Leaving Russia out of consideration, it will be observed that during the war the note circulation of the belligerents advanced from 1,164,000,000l. to 6,372,000,000%.

-an increase of 5,208,000,0007., or 447 per cent. During the same period their aggregate gold reserves only increased from 772,000,000l. to 1,119,000,0007., an advance of 347,000,000l., or 45 per cent.; and of this aggregate increase the United States accounted for 264,000,000%.

Having regard to the fact that the quantity of paper money in existence in belligerent countries (exclusive of Russia) has increased nearly 450 per cent., the protagonists of the quantity theory of money may be somewhat hard put to it to explain why the world prices of commodities have not increased to a greater extent than is shown above. But this is no doubt largely accounted for by the policy of fixing maximum prices and unified buying. This was very clearly put by Mr Hoover, the Food Administrator of the United States, who writes in his pamphlet Food in War' (p. 13):

"The European Governments have been compelled to undertake, as the outcome of the shortage of supplies, the singlehanded purchase of their supplies both for civil and military purposes. There has thus grown up an enormous consolidation of buying for 120,000,000 European people, a phenomenon never before witnessed in the economic history of the world. We find ourselves in the presence of a gigantic monopoly of buying, just as potent for good or evil as any monopoly in selling, and, in many instances, either making or influencing prices. Thus, not by virtue of any theory, but by virtue of an actual physical fact, the price made by this gigantic buyer dominates the market.'

It is significant that during the war period the Gold Reserves of the Neutral Banks of Issue advanced from 103,000,000l. to 274,400,000l., an increase of 171,000,000%, or 266 per cent., while their note circulation only increased from 207,000,000l. to 455,000,000l., or 120 per cent.

Public Debts.-An even greater increase has taken place in the amount of the public debts of the belligerents, as is shown in the following table :

P

Fr

Ita

Taking the nine principal belligerent Powers, it will be found that their National Debts increased from 5,336,400,000l. in 1914 to 31,462,600,000l. at the end of 1918, and by the time demobilisation is completed and the war expenditure liquidated, their aggregate debts will probably exceed 40,000,000,0007. The burden of

interest charges on the National Debts has therefore advanced from about 260,000,000l. in 1914 to over 2,000,000,000l. in 1919. Thus, in five years, the National Debts have increased nearly sixfold, and the note circulation more than fourfold.

Decrease in Production.-All competent observers appear to be agreed that there was an alarming decrease of productivity, not only in Great Britain, but throughout Europe, after the Armistice. An able and instructive analysis on the economic situation in Europe was prepared by Mr Hoover in a memorandum, a summary of which was published in 'The Times' of Aug. 12, 1919. Mr Hoover pointed out that the production of necessaries

The dates are the most recent available. tTimes,' Nov. 30, 1918.

results of this delay, he submitted, were unemployment, stagnation, and absorption of capital in consumable commodities to some extent all over Europe.

Dealing with the social ferment and class-selfishness which have arisen, he found Europe full of noisy lenunciations of private property on the ground that it necessarily means exploitation. The extremists of communism were loud in their assertion that production could only be maintained by the impulse of altruism, instead of self-interest. Every trial of this hypothesis, however, had reduced production; and Mr Hoover declared that the first and cardinal effort of European statesmanship must be to secure the materials and tools of Labour, and procure its return to work. They must also obtain the recognition of the fact that, whatever the economic theory or political cry, it must embrace the maximum individual effort, for there was no margin of surplus productivity in Europe to bear the risk of revolutionary experiments. There was no use in shedding tears over rising prices; they were to a great degree the necessary outcome of insufficient production. Mr Hoover, in his analysis, omitted to mention two important obstacles to the resumption of peace production, namely, the necessity of converting machinery from war production to peace production, and the need for repair and renewal of machinery. But, despite these omissions and certain obvious exaggerations, I believe that his survey gives a fairly accurate picture of the economical condition of Europe about the middle of the year 1919. He sees clearly that America can play only a small part in the economic reconstruction of Europe, and that Europe must save herself by work.

The views expressed by Mr Hoover with regard to the economic conditions prevailing in the leading countries of the world before the war and since the Armistice are, in the main, supported by the extremely valuable Bulletin of Statistics prepared by the Statistical Department of the Board of Trade at the instance of the British Section of the Supreme Economic Council. These tables show that the output of coal in the United States of America, the United Kingdom, France and Germany (not including German lignite), was, in 1913, at the rate of somewhat more than 85,000,000 tons per month in the aggregate.