V

REPARATION

137

in spite of subsequent developments, there was anexpectation at that time of balancing our budget bynormal methods. But this was not the case withFrance or Italy . Their peace budgets made no pre-tence of balancing, and had no prospects of doingso, without some far-reaching revision of the existingpolicy. Indeed, the position was and remains nearlyhopeless. These countries were heading for nationalbankruptcy. This fact could only be concealed byholding out the expectation of vast receipts fromthe enemy. As soon as it was admitted that it wasin fact impossible to make Germany pay the expensesof both sides, and that the unloading of theirliabilities upon the enemy was not practicable, theposition of the Ministers of Finance of France andItaly became untenable.

Thus a scientific consideration of Germany 'scapacity to pay was from the outset out of court.The expectations which the exigencies of politicshad made it necessary to raise were so very remotefrom the truth that a slight distortion of figureswas no use, and it was necessary to ignore thefacts entirely. The resulting unveracity was funda-mental. On a basis of so much falsehood it becameimpossible to erect any constructive financial policywhich was workable. For this reason amongstothers, a magnanimous financial policy was essential.The financial position of France and Italy was sobad that it was impossible to make them listen to