Treasury notes does not complete the sum of the Governmental assistance to the country in the way of providing money,' since in other ways there has been a great extension of bankers' credit, the chief form of modern money. Even the war loan was made the basis of the most easy borrowing from the Bank of Englandultra-Teutonic in its easiness.

That such and so great an inflation of currency and credit should raise prices, including the prices of food and other necessaries, seems never to have entered into the minds of any one in authority, The Cabinet Committee appointed to enquire into the rise of prices issued a statement in which eleven points were put down for investigation, but the inflation of the currency was not even mentioned. The check to the issues of the notes in January was the only sign that this old way of paying new debts is not to be indefinitely continued. The worst of it is, as all experience shows, that a rise in prices due to currency causes is never detected until it is so marked and general that the ordinary abuse of the speculator and the shippers and the railways and all the other brigands seems unequal to the situation.

There is, however, one way in which an inflation of prices is forced on the attention of the great financial authorities. Our imports for January 1915 were in aggregate value practically the same as for January 1914, whilst the exports declined 40 per cent. If the rise in prices encourages imports and checks exports, then there will in time be a difficulty in meeting the foreign payments, and the foreign exchanges will again be dislocated in a way that the Government will find not so easy to correct. Early in the war Germany began to feel this difficulty in meeting foreign payments, which is of course so far a comfort to us, but it recalls the old proverb about the house of one's neighbour being on fire: 'proximus ardet Ucalegon.'

J. S. NICHOLSON.

Art. 6.--THE BALKAN STATES AND THE WAR.

THE European conflict began in the Balkans; it will probably end in the Balkans, for the closing period of this gigantic struggle will inevitably be protracted by fresh war in those regions, unless the present artificial and unnatural distribution of territories in the Peninsula can be replaced by a more reasonable and equitable arrangement in conformity with the principle of nationalities. Continued misery and unrest in the Balkans, the direct result of alien and unsympathetic rule, after threatening the peace of Europe for more than a generation has at last brought about the great conflagration. To those who repeatedly pointed out the danger and denounced the uselessness of ineffective remedial measures the dire catastrophe brings a melancholy justification. Like Cassandra, they have witnessed the fulfilment of their prophecies. And it may be predicted with equal certainty that, should the European conflict be followed by new arrangements ignoring the rights of nationalities in the Balkans, another struggle in those regions will inevitably ensue.

The ultimate cause of all the trouble, the 'fons et origo mali,' will be found in the Treaty of Berlin, the proximate cause in the Treaty of Bucarest. At the close of the war of 1877-1878 Turkish authority in Europe had been practically extinguished. An effort to effect its partial restoration was made by Lord Beaconsfield, aided by Count Andrassy, who had already secured Bosnia and Herzegovina as Austria's share in the Sick Man's inheritance, and by Prince Bismarck, who declared that the Balkan Christians were not worth the bones of a single Pomeranian grenadier. The denial of Crete to Greece was a crime which entailed a heavy retribution. The appropriation of Bosnia and Herzegovina by Austria was a gross wrong to Servia, which had twice taken up arms on Russia's side. But the treatment accorded to newly-born Bulgaria was the greatest crime of all. Scarcely two million Bulgarians received political independence under Turkish suzerainty; some 800,000 were given autonomy under a Turkish governor; while more than a million unhappy beings were handed back to

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Turkish tyranny with nothing to console them but the promise of reforms. The big Bulgaria' of the Treaty of San Stefano had been correctly delimited-except in some small particulars-on ethnographic lines and represented a united nation; the little Bulgaria which issued from the dissecting room at Berlin was a maimed and mutilated remnant. The darkness of night fell once more over Macedonia, which for a few brief months had witnessed the dawn of liberty.

The seeds of future trouble were thus sown, and the doleful harvest was reaped during the next three decades. For several years the Macedonian Bulgars patiently awaited the promised reforms; it was not till 1893 that, despairing of aid from the Powers, they began to form revolutionary associations. For ten years the struggle against Turkish oppression went on; in 1903 it culminated in a general insurrection of the Bulgarian population in the Monastir Vilayet. A merciless repression followed; the Powers were at last compelled to intervene ; and Austria-Hungary and Russia, the 'two most interested Powers,' were allowed by Europe to try their hand at reforms. The 'Mürzsteg programme' which they elaborated proved, as might have been expected, a total failure. The two Powers were mainly concerned in prosecuting their . rival interests; in January 1908 they finally fell out with each other, and their place was taken by Great Britain and Russia. The Anglo-Russian scheme, the 'Reval programme,' drawn up a few months later, seemed at last to ensure effective European control in unfortunate Macedonia. But this was precisely what the more patriotic, or rather chauvinistic, element among the Turks was determined to prevent. The Reval project had scarcely been announced when the Young Turk revolution broke out in the Monastir region under Enver Bey and Niazi Bey; the Constitution,' promulgated in 1876 with the object of thwarting foreign interference, was proclaimed once more for the same purpose-together with the 'perfect equality of races and creeds,' a venerable phrase embodied in the Hatt-iSherif of 1839 and since then repeated ad nauseam on innumerable occasions. The Powers, believing or affecting to believe that all would now go well with Turkey and her Christian subjects, committed the unpardonable Vol. 223.—No. 443.

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error of withdrawing their officials from Macedonia, thus sacrificing at a stroke the whole position acquired at the cost of a naval demonstration and five years of laborious diplomacy.

The consequences of this blunder were soon evident. Allowed a free hand in Macedonia, the Young Turks, who had been fêted in London and Paris as the harbingers of civilisation, proceeded to stretch the races of that country on a Procrustean bed. Bulgarians, Greeks, Vlachs, Serbs, Albanians-all alike were expected to renounce their nationality and to become 'good Ottomans.' In order to facilitate their conversion a general disarmament was decreed, and was carried out with the utmost barbarity. A conspiracy of silence was maintained in the European press; and the world knew little of the horrors of 1910 and 1911. But a community of misfortune drew the Christian races together; the formation of a Balkan alliance, hitherto a dream, became a reality; and the battle of Lule Burgas sounded the knell of Turkish domination in Europe.

Had the statesmanship of the victorious Balkan nations proved equal to the task of providing a reasonable division of the liberated regions on the basis of nationalities, the great European conflict might have been averted or at least postponed for several years. The secular feud between Teuton and Slav, the resolve of Germany to challenge the maritime and commercial supremacy of Great Britain, the yearning of France for her lost provinces, the centrifugal forces at work in the Austro-Hungarian monarchy, and the intolerable burden of increased armaments, might have continued to threaten without disturbing the peace of the world for another decade or even another generation. The partition of Africa, an immense achievement, had been effected without a European war. The separation of Norway from Sweden had been accomplished without the shedding of blood. If time could be gained, it was at least conceivable that the advance of democracy and the growth of a universal conscience might have finally triumphed over old-world militarism. However this may be, the golden opportunity for effecting a settlement of the Balkan Question was lost when the conference of the delegates from the various states which assembled

in London in December 1912 broke up without arriving at an agreement.

The inner history of what then took place has yet to be written. Between Servia and Bulgaria there was practically nothing to discuss, inasmuch as the territorial question between the two countries had been settled in the minutest detail by the secret annex' to the treaty of Feb. 29, 1912. Between Bulgaria and Greece no arrangement existed; and it was of vital importance to the future of the two countries, to that of the Balkan Alliance as a whole, and, indeed, to the peace of Europe, that a settlement should be arrived at without delay. Unfortunately the very moderate proposals put forward by M. Venizelos were rejected by his Bulgarian colleague, whether proprio motu or by order from Sofia it is hard to say; the real question at issue was the possession of Salonika, for which the Greek delegate was ready to make large concessions. At the same time the Bulgarian representative met the claims of Rumania to 'compensation' for her neutrality during the war with proposals which can only be described as derisory. It might, of course, be argued that Rumania, which looked on unmoved while the sister states staked their existence in the cause of humanity and freedom, was entitled to no compensation whatever; but considerations of this kind find no place in practical politics. The virtual rejection of the Rumanian claims derived some palliation from the unwise employment of menaces by Rumania, but it was a blunder. The question was afterwards settled, as it seemed, by an award of the ambassadors at Petrograd, accepted by both sides, but subsequently denounced by Rumania.

Had time been allowed for the protracted bargaining so congenial to the Oriental disposition, it is by no means improbable that an arrangement might have been arrived at between Bulgaria and Greece, and that the second Balkan war, with all its lamentable consequences, would have been averted. The real cause of the second war-the repudiation by Servia of her treaty with Bulgaria-would in that case never have taken place. But the work of the Conference was cut short by Enver Bey's coup d'état at Constantinople; and the Balkan States unanimously resolved to continue the