Where Are We Going?

by David Lloyd George

It is not without significance, now that war is being waged against Germany for what the American representative in Paris termed her technical default, to recollect that, between the expense of the army of occupation and contributions already made towards reparations, Germany has already paid to the Allies over three times the amount of the total indemnity exacted by Bismarck in 1871.

This is without making any allowance for the vast and highly developed colonies which she surrendered. Let, therefore, no one approach this problem as if he were dealing with a recalcitrant country that is deliberately refusing to acknowledge any of her obligations under a treaty which she has signed.

The costs of the last war are acknowledged to be irrecoverable. It is difficult enough to find the means for payment of damages. Who will pay the growing cost of this new war?

So far I have referred only to the direct outlay upon these aggressive measures. The indirect cost to victor and vanquished alike will be crushing.

It is already accumulating. The mere threat has depreciated the value of the franc, and thus reduced its purchasing capacity abroad. This loss must be borne by the French consumer. There may be a rally; but I shall be surprised if the improvement is more than temporary.

All that is obvious for the moment to the untrained eye is the way in which the mark is dragging the French and Belgian franc slowly along its own downward course.

As the distance between them lengthens and the invisible cord which ties them together becomes more and more attenuated, it may ultimately snap and the franc be released from this dangerous association. That I doubt, for a bankrupt Germany means a country to which even the most hopeful cannot look as a means of redeeming French deficits.

Once that is clear to the French peasant he will not so readily part with his savings, and the real difficulties of French finance will begin at that stage. A policy, therefore, which demoralises the German currency is one which is also fatal to the solvency of French finance.

Let us follow the probable sequence of events. The terrified German mark is rushing headlong to the bottom of the pit where the Austrian krone is already lost beyond rescue.

As long as reparation coal is dug out by bayonets, and reparation timber is cut down by swords, it is idle to talk of restoring the mark by putting German finance in order.