of its value in a few days, but will turn it into foreign securities or real values of any kind. The big industrialists had long foreseen the possibilities of this procedure and were not unwilling to encourage the downward movement. They had put their assets into foreign currencies and they had only kept their debts (including their tax payments) in marks. The process enabled them to undersell the world and to feather their nests at the expense of the State, their debenture holders and their workmen. The latter would from time to time get restive, but they would then give them a rise of wages which in a few weeks, they knew, would represent still less than their old wages. Latterly, the industrialists have begun to show some signs of apprehension at the situation, but undoubtedly for a long time they welcomed and exploited the devaluation of the mark. But this does not mean that the Government was deliberately playing their game. The Wirth Government stood, on the whole, for the middle classes, the civil servants and the people with fixed incomes, who suffered directly and desperately from the rise of prices. They tried, indeed, to check the speculation by introducing some ill-advised measures for the control of the exchanges, which did more good than harm, but they had to find the payments required by the Allies, and so long as they did so, the depreciation of the mark was a certainty. The collapse was due, in the first instance, to the sale of marks to secure food and raw materials after the war; it was accentuated by the excessive payments exacted from Germany before her financial system was re-established; and it was completed by the general movement of speculation based on the belief that such exactions would continue. The Allied Governments, by showing a disposition to treat Germany favourably, could have checked the movement and, indeed, turned it in the opposite direction: but so long as it got no effective support from the Allies, the German Government was helpless. French and German finances are both suffering from the same cause the uncertainty of reparations-and both countries have a strong inducement to come to a settlement. But France sincerely believes that Germany is shamming bankruptcy to avoid payment, while Germany sincerely believes that France is aiming at the complete destruction and disruption of the Empire rather than at reparations. Both countries can find evidence to support such beliefs: yet there are plenty of moderate men in both countries who would willingly co-operate to secure a reasonable settlement. On such a settlement, above all, depends the restoration of credit in the rest of Europe. Belgium is financially better off than France, but industrially she-and Holland too-has suffered disastrously from German competition. Italy is in every respect at a disadvantage, though a better administration such as we are now promised might produce remarkable results in a country with such capacity for industry and thrift. On the other hand, Austria and Hungary have their special troubles. On these small territories have devolved the liabilities of the old Austro-Hungarian Monarchy. Hungary is at least self-supporting and, given time, she could no doubt pull through. But she will have to develop her resources, and meanwhile the Reparation Commission is coming down upon her and exacting toll of her coal and cattle. Austria is a mere decapitated head. She is at length relieved of reparations and the League of Nations has undertaken to prolong the life which she has maintained on charitable donations for the past three years. But it will be nothing less than a miracle if the Republic of Austria as now constituted achieves a real organic life, and it can only be rendered possible by a rapid revival of confidence in Central Europe as a whole. The financial malady which afflicts Europe is due not so much to economic causes-economic conditions have immensely improved since the Armistice-nor yet is it due to reckless internal expenditure-a gradual return to rational economy is perceptible; it is due in the main to the constant reliance on outside financial assistance. The Governments are content to budget year after year for deficits in the hope that they will receive reparation payments or foreign loans and that they will not have to pay their debts. So long as such hopes are fostered they will not be able to impose on their people the taxation necessary to cover their requirements, whether for internal expenses or for payments abroad; they will be forced to have recourse to inflation and such credit as they have left will vanish. Europe is living in a land of financial dreams. The most urgent step is to fix the reparation debt on a sane and reasonable basis, as assessed by competent financiers. It may be that at the moment no assessment is possible and that for some time Germany must be relieved absolutely and unconditionally of all payments. This will certainly be necessary if prompt action is not taken; but it may be hoped that the situation is not yet so irremediable. Germany has still a great industrial capacity, and if the debt were reduced to a figure accepted by her and recognised as reasonable there is no evidence that she would not set to work with energy and good-will to clear it off. Until, however this debt is fixed on a reasonable basis she has no inducement to balance her budget, and any budget that is devised will fall to pieces as soon as it has been prepared. On the other hand France, Belgium and Italy do not know where they stand : so long as the people are told that Germany can and must pay all the liabilities imposed by the Treaty of Peace, they will naturally resent the imposition upon them of her fiscal burdens. If, on the other hand, they know what they will actually receive, they in their turn (after dealing suitably with the politicians who have prophesied pleasanter things) may be relied upon to accept the measures necessary to restore their finances. The spirit of self-help, however, will not alone be sufficient. There must be a re-awakening of confidence and of security. This is not true only in regard to France: France is strong in her military forces, and has less ground for insecurity than most of the countries of Europe. The reference is more to Central and Eastern Europe, where the settlements made by the Peace Treaty have not yet taken root and where the international situation is extremely delicate. It is true also of Germany, where there are many causes for despair and where only a little carelessness is needed to provoke an upheaval, which, if once started, might well spread both East and West and envelop Europe in a general conflagration. As long as such conditions prevail, financial reforms cannot prosper. A new spirit of mutual trust must be created and a real peace restored. In order to create a new atmosphere, it may be necessary to provide a precedent of generous idealism. The definite renunciation of our war debts would be a small thing if it proved the talisman which would change the spirit of Europe and open the door to peace. But the concession will be vain and wasted if the only result is to give the appearance of peace and not the reality. Before considering such a question, therefore, evidence should be required that reparations will be treated as a business question and settled on a basis acceptable to the market. The situation may have changed by the time this appears in print. Often the imminence of catastrophe has caused a sudden revival of moderate counsels, and it may be that such will prove to be the case in Europe. But catastrophes are not always averted at the eleventh hour and there is a tendency sometimes to let things take their course. Up to the present, despite the danger of the situation, there seems little indication that moderate counsels will be acceptable to the politicians in the countries most directly interested, and particularly in France. If that should be the case, one may well despair of any solution being reached from the political basis. In the circumstances, the financial and economic interests, which are most directly threatened by the continuance of the present policy of drift, should combine to formulate a solution which they would jointly press upon their Governments. December, 1922. CENTRAL AND LOCAL GOVERNMENT 1. English Local Government. Statutory Authorities for special purposes. By SIDNEY and BEATRICE WEBB. Longmans, Green. 1922. a. Report of the Select Committee on Estimates. 1922. 3. Total Expenditure under certain Acts of Parliament. Drage Return. Cd. 189. 1921. ONGRATULATIONS and thanks are due to Sidney and Beatrice Webb upon the completion of their great work in tracing the origins and evolution of local government in England. In their volume of 1907, they dealt with the parish and the county; in that of 1908, with the manor and the borough. In the very rich and full volume published in 1922 they describe the vast number of special local authorities, each rooted in a private Act of Parliament, ranging in dimensions from a committee for paving and keeping clean a square by a rate levied on the squaredwellers, to bodies with large and increasing powers, the Improvement Commissioners, culminating at last in the London Metropolitan Board of Works. These statutory authorities multiplied, as the authors say, 'literally by the thousand,' from the end of the seventeenth to the beginning of the nineteenth centuries, when urban population was increasing and the old municipal corporations proved unable to deal with new matters. It was from these new authorities rather than from the old ones that were developed the modern municipal system and functions. The authors describe how at last, in the nineteenth century, especially by the Municipal Corporations Act of 1835 and the County Councils Act, 1888, all this chaos was reduced to a fairly homogeneous system upon a continually expanding representative basis, the final step, so far, being taken when, in 1902, the school boards were absorbed by the general system. Their books are full of entrancing visions of the old civic life of England, and should be studied by all who take an interest in their country. We are glad, as they are, that there should be a picturesque survival or two from old times, such as the Lords of the Level ' of Romney Marsh,' who defend that lovely region from invasion by the sea. It is not, however, the object of the present article to review these excellent historical works, but to examine the ་ |