her restored financial and economic liberties. In January, 1926, Mr. Robert Charles Kay was appointed Adviser to the National Bank of Austria (a post which the League also insisted should be continued for a further three years), and took up his residence in Vienna in June. The former adviser, a Dutchman, was nonresident, so that in this respect closer relationship between Vienna and the international money market was established. The Social-Democrats, after making demonstrative protests against the conditions attached to the abolition of control, accepted the situation and abandoned their opposition to the necessary Parliamentary measures.

Austria's economic development during the year continued to be hampered by the high tariff walls with which she was surrounded, and the first object of her foreign policy was still to procure from her neighbours more favourable treatment for her articles of export. The only definite success which she had to record in this field during the year was the conclusion, on January 6, of a Commercial Treaty with Switzerland, stipulating for mutual tariff concessions. A Commercial Treaty was also concluded with Hungary in the summer, and in the latter half of the year, a Treaty with Yugoslavia. Minor tariff arrangements were made with seven States during the year, more important commercial agreements with Holland and Norway, and finally a Commercial Treaty with China. In order to arm itself with greater bargaining power in economic negotiations the Government, on April 15, introduced a Bill empowering it to make certain changes in the tariff in a protectionist direction, and this was passed in July, the Social-Democrats supporting it in spite of their Free Trade principles, on the ground that the policy of Austria's neighbours made it necessary.

A condition laid down by some of Austria's neighbours for the granting of commercial concessions was the cessation of propaganda in favour of union of Austria and Germany. The Government, which was in any case divided on this question, was not unwilling to see it temporarily shelved. The official attitude is that while Austria still claims the right to decide this question without foreign interference, it is not possible for her to do so at present. Every public reminder of Austria's claims was deprecated by the Government, but various legislative measures which were adopted during the year sought to bring Austrian institutions into line with those of the German Republic. Austrians and Germans enjoy equal rights in both countries in such matters as education, State insurance, and pensions. In various ways, Austrians and Germans are being placed in a privileged position as regards foreigners in one another's countries. Neither country is in a hurry to see their union realised; there is a great deal of spade work to be accomplished first of all. In March, Dr. Ramek visited Berlin, but he skilfully framed his speeches in such a way as to avoid

either disappointing German hopes or alarming Austria's neighbours. With a view to disarming possible Czech hostility, he paid a special visit to Prague en route.

The cautious attitude of the Austrian Government towards union with Germany rendered possible a notable political rapprochement with Czechoslovakia. The Austrian Social-Democrats, who are always afraid of trouble with, or domination by, Austria's anti-democratic neighbours, Italy and Hungary, saw an additional security for democracy in Austria in the friendship of Czechoslovakia. Despite Czech hostility to the idea of Austro-German union, for which the Social-Democrats showed more enthusiasm than any other Austrian party, and despite the Czech treatment of German minorities, against which Austrian Socialists have frequently protested, they gave the fullest support to Dr. Ramek's Government in this matter. Dr. Beneš came to Vienna on March 4 to sign an Austro-Czech Arbitration Treaty, and was received with a genuine enthusiasm, all the more remarkable when it is recalled that less than ten years ago, Dr. Beneš was an Austrian subject devoting all his abilities and energy to the overthrow of "his" country in time of war.

The good relations between the two countries continued, though in October a certain hostility to the new Austrian Cabinet was manifested in Prague, due to Dr. Beneš's distrust of Dr. Seipel as a Clerical. Austria's denunciation of the existing Commercial Treaty with Czechoslovakia, which occurred at about the same time, also caused temporary ill-feeling in Prague; but this died down on receipt of the Austrian assurance that in no case would the Treaty be allowed to lapse pending the arrangement of more equitable terms. The fact that the new Czech Cabinet has, in itself, a strongly Clerical tinge is an assurance that the presence of Dr. Seipel at the head of affairs in Austria will not prejudice good relations.

In June the country was thrown into great agitation over the education question. In that month, according to legislation previously enacted, religious education was to be banished permanently from the schools. The Christian Social Party were strongly opposed to this step, and with a view to placating them the Minister of Education, Dr. Schneider, arranged that the new school curricula, which had been framed under Socialist influence, should come into force only in industrial Vienna, where the SocialDemocrats were predominant, and not in the rest of the country, which was mostly agricultural and Catholic. The greater part of the Christian Social Party were not satisfied with this, and in consequence of their protests the Chancellor dismissed the Minister of Education and disowned the compromise he had made. This, in turn, infuriated the Socialists, who bitterly charged the Chancellor with breach of faith and organised an enormous demonstration in Vienna on June 18 at which the adoption of the education

proposals was demanded. A few days later the post of Minister of Education was accepted by Dr. Rintelen, the Governor of Styria, and he succeeded in calming the agitation, though he left the question at issue still pending. Dr. Rintelen resigned with the Ramek Government in October, and did not take office again under Dr. Seipel.

ever.

The difficulties of Austria's economic situation were illustrated during the year by a series of conflicts between the Government and the civil servants. The latter are admittedly ill-paid, and the lot of the army of pensioners, formerly servants of the AustroHungarian Monarchy, who have been rejected by the Succession States, is often tragic. The burden of these servants of a great empire is a heavy one for the Austrian Republic to bear alone, but endeavours to induce the Succession States to assume a share of the costs of pensions have met with no encouragement whatThe Government was not in a position to do much for either class of State dependents; taxation was at its maximum, and the Budget equilibrium had to be maintained on pain of a re-imposition of League control. The insistence on this condition by the League has undoubtedly helped to stiffen the Government's resistance to demands which it could only attempt to satisfy at grave risk to the country. In June, Dr. Ramek rejected all the demands put forward by the civil servants and pensioners, but in October the agitation was revived, and a strike ultimatum presented. The impossibility of satisfying the State employees was made the formal ground for the resignation of the Ramek Cabinet on October 15.

The principal ground for the resignation of Dr. Ramek's Cabinet, was, however, the revelation of certain financial scandals which formed an unpleasant background to Austrian politics throughout the year. The first whisper of these was heard in January, when the Social-Democrats launched a campaign against the Foreign Minister, Dr. Mataja, on account of certain transactions with the Biedermann Bank. The Government inquiry which was held subsequently completely exonerated Dr. Mataja, but Dr. Ramek resigned on January 6, and on January 15, took office at the head of a new Cabinet. He himself took over the post of Foreign Minister from Dr. Mataja, who resigned on account of ill-health. Dr. Ahrer was replaced by Herr Kollmann as Finance Minister. The rumours of financial scandals persisted, and the Social-Democrats continued their attacks on the ChristianSocial (Government) Party for having used the funds of public institutions to support "party banks" which had got into difficulties. In July, Press attacks were made on the Central Austrian Savings Bank; a run on the bank commenced, and Dr. Ramek authorised intervention by the National Bank of Austria, which quickly allayed the panic. Since the Central Bank acts as a deposit bank for all the Austrian Savings Banks, the Social

Democrats could not deny that it was essential for something to be done to allay public anxiety, but they attacked Dr. Ramek for having acted without Parliamentary sanction. A Committee of Inquiry was set up, and in the course of its investigations it was revealed that the Central Bank's difficulties arose largely from the fact that it had lent large sums to Herr Bosel, a speculative banker who had been badly hit in the franc speculation of 1924. For this Dr. Ahrer, the late Minister of Finance, was blamed; the only charge brought against Dr. Ramek was that his action in rescuing the Central Bank itself was unconstitutional. The Bosel transaction was a different matter, and other irregularities on the part of politicians and officials came to light during the same investigation. The Parliamentary Committee invited Dr. Ahrer, who had emigrated to Cuba, to give evidence before them, but he declined. At the time when the excitement over these revelations was at its height there occurred the fresh trouble with the civil servants, and the Ramek Cabinet availed themselves of the opportunity which this afforded them to resign (Oct. 15).

Dr. Seipel, the distinguished priest-politician who had successfully guided the Austrian Republic through its most difficult periods, took office once again on October 20 in a Coalition Cabinet composed, like the last, of Christian-Socialists and PanGermans. He took the portfolio of Foreign Affairs, while his Cabinet was strengthened by the inclusion of Dr. Dinghofer, the leader of the Pan-Germans, who became Vice-Chancellor and Minister of Justice. He made a good impression by his announcement that he intended to keep politics and business apart, and even the Social-Democrats soon acknowledged that he was restoring Parliament to public respect. He had not been many days in office before he was able to effect a compromise with the State employees who were on the point of striking.

Austria's adverse balance of trade remains. Coal imports diminished as a result of the progress made in the work of electrifying the railways, largely financed by the League Loan. The electrification of the Arlberg railway from Innsbruck to the Swiss frontier especially enabled a great saving of coal to be effected. Though coal imports decreased, the value of other goods, and especially of manufactured goods imported, increased slightly during 1926.

Special efforts were made to develop Austria's tourist traffic. Two mountain-cage suspension railways have been constructed and opened during the year, one on the Raxalpe near Vienna, and the other on the Zugspitz, near Innsbruck; while a special Austrian tourist bureau was opened in London in November. In October, British hotel proprietors were the guests of Austria, following in the wake of American hoteliers who had paid a similar visit. In the endeavour to maintain Vienna's reputation as an

international centre of learning, special facilities were offered to international Conferences to meet in the city. Out of nearly sixty which did so in 1926, that of the International Law Association, in August, was the most important.

CHAPTER V.

UNION OF SOVIET SOCIALIST REPUBLICS-LATVIA—LITHUANIA POLAND CZECHOSLOVAKIA –

HUNGARY

RUMANIA YUGO

SLAVIA-TURKEY-GREECE-ALBANIA-BULGARIA.

THE UNION OF SOVIET SOCIALIST REPUBLICS.

THROUGHOUT the year a struggle went on between the two sections of the Communist Party of the U.S.S.R.-the Majority and the Opposition. The debates of the Fourteenth Congress (December 18, 1925, to January 2, 1926) ended with the victory of the Majority, led by the General Secretary of the party, M. Stalin.

Some of the leaders of the Opposition lost their influential positions. The Commissar for Finance, M. Sokolnikov, was replaced by M. Brjuchanov. M. Kamenev, another leader of the Opposition, was removed from his offices as President of the Council of Labour and Defence (S.T.O.) and Vice-President of the Council of People's Commissaries, and was appointed Commissary for Internal and Foreign Trade. M. Rykov, the President of the Council of People's Commissaries, took over the position of President of the Council of Labour and Defence, and thus, like his predecessor Lenin, combined both offices. The position of Rykov's right-hand man in both offices was given to M. Kuybyschev, a staunch supporter of Stalin, who promoted him to the post of Head of the Central Control Commission of the Communist Party, a kind of censorship over all members of the party. The number of members of the Political Bureau of the Party was increased to nine. The choice of the Congress fell on Stalin, Rykov, Bukharin, Tomsky, Kalinin, Voroschilov, Molotov, Trotsky, and Zinoviev. Thus two leaders of the Opposition were still included in this influential body, while Kamenev remained a prospective candidate. The Congress passed a resolution that the policy of compromise with the peasant class should not be abandoned; 599 members of the Congress voted for this resolution, and 65 against it.

The position of both Zinoviev and Kamenev in the party was further weakened by the fact that they failed to secure re-election as Presidents of the Leningrad and Moscow Soviets respectively, posts which they had occupied since the beginning of the Bolshevik regime.