these five classes between them accounting for 39.2 per cent. of the total exports.  It will be observed that all these goods are of a kind in which before the war competition between Germany and the United Kingdom was very severe.  If, therefore, the volume of such exports to overseas or European destinations is very largely increased the effect upon British export trade must be correspondingly serious.  As regards two of the categories, namely, cotton and woolen goods, the increase of an export trade is dependent upon an increase of the import of the raw material, since Germany produces no cotton and practically no wool.  These trades are therefore incapable of expansion unless Germany is given facilities for securing these raw materials (which can only be at the expense of the Allies) in excess of the pre-war standard of consumption, and even then the effective increase is not the gross value of the exports, but only the difference between the value of the manufactured exports and of the imported raw material.  As regards the other three categories, namely, machinery, iron goods, and coal, Germany’s capacity to increase her exports will have been taken from her by the cessions of territory in Poland, Upper Silesia, and Alsace-Lorraine.  As has been pointed out already, these districts accounted for nearly one-third of Germany’s production of coal.  But they also supplied no less than three-quarters of her iron-ore production, 38 per cent of her blast furnaces, and 9.5 per cent of her iron and steel foundries.  Unless, therefore, Alsace-Lorraine and Upper Silesia send their iron ore to Germany proper, to be worked up, which will involve an increase in the imports for which she will have to find payment, so far from any increase in export trade being possible, a decrease is inevitable.[127]

Next on the list come cereals, leather goods, sugar, paper, furs, electrical goods, silk goods, and dyes.  Cereals are not a net export and are far more than balanced by imports of the same commodities.  As regards sugar, nearly 90 per cent of Germany’s pre-war exports came to the United Kingdom.[128] An increase in this trade might be stimulated by a grant of a preference in this country to German sugar or by an arrangement by which sugar was taken in part payment for the indemnity on the same lines as has been proposed for coal, dyes, etc.  Paper exports also might be capable of some increase.  Leather goods, furs, and silks depend upon corresponding imports on the other side of the account.  Silk goods are largely in competition with the trade of France and Italy.  The remaining items are individually very small.  I have heard it suggested that the indemnity might be paid to a great extent in potash and the like.  But potash before the war represented 0.6 per cent of Germany’s export trade, and about $15,000,000 in aggregate value.  Besides, France, having secured a potash field in the territory which has been restored to her, will not welcome a great stimulation of the German exports of this material.