisis.Then manshakes himself, and the bonds of custom are loosed.The power ofideas is sovereign, and he listens to whatever instruction ofhope, illusion, or revenge is carried to him on the air.As Iwrite, the flames of Russian Bolshevism seem, for the moment atleast, to have burnt themselves out, and the peoples of Centraland Eastern Europe are held in a dreadful torpor.The latelygathered harvest keeps off the worst privations, and peace hasbeen declared at Paris.But winter approaches.Men will havenothing to look forward to or to nourish hopes on.There will belittle fuel to moderate the rigours of the season or to comfortthe starved bodies of the town-dwellers.But who can say how much is endurable, or in what directionmen will seek at last to escape from their misfortunes?NOTES:1.Professor Starling's Report on Food Conditions in Germany(Cmd.280).2.Including the Darlehenskassenscheine somewhat more.3.Similarly in Austria prices ought to be between twenty andthirty times their former level.4.One of the most striking and symptomatic difficulties whichfaced the Allied authorities in their administration of theoccupied areas of Germany during the armistice arose out of thefact that even when they brought food into the country theinhabitants could not afford to pay its cost price.5.Theoretically an unduly low level of home prices shouldstimulate exports and so cure itself.But in Germany, and stillmore in Poland and Austria, there is little or nothing to export.There must be imports before there can be exports.6.Allowing for the diminished value of gold, the exchange valueof the franc should be less than forty per cent of its previousvalue, instead of the actual figure of about sixty per cent ifthe fall were proportional to the increase in the volume of thecurrency.7.How very far from equilibrium France's international exchangenow is can be seen from the following table:Monthly Imports Exports Excess of importsaverage (£1,000) (£1,000) (£1,000)1913 28,071 22,934 5,1371914 21,341 16,229 5,112Get any book for free on: www.Abika.com THE ECONOMIC CONSEQUENCES OF THE PEACE1101918 66,383 13,811 52,572Jan-Mar 1919 77,428 13,334 64,094Apr-June 1919 84,282 16,779 67,503July 1919 93,513 24,735 68,778These figures have been converted at approximately par rates,but this is roughly compensated by the fact that the trade of1918 and 1919 has been valued at 1917 official rates.Frenchimports cannot possibly continue at anything approaching thesefigures, and the semblance of prosperity based on such a state ofaffairs is spurious.8.The figures for Italy are as follows:Monthly Imports Exports Excess of importsaverage (£1,000) (£1,000) (£1,000)1913 12,152 8,372 3,7801914 9,744 7,368 2,3761918 47,005 8,278 38,727Jan-Mar 1919 45,848 7,617 38,231Apr-June 1919 66,207 13,850 52,357July-Aug 1919 44,707 16,903 27,8049.In the last two returns of the Bank of France available as Iwrite (2 and 9 October 1919) the increases in the note issue onthe week amounted to £18,750,000 and £18,825,000 respectively.10.On 3 October 1919 M.Bilinski made his financial statement tothe Polish Diet.He estimated his expenditure for the next ninemonths at rather more than double his expenditure for the pastnine months, and while during the first period his revenue hadamounted to one-fifth of his expenditure, for the coming monthshe was budgeting for receipts equal to one-eighth of hisoutgoings.The Times correspondent at Warsaw reported that 'ingeneral M.Bilinski's tone was optimistic and appeared to satisfyhis audience'!11.The terms of the peace treaty imposed on the Austrianrepublic bear no relation to the real facts of that state'sdesperate situation
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