22 THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

as in a steady increase of real cost. That is to say,taking the world as a whole, there was no deficiencyof wheat, but in order to call forth an adequate supplyit was necessary to offer a higher real price. Themost favourable factor in the situation was to befound in the extent to which Central and WesternEurope was being fed from the exportable surplus ofRussia and Eoumania.

In short, Europe 's claim on the resources of theNew World was becoming precarious; the law ofdiminishing returns was at last reasserting itself,and was making it necessary year by year for Europe to offer a greater quantity of other commodities toobtain the same amount of bread; and Europe ,therefore, could by no means afford the disorgan-isation of any of her principal sources of supply.

Much else might be said in an attempt to portraythe economic peculiarities of the Europe of 1914.I have selected for emphasis the three or four greatestfactors of instability,—the instability of an excessivepopulation dependent for its livelihood on a com-plicated and artificial organisation, the psychologicalinstability of the labouring and capitalist classes, andthe instability of Europe 's claim, coupled with thecompleteness of her dependence, on the food suppliesof the New World.

The war had so shaken this system as to endangerthe life of Europe altogether. A great part of theContinent was sick and dying; its population was