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At the beginning of 1927 the political situation was very confused, and there seemed to be every prospect of a prolonged Cabinet crisis. At the end of 1926 the Marx Government, which had been unable to secure the adhesion of either of the two larger Opposition parties, had, after long tottering, at length been overthrown by the combined vote of the German Nationals and the Social Democrats. Strenuous attempts had been made repeatedly in the preceding months to induce the Social Democrats to enter the Government, but without success. As a result, a growing desire manifested itself among the parties of the Right to form a majority Government. The German People's Party also declared itself in favour of a coalition of the Right parties, after receiving an assurance that the Centre, which held the balance, was not in principle opposed to such a step. Attempts were first made to form a Government on these lines by Herr Curtius, who was still Minister of National Economy, but these having failed, President Hindenburg again commissioned Herr Marx to form a Cabinet, adding an express request that he would aim at securing a majority Government of the bourgeois parties. Negotiations went on till the end of January, when at last it was found possible to form a Cabinet which could reckon on a majority in the Reichstag. Herr Marx (Centre), remained Chancellor; Herr Stresemann (German People's Party) at the Foreign Office; Herr Curtius (German People's Party), Minister of Economy; and Herr Brauns (Centre), Minister of Labour. Herr Köhler (Centre), hitherto Finance Minister of Baden, became Finance Minister instead of Herr Reinhold. The German National Party sent into the Cabinet Herren von Keudell (Interior); Hergt (Justice and Vice-Chancellor); Koch (Communications); and Schiele (Food and Agriculture). Posts and Telegraphs were taken over by Herr Schaetzel (Bavarian People's Party); Herr Gessler remained in charge of the Ministry of Defence, but in consequence of the attitude of the Democrats to the new Government he left the Democratic Party.

Although the German National Party had seceded from the Luther Cabinet in the autumn of 1925 as a protest against the Locarno Treaties, it had nevertheless in the interval frequently indicated more or less clearly its agreement with the foreign policy of Dr. Stresemann. In the statement of principles on which the new Coalition was based there was included an undertaking not only to accept the Locarno Treaties, but also to continue the efforts to arrive at a better understanding with France; further,

to accept the republican form of government and to uphold the Weimar constitution. The manifesto also made reference to the proposed new "schools law," with its "safeguarding of religious instruction," this being the chief inducement to the Centre to join the Coalition. How far the German Nationals were willing to go in the direction of pure denominationalism in order to satisfy the religious requirements of the Centre was shown by the fact that the German National Party openly declared its readiness to consider the possibility of a German Concordat with the Papacy. The Democrats opposed the Government, chiefly because they mistrusted the sincerity of the thoroughgoing conversion which the German Nationals must have undergone if they were really to accept the principles of the Coalition; also because of what they regarded as the unconstitutional character of the proposed schools law, and their strong objections to the financial and fiscal policy initiated by Reinhold.

On a vote of confidence the new Government received in the Reichstag 235 votes against 147. The minority was composed of the Democrats, the Social Democrats, the Communists, the majority of the Völkische (the Germanic race extremists), and one member of the Centre, Dr. Wirth. In view of the strict discipline prevailing in this party, Dr. Wirth's vote was remarkable; he repeated the offence several times in the course of the year. Dr. Wirth retained the leadership of the left wing of the Centre; this faction, however, exerted no decisive influence on the general policy of the Clerical Party. In Prussia the Centre continued to support the somewhat left-wing policy of the Braun Government, whereas in the Reich it was this same party which alone rendered the Coalition possible. Nevertheless, owing to the spirit of compromise exhibited by the various sections within the party, serious conflicts were avoided. In the autumn it was even found possible to lay the foundations for a reunion of the Centre with the Bavarian People's Party, which was likely to strengthen the party materially.

The lack of homogeneity in the Cabinet soon made itself persistently noticeable, and prevented any rapid progress being made with the legislative programme. In the matter of the schools law and the Concordat, the German People's Party, continuing the old Liberal tradition of freedom of conscience, inclined more to the standpoint of the Democrats than to that of the Centre; the latter again was supported by the German Nationals. Vehement conflicts both in and out of Parliament raged round the person of von Keudell, who was alleged to have been implicated in the Kapp Putsch against the Ebert Government. In the Reichsrat von Keudell had some unedifying passages of arms with the representatives of Prussia, from which he did not emerge entirely unscathed. In April von Keudell dismissed two high officials of his Ministry, State Secretary Schulz

and Chief of Department Dr. Brecht; this action was hardly calculated to pacify the Opposition. On the other hand, the Cabinet showed itself duly regardful of the Parliamentary situation, and also of the obligation which it had laid down in its guiding principles, to agree without delay to an extension of the Defence of the Republic Act, which included the so-called Kaiser clause, forbidding the ex-Kaiser to set foot on German soil.

The legislative work of the session included as its principal feature the Emergency Law on hours of labour, which, without going so far as to introduce the eight-hour day, imposed a number of restrictions on overtime. An extensive system of Labour Courts was introduced which offers a guarantee for the future peaceful solution of social questions relating to hours of labour, and will, it is hoped, exercise a beneficial influence on the general relations between employers and employed. A conflict which broke out towards the end of the year in the steel and iron industry of Western Germany, as also a strike of the brown coal miners of Central Germany gave the Reich Labour Ministry an opportunity of showing that the Government was thoroughly in earnest with the enforcement of the Hours of Labour Act, even in the teeth of energetic protests from the employers.

Another social problem, which had continually been growing more acute, was solved by the law on Labour Exchanges and Unemployment Insurance. To this insurance is now added for times of exceptional slackness in the labour market an emergency provision the amount of which depends on the need of the unemployed; although the labour situation was on the whole good there were some branches of industry in which this provision had to be granted during the whole of the year. The funds required for insurance and maintenance are furnished by employers and employed jointly. All the same, the unemployment laws entail burdens on the Reich and the States which considerably complicate the financial problem of both.

Two measures of great importance-the reform of the criminal code and of the schools law-were able to make only very little progress in the course of the year. The new Schools Bill was the subject of heated controversy in which the public also took part, chiefly on account of the threat which it contained to the joint Protestant and Catholic schools (Simultanschulen), which in Baden and other portions of the Reich have behind them a tradition reaching in some places to considerable antiquity. In October, 1927, the Reichsrat rejected the Schools Bill, and at the same time some 1,500 secondary and advanced teachers and numerous teachers' associations entered a protest against the menace to the liberty of instruction, which is guaranteed in the Constitution.

The flag question did not emerge from the embittered and dangerous atmosphere in which it had been enveloped in the

previous year. Important effects were produced by the mere discussion of an increase in the salaries of civil servants, which in December was passed into law. On September 17 the Reich Cabinet issued the draft of this Salaries Bill, which, while meeting the pressing need of an increase in the salaries of civil servants, gave rise to serious misgivings in view of the disturbing effect which it was likely to exercise on the Reich's finances.

The General Agent for Reparations, Mr. Parker Gilbert, made this the ostensible ground for delivering to the German Government on October 20 a Memorandum pointing out the dangers which threatened the national finances and the economic position of Germany. The correspondence between Mr. Gilbert and the German Government was for some time kept secret, but was eventually published in response to a strong demand from the public. Mr. Gilbert proceeded on the assumption that the German Government meant to do everything in its power to carry out its obligations under the Dawes plan. This being so, he felt it incumbent on him to call attention to the continual expansion of Government departmental programmes for expenditure and loans, and to the steady rise in public outlays which gave an artificial stimulus to industry at the cost of undermining the stability of German finances. He called for the immediate application of a rigorous system of economy, if serious crises were to be avoided, carefully marshalling all the facts which seemed to support his views.

The Finance Minister, Dr. Köhler, in his answer, which represented also the view of the Minister of Public Economy and the Minister for Foreign Affairs, recognised the justice of a part of Mr. Gilbert's criticism, which indeed was corroborated to some extent by the views of influential financial circles, but adduced a number of considerations which placed the matter as a whole in a somewhat different light. It was shown by figures that the growth of public expenditure, which had taken place since the stabilisation of the German currency, was due almost exclusively to the increase in internal and external war burdens (national debt of the Reich, reparations, care of unemployed and of disabled ex-soldiers and dependants of the fallen). Mr. Gilbert had indirectly found fault with the slow progress of the measures for simplifying the administration. This was excused by the German Government on the ground of the great cumbrousness of the German administrative system, due to its slow growth through the centuries.

Even among the German public opinions differed as to the rights and wrongs of the two sides to this discussion. All were agreed, however, that it had brought into the foreground the central problem of German internal affairs. In influential business and political circles the idea of a reform of the administration, and, as a necessary corollary, of a unified German State,

made great strides during 1927. In April the Prussian Prime Minister, Herr Braun, made a calculation which showed the disproportionately heavy expenses entailed on the eighteen States through their Governments, their Parliaments, and their representations in Berlin. In October a preliminary conversation took place between the Reich Government and the representatives of the States, as a result of which it was decided to initiate a thorough examination of the legal relations between the Reich and the States. A committee consisting of a number of Ministers and the Commissioner for Savings was appointed to investigate the possibilities of economising and the question of a reform of the administration. The movement for unification met with some opposition, in which the lead was taken by the Bavarian Prime Minister, Herr Held, who demanded the restoration of the complete financial sovereignty of the States. The German Nationals argued that the excessive expenditure of Germany was due to the dependence of the Government on the Parliaments, and they drew the conclusion that reform of the administration should start with an extension of the powers of the Governments and especially of the President of the Reich. In fact, what they had in view was rather an alteration in the constitution than in the administration.

Very different was the attitude of the economic organisations. In December some leading associations, including the Federation of German Industry, the German Industrial and Commercial Conference, and the National Association of German Wholesale and Export Trades, issued an emergency programme for German commerce and industry, containing the following proposals: (1) The most important object of all financial measures is the reduction of the expenditure of the Reich, the States, and the Municipalities; (2) the Reich Minister of Finance must be given the right of vetoing increases in the Budget and supplementary estimates voted by the Reichstag; (3) the States and the Municipalities must supply the Reich Minister of Finance with all necessary information on the state of their finances; (4) the Reich Minister of Finance shall have the power of vetoing the Budgets of the States; (5) the reform of the administration must be taken in hand with all possible speed; (6) the powers of the Reich Commissioner for Savings must be enlarged.

Several of the proposals for simplifying the administration involved far-reaching changes in the existing arrangements and became the theme of general discussion. One suggestion was to substitute Provinces of the Reich for States. In this way the Reich Ministry of Justice would be given the control of the administration of justice, the Reich Ministry of the Interior the control of internal administration and police; the State Ministries of Commerce would be absorbed in the Reich Ministry of Economy, the State Finance Ministries in the Reich Finance Ministry, and

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