Coming across Europe like that, and seeing the spreading track of financial and commercial ruin, the lowering of the standard of life in many countries where it had been high and splendid, the loss of purchasing power for anything but the barest necessities, and all the new frontiers and customs lines between new States and old States, checking the free interchange of goods, slowing down world trade, an observer like myself was staggered by the gravity of this state of things. It seemed to me that we were all heading for disaster. I was convinced that all those fair promises of quick prosperity, German reparations, revival of British trade, stabilising of international exchanges, would be utterly falsified unless there was a new co-operation among the countries of Europe on lines of economic commonsense, and a truce to the policy of demanding from the defeated countries immense sums of money beyond their ability to pay. It seemed to me very clear that if Germany went down into real economic disaster the whole of Europe would go down too, and that what was wanted most was not payment of fantastic reparations but a return to the normal exchange of goods and energy. I was afraid for England. THE BRITISH ILLUSION The British Government, after the Armistice and the uncertain Peace, had behaved for a while as though victory had re-established her old strength. Superficially, indeed, and in moral prestige, among the nations of the world, the British Empire had emerged stronger than before the war. The menace of the German fleet was at the bottom of the sea. New territories in Africa had come under British dominion. British spheres of influence had been extended through Palestine, Mesopotamia and Persia. But those new “mandates” were a source of weakness and not of power. They were very costly at a time when there was no money to spend on new adventures in Imperialism. At least the vast sums of money poured into Mesopotamia and other Eastern territories on extravagant administration and development could not be justified to British taxpayers confronted by a staggering bill of costs for war purposes which drained the old reserves of wealth. British statesmen, not yet taught the elementary lessons of economic law, behaved with a kind of splendid madness, as though a new Golden Age had arrived in which their people would possess an Oriental Empire such as Alexander had carved out of the old world. They forgot, or did not know, that poverty and something like industrial ruin was creeping over English life. They did not realise that after a devastating war they could not call upon the last reserves of manhood to support military adventures in far lands. They did not understand that the effects of war in Europe from the Rhine to the Volga, and beyond, had so lowered the purchasing power of the defeated peoples, the neutral countries and the new States, that Great Britain, for a long time to come, would lose many of her