Or was it just one great lie to deceive the people of the victorious nations and to keep them quiet by golden promises which the liars knew in their hearts could never be fulfilled? One is tempted sometimes to think so. It is now so transparently clear that not even the richest and most powerful nation in the world of commerce—the United States of America—could pay one tenth of the sum expected from Germany after her overwhelming defeat, and the ruin of her world trade, without overwhelming financial disaster, that it is incredible that the greatest statesmen of the Allies and all their experts and advisers could ever have believed in such mad economics. Year after year there were assemblies of financial gentlemen who solemnly sat round tables estimating Germany’s capacity to pay. Year after year they reduced their estimates until they were brought down to 6,600 millions, and then by easy stages to 2,200 millions, while Europe sank deeper into economic misery; while British trade declined; while Austria starved; while France grew desperate for these payments; while Russia was famine-stricken; while Germany poured out paper money which became worthless, until her bankruptcy could no longer be concealed. Future historians will be baffled by that psychology. They will hunt desperately for some clue to the mystery of that amazing folly which took possession of many people. They will call it perhaps the Great Financial Hoax, and argue that it was a deliberate deception on the part of the world’s leaders, afraid to confess to their nations that after all their sacrifice there would be no “fruits of victory,” but only heavy taxation, to pay for the costs of war which could not be shifted on to enemy nations. I do not think it was quite as simple as all that. I think in the beginning that sheer ignorance of the most elementary economic laws led men like Clemenceau and Lloyd George to over-estimate the power of a nation like Germany to transfer wealth in money values to other nations. They did not understand that all transferable wealth—or nearly all—can only be obtained by a trade balance of exports and imports, and that the potential energy of a nation, its factories and plant, its public buildings, bridges, organisation and industry, are not transferable except by a balance over exchange of goods. They were so hopelessly ignorant of international finance that they actually did believe that they could “squeeze” Germany of vast sums of money which could be divided among the Allies for the settlement of their immense bill of costs, without damaging their own trade or allowing Germany to trade unduly in the markets of the world. One British statesman promised his people that Germany should be squeezed like an orange until the pips squeaked. French statesmen, like Poincaré, dazzled the eyes of their people with golden visions. They balanced their budget by the simple method of assuming that all that war debt would be paid by Germany when pressure