continuously slumped until, in July, it hovered about 250 to the pound sterling. They were, perhaps, less concerned, but were still keenly interested, in their relations with the German people. In addition, there were, in the autumn, unpleasant incidents on the Italian frontier (French railwaymen being attacked at Ventimiglia by Fascisti) which clouded the relations of France and Italy. But regarding the year as a whole, foreign affairs related to the diplomatic fortunes of France and Germany.

The year ended much more satisfactorily than anybody could have predicted at the beginning. The first half of 1926 was ominous. Pessimists considered national bankruptcy to be inevitable. Parliamentary institutions were challenged, because Parliament appeared to be incapable of restoring the menaced finances of the country. Parliament indulged in long and fruitless discussions, and refused to pass any specific measures which were placed before it. Democracy was called into question, and there was talk of a Dictator. While financial recovery seemed almost impossible, and the Chamber was regarded by the public with hostility, there was a diplomatic breakdown when, in March, Germany, owing to French intrigue, was prevented from taking the seat in the League of Nations which was a condition of the Locarno Pact.

In the first half of the year, which was so disastrous from every point of view, M. Briand was Prime Minister. Twice he was compelled to resign, once in March and again in June, before his final resignation in July. His tenure of office was always precarious; and having regard to the attitude of the Chamber he probably managed as well as any man at that time could have managed. Still the franc continued to fall when M. Briand formed his third Cabinet of the year (June 23), with M. Caillaux as Finance Minister. M. Caillaux had been hailed as a financial genius. Great expectations had been placed upon him, but precisely as he had failed in 1925 he failed again in 1926. He was unable to win confidence; the franc slumped without respite; capital left the country; the Treasury was empty; the Chamber was in confusion; the populace grew angry. M. Herriot acted as a kind of lightning-conductor when, on July 17, he took the unusual course of descending from the Presidential fauteuil of the Chamber and overthrew the Briand-Caillaux Cabinet. His own Ministry for M. Herriot was obliged to take up the succession was overturned after a single day of existence (July 21). The people clamoured in the streets, with the franc at its lowest level, for a party truce; the Bloc des Gauches, or the Cartel, had run on the rocks, and France was within an inch of financial disaster.

The contrast between this first half of the year and the second half was striking. When things were at their worst, the President of the Republic, M. Doumergue, called on M. Poincaré to accept

a formidable task. After consultations he decided to form a Cabinet (July 23) composed of men of all parties, except the Socialists and Communists. There were no fewer than six former Prime Ministers in the Government, including M. Briand at the Foreign Office. He concentrated his attention on finances. He worked with remarkable celerity. At once the outcry was stilled and confidence began to return. The franc stopped on the edge of the abyss and quickly took up a tenable position. A sinking fund was established to ease the Treasury. The Chamber, frankly alarmed, did everything it was asked to do, and M. Poincaré passed laws with record rapidity and obtained powers of decree which had previously been fiercely disputed by the Deputies. The Budget, a properly balanced Budget, was voted in thirty-six days, before the opening of the financial year to which it applied. Nothing like M. Poincaré's performance had been seen for generations. If anything, the franc recovered too quickly and the economic life of the country was perturbedan inevitable penalty, however, for past blunders, a penalty which M. Caillaux had never ceased to prophesy. At the end of the year stabilisation was still to be achieved, but the Banque de France had announced its willingness to buy and sell at approximately 122 francs to the pound and 25 to the dollar. There was, if not legal stabilisation, what appeared to be de facto stabilisation. In the meantime, M. Briand, retrieving his earlier blunders, strove for political rapprochement between France and Germany. The Industrialists, on their side, strove for economic accords, and a Steel Trust was established. On September 8, Germany was admitted into the League of Nations and the Locarno Pact became operative. M. Briand, in the same month, had private conversations with Herr Stresemann at Thoiry. In December, at a meeting of the Council of the League of Nations at Geneva, it was resolved to withdraw the Inter-Allied Commission of Military Control which had been operating in Germany, and to allow an investigating committee of the League to take over similar duties as from February 1, 1927. There was also serious talk of the withdrawal of British, French, and Belgian troops from the Rhineland, where they are entitled to stay, under the Treaty, until 1935.

Such was the general trend of affairs during the year. It may be amplified by the record of the more important outstanding facts.

On January 12 the Socialist Congress once more rejected the principle of participation in Ministerial responsibility. The Bloc des Gauches, or the Cartel, was a combination of the Radical and Socialist forces in the Chamber. It had been put to severe tests by the attitude of the Socialists in 1925. They were willing to give a conditional support to Radical Governments, but were always ready to go into opposition, and would not permit members

of the party to hold office in the Government. Already the alliance was breaking down, and this decision of the January Congress was yet another warning.

On January 16 the International Institute of Intellectual Cooperation was inaugurated in Paris. It had arisen out of a French proposal to organise, under the auspices of the League of Nations, in the Montpensier wing of the Palais-Royal, a body which should concern itself with the co-ordination of literary, artistic, and scientific efforts in all the countries of the world. Representatives were appointed for many nations, and at the head of the Institute was placed M. Julian Luchaire.

At the end of January the Allied troops withdrew from the Cologne zone which, according to the Treaty, should have been evacuated a year earlier.

Throughout February the Chamber wrestled with the budgetary problems. The Budget under discussion was that relating to 1926, which should have been passed before the end of 1925, but the Deputies could not agree on the nature of the taxes to be imposed nor on the method of their application. Week after week the struggle continued, with interminable debates, many night sittings, and constant danger for the Government; and it was to be pursued in this disheartening fashion for several months. The system of monthly credits had to be adopted, with unfortunate results for the franc. On February 3 the Chamber voted for an obligatory declaration under oath of income, but on February 18 the Senatorial Commission rejected these measures. On February 10 the Chamber decided that rents of houses and apartments should, in spite of the depreciated franc, be raised. only 100 per cent. over the pre-war rents. On February 19 a Franco-Turkish accord dealing with outstanding disputes, political and economic, was signed at Angora. On the 26th a debate on the Locarno policy of M. Briand was begun in the Chamber, and on this occasion M. Briand made a notable discourse in favour of reconciliation, a discourse which, following the French custom, was ordered to be printed and placarded on public buildings in every commune of France. On March 2 the Chamber ratified the Locarno agreement by 413 votes to 17-thus demonstrating the quasi-unanimity of Parliament in favour of the Briand policy.

March was a stirring month. On the 3rd the Chamber again endeavoured to re-establish the principle of the fiscal oath. On the 6th, however, the Briand Cabinet was placed in a minority at the Palais-Bourbon on the question of the sales tax, and M. Briand was obliged to present his resignation to the President of the Republic. M. Paul Doumer was the Finance Minister at this time and he had thought right to press his opinion that, considering the great budgetary deficits, the sales tax should be increased. The Socialists, and in large part the Radicals, believed

the sales tax to be undemocratic, inasmuch as it was a tax on all articles of consumption and would fall heavily upon the working classes. M. Doumer's argument was that increased direct taxation would be difficult to enforce, could not be collected immediately, and, therefore, would not meet the urgent needs; and, moreover, would not increase automatically as the franc depreciated. The sales tax, on the contrary, would collect itself, would bring money into the Exchequer at once, and would, in the event of a further fall of the franc and a corresponding increase in prices, automatically augment in volume.

The downfall of M. Briand at this juncture was the more serious because, in his capacity of Foreign Minister, he was due that day at Geneva, where forty-eight nations were prepared to admit Germany into the League of Nations and thus render the Locarno Pact operative. In spite of his ambiguous situation, M. Briand nevertheless decided to go to Geneva. There fresh difficulties awaited him. Certain French diplomatic circles had imagined that when Germany took her seat on the Council of the League Poland should be given a permanent seat to counterbalance Germany's influence. Poland was, indeed, anxious to obtain a seat at the same moment as Germany. Thereupon other nations, notably Brazil and Spain, declared that they, too, were entitled to permanent seats, and they announced that if seats were not given them they would resign from the League. Germany, for her part, urged that the bargain was that she alone would be given a seat, and she would not accept it if its significance were diminished. Hence the abortive character of the March meeting of the League of Nations.

The absence of M. Briand during a ministerial crisis was the more extraordinary because the President of the Republic was at Lyons, and M. Herriot, the President of the Chamber, was also at Lyons, in connexion with the opening of the Fair in that city. They hastened back to Paris, and, after the usual consultations, M. Briand, on March 10, reconstructed his Cabinet, with M. Raoul Péret in the post of Finance Minister. M. Herriot had been asked to take the post but had declined it, and M. Caillaux awaited a more favourable season. M. Louis Malvy was included in the Cabinet as Minister of the Interior. When, however, M. Briand presented his Government to the Chamber on March 18, there were fierce personal attacks on M. Malvy on account of his war administration and his subsequent condemnation by the Senate sitting as a High Court of Justice. So keenly did M. Malvy feel these attacks that he fainted in the Chamber. His resignation followed on April 8.

A curious political incident occurred on March 28 when, in a by-election in the second sector of Paris, two Communists were chosen as Deputies, with the support of the Radicals and the Socialists on a second ballot. The alliance of Socialists and

Radicals had always been understood to be antagonistic to Communism, and yet, although that alliance had been enfeebled in the Chamber, it was renewed for electoral purposes, and was even, in virtue of the theory that there were no enemies on the Left, extended to include the Communists. Political prophets saw in this incident the premonitory signs of a subsequent combination of all the parties of the Left. Many Radicals protested. M. Franklin-Bouillon, in particular, voiced the view that Radicals who were at the same time Nationalist should separate themselves from the group which was trending Leftwards.

April was chiefly remarkable for the signature, at Washington (April 29), of a debts agreement between France and America. Three days before a provisional accord on the lines already reached the previous year had been accepted by Paris and London. The agreement with London was contingent upon the agreement with Washington and involved no new point (see ANNUAL REGISTER, 1925, p. 148). M. Bérenger had been appointed Ambassador to the United States, and the accord which he signed with Mr. Mellon contained the following provisions. The amount to be consolidated was four milliards and 25,000 dollars. This sum comprised the war stocks purchased by France. The borrowings were to be reimbursed in sixty-two annuities of varying importance. There was to be no interest paid until June, 1930. From 1930 till 1940 1 per cent. per annum was to be paid, from 1940 to 1950 2 per cent. per annum, from 1950 to 1958 2 per cent. per annum, from 1958 to 1965 3 per cent. per annum, and after 1965 3 per cent. per annum. This meant that for 1926 30 million dollars were due, for 1927 35 million dollars, and so on an ascending scale, reaching, in 1940, 110 million dollars, and, from 1943 until 1987, 125 million dollars per annum. On the basis of the existing rates of exchange the sum total in francs. was 230 milliards. Certain payments could be carried forward for a maximum period of three years, with interest of 4 per cent. on the sums thus carried forward.

Apart from the general objections in France to this agreement, there were special objections. In the first place Article 7 envisaged the possibility of the American Government's selling, on the finance markets of the world, bonds created by France which carried an absolute engagement to pay the stipulated sums at the indicated dates. Obviously this Article would, if applied, put France at the mercy of the American Government. Further, no safeguarding clause figured in the agreement that is to say, French payments were in no way contingent on German payments to France. Nor did there exist any transfer clause. payments were to be made in dollars or in gold. France must, therefore, procure on the money markets the necessary dollars or gold. Clearly, circumstances might arise in which such an obligation would be fatal to the franc. It was pointed out that the

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