Then, of course, the facts were obscured mainly by the purchasing power created by the manufacture of credit and paper money. Some light is thrown upon this ambiguous situation by a fact which is now so manifest--that this juxtaposition of growing indebtedness and lavish spending, high wages, high profits, active trade, and a rising standard of living, were all things that marked the condition of Germany in the first few years of the War. Industrial concerns showed profits such as they had never shown before; wages steadily rose; and money was plentiful. But the profits were made and the wages were paid in a money that continually declined in value--as ours is declining. The higher consumption drew upon sources that were steadily being depleted--as ours are being depleted. The production was in certain cases maintained by very uneconomic methods: as by working only the best seams in the coal mines, by devoting no effort to the proper upkeep of plant (locomotives on the railway which ordinarily would go into the repair shop every six weeks were kept running somehow during the whole course of the War). In this sense the people were 'living upon capital'--devoting, that is, to the needs of current consumption energy which should have been devoted to ensuring future production. In another way, they were converting into income what is normally a source of capital. An increase in profits or wages, which ordinarily would have provided a margin, over and above current expenditure, out of which capital for new plant, etc., could have been drawn, was rapidly nullified by a corresponding increase in prices. Loans for the purpose even of capital expenditure involved an inflation of currency which still further increased prices, thus diminishing the value of the capital so provided, necessitating the issue of further loans which had the same effect. And so the vicious circle was narrowed. Even after four years of this kind of thing the edifice had in many respects the outward appearances of prosperity. As late as April, 1918, the German organisation, as we have noted, was still capable of maintaining a military machine which could not only hold its own but compel the retirement of the combined forces of France, Britain, America, and minor Allies. But once the underlying process of disintegration became apparent, the whole structure went to pieces.