226 THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

their imports paid for out of the resources of theirallies. I take Germany as typical of the first, andFrance and Italy of the second.

The note circulation of Germany is about tentimes 1 what it was before the war. The value ofthe mark in terms of gold is about one-eighth ofits former value. As world-prices in terms of goldare more than double what they were, it follows thatmark-prices inside Germany ought to be from sixteento twenty times their pre-war level if they are tobe in adjustment and proper conformity with -pricesoutside Germany. 2 Bat this is not the case. Inspite of a very great rise in German prices, theyprobably do not yet average much more than five timestheir former level, so far as staple commodities areconcerned ; and it is impossible that they should risefurther except with a simultaneous and not less violentadjustment of the level of money wages. The existingmaladjustment hinders in two ways (apart from otherobstacles) that revival of the import trade which isthe essential preliminary of the economic reconstructionof the country. In the first place, imported com-modities are beyond the purchasing power of the greatmass of the population, 3 and the flood of imports which

1 Including the Darlchcnsfcassenscheine somewhat more.

2 Similarly in Austria prices ought to be between twenty and thirtytimes their former level.

3 One of the most striking and symptomatic difficulties which faced theAllied authorities in their administration of the occupied areas of Germany during the Armistice arose out of the fact that even when they broughtfood into the country the inhabitants could not afford to pay its cost price.