Why has the world been so credulous of the unveracities of politicians?  If an explanation is needed, I attribute this particular credulity to the following influences in part.

In the first place, the vast expenditures of the war, the inflation of prices, and the depreciation of currency, leading up to a complete instability of the unit of value, have made us lose all sense of number and magnitude in matters of finance.  What we believed to be the limits of possibility have been so enormously exceeded, and those who founded their expectations on the past have been so often wrong, that the man in the street is now prepared to believe anything which is told him with some show of authority, and the larger the figure the more readily he swallows it.

But those who look into the matter more deeply are sometimes misled by a fallacy, much more plausible to reasonableness.  Such a one might base his conclusions on Germany’s total surplus of annual productivity as distinct from her export surplus.  Helfferich’s estimate of Germany’s annual increment of wealth in 1913 was $2,000,000,000 to $2,125,000,000 (exclusive of increased money value of existing land and property).  Before the war, Germany spent between $250,000,000 and $500,000,000 on armaments, with which she can now dispense.  Why, therefore, should she not pay over to the Allies an annual sum of $2,500,000,000?  This puts the crude argument in its strongest and most plausible form.

But there are two errors in it.  First of all, Germany’s annual savings, after what she has suffered in the war and by the Peace, will fall far short of what they were before, and, if they are taken from her year by year in future, they cannot again reach their previous level.  The loss of Alsace-Lorraine, Poland, and Upper Silesia could not be assessed in terms of surplus productivity at less than $250,000,000 annually.  Germany is supposed to have profited about $500,000,000 per annum from her ships, her foreign investments, and her foreign banking and connections, all of which have now been taken from her.  Her saving on armaments is far more than balanced by her annual charge for pensions now estimated at $1,250,000,000,[132] which represents a real loss of productive capacity.  And even if we put on one side the burden of the internal debt, which amounts to 24 milliards of marks, as being a question of internal distribution rather than of productivity, we must still allow for the foreign debt incurred by Germany during the war, the exhaustion of her stock of raw materials, the depletion of her live-stock, the impaired productivity of her soil from lack of manures and of labor, and the diminution in her wealth from the failure to keep up many repairs and renewals over a period of nearly five years.  Germany is not as rich as she was before the war, and the diminution in her future savings for these reasons, quite apart from the factors previously allowed for, could hardly be put at less than ten per cent, that is $200,000,000 annually.