s and to their property by the aggression of
Germany by land, by sea, and from the air."[1] This is letting Germany
off lightly; but, after stating their readiness to make peace on the
basis of the fourteen points, if amended as above (and also with
regard to the Freedom of the Seas question) it is not possible for
the European Allies, as the Prime Minister's late manifesto says they
propose to do[2] to expand this claim for civilian damage into a
demand for the whole of their war cost up to the limit of the capacity
of the Central Powers to pay, without a serious breach of faith. So
that the question of how much we can get out of Germany is complicated
by the further uncertainty of the size of the bill for damages that we
can present. It will be big enough. We know that the Germans have sunk
8-1/2 million tons of British ships during the war. As to the price
at which, for "restoration" purposes, we shall value those ships and
their cargoes, and all the civilian property damaged by aircraft and
bombardment, this is a matter which it would be obviously improper
to discuss; but we may be sure that the bill will mount up to many
hundreds of millions, and it remains to be seen whether, after Belgium
and France have presented their account, it will be possible for us to
secure payment even for all the civilian damage that we have suffered.

[Footnote 1: _Times_, November 7, 1918.]

[Footnote 2: _Times_, December 6, 1918.]

It thus appears that the net cost of the fighting period has been
somewhere in the neighbourhood of L5500 millions, taking our loans
to Allies at half their face value; and that the armistice and
demobilisation period is likely to cost another L1000 to L1500
millions more, to say nothing of pensions and debt charge that will go
on for years (unless the supporters of Levy on Capital have their way
and wipe the debt out), and that against this further expenditure we
can set whatever sum is recovered from Germany.

Seeing that our total pre-war debt was L710-1/2 millions, or, omitting
what the Government returns call the Other Capital Liabilities,
L653-1/2 millions, these figures of war debt and war cost are at first
sight somewhat appalling. But there is no reason why they should
terrify us, and there are several reasons why they are, when looked at
with a discriminating eye, much less frightening than when we first
set them out.

In the first place, we have always to remember that these figures are
in