basis, with some corrections of autonomous administration. According to chap. VIII of the Constitution, the country is to be divided into about 16 regional areas, not exceeding 800,000 inhabitants each, the total population numbering about 13 millions of inhabitants. The head of an area is to be a high functionary nominated by the King, but each area will have its regional Diet and regional Committee, as the autonomous organs of the area. To the functions of these organs will belong all things concerning the area: finances, works, agriculture and fisheries, public health, social problems, etc.

The areas are not yet determined; according to chap. XIII this will be done in six months. The same chapter provides that the areas of Bosnia and Herzegovina shall not extend beyond the boundaries of those provinces; it also looks forward to an eventual division of Croatia and Slavonia into four areas, Montenegro eventually constituting one area. Until the areas are determined, the present local governments remain.

The Constitution was voted by a majority of 223 votes (Radicals, Democrats, Mohammedans, and dissidents of the Peasant party). The opposition (Peasant party, Socialists, Republicans, and M. Trumbić) comprised 35 votes. But there were numerous abstentions, no less than 158 in all. The 52 followers of M. Radić did not appear in Parliament, and their abstention is quite intelligible, as is also that of the 58 Communists, who were in Parliament but left it a short time before the voting. It is, however, regrettable that the leaders failed to induce the adherents of the Slovene Clerical party and of the Croatian Union to vote for the Constitution instead of leaving the Assembly. Still, the establishment of a Constitution is the most important step in the consolidation of our somewhat chaotic postwar conditions; and the country rejoices at seeing it published and proclaimed at last.

II.

Like other States, the Tri-une Kingdom suffers from a heavy war deficit, a deficit both economic and financial. Agricultural and industrial production can hardly be

said to exist. The communications are out of order, ill-arranged, and costly. The national credit is low, the rate of exchange unfavourable, international transport inadequate; and all the instruments of industry are destroyed or seriously insufficient. The question of compensation for losses incurred in the war has not been settled. Economic and financial relations within the country are still in confusion, and those with foreign countries are a long way from being restored.

The different provinces of the new State are, from the economic point of view, differently organised. Economically, they stand on different levels; and the total amount of war losses is very unequally divided. From the point of view of economic organisation, the districts which formerly belonged to the Austro-Hungarian Empire have an advantage over those that were independent; and this increases the difficulty of bringing them into helpful relation with each other. After the Armistice there was a lack of currency, and prices rose to a great height, but not to the same level everywhere. Strange to say, in districts where there is plenty of corn it was twice as dear as in the non-productive areas. The assistance of the national credit was not given to the import trade, and merchants therefore adopted various means of buying stores abroad in order to sell them at very high prices. On the other hand, industrial undertakings such as iron-works, tanneries, cloth factories, factories of agricultural implements, etc., were unable to start work, for the State found it impossible, owing to the adverse exchange, to obtain for them the necessary raw products from abroad. In our treaties with other countries economic compensations were neglected, and we did not borrow from them, as we might have done, in the form of raw materials. The proceeds of agricultural products sold abroad were applied to the purchase of articles of luxury. We sold to Austria corn, meat, and other food products, getting in exchange depreciated Austrian kronen, which to the value of several milliards flooded the country, when instead we should have bought materials for our manufacturers.

In regard to communications there are in the Kingdom about 3000 kilometres of normal-gauge railways, and about the same amount of small-gauge; there are

also about 24,000 kilometres of good roads. The waterways, viz. the rivers Danube, Drave, Save, and Theiss, together with canals, are, of course, of great value; but all these means of communication, both by land and water, have got sadly out of order during the last six years. On the railways there is a great lack of locomotives as well as of carriages and trucks, while the staff leaves much to be desired, for many of the best officials were Hungarian or German. The important line between Belgrade and Salonica was destroyed by the enemy in his retreat, and is still only partially repaired. The waterways are for the most part not open for the whole year; and the geographical course of the rivers is not such as to make them convenient for domestic trade.

On account of the quarrel with Italy one great means of communication with Europe, the Adriatic, was cut off for two years. We have no access to good harbours on that sea, except at Fiume; but the question of harbours is still unsettled. In other ways, too, the political changes made by the Peace increased the difficulties of foreign trade, for the new States have set up tariff frontiers which formerly did not exist. Vienna and Buda-Pesth, which were formerly great centres of trade, are no longer markets of importance. Fresh centres will have to be created, and our trade must accommodate itself to novel conditions-a process necessarily slow.

The unfavourable condition of the Exchanges is not justified by the economic potentialities of the country. Even now, we can export 208,000 waggon-loads of cereals. We have 7,357,000 hectares of forest, mainly beech and oak. We can export stock to the value of 10,000,000l.; we can extract annually about 1,500,000 tons of coal of varying quality, with 60,000 tons of iron ore and 15,000 tons of copper. A country which possesses such means of wealth ought not to have a poor credit abroad or so unfavourable an exchange as obtains at present. The cause of this is probably the unsettled conditions both internal and external, but the possession of articles necessary to the world should remedy this disadvantage in the course of time. We are also heavily in debt; to England alone we owe, in the form of a War Loan, 22,500,000l. It would be difficult if not impossible

to borrow in present conditions; and yet capital is indispensable. It is necessary to us for the restoration of the ruined districts, for the rebuilding of towns, for the construction of roads and wharves, for the exploitation of forests and mines, and for industry in general. The remedy is to be found in doubling or trebling our production, in a revision of all concessions and monopolies granted to companies, in the exploitation of mines and forests and the reduction of their dividends to a reasonable figure; possibly in the nationalisation of all such undertakings and the diminution of imports and their confinement to articles, such as cotton goods, the materials of which do not exist in the country.

The Exchange question has been complicated by the existence of many diverse currencies, by the lack of the minting of our own good dinars and a superfluity of bad Austrian kronen; also by the iniquities of financial speculators. The question of values has now been settled at the rate of 1 to 4 (1 dinar = 4 kronen), while the coinage of the whole State has been assimilated and nationalised. We have in circulation about three milliards of dinars, which is an amount relatively less than in any other country; and there is no inflation. The State Bank has been instrumental in regulating this matter, though many attempts have been made both in Vienna and Buda-Pesth to bring foreign money into our industries and thus to prolong the financial confusion.

International commercial relations are still chaotic, on account of conditions in Central Europe, while direct communication with England is impossible except through Salonica or Montenegro, or through Italy. The French, the Italians, and to some extent the Americans, are showing great activity in their efforts to dominate our foreign trade. The English, on the other hand, appear to be slow in getting to work and unwilling to adapt themselves to the conditions, habits, and needs of our country, to such an extent as to give the impression that the British have no desire to open or link-up trade communications with the Tri-une Kingdom. The Germans and Italians are rivalling them in regard to prices and finish, and adapt themselves more easily to the commercial habits of the Balkans. The Italians, in particular, aim apparently at becoming the

great trade intermediaries between East and West; and D'Annunzio is not alone in dreaming of Italian control from Trieste to Constantinople.

The National Revenue is inevitably small, and the Budgets habitually end in a deficit. Among the items old and new which figure in the Budgets of 1920-21 are: annuities for war invalids and interest on pre-war debts (about one milliard of dinars), for administrative purposes at least one and a half milliards, for land and sea forces about 500 millions; the whole expenditure amounting to about four milliards. The deficit at present is about 110,000,000 dinars. Owing to the destruction wrought by the war, Serbia and Montenegro will not be able for many years to produce their pre-war revenues; and for a long time to come the other districts comprising the Tri-une Kingdom will be able to give but little assistance towards the balancing of the revenue and expenditure. They will, however, have to put all they can into the common stock, in order that the ruined districts may be restored and a levelling-up process completed as soon as possible.

To this desirable end there are various obstacles. The population of the districts not damaged by the war do not appreciate the necessity of coming to the assistance of those that require restoration. They think that Serbia and Montenegro should be restored out of the compensation to be paid by our enemies. Had we got the compensation that was foreseen in the Peace Treaty, there would be something to say for this view; but, so far, after two years we have received nothing. Such compensation was to be partly in kind (live stock, machinery, etc.), and partly in bonds which would have enabled us to revive our finances and industries at the enemy's expense. During the Armistice period or since, many countries have received a portion at least of their war compensation; but concrete guarantees, such as were introduced into other treaties, were not included in our treaties with Germany, Austria, and Bulgaria. Consequently we are still without our due; and, in any case, the money compensation, which should have been over five milliard francs, will not be paid for some time, and will certainly be much reduced from that figure. The enemy States, excepting Germany, are not in the