74 A REVISION OF THE TREATY chap.

would be necessary to meet her Eeparation liabilities.If, however, her exports were to rise to 10 milliards,her Reparation liabilities would become 4-6 milliards.Germany , to meet her liabilities, must therefore raisethe gold-value of her exports to double what they werein 1920 and 1921 without increasing her imports at all.

I do not say that this is impossible, given time andan overwhelming motive, and with active assistanceby the Allies to Germany 's export industries ; but doesany one think it practicable or likely in the actualcircumstances of the case % And if Germany succeeded, would not this vast expansion of exports,unbalanced by imports, be considered by our manu-facturers to be her crowning crime ? That this shouldbe the case even under the London Settlement of1921 is a measure of the ludicrous folly of the figuresgiven out in the General Election of 1918, which weresix times as high again.

(2) Next there is the problem of the Budget. ForReparation payments are a liability of the GermanGovernment and must be covered by taxation. Atthis point it is necessary to introduce an assumptionas to the relation between the gold mark and thepaper mark. For whilst the liability is fixed in termsof gold marks, the revenue (or the bulk of it) iscollected in terms of paper marks. The relation is avery fluctuating one, best measured by the exchangevalue of the paper mark in terms of American golddollars. This fluctuation is of more importance over