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the man who gave vision and voice to Italy in 1915 when the nation needed different guidance from that of Salandra, the halting premier, or of Giolitti, the pacifist friend of Bülow. His admirers speak of him as a man whose prewar corruptions, whatever they may have been, were burned up in the cleansing fires of a supreme passion for his country during the war. He was without doubt a superb recruiting officer who helped to enlist the scattered purposes and hesitant loyalties of the nation under the banner of decisive action. His theatricalism served Italy and the Allies well at a time when the adhesion of Italy to the Allied powers meant much.

war

Both before and during the D'Annunzio was more than a stager of daring and dramatic feats. He was a dynamic factor in Italy's war-making. He cannot be dismissed as an erratic free-lance. But we have since come to see, what was evident to Europeans from the start, that the seizure of Fiume was far from being the purely personal adventure that many Americans naïvely took it to be.

It is, perhaps, significant that D'Annunzio's first appeal to the Italian people to enter the war was made when he went to Genoa in the summer of 1915 for the dedication of a monument erected at Quarto to Garibaldi and his volunteer band, for, as Mr. Simonds has suggested in one of his articles on after-the-peaceconference developments, D'Annunzio's taking of Fiume was not unlike Garibaldi's attack upon the Kingdom of Naples, in that both the king and Cavour knew in advance of Garibaldi's plan, as doubtless both Victor Emmanuel and Nitti knew of D'Annunzio's purpose.

Whether or not the facts will bear out the conjecture that the Italian Government was an actual, although silent, accomplice in the capture of Fiume, certain things are plain. Fiume was a knotty and disturbing problem for the Italian Government. There was a rising national sentiment demanding Fiume as an Italian city. The Government, however, faced the tentative verdict of the peace conference. It hardly dared an official occupation of the city, had it so desired. It was doubtless a welcome

relief, therefore, for the Italian Government to be able to stand aside while the picturesque D'Annunzio seized the city, and then to say, in effect, to the nations represented at Paris what was absolutely true: "This is indeed embarrassing. We dare not risk the wrath of our people by attempting to use our army to drive out of Fiume this idol of the Italian masses. It seems that you will have to handle the situation."

Regardless of the final settlement of the Fiume question, the incident is suggestive of what may, and, indeed, probably will, develop into a whole series of informal and irregular amendments, by the direct action of national groups, of those features of the Versailles settlement which left unsatisfied vigorous nationalistic aspirations.

HELPING EUROPE REBUILD

SINCE the armistice was signed, the one consideration that has overshadowed all else has been to get the world in general and Europe in particular back to work. Our inability to get quick action on the peace treaty has meant months of delay in our getting at certain aspects of this fundamental job, upon the successful doing of which the social peace of the world markedly depends. In the closing weeks of the year just ended the presence in the United States of business missions from England, France, Italy, and Belgium raised this question in its most concrete aspect, the extension of credit to Europe.

The necessities of the situation have placed this matter of credit upon a broader basis than that of an ordinary banking operation to be determined by our financial institutions alone. The problem is of the widest national concern. It must ultimately be studied and understood by the man in the street, the workman in the shop, the farmer, and the modest-salaried classes, as well as by the magnates of the bourse.

What is the situation, in brief, and why does it concern any one but the banker? Are there reasons beyond the obligations of international helpfulness that make the restoration of Europe to normal an intimate American issue?

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To begin with, we are in honor bound to finish the job we set out to do when we entered the war. It is no mere juggling with words to say that our purpose was not accomplished when Germany signed the armistice and acceded to the demands of the peace conference. The defeat of Germany was simply one necessary step on the road to that purpose, which was the achievement of a safe and orderly world in which sane, democratic progress might be possible. Clearly a world of paralyzed industries and idle masses does not answer to that description, for every idle factory in the world is a breedingground of radicalism and a recruiting station for the social revolution.

If Europe does not get quickly back to work, increasingly serious social disturbances are bound to occur throughout the Old World. Frontiers cannot be sealed against such unrest. The infection of Europe's discontent will inevitably invade the United States, further to complicate our own none too happy situation. Typhus in the next block concerns us, although we may not own the property. Doing everything within our power to stabilize industrial Europe is for us a profitable and preventive venture in the sanitation of an area that may breed dangerous social moods.

Then, too, unless Europe quickly regains her economic balance, we shall find ourselves without adequate markets for our surplus products. And when a nation's wharves become choked with goods for which there are no effective demands, there is hardly a domestic problem that escapes the deadly complications that ensue.

The average American has been slow to appreciate the dangerous signifidangerous significance of this possibility, because in the months immediately following the termination of the war there were effective demands that measurably absorbed surplus production everywhere. But those demands grew out of an abnormal situation that, in the absence of adequate credit arrangements, could not be other than short-lived. For one thing, the credits upon which Europe's early post-war purchases were made were rapidly depleted, and the creation of the

necessary new credits is no breakfast job that can be despatched instanter. And then our own national demand has been abnormally heavy during the early post-war period for two obvious reasons. In the first place, an enormous amount of the deferred buying of wartime came into the market when the war ended, and, in the second place, we reacted from the enforced economy of war-time and began spending our money like drunken sailors. But during the next two years these factors will operate with decreasing effect. Deferred demands will be satisfied gradually, and there is bound to come a reaction from our orgy of buying. It is one of our major sports just now to make the profiteer the national scapegoat for the plague of prices, but justice will not permit the reckless buyer to go uncondemned for his share of responsibility in the matter of excessive living costs. It is clear, therefore, that as our own national demand becomes deflated, the economic health of America will be increasingly dependent upon a profitable export trade with Europe. This is why. it is to the intimate self-interest of every American citizen that industrial Europe be set going again with the least possible delay.

One elementary law of the situation that needs to be said, repeated, and emphasized is that finally the only way Europe can pay for the goods she needs to import from us is to export goods of her own production. Europe is not in position to ship gold in return for her purchases here. If Europe were in position to pay cash for her purchases here, the exchange rates are such that she would be paying for them in American dollars that would cost from two to six times the normal rate. That would mean quick ruin for Europe, and we would suffer from the fall only second to Europe herself. Not only is Europe in no position to make gold payment for purchases, but, broadly speaking, she has no goods to export. Before she can possibly have an adequate surplus of goods for export she must import raw materials and machinery on a large scale.

The situation hinges, therefore, on the answer to one question, How is

Europe to pay for these raw materials and machinery in the interim while she is getting her productive processes going again at full blast, turning out surplus products with which to redress the balance of trade now going heavily against her? In 1918 Europe's imports exceeded her exports by four billion dollars to the United States alone. The answer is plain. Europe must be able to defer actual payment until she is able to produce and export goods to correct this deadly trade balance. That means, in the main, credit extended by the one nation in position to extend such credit on a scale commensurate with the need-the United States.

To realize the concern of the average American in this whole business, it is necessary to set down briefly the alternative methods of providing this credit.

First. The obvious method that suggests itself is the extension of government loans. Our Government, however, has decided that it will not continue the extensive participation in export trade financing that it undertook during the war. It has announced that this field is to be left to be developed by private enterprise, that henceforward financiers and business men must realize that the war period in our foreign business has come to an end. This puts the matter of government loans out of the question, at least as a major solution of the problem.

Second. Another approach to the problem is through the granting of direct loans to Europe by private American banking institutions and the extension of long commercial credits to European buyers by American manufacturers and business men. These two operations will play a valuable part in the restoration of Europe, but, considered as a comprehensive solvent of the situation, they are subject to obvious limitations. An enormous loan by American banks of the funds Europe needs would probably produce a stringency in the American money market that would seriously hamper the industrial enterprises of America in getting funds for necessary promotion. And, then, as Mr. Edward A. Filene has pointed out in several statements recently, the banks must ever hold them

selves as the responsible trustees of American savings, and if they were to handle the situation alone, they would be forced to lend in those quarters where the best security could be found, judging security by the strictest technical requirements. That would result in loans being granted first to countries least in need of credit and last to countries most in need of credit. The countries in direst need of funds and in greatest danger of social upheavals that would react upon us would stand the slenderest chance of getting credit.

That is the one thing that we must avoid in any plan for extending credit to Europe. We must use our credit powers as an instrument for securing political and social stability, without which industrial Europe cannot be made a going concern. Otherwise the extension of credit will simply mean pouring our money into a bottomless well. And every alert student of the situation assures us that there can be no political safety anywhere in Europe as long as there is any country without the credit necessary to start its idle industries. That one country will breed a contagious spirit of revolution that will in time infect the rest of Europe. Europe cannot be restored piecemeal. All of Europe must be healthy or none of Europe will be healthy. It will be a penny-wise-and-pound-foolish policy for us to pick out the nation here or there that seems to offer the best security. We face a situation in which we dare not permit the ordinary principles of credit to govern our decisions. This does not mean that we should or must place the matter of credit to Europe upon a philanthropic basis, but it does mean that we must extend credit in the light of the social necessities of the situation rather than the type of security individual nations can offer. Europe is fundamentally rich and she has intrinsic powers of quick recovery if in the early stage of her return to work credit is not strangled by red-tape considerations. Manifestly the job is too big for private manufacturers to handle by the granting of long commercial credits, even though they were not hampered somewhat in so doing by the regulations of the Federal Reserve

Board as to the rediscount of commercial securities.

Third. The plan that seems essential is an enormous loan by the rank and file of Americans, made by investment in European securities. There is, finally, little question about the soundness of such securities if we really set all Europe on her feet. Tangible assets and conventional collateral may be scarce, but credit is primarily a matter of character, and the spirit of Europe is solvent. Such a people's loan probably could not be floated by the methods of our Liberty Loans; but our banks might well purchase these securities upon a basis that would justify their issuing other securities of their own for sale to the American public at a rate that would attract a popular investment and at the same time leave for the banks a margin that would provide a fund for their security.

The average American, when the facts are fully laid before him, will see that the purchase of these securities is in reality an investment in social insurance against the radicalism that a paralyzed Europe will inevitably breed. Such a popular loan would restrain our reckless expenditure and stimulate that thrift which underlies our national security.

EXIT SOVEREIGN PERSIA

NEITHER men nor empires waste worry on a common scold. To call names requires only an embittered disposition, a strain of cynicism, and a slender sense of the gentlemanly courtesies. The billingsgate of political controversy is not even diverting to honest minds. It is always interesting, however, when a verdict, drawn with a fine sense of the decencies of discussion, sticks and stings by virtue of an irony that is a pure distillation from the facts in the case.

Elsewhere in this issue Lothrop Stoddard contributes a scathing indictment of British imperialism in its latest Persian adventure. His paper is an eightpage Donnybrook Fair. No end of heads are broken. And the whole business is despatched without a moment's descent to demagogism. The only bludgeon wielded is the bludgeon of historical

data. In fact, one might easily imagine Mr. Stoddard's having adjourned his critical judgment now and then while writing this paper to indulge in a sportsman's admiration of the sublime sangfroid with which foreign office veterans, in face of the most searching criticism of their imperialism, blandly repeat the time-worn patter of diplomatic altruism, snuffing out sovereignties with the air of fulfilling a Messianic mission.

The story of Anglo-Persian relations has all the intriguing interest of a Sherlock Holmes tale. One senses a game astutely played. For a study in subtlety it would be difficult to improve on the story, told in this paper, of how British statesmen, almost before the sound of firing had died on the western front, began to set the stage for the last act in the Persian play; how Downing Street took advantage of the fact that many of Persia's ablest nationalists were away from home waiting outside the council chamber in Paris for a hearing that was never granted-to carry on negotiations not in Paris, not in London, but in Teheran for a new Anglo-Persian agreement, after the home Government had been still further emasculated by changes in personnel which meant the replacing of Persian patriots with Anglophiles.

The present thinly veiled protectorate is quite clearly not the work of one or two of an old guard who may not represent the major judgment of the Government. Lord Curzon, who used to speak in liberal appreciation of Persia's sovereign integrity, is found using a different vocabulary after the conclusion of this new agreement. Speaking at a dinner accorded the Persian foreign minister in London, Lord Curzon lapsed into the phrases that have ever been on the lips of British statesmen when they have faced the task of mollifying an absorbed sovereignty. He painted the familiar picture of the imperial Good Samaritan. That he faithfully interpreted the intention of the Government is evident from the news that soon followed of his succession to the portfolio of foreign affairs, lately held by the Right Honorable Arthur James Balfour.

A survey of Anglo-Persian relations raises the interesting question whether democracy in the British Empire is con

fined to the tight little island and such self-governing dominions as may have reached a maturity that will not brook political vassalage. Incidentally the pact of Teheran is an illuminating commentary upon the elusive and multifaced sophism of self-determination. It is interesting to note that the one consideration shown Persia by the peace conference was her inclusion in the list of states invited to adherence to the League of Nations covenant. That might be interpreted as a tacit acknowledgment of her sovereignty. But with her future interests and actions so thoroughly and comprehensively lodged in the safe-keeping of British hands, we must add another vote to the list of votes controllable by Great Britain in the league. But of course no one thought of that at the time. Just English luck!

FACT versus FANCY

THERE is no place in the modern world, - with its challenging competitions, for the rule of thumb. In the late war the scientist ranked with the soldier in the tasks of defense and offense. The war forced a mobilization of brains throughout the world. The war could not have been won without this conscription of science. It was not enough that the nation had individual scientists doing creative work in a thousand and one scattered laboratories. A national coordination of our scientific genius was necessary. This necessity did not disappear when the war ended. The next ten years will demand, as few years in our history have demanded, that we provide a sound fact basis for our political and social policies. The multitude of problems, together with the many factors making for hysterical thinking on our social problems, make this demand imperative.

Other nations have led the way in this field. The British Empire has approached the matter in a comprehensive fashion. England has created a Department of Science and Industrial Research charged with the prosecution and coördination of scientific investigation in behalf of the empire's interests. To this department has been given, as a start, an endowment of five million dol

lars. The self-governing dominions are adopting a similar policy. In Canada and Australia appropriations have been made, and the beginnings of organization well started. Japan has authorized and organized a National Laboratory for Scientific and Industrial Research and placed to its credit a fund of two and a half million dollars. Italy has taken steps toward the creation of a National Research Council. This attempt to organize throughout the world the peacetime service of science in the interest of national advancement is an outgrowth of the war-time emergency organization of scientists.

It is gratifying to know that we are not indulging in our customary trust to our extemporizing powers, but are likewise attending to this matter of harnessing the scientific brains of the nation to the complex needs of the nation. During the war there sprang up a spontaneous organization of our scientific men in the form of a National Research Council. This meant the bringing together for organized coöperation the hitherto isolated scientists of the country. These scientists worked in closest coöperation with the already established scientific bureaus of the Government. Mr. Vernon Kellogg, in a recent issue of "The Nation's Business," described the effective manner in which this council during the war allocated to the centers of research throughout the country important government work. The leading university laboratories of the country were conscripted for work on military optics, ordnance, munitions, topography, and food conservation. The unofficial scientists of the nation were directed by this council in investigations respecting gun defense, high explosives, smoke screens, dyes, fuel substitutes, wireless telegraphy and telephony, testing of materials, certain pathological and medical problems, not to mention the admirable work of the psychologists in placing the personnel work of the army upon a scientific basis. It was a magnificent illustration of what can be accomplished by the aggregate inventive genius of the country when that genius is correlated and directed.

It is good news that this council has been reorganized for peace-time service.

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