174 THE ECONOMIC CONSEQUENCES OF THE PEACE CH.

For the purpose of arriving at a figure it is ofno great consequence whether payment takes theform of cash (or rather of foreign exchange) oris partly effected in kind (coal, dyes, timber,etc.), as contemplated by the Treaty . In anyevent, it is only by the export of specific com-modities that Germany can pay, and the methodof turning the value of these exports to accountfor Reparation purposes is, comparatively, a matterof detail.

We shall lose ourselves in mere hypothesis unlesswe return in some degree to first principles, and,whenever we can, to such statistics as there are.It is certain that an annual payment can only bemade by Germany over a series of years by diminish-ing her imports and increasing her exports, thusenlarging the balance in her favour which is avail-able for effecting payments abroad. Germany can payin the long-run in goods, and in goods only, whetherthese goods are furnished direct to the Allies , orwhether they are sold to neutrals and the neutralcredits so arising are then made over to the Allies .The most solid basis for estimating the extent towhich this process can be carried is to be found,therefore, in an analysis of her trade returns before thewar. Only on the basis of such an analysis, supple-mented by some general data as to the aggregatewealth-producing capacity of the country, can arational guess be made as to the maximum degree to