would disdain, have in the economic penetration of foreign countries produced far more solid results for the Fatherland. While the professors, in a pedantic and irritating manner, are continually misstating and overstating the case for Germany and are under the delusion that it is strengthened by their reputations, the reticence and discretion of German financiers in hiding the true nature of their operations are quite uncanny.

These German financiers who work in foreign countries do not conform to any type we know. They are utterly unlike the adventurous spirits of fiction, who, with a craving for independence and a blameless desire to get rich, go abroad to seek the opportunity which, after years of wasted endeavour, at last comes and enables them to show their grit and superiority and forge to the front. Our Germans are quite different. Having been carefully trained in the language, history, physiography and industries of the country they are destined to occupy, and having learned the most approved methods of finance and of organisation, they are then sent out by one of the powerful Industrial Banks to a district which has been carefully studied and prepared for their arrival. They go there with all the proper introductions and the financial backing of those who sent them, and they proceed to found a financial institution, probably an Industrial Bank, to which they at once give a name which suggests a local origin or at any rate avoids all suspicion of German influence. Thus we have a Banca Romena at Bukarest, a Creditna Bank at Sofia, a Banca Commerciale Italiana at Milan, and, what is even more mystifying, a Banca Russa at Genoa. All these Banks are of German origin, but do not betray it in their names; and the same procedure is followed in Austria, Switzerland, Belgium, Russia, or any other country to which German capital is attracted.

Having founded the Bank, our German financiers see to it that the control and management remain in their hands, and that Germans are appointed to the responsible posts on the staff; but otherwise, to the best of their abilities, they will endeavour to secure local notabilities as shareholders or even directors. This is useful in obtaining further capital and desirable business

connexions; and, above all, it goes a long way to give the enterprise the local or national appearance which the name usually implies. In the course of time the preponderating German influence will no doubt be suspected. If it creates difficulties, it is quite easy for the parent Bank to transfer the German interest in the undertaking, which we will suppose to be in Russia, to a Bank, Belgian in name, but equally under German control; and the preponderating influence will then appear to be Belgian. The procedure is sometimes varied by creating a pseudo-international Trust, subscribed to by financial institutions apparently foreign but really under the control of the parent Bank. In extreme cases German financiers have been known to go so far as to part with the whole of their shareholding, except the amount necessary for the qualification of the directors, retaining, however, the control and management for which they had made themselves indispensable. As we shall see, they can even then be of considerable use to the Fatherland. The investigator is so bewildered by these financial complications that, despairing of getting to the end of German influence, he probably overstates it; but for this overstatement the devious methods of German finance are alone responsible.

In Italy the main agency for German economic penetration has been the Banca Commerciale Italiana. There has been in the last twelve months a very serious agitation against this Bank; and Dr Preziosi's pamphlet, 'La Germania alla conquista dell' Italia,' gives in detail the evidence of its German origin and management and its extraordinary domination of the economic situation. The Bank, while not denying its past and admitting the extensive ramifications of its influence, has in a halfhearted way made several attempts to prove that, even prior to August last, the management had been transferred to Italians. Its most reasoned defence was published in March last in a London daily paper which had reviewed Dr Preziosi's pamphlet. It is certainly curious that the Bank should have chosen London for the publication of its defence, as in August last, at the date of the opening of the war, the bulk of the employees and all the managers of the two London branches of the

Bank were enemy aliens. Dr Preziosi dealt trenchantly with the defence in his second pamphlet, published in April last. Though he possibly overstates the case, in essentials he appears to be right; but this is not an opportune moment for continuing the controversy. Since April Italy has gone to war; and, as a result, the Bank must have lost the services of many of its most competent managers and of most of its highly trained staff, whom it will be difficult to replace. Moreover, its past pro-German reputation must now add to its difficulties; and, as directly and indirectly a vast amount of Italian savings is dependent on the continuance of the Bank's prosperity, one would not wish to say anything which might be regarded as hostile. On the contrary, one hopes that, with new management and new methods, it will secure not only its own prosperity but that of the industries dependent on it.

It is not, however, with the present or the future of the Bank that we are now concerned, but with the past which is already part of the industrial history of Italy. In the early days of the Triple Alliance Crispi endeavoured, with the approval of Bismarck, to induce German bankers to support the market for Italian bonds, which were at the time attacked on the Paris Bourse. The support was given grudgingly; and it was intimated to Crispi that, if German bankers were to interest themselves in Italian securities, there should be some institution founded which would enable them to keep in touch with the financial condition and development of the country. This led in 1894 to the formation of the Banca Commerciale Italiana with the very modest capital of 200,000l., subscribed to the extent of 74 per cent. by German and Austrian and the balance by Swiss and Italian bankers. Certainly, when Crispi encouraged the formation of the Bank, he did not foresee that in twenty years it would have a capital of 6,240,000l.; and that, Working with other institutions under German management, such as, e.g., the Credito Italiano, it would dominate the economic situation. It is, however, to be noted that, very shortly after the formation of the Bank, Sonnino, who was Crispi's Minister of the Treasury, had his suspicions aroused and refused to countenance some of the Bank's claims to exceptional recognition.

The Bank has recently informed the public that, of the present capital of 6,240,000l., 63 per cent. is owned by Italians, and that the German-Austrian holding has been reduced to 2 per cent., the balance being in the hands of investors described as Swiss and French. There is a Board of 33 directors, which, before the agitation made itself felt, consisted of 15 Italians and 18 foreigners. Dr Preziosi makes a great point of the fact that, whereas the foreign directors were trained financiers representing important banks, such as the Deutsche Bank, the Dresdner Bank and the Diskontogesellschaft-and in this connexion we may note that the Berlin Bank für Handel und Industrie was at the time represented by no less a personage than Herr Kaempf, the President of the Reichstag-the Italian directors represented merely wellknown aristocratic families and political interests. This point does not appear to be very important, because only very general lines of policy could be settled by a Board of directors living at very considerable distances from the company's office. The real work had to be done by the resident Managing Directors; and, until the last few months, Italians have as far as possible been excluded from these posts. It is no secret that the real work has been done by three extremely competent men, Herr Joel, who has been on the management from the start, Herr Weil and Herr Toepliz; and their names appear and reappear in the annals of the Bank and of the subsidiary companies which it has founded. These men deserve well of the Bank, for to them it owes the extraordinary power which it has attained. The fact that Italian

Industry is glad to be rid of them is no discredit to them, for they have acted according to what they considered to be their duty. The new management will find it a very difficult task to obtain efficient substitutes for them and for the staff they have trained. In the writer's opinion the initial mistake, from the Italian point of view, in the formation of the company was the admission of Italians to the subscribing syndicate and to the Board of Directors. No one could have objected to foreign bankers starting in Italy a 'maison de vente,' to which their clients wishing to invest in Italian securities could be referred. The association of Italian directors, as the character of the individuals selected throughout has

shown, was for the purpose of attracting the Italian investing public and obtaining political influence. In the course of time and with the extension of the company's operations, that influence has become so great as to be dangerous not only in the world of industry but in that of politics, of the Press and of administration. Readers interested in this point may be referred to the 'Rivelazioni postume alle memorie di un questore,' published in Milan in 1913 before the agitation against the Bank had commenced.

The Bank's campaign of economic penetration was greatly facilitated by the fact that Italian industry was mainly carried on by a large number of limited liability companies with relatively small capitalisation. Shareholders all over the world are notoriously inattentive to their interests; but this, for reasons we shall mention, is far more the case in Italy than elsewhere. There is not in Italy any one pre-eminent financial and residential centre like London and Paris, where all companies have their offices and hold their meetings, and where a substantial body of shareholders can, if necessity arises, attend without difficulty. Italy has a number of centres; and the offices of the companies and the shareholders are spread over the whole peninsula. In the absence of an active financial press and of a serious treatment of finance in the daily press, Italian shareholders are singularly uninformed as to the management of the companies in which they invest. A common practice is for shareholders to deposit their certificates at the nearest branch of their Bank, with a document empowering the Bank to represent them at the meetings of the company, thus abdicating their power of control in favour of the Bank. Moreover, the law which is devised for the protection of minorities puts quite unnecessary difficulties in a majority getting its way. In these conditions it was easy for the Banca Commerciale, by purchasing a substantial block, though often only a minority, of the shares, to obtain control of a company. The Banca Commerciale is itself a case in point, as the German management has had no difficulty retaining control, though it is doubtful whether in recent years it could ever count on the support of more than a third of the shares.

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