In short, the central effect is a vast impairment of Europe’s current income and of the capital from which her future income will flow.  It means a veritable impoverishment of vast populations.  The great burden will bear heaviest, of course, on the poor.  It will impinge very unequally and will cause a great redistribution of wealth.  As always happens, some people, mostly lucky speculators, will come out of the melee wealthier than before.  This fact will not serve to lessen the discontent of the masses, which their impoverishment is sure to create.  Food prices will be high, the earnings of labor will be low, and after the war unemployment will be great, due to the impossibility of quick absorption into the industrial system of returned soldiers, as well as other maladjustments which the war is sure to bring.

The victor may secure indemnity for part of the loss, but not for all; he will, in spite of himself, be a net loser.  Taxes will be a crushing burden, merely to secure funds with which to pay high interest on vast new war debts, to say nothing of funds with which to purchase new armaments—­if again the nations are forced, by lack of international control, to resume the stupendous folly of racing each other in military equipments.

Bankruptcy and Revolution.

It may well be that among the economic consequences of the war there will be some national bankruptcies, and that among the political consequences will be revolutions.  High prices, high taxes, low wages, and unemployment make an ominous combination.  We may be sure that discontent will be profound and widespread.  This discontent is pretty sure to lead, especially in the defeated nations where there is no compensating “glory,” to strong revolutionary movements just as was the case in Russia after her defeat by Japan.  Whether or to what extent these movements, in which “Socialism” in the various meanings of that word is sure to play a part, will succeed, depends on the relative strength of opposing tendencies which cannot yet be measured.  One possible if not probable result may be, as I suggested in THE TIMES two weeks ago, some international device to secure disarmament and to safeguard peace.

Though part of the losses to Europe will be permanent, her chief loss will be coterminous with the war.  She will, therefore, seek ways and means to fill in this immediate hole in her income in order to “get by.”  To do this she must borrow; that is, she must secure her present bread and butter from us and other nations and arrange to repay later out of the fruits of peace.  She can stint herself, but not enough to meet the situation.  She must borrow.  And in one way and another she will satisfy this necessity by borrowing in the United States.