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steel production was back to the prewar figure, railroads and rollingstock were superior to prewar days, her merchant tonnage hadincreased from 400,000 tons to 3,738,000 tons—all new. Her commercialbank deposits rose from $342,000,000 to $i,657,ooo,ooo. 10Her savings deposits, wiped out by the inflation, had risen to24,000,000,000 marks. 11 She had regained, says Dr. James W. Angell,a large part of the world leadership she had lost during the war. 12Where did the money for all this come from? How was it created?What was the secret of this magical increase that appeared so wonderfuluntil the bubble burst? The answer must be that it was accomplishedby the use of that same fatal instrument for creatingnational income—government borrowing. The nation that had beendrawn toward a great war by a combination of forces, one of whichwas its fiscal sins, that saw itself pillaged after that war by one ofthe most grotesque fiscal disasters in history, now turned onceagain to the same dangerous weapon. But this time the politicianswere supplied with a new theory of national debt by the professors.In the past bewildered ministries had taken refuge in deficits underpolitical pressure. People demand increased spending. Politicians areeager to comply. More expenditures mean heavier taxes. But peopleresist more taxes. Here are contradictory streams of public desire.Both must be followed. People call on the government to spendwhile denouncing it for doing so. They cry out for economy butare unwilling to do without the benefits of extravagance. So citizenssubscribe to the general virtue of economy and politicians solvethe problem of spending more without taxing more. They resortto borrowing. But these old offenders never made any defense ofthe policy save political necessity. At most they defended it merelyas the lesser of two evils.But after the war, when the republican government came intopower, that peculiar creation—the German professor of economics—inserted himself into the scene. He proceeded to unfold a newtheory that fell like manna from above into the bewildered treasury.The old-fashioned fear of national debt, they assured the politicos,Euroþe Since 1914, by F. Lee Benns, Crofts Co., New York, 1935.^German Economy, by Gustav Stolper, Reynal & Hitchcock, New York, 1940.The Recovery of Germany, by James W. Angell, Oxford University Press, 1929, 1932.93