of wealth, but by the utilisation for immediate consumption of wealth which would have been used as new capital, and by the withdrawal of probably close upon fifteen million men from production during the period of the war.  Even if we assume that the world has lost the production of only twelve million men[1], the loss is enormous.  If each man were capable of producing, on the average, wealth to the value of L100 per year, the loss of production per year during the continuance of the war would be about L1,200,000,000.  The effect of these factors will be heightened by the fact that the millions of men whose needs during the war have been satisfied by their non-combatant fellow-countrymen will be thrown upon their own resources.  And though Europe will still need to be fed and clad and housed, the effectual demand of the population for the goods and services it needs, a demand which it is able to satisfy because of its possession of exchangeable wealth, will be smaller than before the war.  The demand will be more or less stifled until the credit system is re-established and mutual confidence restored, and until industry and commerce have adjusted themselves to the new situation.  The volume of employment in this country during the war will have been swollen by temporary demands for war supplies which will cease when the war ends; foreign trade will be uncertain; a larger number of soldiers will be thrown on the labour market than ever before.  It would seem, therefore, that in the absence of special steps, the volume of unemployment at the close of the war will be a good deal greater than during the progress of the war[2].

[Footnote 1:  The number must be larger than this, as the mobilisation of the armies of neutral states should be taken into account.]

[Footnote 2:  It is thought by some that the war will be followed by a short boom, when Europe will make good the necessities of industry and civilised life, but it is at least doubtful whether there will be a rapid reproduction of these commodities, owing to the conditions, already described, which will obtain at the close of the war.  In any case, however, it will be merely a flash in the pan, and there will follow the gloom of a deep depression, unless there is clear-sighted State action.]

It is just conceivable, though one hopes not probable, that the economic effects of the war will be complicated by the imposition of war indemnities.  The indemnity is really a means of obtaining booty from a vanquished State, and has been looked upon as a justifiable means of further humiliating an already beaten enemy.  It has been pointed out[1], however, that the advantages derived from an indemnity are not an unmixed gain.  The indemnity recoils on the heads of those who impose it.  It is unnecessary here to enter into a consideration of the detailed effects of huge payments by defeated nations; though it may be remarked that the ramifications of such payments are so intricate and often so incapable