been at least temporarily held up in this region, and as I write these lines the Poles seem to be making further gains.

After all, the Polish war is only one more demonstration of the fact that the big nations, having accomplished their war aims, cannot, save by force of arms, hope to prevent the smaller nationalities from vindicating claims which are at least as justifiable. As I said before, Poland is merely seeking to acquire what was once hers. She must expect permanent danger from the Russian side, whether the Bolshevists continue in power or give way to a nationalist reaction. Security has been denied by the Paris Conference, which blandly turned over millions of Poles to Russian rule. sult has been a new war, fought with vast numbers and fought for issues which were familiar all through the last century.

IV.

The re

LONDON NEGOTIATIONS

As if to give final evidence of the incoherence of latter-day Allied policy, while Poland is fighting the Bolshevist along the Beresina, a Bolshevik agent is negotiating with Lloyd George in London. Moreover, while Rome follows this extraordinary spectacle with approval, there continue to come from Paris protests and unmistakable accusations.

Lloyd George's course is perfectly consistent with past performances. As far back as the early days of the Paris Conference he framed the Prinkipo proposal, looked with interest upon the Bullitt mission, and only abandoned more or less indirect conversations with the Russian Reds when English public sentiment for the time being seemed hostile.

To-day this hostility has died down and new circumstances combine to strengthen his hand in any peace proposal. First of all, Bolshevist agents and forces are busy in all that "no-man's land" which extends from the Caspian Sea to the frontiers of India. Failing peace with Russia, Britain may have to fight not merely to protect Persian interests but to defend Bagdad, to hold Mesopotamia, and all her Near-Eastern conquests of the world war.

In the second place, peace with Russia holds out the promise of the richest field for commercial exploitation in the world, and Britain is at the moment rapidly reaching a condition when she will be able to operate with enormous profit both on the

shores of the Baltic and of the Black Sea. In all the Baltic district British agents have been busy for more than a year and on the Black Sea the activity has been not less in

tense.

Prolongation of the existing situation so far as Russia is concerned promises something approaching a real war, the perpetuation of a menace to all of the British positions in the Near East. Actual peace means the abolition of this danger and the opportunity to forestall Germany in the great and profitable field of Russian reorganization.

Italy, also eager for a Russian settlement, is moved by slightly different reasons. The high cost of living reaches its apex in Italy. Nowhere has the result of the war been more disastrous to the masses of the people, that is, nowhere among Allied nations. In Italy it is believed by the masses that peace with Russia will mean the immediate release of vast quantities of Russian foodstuffs. Wheat and oil are particularly scarce in Italy, and the Italian masses believe Russia can furnish them. The hope is largely illusory, but it exists. In addition, the great Socialist party of Italy has much sympathy with the Russian Revolution.

In France, on the contrary, the sentiment remains fixed against peace with the Bolshevist. France has remained fairly constant in her Russian policy from the beginning. Moreover, if peace promises profit to Britain and holds out a dream of cheaper food for Italy, any peace which does not recognize French loans to Russia and provide for their payment spells a catastrophic loss for the French. To-day Russia owes France almost $6,000,000,000, and this sum is more than sufficient to meet the external obligations of the French Republic.

The Bolshevists have repudiated this debt as a debt of the Czarist régime. The French naturally and bitterly resent any separate peace negotiations on the part of the British -particularly negotiations which do not include a recognition of Russian debts to France. The whole London conference with the Bolshevist agent has awakened once more precisely the same French emotion which we saw stirred a few months ago over the Ruhr episode. Despite the temporary adjustment at that time, French suspicion has lingered and recent events have called forth a new explosion.

At bottom lies the same old difficulty. There is no common policy among the European Allies either as to Russia or as to Ger

many. The British have backed the various anti-Bolshevist movements to an extent which, measured in money, is stupendous. Yet between times Lloyd George has conducted backstairs negotiations with the Reds, at one moment lending money and even soldiers to their enemies and at the next trying to arrive at some basis of business with their leaders.

The French believe, perhaps wrongly, that the Bolshevists are about at the end of their rope. They are satisfied that the present British policy may just avail to save Lenine and Trotsky, and the French wholeheartedly and fairly unanimously desire the extinction of Bolshevism in Russia. In Britain, and far more in Italy, there is a measure of sympathy with the Red in certain radical quarters. In France the situation is far more closely like that existing in the United States.

V. FINANCIAL CONFERENCES

The Spa conference, which I mentioned in my last article, has been several times postponed and will not now be held before July. Exactly what effect the recent election. in Germany will have upon the gathering remains problematical. Yet on the whole there is more than a suggestion that Germany will be even less compliant than had been hoped.

Meantime new differences have sprung up among the Allies over the subject of reparation. Belgium and Italy have both expressed displeasure at the fashion in which British and French premiers ignored the claims of other Allied nations at the Hythe Conference and have demanded a new hearing. Also France has again protested against the proposal to fix a sum for the total of German payment.

In Britain there is much disapproval of the Hythe suggestion that the bonds issued by Germany and paid to France should be accepted as payment of French indebtedness in Great Britain. This protest has been increased by the plain disclosure that the United States has no intention to accept German bonds as payment of British, French, Italian, and Belgian debt. By this cheerful process the United States would acquire more than half of all the outstanding German bonds and thus be the principal great power concerned in German payment. This would involve the United States in European affairs with a vengeance. But,

on the other side, Italy has demanded that the British accept German bonds for Italian debts, if she consents to take French.

And so the whole financial question is raised again. Ex-President Poincaré has resigned from the Reparations Commission in protest against the Hythe decision, Premier Millerand has told his fellow countrymen that France is bankrupt if Germany does not pay. But the question of payment remains wholly unsolved, and Canada has added to the general confusion by filing claims for a little less than $2,000,000,000.

This sum is half as large as Keynes allowed France; it is materially larger than Belgium has been allotted in many schemes; and it forecasts an even larger claim from Australia, with impressive bills from New Zealand and South Africa. If Canada and South Africa are to have $2,000,000,000 apiece, then the total British bill can hardly be less than $10,000,000,000, and this is equal to the sum allowed all the Allies by Keynes. It is also more than two-thirds the sum agreed upon by the Hythe Conference, which fixed upon $30,000,000,000 in annual payments of $1,000,000,000, the principal to draw no interest.

Meantime the Germans are not paying— even in coal-and the French who recently evacuated Frankfort are now raising the question of the necessity of occupying the Ruhr and thus obtaining the all-essential coal supply promised under the Treaty of Versailles but not yet provided.

For Americans the dispute has a vital bearing, for if we are to get back the $10,000,000,000 owed us by our recent associates, we can only receive it if Germany pays. Moreover, if we refuse to accept German bonds, neither Italy nor France can pay us. The same is probably true of Belgium and certainly true of all the lesser states to whom we have made smaller loans. Keynes, it will be recalled, urged that we should consent to cancel these debts—a proposal which found little favor in Washington or in the country generally.

That Germany can pay more than $15,000,000,000 has always seemed impossible to American financial experts. This was the American verdict at Paris. The Hythe

Conference has doubled the amount, but the Canadian bill serves to demonstrate how inadequate even the Hythe figure is, in the face of the expectations of British Colonies, while French and Continental protests emphasize the fact.

VI. PEACE WITH HUNGARY

During the past month peace has been signed with Hungary. In some ways this treaty is the most severe of all the documents so far drafted. Before the war Hungaryequal and in reality dominant partner in the Dual Monarchy-had an area in excess of that of Great Britain and a population greater than most of Spain. As a quence of the recent treaty she loses twothirds of her area and population alike. Today she is a country about twice as large as Switzerland, with a population inferior to that of Belgium. She has in fact become one of the small states of Europe.

conse

In addition, she finds herself without access to the sea, with no natural frontiers-a mere mutilated fragment composed of the lands in the Danube Valley. More than 1,500,000 Magyars are now under alien rule. Czechoslovakia, Rumania, and Jugo-Slavia have divided the Magyar border lands between them, and even Austria has acquired a slice about Odenburg.

On the whole, the boundaries have been drawn with fair regard for the ethnographic circumstances, but with a total unconcern for the economic factors. In truth the new Hungary, like the new Austria and Czechoslovakia, cannot exist permanently in its present state. Either all three must presently unite in some sort of economic if not political association or they will literally perish, for the products of all three are mutually and necessarily complementary. This Hungarian Treaty is the final step in what has not inaccurately been described as the Balkanization of Middle Europe.

In Italy, Nitti has not succeeded in retaining power. Beyond question he has

shown himself to be the ablest and most moderate of contemporary Italian statesmen. His moderation has contributed much to smoothing the relations between Italy and Greece and has at least prevented an open clash with the Southern Slavs. Still the Fiume dispute remains unsettled, and D'Annunzio recently added fresh provocation.

The truth is that in all of Southeast Europe, as well as along the old Russian border, chaos still continues. Poland is fighting a real war. Hungary accepts an inescapable peace with no disguise of her determination to seek a new adjustment by force of arms. Italians and Southern Slavs remain at daggers drawn, while even in Albania the unrest is becoming significant.

Nor is the situation in Asia Minor more promising. There the Turk is successfully holding out in Armenia and in all the hinterland and menacing the Greeks in Smyrna and the French in Cilicia, where the fighting has been very sharp. Moreover, in Thrace, Turks and Bulgarians are resisting Greeks.

In short, all over Europe the barriers to all actual settlement continue to multiply. Germany remains still outside the world sys. tem. The Allies continue alternately to fight and to woo the Bolshevist. The small powers follow the example of the great in seeking their nationalistic ends, while the great powers threaten but do not do it. Finally, the great powers continue to disagree among themselves and to express their views with increasing bitterness. This is the situation almost a year after the Versailles Treaty closed "the war that was to end war."

HERE has been so much written and

THE about the dire need of Eastern Europe, and so little done, that it is, perhaps, pertinent and helpful to put forward a definite plan for immediate action.

Constructive action in this matter may be regarded as altruistic by those who are so minded; it may be regarded as ordinary decency by those who so desire, or it may be regarded withal as good common-sense business, in the interests of commerce and trade and of the American people.

Here is what I would recommend: First. That Congress pass a bill as soon as possible appropriating a sum not to exceed $500,000,000 for the use of Central and Eastern Europe.

Second. That Congress call upon the President to appoint a non-political commission of three Americans, distinguished for their character and executive ability and commanding the respect of the American people. Such a commission should include men of the type of General Pershing, Mr. Hoover, or ex-Secretary Lane. I would invest that commission with complete power.

Third. The commission should be instructed to proceed at once, accompanied by proper personnel, to survey conditions in Central and Eastern Europe, and then to act for the restoration of those countries, under such conditions and upon such terms as the commission itself may decide to be practicable and effective. Among the conditions. should be provided that there should be no local interference with the free and untrammeled exercise by the commission of its own prerogative of allocating materials. Governmental politics should be eliminated;

unreasonable and prejudicial barriers between the various countries should be removed; and such substantial guarantees as may be available should be exacted, in order that the conditions imposed should be fulfilled.

Fourth. The financial terms should be made liberal. I would suggest no interest for the first three years; for the next three years, six per cent., with the provision that such interest might be funded if the economic conditions of the country were not approaching normal, or if its exchange conditions were so adverse as to make payment unduly burdensome, the maturity of the obligation might be advanced fifteen years from its date, and I should have no doubt as to its final payment.

Fifth. As soon as the plan was adopted, our Government could invite other governments in a position to assist to participate in the undertaking.

Sixth. To set forth completely my opinion, I should add that in the final instructions the American people, through their Government, should say to the commission:

"We want you to go and do this job in such a manner as, after study, you think it should be done. This is no ordinary undertaking. The American people trust you to see that it is done right."

The commission should also be instructed to "use so much of this money as is needed." Personally, I am confident that with the assistance and coöperation which would come from other parts of the world, the sum of $500,000,000 from the United States would be more than enough to start these countries

on their way to self-support and the restoration of normal conditions.

The whole plan, of course, involves many practical considerations, the most serious of which is that of obtaining the money, whether by issuing additional Liberty Bonds, an increase in the floating debt, or by taxation. But I think we could properly say to the Treasury Department: "We know how serious your financial problems are; we know the difficulties which are immediately confronting you; we know the importance of deflation, and we know that the Government must economize and that individuals must economize, but we also know that the American Government advanced ten billion dollars to its allies to attain victory and peace. Certainly it is worth making the additional advance in order to realize the peace for which we have already struggled for nothing is more certain than that until normal conditions are restored in Europe there can be no peace."

Above all things, I would say that whatever action is taken should be taken without delay. The crisis is so acute that the situation does not admit of delay, except with the possibility of consequences one hardly dares contemplate.

The situation is far beyond the scope of individual charity. Only by the action of governments, our own and the others whose resources enable them to coöperate, can aid be given in sufficient volume. And I am confident that if the United States of America were to announce that it proposed to move to rescue those suffering peoples, there would go about the world a cry of joy. I am also confident that our action would be followed by the governments of Great Britain, Holland, the Scandinavian countries, Spain and Japan, and that France and Belgium and Italy, notwithstanding all of their losses, would help to the best of their ability in a coöperative effort of this kind.

S

INCE the era which saw the beginning of railway service and telegraphic communication, the peoples of Europe-no matter what their nationality-had been steadily drawn into closer economic relationship. Bent upon commercial development, the governments developed their railroads to fit in with those of other nations. Through train service between Paris and Petrograd was as reliable and comfortable as though traversing only one nation; freight and express delivery were highly developed.

Underlying this perfect piece of machinery for the physical exchange of commodities were currencies upon a gold basis and with fixed relative values. To facilitate transactions further, there were great banks and private banking firms which for generations had done business together. The war shattered the currencies, and in so doing it entirely destroyed the relative standing of banks and private firms. A bank in Vienna to-day might have enormous assets meas ured in Austrian kronen, but this does not

give it standing in Paris or London, or even in Berlin.

The countries which did not lose territory by the war have nevertheless suffered physical damage in loss of manhood and in credit by reason of their inflated currencies. As against the gold-basis countries of America, and nations such as Spain and Switzerland, which did not inflate their currencies, they are greatly handicapped in doing business.

Far worse is the situation of the little countries in eastern Europe which were launched forth into the world with new governments, new constitutions, and new currencies. They must each struggle for their own existence. Each one owns a small piece of the network of railways and telegraph lines which so closely connect the whole of Europe; but that piece is in bad condition and inadequately equipped. All agreements for the exchange of mails, the running of through passenger trains, the basis for customs duties, must be made again before these complicated pieces of machinery can be once