I2 4 THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

entitled to present to the enemy. For reasons whichwill appear more fully later on, I believe that itwould have been a wise and just act to have askedthe German Government at the Peace Negotiationsto agree to a sum of £2000 million in final settle-ment, without further examination of particulars.This would have provided an immediate and certainsolution, and would have required from Germany asum which, if she were granted certain indulgences,it might not have proved entirely impossible for herto pay. This sum should have been divided upamongst the Allies themselves on a basis of need andgeneral equity.

But the question was not settled on its merits.

II. The Conference and the Terms of the Treaty

I do not believe that, at the date of the Armi-stice, responsible authorities in the Allied countriesexpected any indemnity from Germany beyond thecost of reparation for the direct material damagewhich had resulted from the invasion of Alliedterritory and from the submarine campaign. Atthat time there were serious doubts as to whetherGermany intended to accept our terms, which inother respects were inevitably very severe, and itwould have been thought an unstatesmanlike act torisk a continuance of the war by demanding a moneypayment which Allied opinion was not then antici-