More crippling in its effects upon the nation as a whole was the
taxation of capital in trade and industry. At a time when it was
most necessary to limit the costs of production and to stimulate the
adventure of trade, the business world was crushed under a burden of
taxation which limited its reserves, put heavy charges upon the cost
of manufacture, and reduced the capital available for new enterprise.
The price of war, and of victory, lay with an almost intolerable
weight upon the spirit of the British people, even before they had
to shoulder the burden—rejected by every other nation—the payment of
War Debt to the United States of America, amounting to £35,000,000
sterling every year. With an export trade less than 75 per cent. of
what it reached before the War, with a population which had increased
by nearly two millions in spite of all the slaughter, with new and
ruinous expenses, and with a higher standard of life demanded by the
labouring class, the people of Great Britain breathed hard, became
very anxious, faced up to realities, and saw, with almost blinding
clarity of vision, that their own national life depended upon the peace
and recovery of Europe, including that of Germany and the defeated
peoples. This realisation changed their whole attitude of mind towards
the problem of peace. It made them draw farther and farther away from
the French policy of Poincaré, which was based upon the prevention
of German recovery and “security” by military force. But above all
these financial considerations England believed in fair play even to
a defeated foe, in generosity rather than vengeance, and in future
peace by conciliation rather than by a military combination which one
day would be challenged in another “inevitable” war, more ghastly than
the last. All that sounded like weakness and treachery to the mind of
France. The Entente Cordiale was strained and broken....