of the Minister of the Royal House and of the Prefect of the Palace, hitherto reserved to the Sovereign, were to be made by the Council. Victor Emmanuel III. could not have given a more conclusive proof of his desire to follow as closely as possible the principles of Constitutional Monarchy.

It was under this impression that the winter session opened (Nov. 27). The Minister of the Treasury, Di Broglio, made known to the Chamber that the financial year 1900-1 left the country with a surplus of 40,000,000 lire instead of the deficit of 7,000,000 lire which had been predicted. This favourable state of affairs, while it strengthened the Government, hastened the disruption of the opposing parties, of which many incidents had made every one aware. Among these incidents must be included the Congress of Ancona, where a group of audacious men of the Republican party voted the nomination of a committee of direction charged to issue commands to all the Republicans of the peninsula, and decided that this imperative mandate should be imposed on all the Deputies elected by that party. One of them, the member for Venice, Sgr. Pantano, made it known that he would rather resign his seat than submit to a humiliating tutelage. One of the leaders of the Extreme Left, Sgr. Turati, gave in. his resignation, and announced from Milan some days later that he would not consent to re-election. Some time before a congress of agricultural labourers had taken place at Bologna, organised by the Socialists, but it had escaped from the control of that party.

While the anti-dynastic opposition was crumbling of itself Sgr. Giolitti dealt a clever blow at the Constitutional opposition by creating a batch of thirty new Senators. The higher Chamber welcomed these new-comers with the greatest illhumour. "I have the honour," wrote Sgr. Saracco, President of the Senate, "to acknowledge the receipt of the Royal Decree, which nominates thirty persons to take part in the work of the Senate." On hearing of this action seventy-four Senators present left their cards on their President. The next day (Dec. 8) in the Chamber of Deputies a storm took place. The Government brought forward a bill for authorising the burial of Crispi in the Church of San Domenico at Palermo. While Sgr. Sonnino was defending the memory of his old friend and eulogising his policy the Socialists protested vehemently, and made such a tumult that the President was obliged to conclude the sitting. On December 9 questions on the affairs of Naples began. Five counsellors of the Court of Appeal were cited on a charge of corruption before the Court of Cassation. Senator Sareddo, who conducted the inquiry, revealed appalling facts. The Government proved easily that the leniency of authority towards those principally guilty, which had aggravated the situation, was, indeed, to be imputed to former Ministries, but that the present one had tried energetically to throw light on the affair. All the same, Sgr. Giolitti was

obliged to plead guilty, as he had been several times in power. Very much more happy was the position of Sgr. Prinetti, who scored a marked success when (Dec. 14) he explained fully the Franco-Italian Agreement with regard to Tripolitania, and made public (Dec. 20) his circular to Italian Consuls abroad on the measures to be taken with regard to emigration, and especially on all that concerned the exploitation of children's labour. The efforts of Italian diplomacy to obtain from Mr. Hay reparation and indemnities for the ill-treatment of which Italians had been the victims, especially in the States on the Gulf of Mexico, met with less success.

On December 22 the Chamber began its recess, after having voted the financial measures proposed by the Government. The duties on flour, which the Ministers had long promised to suppress, were gradually abolished. And in spite of the reduction in taxes the Minister of the Treasury made the grand announcement that the public works necessary to give work through the hard winter months could be executed without fresh taxation or loans. The year ended under a sense of great satisfaction. Italy realised with legitimate pride that her public finance was the most wisely managed of any in Europe; that her Parliamentary debates had been idyllic compared with the storms which had disturbed the other Continental Assemblies; and, finally, that, in view of the term of the Triple Alliance in 1903, competing countries had made friendly advances and promises to secure her good-will-a situation as agreeable to a nation as to an individual.

CHAPTER II.

GERMANY AND AUSTRIA-HUNGARY.

I. GERMANY.

THE great question of the Elbe and Rhine Canal, on which the Prussian Government was defeated in 1899 (see ANNUAL REGISTER, 1899, pp. 274 to 276), was again the subject of a violent conflict between the agrarians and the manufacturers throughout the year 1901. On January 9 the new Imperial Chancellor, Count von Bülow, described in the Prussian Parliament the policy he intended to adopt on this question. He said that he regarded it as the first duty of the Government to do its best to reconcile the interests of the agrarians with those of the manufacturing classes by means of a compromise acceptable to both parties, and to protect with impartiality agriculture as well as commerce and industry. He denied that the Canal Bill would either confer benefits on the western districts at the expense of the eastern, or on industry and commerce at the expense of agriculture. These interests were designed both by

nature and by historical development to support each other. The west possessed an ancient civilisation, great energy and alertness, copious natural resources; the east was the cradle of the monarchy, and in the most critical period of German history, a century ago, had saved the Prussian State, and with it the German nationality. The object of the Canal Bill, with the supplementary measures now introduced by the Government, was to provide a system of inland waterways which would equally benefit all classes and all portions of the country, and would open a splendid market in the west for the agricultural products and the timber of the east. At the same time he announced that the Government would take care that the eastern provinces should obtain protection against foreign competition by means of tariffs-thereby hinting that the corn duties would be increased.

The supplementary measures to which the Chancellor referred were for a canal between Berlin and Stettin, one between the Oder and the Vistula, the regulation of the Warthe and the lower reaches of the Oder and Havel, and further works for developing the canalisation of the Spree. These concessions to the eastern provinces, combined with the promised increase of the corn duties, would, it was hoped, overcome the opposition of the agrarians to the bill, but Count von Bülow's speech was on the whole coldly received, not only by the agrarians, but by the Liberal Opposition, who objected to the increase in the price of bread which would be caused by the proposed augmentation of the corn duties. Moreover, the bill as amended involved a very heavy expenditure, amounting to a total of 389,000,000 marks (19,000,000l.), and one of the chief objections of the majority to the bill of 1899, which involved a much smaller expenditure, was that it would impose too heavy a burden on the finances of Prussia. An increase of the corn duties, as promised by the Chancellor, would, of course, be very acceptable to the agricultural classes, but he did not state what would be the amount of such increase, and it would have to be very considerable to induce their representatives in Parliament to waive their objections to the bill. An attempt was made by them on January 28 to obtain a categorical statement from the Government on the subject, but without success. In the debate which followed it was urged by the Conservatives that unless the existing duties on corn were very largely increased Germany would become exclusively a manufacturing and trading country; that this was not expedient from a political point of view, as the peasantry form the backbone of the German Army and are by their loyalty and patriotism the strongest bulwark against the advance of Socialism; and that the working-classes in the towns would not suffer from the increase in the price of provisions resulting from the proposed higher duties, as wages would go up in consequence of the increased purchasing power of the agricultural classes, and the consequently increasing

demand for manufactured goods. The Radicals, on the other hand, argued that high protective duties would not benefit the agricultural labourers, but the landowners only; that a rise in industrial wages would increase the cost of production and thereby diminish the quantity of goods sold and throw a number of workmen out of employment; and that a large increase of the corn duties would produce a tariff war with Russia and America, causing incalculable damage to German trade.

The bill was introduced in the Prussian Parliament on February 4, and was strongly opposed by the Clericals and Conservatives. The Rhenish Deputies objected to it because it did not make provision for the canalisation of the Moselle and the Lahn; the members for Silesia urged that the reduction in the cost of transport which would result from the construction of the proposed canals would enable English coal to compete with that from Silesia; and the Conservatives alleged that Prussian finances would suffer not only on account of the great expense involved, but by the decrease in the profits of Prussian railways which would be caused by the competition of the proposed canals. After four days' debate the bill was referred to a committee for consideration.

The debate showed that the Conservatives had not in any way been conciliated by the prospect of an increase in the corn duties, and that their hostility to the Canal Bill was as great as ever, though most of the Landräthe who had been dismissed in 1899 for opposing the bill (see ANNUAL REGISTER, 1899, p. 276) were now reinstated.

The committee, owing chiefly to the obstruction of its agrarian members, sat for more than three months without making any substantial progress, the Government not having given any clear intimation of its intentions as to the contemplated increase in the corn duties on which the votes of the agrarians depended, though the Chancellor made no secret of his sympathy with the agrarians, and it was known that the Emperor was a warm advocate of the proposed canals. Under these circumstances the Government decided to drop the bill and close the Prussian Parliament (May 3), Count von Bülow stating that "in view of the course which the deliberations of the committee had taken, his Majesty's Government had regretfully been compelled to conclude that the anticipated understanding with regard to the Canal Bill is at the present time impracticable." This, of course, was a triumph for the Conservative party, to which the representatives of the agrarians in the House belong, and which is the strongest party in the Prussian Parliament, while their allies, the Clericals, are the strongest party in the German Parliament; and there was no chance of obtaining a majority for the bill by a dissolution, for the Conservatives and Clericals in the country were as strongly opposed to the bill as those in the House.

The Prussian Ministry having thus sustained a severe defeat,

its leading members-the Finance Minister, Dr. von Miquel, the Minister of Agriculture, Baron von Hammerstein, and the Minister of Commerce, Herr Brefeld-resigned. Baron von Rheinbaben, Minister of the Interior, was appointed in place of Dr. von Miquel; General von Podbielski, Director of the Post Office, in place of Baron von Hammerstein; and Herr Möller, an authority on commercial and industrial questions and a very able and experienced man of business, in place of Herr Brefeld. The most important of these changes was the removal from the field of Prussian politics of Dr. von Miquel, who was by far the ablest member of the Ministry, and had gained the favour of the Emperor to such an extent that he was known as the Emperor's man." He was a great Finance Minister, but in general politics he was a disturbing element, continually sacrificing other members of the Ministry to his personal ambition and intriguing against those who did not in all points adopt his views. On his retirement he was promoted by the Emperor to the Upper House and granted the new Prussian Order of Merit, chiefly confined to members of the Imperial family. He died shortly after.

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As shown above, the chief obstacle to the passing of the Canal Bill was the uncertainty as to the amount of the increased duty to be imposed upon corn; and a conference of the representatives of the Imperial Government and of the Governments of the more important Federal States met at Berlin shortly after the closing of the Prussian Chamber to discuss the question of the establishment of a new tariff code. The result of their deliberations was embodied in a bill which was laid before the German Parliament in November. The preamble of this bill, while admitting that the commercial treaties of 1892 and 1894 had a considerable influence in promoting the commercial and industrial development of the Empire, attributed this development rather to the protection which was maintained by those treaties than to the reduction in duties which they effected. The balance of German trade in favour of imports was stated to amount to 1,200,000,000 marks, but of this amount 800,000,000 marks were accounted for by imports of raw materials, such as cotton, jute, silk, and indiarubber, and by imports of colonial produce, such as coffee, cocoa, and fruits, not produced in Germany. It was admitted that in order to develop industry and commerce it had been necessary temporarily to sacrifice in some degree the interests of agriculture, but the time had now arrived to make a change in this policy. Between 1882 and 1895 the number of persons employed in agricultural pursuits had declined from 43 38 per cent. of the population to 36.19, representing a total reduction in agricultural labour of 700,000 persons. This was attributed chiefly to the increase in the scale of wages in industrial establishments, which attracted the population of the country districts to the towns; and the result was that agricultural wages had also to be increased, thereby making agriculture less profitable.