not been unaffected by the almost total loss of her
colonies, her overseas connections, her mercantile marine, and her
foreign properties, by the cession of ten per cent of her territory and
population, of one-third of her coal and of three-quarters of her iron
ore, by two million casualties amongst men in the prime of life, by the
starvation of her people for four years, by the burden of a vast war
debt, by the depreciation of her currency to less than one-seventh its
former value, by the disruption of her allies and their territories, by
Revolution at home and Bolshevism on her borders, and by all the
unmeasured ruin in strength and hope of four years of all-swallowing war
and final defeat.

All this, one would have supposed, is evident. Yet most estimates of a
great indemnity from Germany depend on the assumption that she is in a
position to conduct in the future a vastly greater trade than ever she
has had in the past.

For the purpose of arriving at a figure it is of no great consequence
whether payment takes the form of cash (or rather of foreign exchange)
or is partly effected in kind (coal, dyes, timber, etc.), as
contemplated by the Treaty. In any event, it is only by the export of
specific commodities that Germany can pay, and the method of turning the
value of these exports to account for Reparation purposes is,
comparatively, a matter of detail.

We shall lose ourselves in mere hypothesis unless we return in some
degree to first principles, and, whenever we can, to such statistics as
there are. It is certain that an annual payment can only be made by
Germany over a series of years by diminishing her imports and increasing
her exports, thus enlarging the balance in her favor 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, or whether they are sold to neutrals and the neutral credits so
arising are then made over to the Allies. The most solid basis for
estimating the extent to which this process can be carried is to be
found, therefore, in an analysis of her trade returns before the war.
Only on the basis of such an analysis, supplemented by some general data
as to the aggregate wealth-producing capacity of the country, can a
rational guess be made as to the maximum degree to which the exports of
Germany could be brought to exceed her imports.

In the year 1913 Germany's imports amounted t