igo THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

It is true that in 1870 no man could have predictedGermany 's capacity in 1910. We cannot expect tolegislate for a generation or more. The secularchanges in man's economic condition and the liabilityof human forecast to error are as likely to lead tomistake in one direction as in another. We cannotas reasonable men do better than base our policy onthe evidence we have and adapt it to the five or tenyears over which we may suppose ourselves to havesome measure of prevision ; and we are not at faultif we leave on one side the extreme chances of humanexistence and of revolutionary changes in the orderof Nature or of man's relations to her. The fact thatwe have no adequate knowledge of Germany 's capacityto pay over a long period of years is no justification (asI have heard some people claim that it is) for the state-ment that she can pay ten thousand million pounds.

Why has the world been so credulous of theunveracities of politicians ? If an explanation isneeded, I attribute this particular credulity to thefollowing influences in part.

In the first place, the vast expenditures of the war,the inflation of prices, and the depreciation of currency,leading up to a complete instability of the unit ofvalue, have made us lose all sense of number andmagnitude in matters of finance. What we believedto be the limits of possibility have been so enormouslyexceeded, and those who founded their expectationson the past have been so often wrong, that the man