speech which met with general approval. A special committee representing England, France, Italy, Czechoslovakia, and Austria was appointed to consider the Austrian situation and draw up a plan to be submitted to the Assembly of the League. The chairman of the Committee was Lord Balfour, the British delegate, who espoused the cause of Austria with great zeal. The Committee commenced its labours at once, and Dr. Seipel returned to Vienna to prepare public opinion for accepting the control which would inevitably be imposed. On September 20 he judged the situation to be sufficiently favourable to allow of his returning to Geneva in order to continue the negotiations.

These took a course which on the whole was highly satisfactory to Austria. There was general agreement among the delegates that the countries which they represented should assist Austria by guaranteeing effective credits. The only difference of opinion was over the way in which the control of Austrian finance should be exercised. While all the other delegates were in favour of vesting this control in the League, the Italian delegate desired it to be exercised by a Commission of the States which guaranteed the loan. A compromise was finally arrived at by which there was to be a Commissioner-General appointed by the League residing in Vienna and supervising Austrian finances, and assisted from time to time by a Committee of Control to which each of the four guaranteeing Governments was to appoint one representative.

The delay occasioned by this hitch prevented the plan from being prepared in time to be laid before the Assembly of the League, which rose on September 30, but it was brought before the Council on October 4. It was embodied in three protocols. The first of these guaranteed the independence of Austria. By the second the Governments of Great Britain, France, Italy, and Czechoslovakia undertook to guarantee Austrian state bonds to a total of not more than 650,000,000 gold crowns, the expenditure of which was to be supervised by the Commissary of the League. The third protocol laid down the conditions to be fulfilled by Austria, the chief of which was a gradual reform of taxation and the civil service. As pledges for the guarantees were specified the gross receipts from the customs and tobacco monopoly. It was estimated that if the reforms were carried out, Austria with the help of the loan would be able in two years to restore her budget to a condition of equilibrium.

The plan was endorsed by the Council without opposition, and Dr. Seipel, after thanking the League for its great work, returned with the protocols to Vienna in order to obtain the ratification of Parliament. He met with considerable opposition from the Social Democrats, who asserted that the conditions of control meant the enslavement of the country, and who proposed as an alternative plan a capital levy and increased taxation of the rich. The issue of the struggle was for some time in doubt, but the mere prospect of credits sufficed by the

middle of the month to bring about a stabilisation of the krone, and a consequent drop in the cost of living.

The League of Nations protocols were embodied in a Reconstruction Bill (Wiederaufbaugesetz), which was the subject of stormy debates in the Austrian Parliament. The Social Democrats stigmatised it as the "Geneva Bondage Treaty," and secured its modification in certain details; but they could not prevent it from being passed by the National Council on November 27. It was thrown out by the Federal Council on November 27, but passed again by the National Council on December 3, thus automatically becoming law. Before the end of the year also the Parliaments of the guaranteeing StatesEngland, Czechoslovakia, Belgium, Switzerland, Italy, and France-approved of the plan of the League, which appointed as its High Commissioner provisionally till April 1 Dr. Zimmerman, ex-Burgomaster of Rotterdam. Dr. Zimmerman arrived in Vienna on December 16.

In anticipation of the ratification of the protocols the Austrian Government had, immediately on receipt of them, commenced to carry out its side of the bargain. Its first step was to suspend, on November 18, the activity of the note press -not before the notes in circulation had reached the colossal sum of 3.16 billion kronen, and the indebtedness of the State to the bank stood at 2,561,000,000,000. Its next step was to effect drastic reductions in the civil service; by the end of the year no fewer than 23,600 civil servants had been dismissed, mostly railway employees and members of the defence force. Thirdly, it fixed the statutes of the new National Bank, which was henceforth to control the currency. The public and the banks on their side responded to the call of the Government by subscribing 47,000,000 gold crowns (approximately 2,000,0007.) to Treasury Bills, and over 20,000,000 gold crowns for shares. in the new Bank.

By these and similar measures Austria had by the end of the year succeeded in stabilising her currency and reducing her deficit from 450,000,000 to 350,000,000 kronen. But this financial improvement has been obtained at the expense of severe economic hardship for large sections of the population. Owing to the approximation of the internal to the external value of the krone, industry has been crippled and unemployment has seriously increased. A considerable time must elapse before the benefits of the foreign assistance can be felt in the economic sphere. So far the population has borne its sacrifices without repining (though there has been a regrettable increase of antisemitic virulence among the Pan-Germans, which may have its roots in nervous strain); but the period of hardest trial is perhaps yet to come.

Apart from the vicissitudes of the financial situation-which naturally formed almost the sole preoccupation of the Government during the year-the chief thing that deserves recording

is the improvement in Austro-Hungarian relations, which had become strained owing to the Burgenland dispute. On January 12 a meeting took place at Vienna between Dr. Schober and Count Bethlen, the Hungarian Premier, who reached an accord on various questions arising out of the transfer of Western Hungary, and paved the way for the conclusion of a commercial agreement between the two countries. At the beginning of March Hungary caused a certain perturbation in Austria by certain demands which she laid before the International Boundary Commission engaged in tracing a new frontier in the Burgenland. These demands, which embraced thirty-seven communes and approximately 23 per cent of the whole Burgenland area, were rejected almost in toto by the Commission at the end of March. Shortly afterwards the Hungarian Premier again paid a visit to Vienna.

The death of the ex-Kaiser Karl at Madeira on March 31 was commemorated in Vienna by a Requiem Mass which was followed by a large Monarchist demonstration. The Government, however, refused to lower flags to half-mast, a step in which it certainly had the support of the mass of the population. There was some agitation during the year for the Anschluss (union with Germany), but it was finally quelled by Austria undertaking, as one of the conditions for receiving a loan, "to preserve her independence," i.e., not to join with Germany.

SLAVIA-TURKEY-GREECE-ALBANIA-BULGARIA-FIUME.

SOVIET RUSSIA.

DURING 1922 Russia began to reap the fruits of the new economic policy, which had been introduced in the previous year as a result of the rebellion of Cronstadt. The new policy renounced some of the Communistic principles and allowed private ownership of land and factories. The results were not such as had been hoped for. A number of individuals were enabled to do business at a profit, but no progress was made towards securing the main object, the revival of production. The dark side of the new policy soon showed itself in the rapid depreciation of the rouble. Already, towards the autumn of 1922, the official circles of the Soviet Government began to realise the fiasco of the new economic policy. According to a statement of experts of the Supreme Economic Council, the turnover of industry at the beginning of the New Economic Policy in 1921 had amounted to 500,000,000 gold roubles, whereas in 1922, the second year of the new policy, it amounted only to 250,000,000. At the economic conference which took

place in Moscow in the beginning of December the catastrophic situation of the State industries was viewed with great anxiety. The discussions made it clear that the crisis was brought about by the lack of working-capital in the nationalised enterprises. As additional causes were mentioned the unsound administration of the factories, the bureaucratic methods employed in the sale of goods, and the lack of commercial experience. The conference decided by a majority of three to one to approach the Government with a request to denationalise those enterprises which still remained under State control. At a meeting of the Board of the "Gosplan" (Commission for Systematic State Economy) in December the statistician, Groman, stated in a report on the economic situation of Russia that the two outstanding features in the situation since the New Economic Policy had been introduced were the gradual wearing out of the country's machinery and means of transport, and a slight improvement in production and the marketing of goods. The position, it was said, was candidly recognised by the Soviet leaders, who admitted that the industrial enterprises of Russia were working at a loss. Only a few branches, such as distilleries, cigarette factories, and confectionery works made a profit. But the chief branches of Russian industry, coal, oil, and metallurgy, are unable to meet the cost of production.

In view of these facts the Russian Government was anxious to attract foreign capital and obtain credits at the Conferences of Genoa and the Hague. On the other hand, the Western Powers had come to realise that unless the produce and markets of Russia were once more available to the world the trade paralysis in Europe could not be remedied. At the Cannes Conference Mr. Lloyd George moved a resolution that an "economic and financial conference" be called which should be attended if possible by the Premiers of all the Powers of Europe, with the object of restoring trade and providing "substantial credits for weaker countries." The proposals of the British Premier were adopted unanimously and at the same time a number of principles were agreed to: "(1) Nations can claim no right to dictate to each other regarding the principles on which they are to regulate their system of ownership, internal economy, and government. It is for every nation itself to choose the system which it prefers in this respect. (2) Before foreign capital can be made available for assisting any country, foreign investors must be assured that property and rights will be respected and the fruits of their enterprise secured. (3) This sense of security cannot be re-established unless the Governments of countries desiring foreign credit freely undertake to recognise all public debts and obligations which have been or may be undertaken or guaranteed by the State, by cities, and municipal bodies or by other public bodies, as well as obligations. to restore and compensate all foreign interests for loss and damage caused when property has been confiscated or with

held; to establish a legal system which sanctions and enforces commercial and other contracts with impartiality. (4) An adequate means of exchange must be available, and generally there must be financial and currency conditions which offer sufficient security for trade. (5) All nations should undertake to refrain from propaganda subversive of order and the established political system of other countries. (6) All countries should join in undertaking to refrain from aggression against their neighbours. If, in order to secure conditions necessary for the development of trade in Russia, the Russian Government requests official recognition, the Allied Powers will be prepared to accord such recognition only if the Russian Government accepts the foregoing stipulations."

In a Memorandum which Mr. Lloyd George presented to M. Briand at Cannes, the British Prime Minister emphasised the importance of securing the attendance at the Conference of the "real leaders of Russia." The locale of the Conference having been fixed at Genoa, the Italian Government sent out invitations to the European Governments, and on January 7 its Memorandum was transmitted to Moscow through the Russian Trade Delegation at Rome. On January 21 the Russian Government accepted this invitation, and on January 27 an Extraordinary Session of the All-Russian Central Committee met to determine the composition of the Russian Delegation to the Conference. At the eleventh Communist Conference, in March, Lenin said; "We go to Genoa not as✔ Communists but as merchants seeking to widen our trade and to obtain for it favourable conditions." The basis of discussion at the Conference was a London memorandum of experts which dealt in its first part with the reconstruction of Russia. It proposed that foreign capital should be given there full liberty and security, and that Russia should recognise her debts and protect the private property of foreigners. The Russians made counter proposals, and protracted negotiations followed. The essential demands of the Soviet Delegation were laid down on April 24 as follows: Recognition de jure, credits from foreign Powers, the exclusion of the question of war debts from the negotiations, and a moratorium of thirty years instead of five years as proposed by the Western Powers. In addition the Delegation demanded that pre-war debts (until September, 1914), about which no agreement had yet been made, should not be recognised, that no compensation should be paid for foreign property which had already been socialised, and that those foreigners whose property had been socialised could settle in Russia and have the use, but not the ownership, of their property. The Western Powers made some concessions with regard to the moratorium, but insisted on the recognition of debts and guarantees for the former non-Russian factory-owners. The Russian Delegation replied on May 11 in a note which showed that an understanding was impossible. It laid stress