Minister of Labor-DR. HEINRICH BRAUNS (Centrist).

Minister of Transportation-GENERAL GROENER (Democrat).

Minister

of Justice DR. GUSTAV RADBRUCH (Social Democrat).

The post of Minister of Reconstruction was left open, but it was expected that Dr. Walter Rathenau, the former incumbent, would be able to obtain the consent of his fellow-Democrats to re-enter the Cabinet as a matter of patriotic duty, despite the fact that the Democratic Party did not intend to assume any responsibility for the acts of the new Government. From a political viewpoint the Cabinet is CentristSocial Democratic, as Dr. Gessler and General Groener are supposed to be serving merely as non-partisan experts. The new men in the Cabinet are Dr. Radbruch, a professor at Kiel University, and Dr. Koester, who was Foreign Minister in the Herman Mueller Ministry. The three members of the old Cabinet not present in the new Government are Dr. Rosen, ex-Foreign Minister; Dr. Schiffer, ex-Minister of Justice, and George Gradnauer, ex-Minister of the Interior. Herr Gradnauer has been named Saxon representative in Berlin.

Dr. Schiffer was appointed by the Cabinet on Oct. 27 as National Commissioner to negotiate with the Poles and the Council of the League of Nations on Upper Silesian conditions, with Dr. Lewald, Secretary of State in the Ministry of the Interior, as his deputy. The Council of Ambassadors in Paris was duly notified of Germany's acceptance of the Upper Silesian decision. [The text of this decision is printed on pages 501-4.] This notification was accompanied by a German protest, but in acknowledging its receipt the Council of Ambassadors remarked that the protest was "without foundation" and would, therefore, considered null and void." The main fact was that the Germans apparently had decided to make the best of what they called an "outrageous situation," and trust to the future for possible changes in their favor. The German Government officially denied Paris rumors of German sabotage of industrial plants and railways in Upper Silesia, and on Oct. 29 officials of German mining and smelting companies in the Koenigshuette and Laurahuette districts met in Berlin and declared that they intended to run their plants as efficiently as possible,

"be

even if they were under Polish political rule.

The first concrete result of the decision of the Goerlitz Social Democratic Convention allowing its members to work with People's Party men where this could be done to the advantage of the republic was seen on Nov. 5, when, according to a Berlin cablegram, Otto Braun, a leading Social Democrat and former Prussian Minister of Agriculture, was elected by the Diet to head the Prussian Ministry in place of Adam Stegerwald, who had resigned on Nov. 1. Premier Braun's new Cabinet was reported to be made up of three Social Democrats, two Centrists, two People's Party men and one Democrat. Such a combination would be sure of a big majority in the Diet, whereas the Centrist-Democratic Cabinet of Herr Stegerwald, organized last April, only existed on suffrance.

The arrival of the entire Reparation Commission in Berlin on Nov. 10 for the purpose of studying the financial crisis, due to the rapid fall in the exchange value of the mark, and consulting with German officials and experts regarding means of guaranteeing future payments on the reparation account, gave rise to a huge crop of rumors concerning the imminent bankruptcy of the republic, its taking over by the allied powers as receivers, and similar possibilities. The definite facts available up to Nov. 10 showed that the Reparation Commission had no intention of crowding its German creditors, as the payment scheduled for Nov. 15-some 300,000,000 gold marks, representing 26 per cent. of the German exports for the three months ended July 31had been covered by deliveries of materials, and it appeared that the commission was willing to help make it easier for Germany to pay the regular fixed instalment of 500,000,000 gold marks due on Jan. 15, 1922. It was also reported that the problem of arranging for the carrying out of the Wiesbaden reparation agreement between Germany and France in such a way as to overcome the objections raised by Sir John Bradbury, British representative on the Reparation Commission, would be tackled.

Developments of the Wiesbaden agreement are treated in the article on France. If a plan for economy in administration, recommended to the Supreme Council on Nov. 8 by an Interallied Commission ap

pointed by the Council for the purpose of studying the situation in the occupied territory, is put into effect, the occupation costs to Germany during 1922 will be about 22,000,000 gold marks less than those of the current year. There will be a further reduction due to the winding up of the work of many of the allied commissions in Germany and the expected lessening of the forces of occupation. On Nov. 3 the German Government asked the Allies to evacuate such watering places as Wiesbaden on the ground that the presence of troops annoyed visitors and cut down the receipts of the resorts. Prince von Hatzfeld, the new German Commissioner for the occupied territory, was formally welcomed to Coblenz on Oct. 15. Under a German order, unopposed by the Interallied Rhineland Commission, and effective Oct. 26, foreigners traveling through the occupied territory cannot take advantage of the depreciation of the mark by wholesale shopping, as they are forbidden to buy anything in the retail stores except what they need for immediate use or maintenance.

According to the decision on the delivery of river shipping to the Allies rendered by Walker D. Hines, the American arbitrator, Germany is to be credited with 15,450,000 gold marks for deliveries of Rhine vessels, with 8,350,000 for Elbe deliveries, and with 338,940 for Danube deliveries.

As the result of the protest against the continued military formation of the Security Police made by General Nollet, head of the Interallied Military Control Commission, the number of men in each unit was reduced from 121 to 104.

Through the decline in the value of the mark, which fell so low that 100 marks could be bought for 33 cents in New York on Nov. 7 and 330 for $1 in Berlin on Nov. 8, the budget estimates and taxation plans of the Wirth Government were all upset. To this was added a promised increase of some 20 per cent. in the wages of all the State employes, including the railroad men, calculated to add about 30,000,000,000 marks to the yearly expenses of the Government. In explaining the new taxation bill to the Reichstag on Nov. 4, Minister Hermes pointed out that estimates for the fiscal year 1922 put receipts at 97,000,000,

000 marks and expenditures at 182,000,000,000. He took occasion to remark that " an effective way out of this immense financial distress cannot be found until our erstwhile adversaries realize that, in the interests of their own peoples, the position of the German people, made considerably worse through the Silesian decision, must be rendered tolerable by reasonable adaptation of Germany's obligations to her capacity.".

The League of German Industrialists, in which Hugo Stinnes plays a big rôle, voted on Nov. 7 to place foreign credits to the amount of 1,000,000,000 gold marks at the disposal of the Government, provided the Wirth Cabinet would agree to an efficiency program calling for governmental economies, the freeing of the country's economic life from hampering restrictions—such as the eight-hour day-consultation with private interests in formulating tax bills and the managing of State enterprises in such a way as to stop their drain upon the Treasury. The Socialist and radical press immediately warned the Government against being dictated to by private capitalists, and a conference held Nov. 9 between representatives of the industrialists and Chancellor Wirth was reported as fruitless. Stories of foreign loans to Germany were numerous, but nothing definite was reported.

In the midst of all the financial chaos German industries continued to operate feverishly, despite the high prices in paper marks demanded for foreign raw materials. The first week of November it was reported that the number of unemployed persons drawing Government aid was only about 100,000, against 189,000 on Oct. 1. As the mark dropped, the prices of industrial stocks went up and almost everybody owning large amounts of marks seemed determined to turn them into pieces of paper of more substantial value.

W

HILE the news of the signing of the Peace Treaty with the United States, Aug. 24, 1921, at Vienna, was received quietly by the general public and was forgotten the following week amidst the popular indignation at the Hungarian coup in West Hungary, the Government and the Viennese financial press attached great significance to the treaty as being the greatest step yet taken toward realization of the much-talked-of foreign loan, upon which Austria has built its last hopes of avoiding utter collapse and disintegration. The necessity of obtaining foreign credits was given by Federal Chancellor Schober as the reason for signing the treaty, when he laid that document before the Foreign Relations Committee of the National Assembly. The treaty was ratified Sept. 2 without debate,. and became effective Nov. 8 with the exchange of ratifications in Vienna by Chancellor Schober and Arthur Hugh Frazier, the American Commissioner.

The Ter Meulen scheme for assisting Austria is based on the waiving for twenty years, by the allied and associated powers, of their general lien on Austrian resources imposed as security for reparations and other claims. During the week preceding the signing of the Austro-American Treaty, Italy agreed to waive her rights, thus leaving only the United States, Jugoslavia and Rumania still in the attitude of demanding payment of their bills against a bankrupt nation. It is generally recognized that any action taken by the United States would be followed by the other two countries. The Austrian Government hopes that, when the present obstacles are removed, a loan will be forthcoming through the Financial Committee of the League of Nations, which has the matter in charge.

The treaties signed with the three Central Powers-with Austria on Aug. 24, Germany on Aug. 25, and Hungary, Aug. 29—are alike in that the most important sections-the fi

nancial and economic-are yet to be negotiated. In the case of Germany, the magnitude of the trading, shipping and investment interests involved endows the negotiations with great significance. As regards Austria, there is much less at stake, the interrelated problems of pre-war debts and Austrian property in America being the most important matters to be solved.

American trade with Austria has never been of the first magnitude. Foodstuffs have composed the bulk of American exports to Austria since the armistice, and will continue to hold first place in the trade with that country. With the exception of magnesite, which is extensively demanded in the United States, and of which Austria and Czechoslovakia have a virtual monopoly, Austrian exports to the United States have been chiefly articles of luxury, such as fancy leather goods, antiques, and the like. Declared exports from Austria to the United States for July amounted to only $173,307. The conclusion of peace will be a great relief to Austrians wishing to go to America on business; hitherto it has been almost impossible to obtain visés. The thousands anxious to emigrate to America probably will be disappointed.

Settlement of pre-war debts is a question of vital interest to Austria at this time. The amount due creditors in the United States is approximately $2,000,000, a small sum in comparison with the £6,000,000 due to English creditors and the 125,000,000 francs due in France. Before the war most American trade with Austria was financed in London.

Austria's assets in the United States, which were sequestrated by the Government during the war, amount to nearly $8,000,000. It is for Congress to decide whether this property shall be returned to its private owners or held until all claims against Austria are settled. As the United States asks no reparations, those claims will consist for

the most part only of private pre-war accounts. Settlement of this question will release several million dollars in Austria's favor-a sum which looks very large to Austria at this time, as its Government is in desperate need of foreign "valuta" with which to pay for food imports.

In August considerable progress was made toward settlement of Austria's pre-war debts to the allied countries. It had long been evident that if Austrian debtors were forced to meet at par all their pre-war obligations payable in crowns, every large enterprise in the country would be forced into bankruptcy, owing to the extreme depreciation of the currency. [On Sept. 1 the exchange was about 1,100 crowns to the dollar, as compared with the normal rate of 5 crowns to the dollar.] The uncertainty of the situation has hung like a sword of Damocles over the heads of Austrian banks

during the last three years. This uncertainty has been an obstacle to commerce, because bank guarantees, which are the cornerstone of the trading structure, have been valueless as long as the solvency of the banks themselves was in question.

Long strides toward a settlement, however, have now been made. The most important recent developments are: (1) A proposal of the Austrian Government to refund one-half of the foreign debts of Austrian concerns, and (2) an agreement reached at Paris Aug. 2 between the leading Vienna banks and their French creditors, according to which Austrian debts payable in crowns are scaled down to 30 centimes for each crown of the original debt. As the assistance promised by the Government, however, will be in the form of 5 per cent. State bonds, and not in cash, this

help will not be as important as it sounds, for the bonds will never reach par. But the Paris agreement is of great importance, as it furnishes an opportunity for the Viennese banks to regulate their position on the Paris market. The agreement provides that a first instalment of 12 centimes is due Dec. 31, 1921, further instalments of 9 centimes being payable on Dec. 31, 1922 and 1923, with 5 per cent. interest. French creditors were allowed-until Oct. 31, 1921 -the option of accepting payment in francs, as above described, or of demanding payment in crowns of an equivalent value, this value to be calculated on the basis of the Zurich exchange the day the option was exercised.

The sum due France is partly covered by French debts to Austrian creditors, and partly by other Austrian assets in France, but after these credits are deducted there will still be left a balance of many million francs which Austrian debtors must pay within the next three years.

Austria's obligations to England are for the most part in the hands of the Bank of England, and the largest Viennese debtor A bill was is the Anglo-Austrian Bank. introduced in the National Assembly Sept. 3 to authorize the Anglo-Austrian Bank to convert itself into an English institution; the purpose of this plan is to allow a reorganization of the bank whereby the London creditors will be satisfied by a new issue of preferential stock. A similar bill authorizing the Laender Bank to change its headquarters to Paris was defeated at the last session of the National Assembly, after a stormy fight which developed sensational charges and counter-threats.

ELIHU ROOT, one of the American dele

gates to the Disarmament Conference, speaking in New York on Oct. 26, 1921, analyzed the obstacles in the way to universal peace, and pointed out the way to overcome them, in the following words:

The world is full of hatred and strife and murder today because of the incapacity of millions of people in organized States to receive the truth that is being spread throughout all civilization and that is to be theirs in centuries to come-but they are not ready for it. That

is a matter not of intellectual power, it is not a matter of learning, it is not a matter of precept; it is a matter of the development of character. ***The development of character must come through exercise of the virtues that make human character-mercy, compassion, kindly consideration, brotherly affection, sympathy with fellow men, unselfish willingness to sacrifice for others. The exercise among the people of those qualities is the essential and the only way by which the character of the people may be developed, so that they may become truly civilized and truly Christian.

A$

S was foreseen, the tangled situation in Burgenland was utilized by the supporters of ex-King Charles's claims to the throne for launching another attempt to restore Charles at Budapest. From the beginning the Magyar troops, regular and irregular, which occupied the Burgenland and prevented its transfer to Austria, were sharply divided into a Karlist and a Horthyist group, the former being led by Colonel Lehar, Major Ostenburg, Count Sigray, Commissioner for West Hungary, and the former Premier Stephen Friedrich, the latter by Colonel Pronay and Lieutenant Hejjas, close friends of Regent Horthy. On Oct. 22 Charles, accompanied by the ex-Empress Zita, appeared at Oedenburg, having made the trip from Hertenstein Castle, near Lucerne, Switzerland, by airplane. His arrival was apparently better prepared for than the previous attempt at

A WARNING FROM KARL

Easter, for this time an army of 12,000 was placed immediately at his disposal.

After a day's delay, spent in celebrating the expected victory, Charles and his entourage proceeded, at the head of this army, which was commanded by Major Ostenburg, toward Budapest. At first it seemed that Charles would attain his goal without much difficulty. The garrison at Raab (Gyor), the first important city on his route, joined him, and a Cabinet was formed with Stephen Rakovsky, former Speaker of the National Assembly, as Premier, and including Count Julius Andrassy, Dr. Gustav Gratz and Edmund Beniczky, foremost Karlist leaders in Parliament. From Raab Charles issued a proclamation to the people, announcing his return, and convoking the old Parliament that had been dissolved by the revolution of October, 1918.

At Budapest the coup d'état created the greatest consternation. The Government, headed by Count Bethlen, assumed an equivocal attitude, apparently making its decision dependent on the attitude of the Entente Powers and the 'development of Charles's chances. Count Bethlen, the Premier, and other Ministers had been suspected of Karlist sympathies, and there is reason to believe that they would have gone over to Charles en bloc had there been an assurance of success. The bourgeoisie, mostly Jewish, as well as the organized workers, though by no means enthusiastic for a Hapsburg revival, were prepared to hail Charles as a welcome substitute for the terrorism of the Horthy régime, but they, too, preferred to mark time. On the first and even the second day of the crisis the allegiance of the military was similarly doubtful. Budapest was very scantily. garrisoned, most of the army being concentrated in West Hungary and on the Jugoslav frontier. Meanwhile Charles's advance continued.

In the Entente capitals the Hapsburg venture was received with unanimous hostility. That the Little Entente would oppose the restoration was more or less a foregone conclusion; but the Karlist leaders had believed that their