nother path, and I found it in 1919. Lord Robert may
possibly remember that in the early days of the Peace Conference I came
to him and made my confession of faith, and I promised to give him what
little help I could. I have tried to keep my promise, and I believe this
vital problem, upon which not only the economic reconstruction of Europe
and the future peace of the world, but also social development at home
depend, can be solved provided you will recognise that the problem is
very complex; that there is fear to be overcome; that you are content
with what is practical from day to day, and accept each practical step
provided it leads forward to the desired goal. I therefore most
earnestly trust that the Liberal party will take this question up, and
translate it into practical politics. For that is what is required.

REPARATIONS AND INTER-ALLIED DEBT

BY JOHN MAYNARD KEYNES

M.A., C.B.; Fellow of King's College, Cambridge; Editor of _Economic
Journal_ since 1912; principal representative of the Treasury at the
Paris Peace Conference, and Deputy for the Chancellor of the Exchequer
on the Supreme Economic Council, Jan.-June, 1919.

Mr. Keynes said:--I do not complain of Lord Balfour's Note, provided we
assume, as I think we can, that it is our first move, and not our last.
Many people seem to regard it as being really addressed to the United
States. I do not agree. Essentially it is addressed to France. It is a
reply, and a very necessary reply, to the kites which M. Poincare has
been flying in _The Times_ and elsewhere, suggesting that this country
should sacrifice all its claims of every description in return
for--practically nothing at all, certainly not a permanent solution of
the general problem. The Note brings us back to the facts and to the
proper starting-point for negotiations.

In this question of Reparations the position changes so fast that it may
be worth while for me to remind you just how the question stands at this
moment. There are in existence two inconsistent settlements, both of
which still hold good in law. The first is the assessment of the
Reparation Commission, namely, 132 milliard gold marks. This is a
capital sum. The second is the London Settlement, which is not a capital
sum at all, but a schedule of annual payments calculated according to a
formula; but the capitalised value of these annual payments, worked out
on any reasonable hypothesis, comes to much less than the Reparation