would make it most easy for the French Government to meet them. The situation had become so grave that the alternative policies of France and Great Britain ought to be put before the world.

Lord Curzon in replying reiterated Lord Grey's argument that it was of the highest importance to bring to bear on the Ruhr situation the united action of all the Powers. He could not admit that because the replies of France and Belgium were not encouraging, therefore the Government's policy had failed, or that all chances of its being successful in the future had disappeared. Referring to the suggestions of Lord Birkenhead, he pointed out that the Reparations Commission dealt not only with Germany, but with Austria, Hungary, and other countries, and that the presence of British Forces on the Rhine had had a most quietening and steadying effect on the situation. He thought no good purpose could be served by withdrawing either their representative on the Reparations Commission or their Army of Occupation. He confessed that he had no idea what the Government would do next week or next month; but their immediate step would be to lay on the table all the papers relating to the matter, in order that public opinion might be informed.

The debate in the House of Commons was not more successful in eliciting information as to the Government's next step. Mr. Ramsay Macdonald, it is true, professed to find in the Government statement indications of what he called a policy of reconstruction which should combine a settlement with Germany and an agreement with France. But he received no support in this view. Both Mr. Asquith and Mr. Lloyd George confessed themselves unable to discover a definite policy in the Government's statement. Other members-and not members of the Opposition either-were more outspoken. Colonel MooreBrabazon, a Unionist, sarcastically remarked that the country was in charge of an Alice still in Wonderland, and Mr. Mosley, an Independent, referring no doubt to the extraordinarily lame and impotent conclusion of the Government's statement said that, as far as policy was concerned, the mountain had laboured and even the ridiculous mouse was still-born. An objection of an opposite character was made by Colonel Gretton, one of the most prominent of the "Die-Hard" section of the Conservatives, who took the statement as evidence that the Government was drifting into a breach with France, and called for whole-hearted co-operation with that country.

The Prime Minister's reply reflected the extreme perplexity in which the Government found itself. He administered a sharp rebuke to Colonel Gretton for adopting the attitude of those who thought that when there was any difference between this country and another country it must necessarily be this country that was in the wrong. He strongly deprecated in discussions of this kind such phrases as pro-French or proGerman; if they were to be anything let them be pro-British.

He defended the attitude of passivity adopted by the Government on the ground that it showed with the utmost clearness that their desire was to maintain the old relationship with their Allies. They sacrificed something to prove that, and they also allowed time to elapse to show whether their contention or the contention of France as to the efficacy of the method adopted for attaining the end they all had in view was more correct. He then went on to give the familiar reasons for doubting the wisdom, or being certain of the unwisdom, of the Ruhr occupation as a method of securing reparations, and ended his disquisition with the statement that should at any time a crisis arise in the relations of the Allies, he should not hesitate to call Parliament together. Then as a kind of after-thought he added a passage in quite a different tone, which made a deep impression. on his audience and on the public. He had, he said, always acted on the assumption that the object of their Allies was to secure reparations, as it was their own object. But it had often been stated that there were ulterior motives. He was loth to believe such a thing, but should it be so, he would say that in every British heart, irrespective of party, lay a profound sense of what they believed to be right, which was one of the most potent forces of their lives. It was the force that took them into the war and kept them there till the end. If the British people should feel, after a lapse of time, that the wounds of Europe were being kept open instead of healed, there might then easily ensue the last thing in the world that he should like to see, an estrangement of heart between them and those who took the opposite view. He hoped and believed that nothing of the kind would ever happen, but as one who was and always had been a warm friend of France, he thought it only a mark of friendship to say what he had just said.

The debate was not allowed to close without the fatal weakness in the Premier's speech being exposed. Mr. Lloyd George asked him point blank whether it was not better that he should recognise facts. The Government knew perfectly well what the French policy was. The French reply was rather brusque; it had taken no notice of the British "questionnaire;" it had not vouchsafed any answer; but on one point it was perfectly clear, and that was that the French Government meant to adhere to their policy of occupying the Ruhr until the last farthing of reparation had been paid. Did the British Government imagine that it was going, by the process of sending a few more notes, to influence M. Poincaré to deviate from his declared policy which had received the overwhelming support of the French Parliament? And if not, what was the Government's policy?

On this note of querulous interrogation the momentous debate was allowed to end, and with it-save for the brief discussion of the Lausanne Treaty reported above-the Session. Without obtaining any further satisfaction from the Prime

Minister, Parliament adjourned for the summer recess till November 13, leaving to the Executive the sole responsibility of dealing with the reparations problem abroad, and at home with the unemployment problem which with the approach of winter threatened soon to become equally harassing.

The Session had been a strenuous one, and in spite of the attention devoted to foreign affairs, progress had been made with domestic legislation. The problems of rent control and housing, which at one time nearly brought the Government to grief, had been tackled by Mr. Neville Chamberlain in such a way as to allay popular discontent, at least for the time being. A number of useful measures introduced by private members were passed, notably Mr. Entwistle's, equalising wives and husbands in regard to the grounds for divorce, and Lady Astor's, making it illegal to serve intoxicating liquors to persons under eighteen except at meal times. The prestige of the Government stood higher at the end of the Session than at any previous period. After its defeat in the early days of the Session, its Unionist supporters were much more regular in their attendance, and it had never been in danger, in spite of the discontent in the "Die-hard" section of the Conservative Party with what they considered its "pro-German" attitude. On the other hand, the two wings of the Liberal Party had not come nearer together-in fact, one "National" Liberal had crossed the floor of the House to the Unionist benches-and the Labour Party, though it had held together under the leadership of Mr. Macdonald, had shown itself to be far from homogeneous. Mr. Baldwin seemed to enjoy the confidence of his party to no less a degree than his predecessor. His capacity of statesmanship, however, was still a matter of uncertainty, and was now to be put to the severest test.

CHAPTER IV.

TOWARDS PROTECTION.

THE Country had not long to wait in order to find out whether Mr. Macdonald or Mr. Lloyd George had more correctly appraised the Government's statement on the Ruhr issue. the Ruhr issue. The one positive proposal contained in it was to publish the whole of the correspondence on the matter between the various Cabinets, provided permission could be obtained from all concerned. No sooner was M. Poincaré in possession of this portentous threat than he took the wind out of Mr. Baldwin's sails by himself publishing the whole of the French statements and communiqués (August 3). This example was followed a couple of days later by the Belgian Government, and it was not until a week subsequently that the British publication appeared. For the rest

the French awaited the British reply to their Note with equanimity, confident that the British policy would remain one of non-intervention. They knew better than the British public the influence of the "Die-Hard" party in the counsels of the Cabinet.

This influence soon made itself apparent in another connexion. When Mr. Baldwin became Prime Minister, he had pressed Mr. Reginald McKenna to succeed him as Chancellor of the Exchequer. Mr. McKenna, who for some time had retired from politics and devoted himself to banking, had consented on condition that he should be found a seat in Parliament without being involved in an election contest on party lines. The proposed inclusion of Mr. McKenna in the Government was strongly resented by the "Die-Hards," who objected to him as a former member of a Liberal Cabinet, and a strong critic of French reparation policy. Owing to their opposition the efforts of the Government to bring about a vacancy in the City of London, which would have been an admirable constituency for Mr. McKenna, broke down, and he accordingly, on August 13, addressed a letter to the Prime Minister begging to be released from his conditional promise to join the Government. Mr. Baldwin had no option but to consent, and the Cabinet remained free from any Liberal admixture. A fortnight later it was announced that Mr. Neville Chamberlain had been appointed Chancellor of the Exchequer, his place at the Ministry of Health being taken by Sir William Joynson-Hicks.

If in its acts the Government bowed to the wishes of the Die-Hards, in its words it made no scruple of disregarding their sentiments and susceptibilities. Its reply to the French and Belgian Notes, delivered on August 11, a fortnight after their receipt, seemed to show that it had at last made up its mind to act independently, and was on that account bitterly attacked by the Daily Mail while it both astonished and delighted the Opposition. It began by expressing "the most sincere disappointment" with the replies of the French and Belgian Governments to its identic Notes of July 20, and went on to comment on those replies in a manner which, though courteous, betrayed a strong feeling of chagrin. It contested vigorously the claim of France to receive a minimum from Germany of 26 milliard gold marks over and above the amount required to meet its debts to Great Britain and the United States, and of Belgium to a minimum of 5 milliards, pointing out that, under existing agreements as to reparations (which probably exceeded Germany's capacity to pay) France was entitled to 34 milliard gold marks while her debts to Great Britain and the United States amounted to about 27 milliards, so that on the balance she would be left with 7 milliards, not 26; and as for Belgium, she had already received about 14 milliard gold marks (73,000,0007. sterling), a sum far exceeding the receipts of any other Power, besides being entirely relieved of her war debts to the Allies,

amounting to nearly 300,000,000l. sterling. Nor could the Government admit, in view of the heavy burdens borne by the British taxpayer, that there was any ground for modifying the Spa percentages for the benefit of France and Belgium, supposing that the total to which the percentages applied should be reduced. The Note then went on at some length to refute the French contention that there was no advantage in holding an expert inquiry into Germany's capacity to pay, and that such an inquiry would violate some principle expressed or implied in the Treaty. It further upheld the British contention that there was an advantage in getting the German Government to recognise the figure fixed for its liabilities as just and reasonable, and that there was far more likelihood of its carrying out such an engagement than one subscribed under the compulsion of an ultimatum and protested against at the moment of signature. It then went on to express in very plain terms the opinion of the Government that the Franco-Belgian occupation of the Ruhr was illegal according to the terms of the Versailles Treaty. The highest legal authorities in Great Britain, it said, had advised to this effect, and if the Government had hitherto abstained from formally contesting the legality of the occupation, it was solely in order not to embarrass their Allies, in conformity with the declaration made by Mr. Bonar Law in January. Alarm was expressed at the prospect of France occupying the Ruhr district for at least 36 years (the minimum period over which the discharge of the debt was spread under the Schedule of Payments), and perhaps in perpetuity-a situation of which the political, apart from the economic, consequences would be disastrous.

The Note concluded with a restatement in clear and definite terms of Britain's policy in regard to reparations: that Germany should be made to pay up to the maximum of her capacity, that that capacity should be determined by an impartial inquiry into the facts, that as a preliminary to such payments her finances should be restored and her currency stabilised, that the method pursued by France and Belgium to secure reparations was doomed to failure, and involved great and growing danger to the trade of the world, and not last of England, and finally that when steps had been taken to ascertain the real value of the asset represented by German reparations and to secure its realisation without further depreciation, England would be prepared to deal as generously as possible with the debts due to her by the Allies-that is, to ask for no more than would, along with reparation payments from Germany, meet the British war debt to the United States.

The last point-which was a repetition of a proposal made by Mr. Bonar Law in Paris in January-was elaborated in a special Memorandum attached to the Note. In this the British debt to the United States was taken as funded to be equal to 14.2 milliards of gold marks present value; and it was to this sum that Britain proposed to limit her total claim against Allied