VI

EUROPE AFTER THE TREATY

231

whatever for meeting this prodigious deficit, exceptthe expectation of receipts from Germany on a scalewhich the French officials themselves know to be base-less. In the meantime they are helped by sales ofwar material and surplus American stocks and do notscruple, even in the latter half of 1919, to meet thedeficit by the yet further expansion of the note issueof the Bank of France . 1

The budgetary position of Italy is perhaps a littlesuperior to that of France . Italian finance throughoutthe war w T as more enterprising than the French , andfar greater efforts were made to impose taxation andpay for the war. Nevertheless, Signor Nitti, thePrime Minister, in a letter addressed to the electorateon the eve of the General Election (October 1919),thought it necessary to make public the followingdesperate analysis of the situation:—(1) The Stateexpenditure amounts to about three times the revenue.

(2) All the industrial undertakings of the State,including the railways, telegraphs, and telephones,are being run at a loss. Although the public isbuying bread at a high price, that price representsa loss to the Government of about a milliard a year.

(3) Exports now leaving the country are valued atonly one-quarter or one-fifth of the imports fromabroad. (4) The National Debt is increasing byabout a milliard lire per month. (5) The military

1 In the last two returns of the Bank of France available as I write(Oct. 2 and 9, 1919) the increases in the note issue on the week amounted to£18,750,000 and £18.525,000 respectively.