And yet beneath this superficial appearance of renewed prosperity and industrial power there was, as I could see, something rotten. Misery was not to be seen in the open, as in London, but it was there, in middle-class homes and mean streets. The whole of this new industrial adventure in Germany was based upon underpaid and under-nourished labour, upon cut-throat prices, and upon the temporary advantage of a falling exchange. The German Government was tinkering with its money, speeding up the printing presses, issuing notes beyond the backing of real securities. The illusion of a Germany capturing the world’s markets had no great basis of truth. The world markets had lost their purchasing power, however cheap were German goods. Russia was not buying much from Germany, nor Austria, nor Poland, nor Hungary, nor Turkey. Looking into the figures given me by experts—English as well as German—it seemed certain that there was an adverse trade balance against Germany when her national expenditure was reckoned with her revenue. The reparations she was beginning to pay, the deliveries in kind she was making to France, Belgium, and Italy, the costs of the Armies of Occupation on the Rhine, were eating into her capital wealth and swallowing up her last gold reserves. She had to pay her indemnities by buying foreign money—dollars, sterling, francs—and after each payment her own money depreciated by irresistible economic laws. THE ADVENTURE OF INFLATION The financial advisers of the German Government used the method of inflation to keep the German people working on cheap money to avoid a revolution which they feared would happen if unemployment prevailed, to wipe out their internal debt, and to dupe the world. At first, no doubt, they believed that they could control this system of postponing the evil day of reckoning, but, once having started the ball rolling, it increased with frightful velocity down hill. Every time the mark fell in value more marks had to be printed. When its purchasing power fell so far below the real value of wages that the workers clamoured for increased pay, the printing presses had to be turned again to provide the additional money which again fell in the foreign exchange while more slowly prices rose in Germany. The German financiers never checked this wheel in its mad revolutions. They protested that they were unable to check it. To some extent it was a gamble with loaded dice. They were bound to win—up to a point. As long as foreign money was paid for worthless paper—whatever the figure of exchange—they would be taking good money for bad, which is excellent business. As long as by increasing the quantities of paper they could enable their industrialists to employ cheap labour, it was good business. As long as the paper itself and the labour of printing were not more costly than the purchase value represented by fantastic numbers on the note, they could carry on the economic life of the country and at the