cannot be effected by the imposition of additional taxation, as that would bring immediate ruin upon our commerce and manufacture, but only from funds secured by the most rigid economy in national expenditure, and by increasing the commodities available for purchase through the stimulation of production and of trade. There are some drastic remedies which leave the patient cured of his disease, but dead from general debility; monetary deflation, as practised by the Government, is one of them. It is no satisfaction to the manufacturer whose works are closed down, or the worker who is unemployed, to be told that the currency is being restored to pre-war parity of exchange. They see in the United Kingdom and the United States—exponents of this process—a larger proportion of the population unemployed than in any other industrial country, and these are the two wealthiest countries in the world, with the greatest foreign trade. Reconsideration of Reparations Policy No one suggests that Germany should be relieved from payment of reparations or that the Government should be dissuaded from insisting on payment by any fraudulent bankruptcy on the part of Germany. At the same time there is real urgency for clear thinking and decisive action on the part of the Government in regard to the amount and mode of payment. The Government’s original figure of 20,000 millions turned out to be a ridiculous over-estimate, afterwards reduced by the Ultimatum of London to a maximum yearly payment of 400 millions. To make the payment, the surplus of the value of Germany’s exported saleable commodities over the cost of her imported raw materials and food must at least equal that amount. Pressed to provide that surplus she must necessarily undersell our manufacturers in foreign markets, which she will and can do by depreciating the mark in foreign exchange so as to keep its external below its internal value. This results in a premium on German exports, and the undercutting of our commodities in those markets. Mr. McKenna’s reasoned speech to his bank on January 27, 1922, is worthy of close attention. “Before Germany could meet her full liability,” says Mr. McKenna, “before she could develop her foreign trade to such a degree as to have an exportable surplus of 400 millions a year, the foreign trade of this country, her chief competitor, must dwindle into insignificance.” Speaking from the economic point of view, he goes on to point out that Germany can pay annually “to the full extent of the export surplus her trade can give her without forcing the external value of the mark below its internal value ... she can pay in specified commodities, which in our case might include sugar, timber, potash, and other materials which are indispensable to us, but which we either do not produce at all or in insufficient quantities. She can pay also by the surrender of any foreign securities her nationals may possess, so far as they can be traced, and,