The clause dealing with fines and imprisonment for violations of contract was decidedly partial to the employer. Any employer who, without legal cause, has his labourers escorted into the field by gendarmes and forced to work, is fined 600 kronen (251.), and the same fine is imposed upon employers who engage hands still under contract to some one else. The labourer, however, who contracts himself to two masters is to be imprisoned for fifteen days and fined 100 kronen, and the term of imprisonment is extended to sixty days if he fails to appear in the field, or, when escorted to it, refuses to work, or wilfully does bad work, or leaves before time is up. The same penalty is imposed upon every one who induces agricultural labourers to break their contracts, or who, by arranging meetings, spreading false news, using intimidation, or distributing or promising money, interferes between employed and employer; and not only is such interference punishable after the contracts are made, but fines and imprisonments are imposed upon those who, by combination, induce labourers not to take out certificates, who lend money on such certificates, or accept them as pledges for food or drink. There can, of course, be no question of trade unionism under such conditions.

In foreign affairs Austria-Hungary, thanks to the skilful management of Count Goluchowski, achieved a series of triumphs which went far to compensate her for her internal troubles. The compact which he had entered into with Russia under which the two Powers mutually agreed to abstain from exercising one-sided influence in any of the Balkan States was faithfully observed, and this fact had undoubtedly a powerful effect in localising the war between Turkey and Greece. The compact above referred to was concluded during the visit of the Emperor and his Foreign Minister to St. Petersburg in April, though an informal agreement to the same effect had been arrived at some months previously between Count Goluchowski and the late Prince Lobanoff. At the same time the relations of Austria-Hungary with Germany were most cordial, as was shown by the enthusiastic reception of the German Emperor at Buda-Pesth in September and the effusive cordiality with which he spoke of the Hungarian nation on that occasion. The only Power with which Austria had any differences was Turkey. On November 15 it was found necessary to threaten a bombardment of Mersina if the officials who arrested and assaulted the agent of the Austrian Lloyd at that port were not dismissed and the demands of the Turkish Railways Exploitation Company," which has its seat in Vienna, as to the construction of a harbour at Dedeagatsch and concessions for Turkish lines of railway, were satisfied. The Porte at once yielded, and "the incident was closed."

When the Austro-Hungarian delegations met in November an important reform was brought before them and passed unanimously, for the improvement of the position of the non

commissioned officers of the Army. They were already in the Austrian service granted bounties, and, after quitting the Army, they had a right to a lower class of Government appointments in the Civil Service; but the attractions were evidently insufficient, as both in the regular Army and in the landwehrs of Austria and of Hungary there was a great deficiency of trained non-commissioned officers. It was now decided to introduce progressive bounties in three classes, to commence after the third, sixth, and ninth year of service respectively, and, in each case, to grant a leaving bonus, also progressive according to the number of voluntary service years. In addition to this, the non-commissioned officer, of all grades, will in future have an assured permanent position, which he will only lose through judicial sentence. It will no longer be possible for a captain to send away a sergeant whom he dislikes, and only the continuance after twelve years of voluntary servicethat is, of fifteen years with the colours-will be made dependent on the consent of the regimental commander. The appointments in the Civil Service, to which a former non-commissioned officer was entitled, will be, moreover, considerably extended; and county and municipal appointments of a certain class will be also reserved to him as far as possible.

In the speech from the throne to the delegations particular stress was laid on the new compact with Russia, as to which the Emperor said: "The repeated meetings which I have had with the Emperor of Russia convinced me of the agreement of our views, and upon them has been founded a relation of mutual confidence between our countries, the consolidation of which cannot but promise well for the future;" adding, however, that the treaties of Austria-Hungary with Germany "form, now as before, the unshakable basis of our policy, and it is the constant endeavour of my Government to maintain and to strengthen that basis." These statements were further developed by Count Goluchowski in his speech on the foreign policy of the monarchy. It began with a criticism of British policy, and closed with the prophecy of the fierce struggle Europe will have to fight out against transoceanic competition. Between the two extremes was a masterly defence of the European concert, and the first authentic statement of the origin and purport of the Austro-Russian understanding, with supplementary remarks as to the relations with Greece, Turkey, and other countries. The essential difference of views between the British and Austrian Cabinets had, he said, afforded the occasion for a rapprochement between Austria and Russia, and after this was effected the two countries laid down a joint programme for matters in the East which they were jointly carrying out. This programme would finally lead to European defence against a common danger, and as in this question, like in others, England differed from the continent, the defence would be directed also against England, so that the narrower term continent, in

stead of Europe, would be the more accurate reading. Without ceasing to be the friend of England in a general sense, Austria would in future act as the friend of Russia, and the latter Power as the leader of the continent.

The two accusations against England were put in the mildest terms, and with the explanation that the British Cabinet was not able to act otherwise than it did. It rejected Count Goluchowski's proposition to proclaim a blockade of Crete at the beginning of the disturbances, and the Austrian Minister explained the rejection by the fear lest the measure should be interpreted as a service to Turkey; public opinion in England, he added, was just then particularly excited against Turkey in consequence of the Armenian massacres. Austria then made another proposal which would have prevented the arrival in Crete both of Greek volunteers and of Turkish troops; but England was not reassured, and the proposal was dropped, because, the count said, "it seemed not advisable to us and to the rest of the continental Powers to forego England's cooperation." The blockade was nevertheless resorted to, but then it was too late. At another stage of the negotiations Germany proposed the blockade of Greek ports, by which, Count Goluchowski said, the kingdom would have been forced to abandon its suicidal adventure. This time England did not categorically refuse, but she made conditions, of which the discussion lasted so long that meanwhile war between Greece and Turkey broke out.

These were the count's two accusations, which amounted to making England responsible for the Greek war out of too great a consideration for Greece. That kingdom was not spared in Count Goluchowski's narration of events; on the contrary, its Government was described as too weak, the war as a mad undertaking, and the situation after the war as desperate, leaving Greece at the mercy of the victor. The charges afterwards made in Greece against Europe, to which the kingdom has every reason to feel obliged for being saved by the concert, were described as showing a diseased state of mind.

The following were the words used by the count as to the European concert, the relations with England and the relations with Russia :

"The concert has come through the ordeal of fire in such a way as to remain henceforward a successful factor in the settlement of Eastern affairs. Greece is wrong in complaining of hard conditions of peace. What has been accomplished by the concert is one of the best achievements of diplomatic skill. The negotiations regarding Crete are now in a fresh stage, which renders it necessary to maintain reserve. The object of these negotiations, which is to grant Crete a large measure of autonomy under the Sultan's sovereignty, with guarantees for the Mahomedan population, will, it is expected, be attained..

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Although we may often have found ourselves in a certain. antagonism with England concerning the treatment of certain questions, these divergences of opinion have not been able to provoke any coolness between us. We may have regretted the objections which the British Government, giving heed to public opinion in their own country, raised against the execution of certain measures which, in our view, would have sometimes prevented complications; but this has assuredly exercised no prejudicial effect upon the excellent relations in which we stand to the British Empire, and which we desire also to maintain in the future. Our intimate and friendly relations with Roumania are shown by the recent visit of the King and Queen to Buda-Pesth. We entertain sympathy and friendship for the other Balkan States in so far as each endeavours to show itself accommodating towards us and to establish friendly relations. Our successful co-operation with the St. Petersburg Cabinet at the outbreak of the Turkish-Greek conflict, was the beginning of the satisfactory development of our relations with Russia. We had a loyal explanation, which resulted in mutual conviction that after all no differences existed between us which, with some goodwill, could not be adjusted. It was agreed that we both strove after maintenance of the status quo, that Russia rejected the idea of any conquest in the Balkan Peninsula as decidedly as ourselves, and that on both sides the firm resolution exists to respect the independence of the single Balkan States and their right themselves to mould their destiny, with the exclusion of any preponderant influence upon their internal affairs either by ourselves or by Russia. As soon as this concord of views was established, the ground for an understanding was at once cleared; we soon came to the conclusion that our interests do not conflict, that we, the two Powers first to be affected by Eastern troubles, have, on the contrary, every reason for holding together and for remaining in constant touch with each other, with the object of preventing the degeneration of movements as they arise, and of putting an end to the present doings of speculative spirits in the Balkans, which always tried to play us one against the other in their interest. Presupposing that these principles will be strictly adhered to, we shall always be ready to foster the closest understanding with Russia, and we consider so happily initiated a relation with her as a new and potent guarantee of European peace."

Replying to a question, Count Goluchowski subsequently said that the agreement with Russia makes it a condition that neither of the two Powers should exercise a separate influence upon the Balkan States. This statement was received with enthusiastic applause both by the Austrian and the Hungarian delegations, and one of the delegates, referring to the new agreement with Russia, described it as "a triumph of statesmanship."

CHAPTER III.

I. RUSSIA.

THE year 1897 was a prosperous one for Russia, both financially and politically. In the Budget Estimates, the ordinary revenue was set down at 1,318,366,495 roubles, and the ordinary expenditure at 1,284,858,862 roubles, showing increases of 78,894,800 roubles and 53,770,448 roubles respectively as compared with 1896. The estimated excess of revenue over expenditure was thus 33,507,633 roubles. The extraordinary revenue was set down at 3,808,627 roubles, and the extraordinary expenditure at 129,112,196 roubles. The whole of the latter amount was to be devoted to railway construction, and the deficit remaining after the employment of the extraordinary revenue, was to be covered by the surplus in the ordinary Estimates, and an advance of 91,795,936 roubles from the cash in the Treasury. On January 15 an imperial ukase was published, ordering that golden imperials and half-imperials should be minted with the inscriptions "fifteen roubles" and "seven and a half roubles" respectively, without any change in the existing fineness or weight of those coins. The relation of gold to paper currency was thus fixed, but the new gold coins, and the equally new silver values, were not readily taken up by a public accustomed to the superior convenience of paper money. Measures were consequently taken to force the gold into circulation. All the principal Russian banks were compelled in making their payments to give 20 per cent. of the amounts in gold. The Government offices of all kinds also distributed a large proportion of gold and silver, so that coins which ten years back were practically unknown outside the Custom House came into general circulation.

The issue of these imperials and half-imperials placed gold and paper on a level for purchasing purposes, and the readjustment of the gold guarantee for the paper issued was also dealt with in an ukase issued by the Czar from Poland during his stay at Bielowiez. According to the new law, the issue of paper money up to 600,000,000 roubles must be guaranteed by a gold deposit of half that amount; paper issued beyond 600,000,000 roubles must be guaranteed in full, rouble for rouble. Out of 1,068,000,000 roubles worth of paper issued, 59,000,000 was held by the State Bank, leaving 1,009,000,000, or over 107,000,000l. worth sterling, in circulation. The gold deposit required to guarantee this amount was about 710,000,000 roubles, whereas the actual deposit was 750,000,000. The State Bank had other gold at its disposal, apart from this special guarantee fund, amounting to 386,000,000 roubles, so that paper money could still be issued to a very large amount