The recent history of German finance can be summarised thus. Reliance on inflationary taxation, whilst extremely productive to the exchequer in its earliest stages especially whilst the foreign speculator was still buying paper marks, gradually broke down the mark as a serviceable unit of account, one of the effects of which was to render unproductive the greater part of the rest of the revenue-collecting machinery--most taxes being necessarily assessed at some interval of time before they are collected. The failure of the rest of the revenue rendered the Treasury more and more dependent on inflation, until finally the use of legal-tender money had been so far abandoned by the public that even the inflationary tax ceased to be productive and the Government was threatened by literal bankruptcy. At this stage, the fiscal organisation of the country had been so thoroughly destroyed and its social and economic organisation so grievously disordered, as in Russia eighteen months earlier, that it was a perplexing problem to devise ways and means by which the Government could live during the transitional period whilst the normal machinery for collecting revenue was being re-created, especially in face of the struggle with France proceeding at the same time. Nevertheless the problem is not insoluble; many suggestions could be made; and a way out will doubtless be found at length. * * * * * It is common to speak as though, when a Government pays its way by inflation, the people of the country avoid taxation. We have seen that this is not so. What is raised by printing notes is just as much taken from the public as is a beer-duty or an income-tax. What a Government spends the public pay for. There is no such thing as an uncovered deficit. But in some countries it seems possible to please and content the public, for a time at least, by giving them, in return for the taxes they pay, finely engraved acknowledgements on water-marked paper. The income-tax receipts, which we in England receive from the Surveyor, we throw into the wastepaper basket; in Germany they call them bank-notes and put them into their pocket-books; in France they are termed Rentes and are locked up in the family safe. II. _Currency Depreciation_ versus _Capital Levy_ We have seen in the preceding section the extent to which a Government can make use of currency inflation for the purpose of securing income to meet its outgoings. But there is a second way in which inflation helps a Government to make both ends meet, namely by reducing the burden of its pre-existing liabilities in so far as they have been fixed in terms of money. These liabilities consist, in the main, of the internal debt. Every step of depreciation obviously means a reduction in the real claims of the _rentes_-holders against their Government.