The real balance-sheet of the Franco-German War--Disregard of Sir Robert Giffen's warning in interpreting the figures--What really happened in France and Germany during the decade following the war--Bismarck's disillusionment--The necessary discount to be given an indemnity--The bearing of the war and its result on German prosperity and progress. In politics it is unfortunately true that ten dollars which can be seen bulk more largely in the public mind than a million which happen to be out of sight but are none the less real. Thus, however clearly the wastefulness of war and the impossibility of effecting by its means any permanent economic or social advantage for the conqueror may be shown, the fact that Germany was able to exact an indemnity of a billion dollars from France at the close of the war of 1870-71 is taken as conclusive evidence that a nation can "make money by war." In 1872, Sir Robert (then Mr.) Giffen wrote a notable article summarizing the results of the Franco-German War thus: it meant to France a loss of 3500 million dollars, and to Germany a total net gain of 870 millions, a money difference in favor of Germany exceeding in value the whole amount of the British National Debt! An arithmetical statement of this kind seems at first sight so conclusive that those who have since discussed the financial outcome of the war of 1870 have quite overlooked the fact that, if such a balance-sheet as that indicated be sound, the whole financial history of Germany and France during the forty years which have followed the war is meaningless. The truth is, of course, that such a balance-sheet is meaningless--a verdict which does not reflect upon Sir Robert Giffen, because he drew it up in ignorance of the sequel of the war. It does, however, reflect on those who have adopted the result shown on such a balance-sheet. Indeed, Sir Robert Giffen himself made the most important reservations. He had at least an inkling of the practical difficulties of profiting by an indemnity, and indicated plainly that the nominal figures had to be very heavily discounted. A critic[18] of an early edition of this book seems to have adopted most of Sir Robert Giffen's figures, disregarding, however, certain of his reservations, and to this critic I replied as follows: