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obliged to plead guilty, as he had been several times in power. Very much more happy was the position of Sgr. Prinetti, who scored a marked success when (Dec. 14) he explained fully the Franco-Italian Agreement with regard to Tripolitania, and made public (Dec. 20) his circular to Italian Consuls abroad on the measures to be taken with regard to emigration, and especially on all that concerned the exploitation of children's labour. The efforts of Italian diplomacy to obtain from Mr. Hay reparation and indemnities for the ill-treatment of which Italians had been the victims, especially in the States on the Gulf of Mexico, met with less success.

On December 22 the Chamber began its recess, after having voted the financial measures proposed by the Government. The duties on flour, which the Ministers had long promised to suppress, were gradually abolished. And in spite of the reduction in taxes the Minister of the Treasury made the grand announcement that the public works necessary to give work through the hard winter months could be executed without fresh taxation or loans. The year ended under a sense of great satisfaction. Italy realised with legitimate pride that her public finance was the most wisely managed of any in Europe ; that her Parliamentary debates had been idyllic compared with the storms which had disturbed the other Continental Assemblies; and, finally, that, in view of the term of the Triple Alliance in 1903, competing countries had made friendly advances and promises to secure her good-will—a situation as agreeable to a nation as to an individual.

CHAPTER II.

GERMANY AND AUSTRIA-HUNGARY.

I. GERMANY.

The great question of the Elbe and Rhine Canal, on which the Prussian Government was defeated in 1899 (see ANNUAL REGISTER, 1899, pp. 274 to 276), was again the subject of a violent conflict between the agrarians and the manufacturers throughout the year 1901. On January 9 the new Imperial Chancellor, Count von Bülow, described in the Prussian Parliament the policy he intended to adopt on this question. He said that he regarded it as the first duty of the Government to do its best to reconcile the interests of the agrarians with those of the manufacturing classes by means of a compromise acceptable to both parties, and to protect with impartiality agriculture as well as commerce and industry. He denied that the Canal Bill would either confer benefits on the western districts at the expense of the eastern, or on industry and commerce at the expense of agriculture. These interests were designed both by nature and by historical development to support each other. The west possessed an ancient civilisation, great energy and alertness, copious natural resources; the east was the cradle of the monarchy, and in the most critical period of German history, a century ago, had saved the Prussian State, and with it the German nationality. The object of the Canal Bill, with the supplementary measures now introduced by the Government, was to provide a system of inland waterways which would equally benefit all classes and all portions of the country, and would open a splendid market in the west for the agricultural products and the timber of the east. At the same time he announced that the Government would take care that the eastern provinces should obtain protection against foreign competition by means of tariffs—thereby hinting that the corn duties would be increased.

The supplementary measures to which the Chancellor referred were for a canal between Berlin and Stettin, one between the Oder and the Vistula, the regulation of the Warthe and the lower reaches of the Oder and Havel, and further works for developing the canalisation of the Spree. These concessions to the eastern provinces, combined with the promised increase of the corn duties, would, it was hoped, overcome the opposition of the agrarians to the bill, but Count von Bülow's speech was on the whole coldly received, not only by the agrarians, but by the Liberal Opposition, who objected to the increase in the price of bread which would be caused by the proposed augmentation of the corn duties. Moreover, the bill as amended involved a very heavy expenditure, amounting to a total of 389,000,000 marks (19,000,0001.), and one of the chief objections of the majority to the bill of 1899, which involved a much smaller expenditure, was that it would impose too heavy a burden on the finances of Prussia. An increase of the corn duties, as promised by the Chancellor, would, of course, be very acceptable to the agricultural classes, but he did not state what would be the amount of such increase, and it would have to be very considerable to induce their representatives in Parliament to waive their objections to the bill. An attempt was made by them on January 28 to obtain a categorical statement from the Government on the subject, but without success. In the debate which followed it was urged by the Conservatives that unless the existing duties on corn were very largely increased Germany would become exclusively a manufacturing and trading country ; that this was not expedient from a political point of view, as the peasantry form the backbone of the German Army and are by their loyalty and patriotism the strongest bulwark against the advance of Socialism ; and that the working-classes in the towns would not suffer from the increase in the price of provisions resulting from the proposed higher duties, as wages would go up in consequence of the increased purchasing power of the agricultural classes, and the consequently increasing demand for manufactured goods. The Radicals, on the other hand, argued that high protective duties would not benefit the agricultural labourers, but the landowners only ; that a rise in industrial wages would increase the cost of production and thereby diminish the quantity of goods sold and throw a number of workmen out of employment; and that a large increase of the corn duties would produce a tariff war with Russia and America, causing incalculable damage to German trade.

The bill was introduced in the Prussian Parliament on February 4, and was strongly opposed by the Clericals and Conservatives. The Rhenish Deputies objected to it because it did not make provision for the canalisation of the Moselle and the Lahn; the members for Silesia urged that the reduction in the cost of transport which would result from the construction of the proposed canals would enable English coal to compete with that from Silesia ; and the Conservatives alleged that Prussian finances would suffer not only on account of the great expense involved, but by the decrease in the profits of Prussian railways which would be caused by the competition of the proposed canals. After four days' debate the bill was referred to a committee for consideration.

The debate showed that the Conservatives had not in any way been conciliated by the prospect of an increase in the corn duties, and that their hostility to the Canal Bill was as great as ever, though most of the Landräthe who had been dismissed in 1899 for opposing the bill (see ANNUAL REGISTER, 1899, p. 276) were now reinstated.

The committee, owing chiefly to the obstruction of its agrarian members, sat for more than three months without making any substantial progress, the Government not having given any clear intimation of its intentions as to the contemplated increase in the corn duties on which the votes of the agrarians depended, though the Chancellor made no secret of his sympathy with the agrarians, and it was known that the Emperor was a warm advocate of the proposed canals. Under these circumstances the Government decided to drop the bill and close the Prussian Parliament (May 3), Count von Bülow stating that “in view of the course which the deliberations of the committee had taken, his Majesty's Government had regretfully been compelled to conclude that the anticipated understanding with regard to the Canal Bill is at the present time impracticable." This, of course, was a triumph for the Conservative party, to which the representatives of the agrarians in the House belong, and which is the strongest party in the Prussian Parliament, while their allies, the Clericals, are the strongest party in the German Parliament ; and there was no chance of obtaining a majority for the bill by a dissolution, for the Conservatives and Clericals in the country were as strongly opposed to the bill as those in the House.

The Prussian Ministry having thus sustained a severe defeat, its leading members—the Finance Minister, Dr. von Miquel, the Minister of Agriculture, Baron von Hammerstein, and the Minister of Commerce, Herr Brefeld-resigned. Baron von Rheinbaben, Minister of the Interior, was appointed in place of Dr. von Miquel; General von Podbielski, Director of the Post Office, in place of Baron von Hammerstein; and Herr Möller, an authority on commercial and industrial questions and a very able and experienced man of business, in place of Herr Brefeld. The most important of these changes was the removal from the field of Prussian politics of Dr. von Miquel, who was by far the ablest member of the Ministry, and had gained the favour of the Emperor to such an extent that he was known as “ the Emperor's man.” He was a great Finance Minister, but in general politics he was a disturbing element, continually sacrificing other members of the Ministry to his personal ambition and intriguing against those who did not in all points adopt his views. On his retirement he was promoted by the Emperor to the Upper House and granted the new Prussian Order of Merit, chiefly confined to members of the Imperial family. He died shortly after.

As shown above, the chief obstacle to the passing of the Canal Bill was the uncertainty as to the amount of the increased duty to be imposed upon corn ; and a conference of the representatives of the Imperial Government and of the Governments of the more important Federal States met at Berlin shortly after the closing of the Prussian Chamber to discuss the question of the establishment of a new tariff code. The result of their deliberations was embodied in a bill which was laid before the German Parliament in November. The preamble of this bill, while admitting that the commercial treaties of 1892 and 1894 had a considerable influence in promoting the commercial and industrial development of the Empire, attributed this development rather to the protection which was maintained by those treaties than to the reduction in duties which they effected. The balance of German trade in favour of imports was stated to amount to 1,200,000,000 marks, but of this amount 800,000,000 marks were accounted for by imports of raw materials, such as cotton, jute, silk, and indiarubber, and by imports of colonial produce, such as coffee, cocoa, and fruits, not produced in Germany. It was admitted that in order to develop industry and commerce it had been necessary temporarily to sacrifice in some degree the interests of agriculture, but the time had now arrived to make a change in this policy. Between 1882 and 1895 the number of persons employed in agricultural pursuits had declined from 43:38 per cent. of the population to 36:19, representing a total reduction in agricultural labour of 700,000 persons. This was attributed chiefly to the increase in the scale of wages in industrial establishments, which attracted the population of the country districts to the towns; and the result was that agricultural wages had also to be increased, thereby making agriculture less profitable. With regard to the commercial treaties which expire on the 31st of December, 1903, the preamble stated that the Government would endeavour to prevent any interruption of commercial treaty relations between the expiration of the existing treaties and the conclusion of new ones, but that if an interval should prove inevitable it would be highly desirable that the new tariff, with its high maximum rates, should be available for putting pressure on any Power which might adopt an unfriendly commercial attitude. It had not been deemed expedient to introduce a new scale of minimum duties for all items of the tariff, as in France, for it would not facilitate negotiations if foreign countries knew what were the best terms they could hope to gain by means of concessions to Germany ; but minimum duties had been fixed in the case of agricultural produce in order to meet the wishes of the German agricultural interest and to obviate the possibility of future conflicts on this point.

The following were the chief alterations in the German tariff proposed by the bill :

1. The duty on rye was not to be reduced in future commercial treaties below 50 marks a ton, that on wheat below 55 marks, that on barley below 30 marks, and that on oats below 50 marks ; and they might be increased by an “autonomous tariff”* up to 60 marks on rye, 65 on wheat, 40 on barley and 60 on oats. The importance of these duties may be estimated if we consider that the average prices of grain in Germany during the last years were : rye 145 marks a ton, wheat 180 marks, barley 168 marks, oats 147 marks. In future, therefore, the lowest duty on rye, wheat, and oats would be about a third of their price. Under existing commercial treaties the duties were only 35 marks on rye and wheat, 20 on barley and 28 on oats.

2. Horses were to pay a duty varying from 30 to 300 marks, according to the value of the animal.

3. The duty on horned cattle was raised from 9 to 25 marks on each animal, and that on meat from 20 to 30 marks per ton. Considerable increases were also made in the duties on vegetables, seeds, hops, fruit, poultry, lard, butter, cheese, and eggs.

4. The duties on industrial products were also nearly all aug. mented, though not to the same extent as those on agricultural products. Of the imports from the United Kingdom, valued at about 28,000,0001. in 1900, no less than 25,000,0001. worth were affected by the bill.

The announcement of the new tariff produced a storm of *Goods imported from countries which have concluded commercial treaties with Germany pay the duties fixed by such treaties ; goods imported from other countries pay those fixed by the autonomous tariff. There are very few countries, however, which have no commercial treaties with Germany. The main distinction between the autonomous tariff and those fixed by treaty is that the former is determined by a law, every paragraph of which has to be passed by the German Parliament, while commercial treaties are concluded by the Emperor after having been approved by the Federal Council, and are only laid before Parliament after they have been concluded. In such cases the whole treaty must be either accepted or rejected ; Parliament cannot alter any details of it. It was accordingly stipu. lated in the bill that reductions in the tariff should not be made by treaty below the minimum rates stated above.

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