186 THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

that after allowing for this, she is left with a favour-able trade balance of £50,000,000 a year. Doublingthis to allow for the rise in pre-war prices, we havea figure of £100,000,000. Having regard to thepolitical, social, and human factors, as well as tothe purely economic, I doubt if Germany could bemade to pay this sum annually over a period of30 years; but it would not be foolish to assert orto hope that she could.

Such a figure, allowing 5 per cent for interest,and 1 per cent for repayment of capital, representsa capital sum having a present value of about £1700million. 1

I reach, therefore, the final conclusion that, in-cluding all methods of payment—immediately trans-ferable wealth, ceded property, and an annual tribute— £2,000,000,000 is a safe maximum figure ofGermany 's capacity to pay. In all the actual circum-stances, I do not believe that she can pay as much.Let those who consider this a very low figure, bearin mind the following remarkable comparison. Thewealth of France in 1871 was estimated at a little lessthan half that of Germany in 1913. Apart fromchanges in the value of money, an indemnity fromGermany of £500,000,000 would, therefore, be about

1 If the amount of the sinking fund be reduced, and the annual pay-ment is continued over a greater number of years, the present value—sopowerful is the operation of compound interest—cannot be materiallyincreased. A payment of £100,000,000 annually in perpetuity, assuminginterest, as before, at 5 per cent, would only raise the present value to£2000 million.