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.It is not possible at the presenttime to form an accurate judgment either as to the money-value ofthe goods which Germany will require to purchase from abroad inorder to re-establish her economic life, or as to the degree ofliberality with which the Allies will exercise their discretion.If her stocks of raw materials and food were to be restored toanything approaching their normal level by May 1921, Germanywould probably require foreign purchasing power of from £100 to£200 million at least, in addition to the value of her currentexports.While this is not likely to be permitted, I venture toassert as a matter beyond reasonable dispute that the social andeconomic condition of Germany cannot possibly permit a surplus ofexports over imports during the period prior to May 1921, andthat the value of any payments in kind with which she may be ableto furnish the Allies under the treaty in the form of coal, dyes,timber, or other materials will have to be returned to her toenable her to pay for imports essential to her existence.(51*)The reparation commission can, therefore, expect no additionfrom other sources to the sum of from £100 million to £200million with which we have hypothetically credited it after therealisation of Germany's immediately transferable wealth, thecalculation of the credits due to Germany under the treaty, andthe discharge of the cost of the armies of occupation.As Belgiumhas secured a private agreement with France, the United States,and Great Britain, outside the treaty, by which she is toreceive, towards satisfaction of her claims, the first £100million available for reparation, the upshot of the whole matteris that Belgium may possibly get her £100 million by May 1921,but none of the other Allies are likely to secure by that dateany contribution worth speaking of.At any rate, it would be veryimprudent for finance ministers to lay their plans on any otherGet any book for free on: www.Abika.com THE ECONOMIC CONSEQUENCES OF THE PEACE75hypothesis.3.Annual payments spread over a term of yearsIt is evident that Germany's pre-war capacity to pay anannual foreign tribute has not been unaffected by the almosttotal loss of her colonies, her overseas connections, hermercantile marine, and her foreign properties, by the cession often per cent of her territory and population, of one-third of hercoal and of three-quarters of her iron ore, by two millioncasualties amongst men in the prime of life, by the starvation ofher people for four years, by the burden of a vast war debt, bythe depreciation of her currency to less than one-seventh itsformer value, by the disruption of her allies and theirterritories, by revolution at home and Bolshevism on her borders,and by all the unmeasured ruin in strength and hope of four yearsof all-swallowing war and final defeat.All this, one would have supposed, is evident.Yet mostestimates of a great indemnity from Germany depend on theassumption that she is in a position to conduct in the future avastly greater trade than ever she has had in the past.For the purpose of arriving at a figure it is of no greatconsequence whether payment takes the form of cash (or rather offoreign exchange) or is partly effected in kind (coal, dyes,timber, etc.), as contemplated by the treaty.In any event, it isonly by the export of specific commodities that Germany can pay,and the method of turning the value of these exports to accountfor reparation purposes is, comparatively, a matter of detail.We shall lose ourselves in mere hypothesis unless we returnin some degree to first principles and, whenever we can, to suchstatistics as there are.It is certain that an annual payment canonly be made by Germany over a series of years by diminishing herimports and increasing her exports, thus enlarging the balance inher favour which is available for effecting payments abroad.Germany can pay in the long run in goods, and in goods only,whether these goods are furnished direct to the Allies, orwhether they are sold to neutrals and the neutral credits soarising are then made over to the Allies.The most solid basisfor estimating the extent to which this 'process can be carriedis to be found, therefore, in an analysis of her trade returnsbefore the war.Only on the basis of such an analysis,supplemented by some general data as to the aggregatewealth-producing capacity of the country, can a rational guess bemade as to the maximum degree to which the exports of Germanycould be brought to exceed her imports.In the year 1913 Germany's imports amounted to £538 millionand her exports to £505 million, exclusive of transit trade andbullion.That is to say, imports exceeded exports by about £33million.On the average of the five years ending 1913, however,her imports exceeded her exports by a substantially largeramount, namely, £74 million.It follows, therefore, that morethan the whole of Germany's pre-war balance for new foreigninvestment was derived from the interest on her existing foreignsecurities, and from the profits of her shipping, foreignbanking, etc.As her foreign properties and her mercantile marineare now to be taken from her, and as her foreign banking andother miscellaneous sources of revenue from abroad have beenGet any book for free on: www.Abika.com THE ECONOMIC CONSEQUENCES OF THE PEACE76largely destroyed, it appears that, on the pre-war basis ofexports and imports, Germany, so far from having a surpluswherewith to make a foreign payment, would be not nearlyself-supporting.Her first task, therefore, must be to effect areadjustment of consumption and production to cover this deficit.Any further economy she can effect in the use of importedcommodities, and any further stimulation of exports will then beavailable for reparation.Two-thirds of Germany's import and export trade is enumeratedunder separate headings in the following tables.Theconsiderations applying to the enumerated portions may be assumedto apply more or less to the remaining one-third, which iscomposed of commodities of minor importance individually
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