H2 THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

and the great bulk of the land, which is Belgium 'schief wealth, is nearly as well cultivated as before.The traveller by motor can pass through and fromend to end of the devastated area of Belgium almostbefore he knows it; whereas the destruction inFrance is on a different kind of scale altogether.Industrially, the loot has been serious and for themoment paralysing; but the actual money cost ofreplacing machinery mounts up slowly, and a veryfew tens of millions would have covered the valueof every machine of every possible description thatBelgium ever possessed. Besides, the cold statisticianmust not overlook the fact that the Belgian peoplepossess the instinct of individual self-protectionunusually well developed; and the great mass ofGerman bank-notes 1 held in the country at the

1 These notes, estimated to amount to no less than six thousandmillion marks, are now a source of embarrassment and great potentialloss to the Belgian Government, inasmuch as on their recovery of thecountry they took them over from their nationals in exchange for Belgian notes at the rate of Fr. 1.20 = Mk. 1. This rate of exchange, being sub-stantially in excess of the value of the mark-notes at the rate of exchangecurrent at the time (and enormously in excess of the rate to which themark-notes have since fallen, the Belgian franc being now worth more thanthree marks), was the occasion of the smuggling of mark-notes into Belgium on an enormous scale, to take advantage of the profit obtainable. TheBelgian Government took this very imprudent step, partly because theyhoped to persuade the Peace Conference to make the redemption of thesebank-notes, at the par of exchange, a first charge on German assets. ThePeace Conference held, however, that Reparation proper must take pre-cedence of the adjustment of improvident banking transactions effectedat an excessive rate of exchange. The possession by the Belgian Government of this great mass of German currency, in addition toan amount of nearly two thousand million marks held by the FrenchGovernment which they similarly exchanged for the benefit of the popula-tion of the invaded areas and of Alsace-Lorraine, is a serious aggravation