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THE TREATY OF PEACE

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abstract statement, I summarise the argumentthus. The equilibrium of international tradeis based on a complicated balance between theagriculture and the industries of the differentcountries of the world, and on a specialisationby each in the employment of its labour and itscapital. If one country is required to transferto another without payment great quantities ofgoods, for which this equilibrium does notallow, the balance is destroyed. Since capitaland labour are fixed and organised in certainemployments and cannot flow freely into others,the disturbance of the balance is destructive tothe utility of the capital and labour thus fixed.The organisation , on which the wealth of themodern world so largely depends, suffers injury.In course of time a new organisation and a newequilibrium can be established. But if the originof the disturbance is of temporary duration, thelosses from the injury done to organisation mayoutweigh the profit of receiving goods withoutpaying for them. Moreover, since the losseswill be concentrated on the capital and labouremployed in particular industries, they will pro-voke an outcry out of proportion to the injuryinflicted on the community as a whole.

Most Americans, with whom I have discussedthis question, express themselves as personallyfavourable to the cancellation of the Europeandebts, but add that so great a majority of theircountrymen think otherwise that such a pro-posal is at present outside practical politics.They think, therefore, that it is premature to