some specific problem-some executively and some only in an advisory capacity-resulted in a certain lack of co-ordination. The creation of the Inter-Allied Food Council in August 1918 supplied an important need in this respect so far as the various Food Executives were concerned, while the Inter-Allied Munitions Council fulfilled the same function with regard to a large number of articles required for munitions purposes. But a number of Programme Committees remained quite unrelated to one another, or to any higher authority except in so far as their requirements for tonnage ultimately brought them under the sway of the Allied Maritime Transport Council. Owing to the fact that during the later stages of the war by far the most important factor so far as supplies were concerned was the shortage of tonnage, the Allied Maritime Transport Council did in effect play the part to a considerable extent of a coordinating body, but its scope of action was in theory limited. It had no definite power, for example, to decide on questions of general policy which frequently arose, especially as regards raw materials for industry, except so far as it dictated a policy by refusing or allocating tonnage.

In the later stages of the war, finance was entirely subordinated to considerations of military policy and of the organization of shipping. This, however, had its disadvantages. Since nearly the whole burden in respect of tonnage fell on Great Britain and in respect of finance on the United States and Great Britain, symptoms began to develop of a sense of irresponsibility in respect of these matters on the part of some of the other Allies. The absence, moreover, of a single logical organization for final responsibility not only of policy in respect of shipping but in respect of all economic conditions began to be felt. It is probable that, if the war had continued much longer, the Inter-Allied organization for securing cooperation would have been straightened out and completed.

2. The Economic State of Europe at the Time of the Signing of the Armistice. The signing of the Armistice on the 11th November 1918 found the whole world unprepared for the cessation of hostilities. Extravagant hopes were entertained by the majority of people that the period of stringency would almost immediately come to an end, and there started very quickly an agitation in favour of the removal of those controls within the Allied countries on which the Inter-Allied organiza

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tion had been built up. Despite the opposition of organized labour, which in Great Britain was in favour of the retention of much of the existing Inter-Allied machinery with regard to food, the popular clamour for the abolition of controls was too strong to resist, and most of the war-time restrictions were removed. The enormous feeling of relief that the war had ended and the optimism produced by victory far more complete than most people had come to believe possible, blinded the eyes of the allied peoples to the true condition of the European continent and to the inevitable consequence at that stage of letting the economic affairs of Europe look after themselves.

It is indeed clear that the Inter-Allied organization outlined above was essentially a product of war conditions and was to a large extent unsuited to peace problems.

Finance and the need for economy, which had perforce to be submerged during the war under the pressure of graver considerations, began to insist on playing their proper part as war conditions receded. At the same time the immediate easing of the tonnage situation due to the cessation of submarine warfare, the abandonment of the convoy system and the drastic curtailment and ultimate abandonment of the munitions programme, lent added force to the demand from many quarters for the abandonment of Inter-Allied arrangements ostensibly based mainly on the shortage of tonnage. With the ceasing of control over tonnage the chance of the formulation of a uniform economic policy disappeared. It was indeed unfortunate that at the end of the war no central Inter-Allied organization had been created able to deal without challenge with broad questions of economic policy. For whilst in fact the InterAllied Executives were liquidating their commitments and busily destroying their organizations, the state of a large part of Europe was rapidly going from bad to worse. Four years of warfare had sapped the foundations of the economic life of Europe and had removed more of these organizations on which alone economic reconstruction could rapidly be attempted than was for some time suspected.

Many of the evil effects of the war were cumulative in their operation and did not appear at once. It is useful to summarize briefly the economic state of Europe at the end of 1918 and during the early part of 1919.

(a) Food Conditions. Hostilities ceased at the beginning of

the winter of 1918-19, when import had been reduced to a minimum in Allied countries and supplies of food were short throughout practically the whole of Europe, and the neutral as well as the belligerent states had suffered severely by the blockade of the Central Empires. It was possible, however, very soon after the Armistice to increase materially the supplies of food to the allied and neutral countries which had shipping at their disposal, and the danger of a really acute shortage of food was temporarily at any rate removed. In Central and Eastern Europe, however, conditions were very different; lack of fertilizers had brought about a great decrease in the yield of the soil; large areas of land had been the scene of hostilities, and cultivation was far below pre-war standards. In Poland, Rumania, and Yugo-Slavia, the occupying armies had eaten up all supplies of food; famine conditions prevailed over a large part of Eastern Europe; the winter was approaching and such slender stocks as remained from the last harvest must inevitably soon be exhausted completely. Shortage was especially felt in meat and fats owing to the necessity of using cereals for direct human consumption, and the lack of nearly all forms of concentrated feeding stuffs. Germany, herself, was in a position only slightly less serious than that of the countries to the east and south. It became apparent that without substantial supplies from outside it would be impossible for these countries to carry on till the harvest. The peril of a widespread extension of Bolshevism was very real, and was only to be averted by the timely provision of food.

(b) Transport. The general effect of the conditions which have just been described was to increase enormously the dependence of Europe upon supplies of food from overseas. Despite the alleviation in overseas transport, the pressure upon ships remained very great. For various reasons voyages were far slower than before the war and the decrease in the effective carrying capacity of the world's mercantile marine was in a greater ratio than the decline in the actual number of ships as shown by comparison between the volume of shipping before and after the war. It was a matter of great difficulty to carry the additional volume of foodstuffs required to meet the European food situation. On the continent of Europe itself, land transport was in an utterly chaotic condition. Everywhere the railway systems had broken down; an enormous mileage

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of permanent way had been destroyed by military operations. Moreover, the confusion caused by the sudden defeat of the Central Empires disorganized transport throughout large parts of Europe with specially disastrous effects on the output and distribution of coal. The formation of new states full of separatist nationalist sentiment and jealous of each other, led to the enforcement of customs and transport regulations designed apparently merely to be harmful to the rapid interchange of commodities and traffic on which the recovery of internal transport depended. The reconstruction of the transport systems, therefore, throughout the European continent was a matter of the most urgent and vital necessity.

(c) Production and Exchange. During the war production had been directed towards maximum output for war purposes, while the supply of articles for normal peace consumption had decreased very greatly. Industrial machinery and mines had been destroyed in Belgium, and on a large scale in Northern France, Poland, and Italy. Raw material (except in the case of the United Kingdom) was exceedingly short and in many parts virtually non-existent.

During the war, moreover, millions of workers had been withdrawn from productive employment. The termination of the period of gigantic war effort on the part of the peoples of all the belligerent States brought about a deep and lasting reaction. Everywhere the workers were tired and in many countries they had been for long under-nourished. The reduction in hours and in the intensity of working which followed the Armistice soon led to a decrease in the output of labour over large parts of Europe, amounting to about 50 per cent. as compared with pre-war conditions. The result of the consequent enormous decrease in the output of industry, and the difficulty of converting machinery quickly from war to peace production, was that the new States in Eastern Europe in which food conditions, etc. were worst, were completely unable to help themselves, while the capacity of the other European countries to help them was very much reduced. It was necessary, therefore, in order to meet the pressing needs of German-Austria, Poland, the Baltic Provinces, Czecho-Slovakia, Rumania, and YugoSlavia, to provide food in the form of relief. These countries could not find the finance, and supplies were granted them mainly by the United States and Great Britain. In the case

of Germany no credits were granted, but sufficient food to tide her over the period before the new harvest was supplied in return for payments in gold.

(d) Currency. The financial necessities of all European belligerents had caused them to depreciate their currencies during the war. In some cases, revolution or the creation of new States left in circulation several currencies of doubtful value. This provided an additional handicap of great strength to the restarting of normal trade relations inside and especially outside the borders of the issuing country. Only by the increase of production and of transport by which trade could be rendered possible could the currencies be put straight. The difficulties already indicated, coupled with the inability of Governments to break themselves of the bad war habit of profligate creation of paper money in order to meet inflated expenditures, have tended as the months have passed to increase rather than to diminish the difficulties imposed by the chaotic conditions of the European currencies.

3. Inter-Allied Organization during the Armistice. It is doubtful whether any of the Allied Governments realized at the time of the Armistice the extent of the dislocation of the economic life of Europe. Two or three Ministers of the European Allies, whom circumstances had brought into closer relation with the economic situation, however, had a clearer appreciation of the situation than either the United States Government, which was naturally less able to appreciate what had happened, or their own colleagues.

In November 1918, immediately after the Armistice, proposals were put forward by representatives of the British, French, and Italian Governments that the existing organization of the Allied Maritime Transport Council with any necessary additions, should be converted into a general Economic Council with a view to maintaining the existing Inter-Allied co-operation in a modified form. This course would have had the great advantage that it would have enabled at once a comprehensive survey to have been made of the state of European countries before the dispersal of the war organization. The machinery might then have been adjusted with comparative ease to meet the situation which such a survey would at once have disclosed. The proposals, however, were not adopted.

In December 1918 the French Government, mainly under