Marinelli, a member of the Fascist Party Directorate, on suspicion of connivance in the murder. Signor Mussolini likewise relinquished the Portfolio of Home Affairs to Signor Federzoni, Minister of the Colonies. Italian public opinion was deeply stirred by the resolutions of sympathy abroad with Signor Matteotti's family and his political party, notably that of the British Labour Party in Parliament, and on June 24 Signor Mussolini made a powerful speech to the Senate denouncing the deed and its perpetrators, announcing condign penalties, and promising stringent measures to restore constitutional order in the country. He secured a vote of confidence in the Upper House by 225 to 21 votes with 6 abstentions, and repeated his assurances in the Chamber with a formal promise to bring all the guilty, whoever they might be, to justice.

The Minister of Finance, Signor De Stefani, in making his financial statement for the year ending on June 30, reviewed the position of the country, emphasising the retrenchments which had been effected, and which in his own department had meant the dismissal of no fewer than 500 officials; the diminution of unemployment from an average of 399,000 in 1922 to 177,000 in April, 1924; and the increase of railway revenue, and of bank and savings bank deposits. Extraordinary war taxes amounting to 51,000,000 lire had been abolished, the progressive real estate taxes had been fixed at an average of 16 per cent., and further facilities had been introduced for the redemption of outstanding annuities, of a kind which foreshadowed their early extinction. Indirect taxation also showed reductions in the alcohol excise. The abolition of the highly unpopular 10 per cent. excise on wine grown and consumed by the peasantry had led to a loss of revenue, which was met by a steep increase-2 lire per kilo-on coffee, and the same on sugar, imposed by Order in Council in the autumn. This tax has had much to do with the growth of discontent against the present régime. Signor de Stefani concluded his speech with the statement that the deficit had fallen to 800,000,000 lire, and that he estimated a complete balance of revenue and expenditure in 1925-26.

The Address in reply to the Speech from the Throne was transmitted to the King by a deputation of both Houses, and the King accepted it with a speech urging national concord in the trying time through which they were passing. The ministerial changes initiated with the appointment of Signor Federzoni to the Interior were completed with the substitution of Signori Di Scalea Casati (Public Instruction), Sarrocchi (Public Works), and Nava (National Economy) for Signori Carnazza, Gentile, and Corbino respectively.

Meanwhile, as search for Signor Matteotti's body had so far proved fruitless, conjecture and suspicion had a free rein; the Opposition deputies announced their refusal, pending reforms, to attend Parliament, and press polemics assumed a tone of unprecedented violence, which determined the Government to

enact a stringent Press Law. Such a law had already been drafted by Signor Mussolini in the exercise of the dictatorial powers granted to him by the previous Parliament and relinquished by him at the close of 1923, but it had remained in abeyance, not having been submitted for ratification to the present Chamber. It was now rendered operative by Order in Council on July 8. It placed all press misdemeanours under the jurisdiction of the Prefect, removing them from the cognisance of the ordinary courts. The measure, if justifiable on grounds of emergency, was open to objection as permitting the interference of the Executive with the judiciary; moreover, the manner of its application, which was frequently on party lines, cannot but be held largely accountable for the ensuing unrest in the country, which was further intensified by the delays in the investigation of the Matteotti murder, and also by the peculiarly horrible details which now came to light and which worked up public feeling to a paroxysm of indignation.

Signor Mussolini showed considerable skill and great moderation in handling the somewhat delicate position which had arisen in the Italian-Swiss Canton Ticino in consequence of a nationalist agitation which was alleged to have its source in Fascist circles, and which magnified trifling incidents into national slights. Friendly explanations were given, and the incident closed with an interchange of Notes on April 18 between the Swiss Minister in Rome, M. Magnière, and Signor Mussolini. The new Tangier statute in which Italy had expressed the desire to share proved disappointing to Signor Mussolini. The French Government interpreting literally the original tri-partite agreement between Great Britain, France, and Spain, did not see their way to meet Signor Mussolini's view that, the war having altered the balance of power in the Mediterranean, any new terms should include Italy's participation. On being furnished with the text of the new Tangier statute, Italy, on June 10, notified her refusal to subscribe to its conditions, at the same time despatching a force of carabinieri to the Italian Legation at Tangier for the protection of the interests of her nationals.

The visit of Ras Tafari on June 18 drew attention to the development of Italy's East African dominion and her relations with Abyssinia, and also to her progress in restoring her Lybian conquests. The re-occupation of Tripolitania, commenced early in the year, was carried steadily forward, while the summer campaign with the re-occupation of Bengasi and the Cyrenaic coast towns and the repulse of rebel tribes towards the Egyptian frontier showed the Italian determination to allow no border raiding. The occupation of inland oases aroused a certain anxiety in Cairo, and rumours of a coup de main on Solum became rife. The anxiety was allayed by the Italian offer of a boundary commission, negotiations for which have been opened by the Italian Legation at Cairo.

Signor de Stefani, Minister of Finance, Signor Nava, Minister

of National Economy, and Marchese della Torretta, Italian Ambassador in London, attended the opening session of the Reparations Conference on July 16 in London. Whilst the Italian reparations claims necessarily occupied a secondary place in the Dawes Report, Signor Mussolini's known position in the Ruhr question enabled the Italian delegates to play an important part in bringing about the final agreement. The mission returned to Italy on August 20, and Signor Mussolini signified the Government's approval two days later. The Italian Delegation at the General Assembly of the League of Nations, September 1 to October 2, took a prominent part in the debates, showing by their attitude that Italian public opinion had come round to a greater appreciation of the League as a practical factor in political relations. The security and disarmament debate was signalised by a powerful speech from Signor Schanzer (September 8) in defence of sovereign state rights, and the Italian-Swiss Treaty signed on September 20 was submitted by Signor Salandra for registration. The general disarmament and security protocol agreed upon by the Third Commission, September 22, and carried by unanimous vote of the General Assembly, had been accepted ad referendum by the Italian Delegate, Signor Salandra, and Signor Mussolini upon receipt of the text declared that the question of Italy's adhesion was a subject for further deliberation. The Italian offer to make the seat of the proposed International Institute of Law in Rome was accepted unanimously on September 26, and the Assembly before adjourning accepted the invitation to hold the winter meeting of the League Council in Rome, on December 8.

The lapse of several months had not by the end of the year allayed the feeling aroused by the Matteotti murder; outbreaks of violence and inflammatory speeches continued to work with cumulative effect upon public opinion. Notwithstanding Signor Mussolini's formal assurances of "normalisation," on the strength of which the Senate had given him a vote of confidence with practical unanimity in June, Government action in the matter appeared to the public to be tardy and reluctant. Signor Mussolini's fighting speeches to the Party Directorate, to bodies of operatives, and to volunteers, were answered by resolutions of Service Men's Associations demanding constitutional government. Proceedings at Fascist Councils and Liberal Opposition Congresses added fuel to the flames. The refusal of the War Veterans to take official part in the Fascist celebration of the March on Rome, October 28, was followed by reprisals on the part of the Fascists at the Armistice day celebrations in Rome and other cities on November 4. A certain measure of satisfaction was afforded by the swearing-in after long delay of the Militia, though this act was deprived of some of its significance by the expressed reservations of certain Fascist leaders. Public opinion therefore still remained discontented; and at the opening of the autumn Parliamentary session it was obvious that Signor

Mussolini's position was shaken. But his assurances to the Chamber secured him renewed votes of confidence. He realised, however, that a change of policy was necessary, and he has already given an earnest of his intentions by his proposed reform of the Militia, and by the new Press Law laid before the Chamber early in December, and intended to supersede the obnoxious emergency decree of last summer.

On December 5 negotiations were opened for a new trade agreement with Germany on the basis of most-favoured-nation treatment and reciprocity. A favourable issue is expected in the near future.

Just before the end of the year (December 20) Signor Mussolini electrified Parliament and the public by announcing that he intended to introduce a new electoral law, but he did not mention any details. Opinion in Italy regards the proposal as a leap in the dark, and it remains to be seen whether Signor Mussolini will weather the storm which appears to be brewing.

CHAPTER IV.

GERMANY AND AUSTRIA.

GERMANY.

THE French occupation of the Ruhr in 1923 had been disastrous to Germany without bringing substantial benefits to the occupying Powers, and its lessons were not lost on the statesmen of both sides. The Entente countries had learnt that the economic restoration of Germany was to be regarded not merely as a favour reluctantly and guardedly granted to an enemy and a debtor, but as a step dictated by sound economic principles and as the true basis of future friendly relations between themselves and a Germany, which had emerged from the Ruhr conflict with her unity unbroken. Germany on her side had to reconcile herself to the sacrifices of independence which would be required to secure an international settlement of her difficulties. She had learnt from recent events the dependence of her political status on international finance: her currency had been ruined, and the disintegration of the Reich was threatened as a consequence. She was faced with the fact that the financial support required to preserve her national unity could be obtained only through international co-operation.

Thus the ground was prepared on both sides for a better understanding and for a combined effort to restore Germany's financial and economic stability. This effort was successfully launched during the year, and will always be associated with the names of Stresemann, Marx, Luther, and Schacht in Germany, with the British and French Premiers, MacDonald and Herriot, and with the American, General Dawes,

When the year opened there were still some remnants of the movements of revolt which in various parts of the country had followed the defeat of the Reich in the Ruhr contest. The object of these movements was in some cases to obtain merely local autonomy, in others complete severance from the Reich. A number of Rhineland capitalists cherished the project of a separate note-issuing bank for this district; but the plan was foiled by the action of the German Government in making its consent depend on certain conditions which France refused to sanction, and the growing confidence which the German currency inspired soon took the wind out of all such efforts. In the Palatinate the Separatist movement was still carried on by a small band of adventurers who, under the protection of the French garrison, terrorised the inhabitants. The Bavarian officials in the country were powerless, as the police was disarmed. There was no other way for the oppressed and pillaged population to protect itself against the bandits than by taking up arms in its own defence. On January 5 the Separatist flag was hauled down in Zweibrücken. The French district governor had given his consent to this step, but the Separatist leaders induced him to withdraw it. The population thereupon proceeded to extremes; on January 9 Heinz Orbis, head of the so-called independent Palatinate Government, was, along with many of his comrades, attacked and shot. As the French Government could not bring itself to drop the rebel leaders, the English Government bestirred itself to put an end to a situation so discreditable for the Allies. The British Consul in Munich, Mr. Clive, was commissioned to investigate conditions and political feeling in the Palatinate. On the ground of his report, England declared that the Rhineland Commission had no right to recognise the autonomous Government of the Palatinate. France retorted on England's intervention by instituting an inquiry in the Cologne zone; but in spite of this, and in spite of the defence of his conduct set up by M. de Metz, its military representative in the Palatinate, it could no longer effectively protect the Separatists. The police were armed again, and the papers again came out. M. Poincaré stigmatised as a slander the statement that he had supported the Separatists. France, however, was dilatory in restoring normal conditions; the Separatist outrages lasted some weeks longer, and the administration of the country was not restored to the Bavarian authorities till February 17, and then only after bloody street fights in Pirmasens, in the course of which the rebels entrenched themselves in the Government House, had shown that no other course was possible.

The Bavarian Government, in spite of the proof which these events had given of its powerlessness, felt itself impelled at this time to press further on the attention of the Reich the federal principles to which it had obtained assent in the previous autumn. On January 4 it transmitted to the Central Government a memorandum in which it called for a thorough reform of