f the war, the inflation of
prices, and the depreciation of currency, leading up to a complete
instability of the unit of value, have made us lose all sense of number
and magnitude in matters of finance. What we believed to be the limits
of possibility have been so enormously exceeded, and those who founded
their expectations on the past have been so often wrong, that the man in
the street is now prepared to believe anything which is told him with
some show of authority, and the larger the figure the more readily he
swallows it.

But those who look into the matter more deeply are sometimes misled by a
fallacy, much more plausible to reasonableness. Such a one might base
his conclusions on Germany's total surplus of annual productivity as
distinct from her export surplus. Helfferich's estimate of Germany's
annual increment of wealth in 1913 was $2,000,000,000 to $2,125,000,000
(exclusive of increased money value of existing land and property).
Before the war, Germany spent between $250,000,000 and $500,000,000 on
armaments, with which she can now dispense. Why, therefore, should she
not pay over to the Allies an annual sum of $2,500,000,000? This puts
the crude argument in its strongest and most plausible form.

But there are two errors in it. First of all, Germany's annual savings,
after what she has suffered in the war and by the Peace, will fall far
short of what they were before, and, if they are taken from her year by
year in future, they cannot again reach their previous level. The loss
of Alsace-Lorraine, Poland, and Upper Silesia could not be assessed in
terms of surplus productivity at less than $250,000,000 annually.
Germany is supposed to have profited about $500,000,000 per annum from
her ships, her foreign investments, and her foreign banking and
connections, all of which have now been taken from her. Her saving on
armaments is far more than balanced by her annual charge for pensions
now estimated at $1,250,000,000,[132] which represents a real loss of
productive capacity. And even if we put on one side the burden of the
internal debt, which amounts to 24 milliards of marks, as being a
question of internal distribution rather than of productivity, we must
still allow for the foreign debt incurred by Germany during the war, the
exhaustion of her stock of raw materials, the depletion of her
live-stock, the impaired productivity of her soil from lack of manures
and of labor, and the diminution in her wealth fr