l prices and international prices, a lack
of individual credit abroad wherewith to buy the raw materials needed to
secure the working capital and to re-start the circle of exchange, and a
disordered currency system which renders credit operations hazardous or
impossible quite apart from the ordinary risks of commerce.

The note circulation of France is more than six times its pre-war level.
The exchange value of the franc in terms of gold is a little less than
two-thirds its former value; that is to say, the value of the franc has
not fallen in proportion to the increased volume of the currency.[150]
This apparently superior situation of France is due to the fact that
until recently a very great part of her imports have not been paid for,
but have been covered by loans from the Governments of Great Britain and
the United States. This has allowed a want of equilibrium between
exports and imports to be established, which is becoming a very serious
factor, now that the outside assistance is being gradually discontinued.
The internal economy of France and its price level in relation to the
note circulation and the foreign exchanges is at present based on an
excess of imports over exports which cannot possibly continue. Yet it is
difficult to see how the position can be readjusted except by a lowering
of the standard of consumption in France, which, even if it is only
temporary, will provoke a great deal of discontent.[151]

The situation of Italy is not very different. There the note circulation
is five or six times its pre-war level, and the exchange value of the
lira in terms of gold about half its former value. Thus the adjustment
of the exchange to the volume of the note circulation has proceeded
further in Italy than in France. On the other hand, Italy's "invisible"
receipts, from emigrant remittances and the expenditure of tourists,
have been very injuriously affected; the disruption of Austria has
deprived her of an important market; and her peculiar dependence on
foreign shipping and on imported raw materials of every kind has laid
her open to special injury from the increase of world prices. For all
these reasons her position is grave, and her excess of imports as
serious a symptom as in the case of France.[152]

The existing inflation and the maladjustment of international trade are
aggravated, both in France and in Italy, by the unfortunate budgetary
position of the Governments of these countries.

In France t