in THE BURDEN OF THE LONDON SETTLEMENT 77

that rate, the items in the following account, theincome and the outgoings and the deficit, will alltend to be multiplied threefold.

At this ratio (of 20 paper marks = 1 gold mark) aReparation liability of 3| milliard gold marks (assum-ing exports on the scale of 6 milliards) is equivalentto 70 milliard paper marks, and a liability of 4|milliards (assuming exports of 10 milliards) is equiva-lent to 90 milliard paper marks. The German Budgetfor the financial year April 1, 1921 to March 31, 1922provided for an expenditure of 93-5 milliards, exclusiveof Reparation payments, and for a revenue of 59milliards. 1 Thus the present Reparation demandwould by itself absorb more than the whole of theexisting revenue. Doubtless expenditure can be cutdown, and revenue somewhat increased. But theBudget will not cover even the lower scale of theReparation payments unless expenditure is halvedand revenue doubled. 2

1 The ordinary revenue and expenditure were estimated to balance at48 - 48 milliard paper marks. The extraordinary expenditure was estimatedat 59 - 68 milliards, making a total expenditure of 108"16 milliards. Includedin this, however, were 14 - 6 milliards for various Reparation items. Theseare in respect of various pre-May 1, 1921 items and do not allow for pay-ments under the London Settlement; but to avoid confusion I have deductedthese from the estimate of expenditure as stated above. The extraordinaryrevenue was estimated at 10 5 milliards, making a total revenue of 58-98milliards.

2 I have allowed nothing so far for the costs of the Armies of Occupation,which, under the letter of the Treaty, Germany is under obligation to payin addition to the sums due for Reparation proper. As these charges rankin priority ahead of Reparation, and as the London Agreement does notdeal with them, I think Germany is liable to be called on to pay these asthey accrue in addition to the annuities fixed in the London Settlement.