This line of reasoning is no longer valid, for it was based upon a system of economic individualism, upon a distinction between the functions proper to the State and those proper to the citizen. This individualist system has been profoundly transformed in the direction of national control by the measures adopted everywhere for the purposes of war; a transformation that the confiscatory clauses of the Treaty and the arrangements for the payment of the indemnity help to render permanent. While the old understanding or convention has been destroyed--or its disappearance very greatly accelerated--by the Allies, no new one has so far been established to take its place. To that fact we must ascribe much of the economic paralysis that has come upon the world. I am aware, of course, that the passage I have quoted did not tell the whole story; that already before the War the power of the political State was being more and more used by 'big business'; that in China, Mexico, Central America, the Near East, Morocco, Persia, Mesopotamia, wherever there was undeveloped _and disorderly_ territory, private enterprise was exercising pressure upon the State to use its power to ensure sources of raw material or areas for the investment of capital. That phase of the question is dealt with at greater length elsewhere.[20] But the actual (whatever the potential) economic importance of the territory about which the nations quarrelled was as yet, in 1914, small; the part taken by Governments in the control and direction of international trade was negligible. Europe lived by processes that went on without serious obstacle across frontiers. Little States, for instance, without Colonies (Scandinavia, Switzerland) not only maintained a standard of living for their people quite as high as that in the great States, but maintained it moreover by virtue of a foreign trade relatively as considerable. And the forces which preserved the international understanding by which that trade was carried on were obviously great.