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At first Count Berchtold was not willing to allow any compensation to Italy, contending that the occupation of Serbia was neither permanent nor even temporary, but only “momentary." Afterwards (December 20), Count Berchtold expressed his willingness to negotiate as to the compensation due Italy “in case of temporary or permanent occupations in the Balkans by Austria-Hungary.” This change of heart had, according to evidence received by the Italian ambassador at Vienna, been brought about as a result of advice from Germany."

The principle of compensation having been yielded by Austria-Hungary, it looked as if an agreement might be reached. To render the negotiations as smooth as possible, Germany sent Prince von Bülow, the ex-chancellor, as ambassador extraordinary to Rome.

The questions yet to be settled were the amount and location of the territory to be given and the time of payment. Baron Sonnino let it be known that he would not accept territory

Count Berchtold expressed surprise at this attitude; for he claims that Marquis di San Giuliano, Sonnino's predecessor, had given him assurances “that Italy would not impede Austria's military operations,” and he only wanted Austria to recognize the “applicability of Article VII to the present situation."

7 1. G. B., 3, 4, 5, 7; A. R. B. (2), 75, 78.

It ought to be said in this connection that Count Berchtold, as early as December 13, telegraphed to the Austrian representative at Rome that he had no material objection” to entering upon negotiations with the Italian Government with reference to a possible compensation. A. R. B. (2), 76.

that had to be taken from the Entente Allies, as “this would be equal to taking part in the conflict." 8

Baron Macchio, now Austro-Hungarian representative at Rome, hinted at “compensations with regard to Albania, a country so near Italy and so easily accessible." Baron Sonnino replied that Italy had only a negative interest in Albania—she was only concerned in keeping other powers out; besides, the acceptance of territory here would embroil her unnecessarily in the Balkan troubles and win for her the lasting enmity of Serbia and Bulgaria. He said that Austria-Hungary ought to cede to his country the Italian-speaking districts now belonging to the Dual Monarchy. Prince von Bülow was in favor of the cession of Trentino and said that “Germany was sending to Vienna Count Wedel ... with the intent of inducing the Austrian Government to give the Trentino to Italy." He thought, however, that Italy should not ask for more, for he believed that Austria would go to war rather than surrender Trieste.9 Austria-Hungary was naturally loth to part with her possessions and Baron Burian, her foreign minister, expressed (January 18) surprise that Italy should raise such an embarrassing question; he still thought that she ought to be will

8 I. G. B., 10.
9 I. G. B., 8, 10, 11; A. R. B. (2), 90, 98, enclosure.

ing to "accept a discussion regarding the compensations relating to territories possessed by other warring states." 10

On January 26 Prince von Bülow asked Italy to formulate her demands. This the Italian foreign minister was unwilling to do until Austria-Hungary had accepted "explicitly and definitely that the discussions bear on the ground of the cession of territory now possessed by the [Austro-Hungarian] Empire.” 11 The AustroHungarian Government hesitated, neither accepting nor rejecting the basis of discussion demanded by Italy.

The negotiations were further complicated by the demand made by Austria-Hungary on Italy for compensation under Article VII for the occupation of Valona and the retention of the Ægean Islands. Italy denied the right of compensation because of her action in reference to these places and undertook to justify it on the ground that the “occupation of Valona had been caused by the general state of disorder which reigned in Albania,” and that the Ægean Islands were retained because Turkey had not yet complied with all the terms of the treaty of Lausanne. Besides, she contended that Aus

10 I. G. B., 12.
11 I. G. B., 15; A. R. B. (2), 99.

The Austro-Hungarian foreign minister spoke of Italy's “preposterous” request as a demand for “a slice of our own flesh."

tria-Hungary had waived all her claim to compensation; for on May 27, 1912, her foreign minister had declared that he would not avail himself in this instance of the right of compensation which was due him,” provided Italy would not seize any more of the islands. In deference to this request, Italy had refrained from seizing any of the other islands, though the strategic reasons for doing so were very strong.

After having made this defense, Baron Sonnino, on February 12, withdrew all the proposals made, declaring that his Government would “intrench itself in the simple interpretation of Article VII, declaring that it considers as openly contrary to the very article whatever military action Austria-Hungary would make from now on in the Balkans."

This was a threat to withdraw from the Triple Alliance if the Austro-Hungarian Government should again attack Serbia before an agreement as to compensations had been concluded.12

While the question of the cession of AustroHungarian territory was still unsettled a new

12 Austria-Hungary contended that Count Berchtold's statement “that he would not have availed himself in this instance of the right of compensation which was due him ought to be interpreted in the sense that he did not intend to avail himself of the right of compensation at the moment in which the occupation of the islands had occurred ... but that he reserved to avail himself of that right at an opportune moment.

I. G. B., 20, 21, 22, 23, 24; A. R. B. (2), 95, enclosure, 104, 106, 109, enclosure; S., 345.

difficulty arose. Austria-Hungary claimed that the agreement as to compensation might be initiated before but could not be consummated until after the campaign against Serbia was over, as it could not be determined until then how much Austria-Hungary would profit by the military operations. Italy contended (February 22) that Article VII spoke of a “previous agreement,” which could only mean a definite understanding before military operations were begun. Any other construction would leave her without any guarantee that the agreement initiated before the campaign would be satisfactorily concluded after it. Germany agreed with Italy in her interpretation of this part of Article VII, and “strongly intervened at Vienna to favor an understanding between Austria-Hungary and Italy." 13 It was doubtless in consequence of this intervention that Austria-Hungary announced (March 9) her willingness to enter upon negotiations “on the basis of cession of Austrian territory.

The people in Italy were almost unanimous in the conviction that the Government must use this opportunity for enabling their country to realize its national ambitions. The press was now clamoring for war. The Giornale d'Italia declared (March 7) that it would be extremely

13 I. G. B., 27, 31, 38; A. R. B. (2), 109, enclosure. 14 I. G. B., 39; A. R. B. (2), 115.

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