at Venice on the 9th October.1 On the 10th December M. Ninčić came to Rome to meet Signor Mussolini,2 and the experts repaired to the capital from Venice in order to refer to their principals the most important points on which agreement had not yet been attained. At this meeting the last difficulties regarding the use of the port and railway facilities of Fiume appear to have been overcome,3 and nine more conventions were initialled by the experts at Venice, subject to the approval of their respective Governments, during the last days of the year. Even after this, the experts resumed their labours on the 15th February, 1925.

The improvement in Italo-Jugoslav relations was visible at the same time in other fields. On the 7th June, for instance, the two Governments exchanged declarations that they would not intervene in the particular disturbances which were taking place at that moment in Albania, and a permanent self-denying ordinance to the same effect seems to have been agreed upon reciprocally by MM. Ninčić and Mussolini at Rome in October. Incidents, again, which at any time during the preceding years would have brought the two countries to the brink of war, were now disposed of with common sense and courtesy on both sides. For example, on the 4th May there were anti-Italian demonstrations at Sebenico and Spalato ; on the 24th June an Italian frontier post near Postumia was attacked by raiders from Jugoslavia and one Italian soldier was killed ; 6 on the 3rd July there was another frontier skirmish on the Gorizia sector, the casualties (two killed) being this time on the Jugoslav side. In each case, however, prompt apologies were tendered by the Government whose nationals had been in the wrong; 8 a joint commission was appointed to make inquiries and to study how to prevent such incidents from recurring; and on the Italian side, at any rate, these outbreaks seem to have been taken more calmly by public opinion than the much less serious affair in the Ticino.10 At the close of the year 1924 the Adriatic Question had every appearance of being an extinct volcano.

1 The Corriere della Sera, 10th October, 1924.

2 Ibid., 11th December, 1924.

3 Ibid., 14th December; The Times, 15th December, 1924.

4 For a list of these nine conventions, see Le Temps, 23rd December, 1924.

5 The Times, 8th May, 1924.

6 The Deutsche Allgemeine Zeitung, 27th June, 1924.

? The Corriere della Sera, 5th July, 1924.

9 The Times, 7th July, 1924.

8 Ibid., 14th May, 1924.

10 See Section (ii). above.

(iv) The Reconstruction of Hungary (1923-4).1

The project for the financial reconstruction of Hungary through the good offices of the League of Nations, which took shape in the course of the year 1923, was suggested by the previous reconstruction of Austria-an experiment which had been strikingly successful, at any rate in the first and most dramatic stages. The technical problem in its main features was the same-a rapidly depreciating currency and an unbalanced Budget; an inability in the financial, economic and political forces of the country to achieve unaided restoration '-and the solution found' was also in its main principles identical'. In their non-technical aspects, however, the problems differed widely. The reason why Hungarian reconstruction started so much later than Austrian was not only that the [economic and financial] need was less urgent, but that the political difficulties were much greater.' In fact, while the reconstruction of Austria had seemed such a forlorn hope from the economic point of view that the League might have despaired of attempting it if there had also been very formidable political complications, in the Hungarian case the crux lay not in the economic and financial situation, bad though that had become by 1923, but in the political factors; and thus the reconstruction of Hungary, though a less arduous technical achievement than that of Austria, had far greater political consequences, just because it involved, as a preliminary condition, the relaxation of a political tension which had governed the international situation in South-Eastern Europe since the end of the War of 1914-18. The economic and financial contrast between the Austria and the Hungary which had emerged from the War was thus described in 1924 by Sir Arthur Salter, who was one of the experts best qualified to make the comparison :

The new Austria is essentially a financial and industrial country. More than three-quarters of her population derive their living from finance, trade, and industry, less than a quarter from agriculture. The greater part of both her food-supplies and her raw materials requires to be imported from abroad. Hungary, on the other hand, has always been and remains above all an agricultural country: the bulk of her people are on the land. She is more than self-sufficient in the prime necessities of life. One result has been that the fall of the currency which, by depriving Austria of her ability to import, menaced her with imminent starvation, was not so catastrophic or disastrous for Hungary ;

For a general account, see the Supplement to the League of Nations Monthly Summary, May 1924.

2 For the Reconstruction of Austria, see Survey, 1920-3, pp. 311-28.

and, for the same reason, the fall of the Hungarian crown was less rapid than the Austrian. Ultimate disaster, if the fall was not arrested, was indeed inevitable, but it was not so imminent. This is not the only contrast. The new Austria left by the Treaty of St. Germain was an amorphous fragment of the older and greater Austria, with a capital comprising more than a third of the total population, with frontiers which became economic barriers separating her urban population from the sources of their food, her factories from their raw materials and their markets. Hungary, though reduced to one-third by the Treaty of Trianon, retained her essential character and configuration. She remained a producing agricultural country, with population and resources alike reduced, but capable of much the same economic equilibrium. And she retained a strong sense of local patriotism.

Considering the political turmoils through which Hungary passed during the three years immediately following the Armistice-the Liberal Revolution; the breakdown of the Liberal régime and the successive seizures of power by 'Red' and 'White' extremists ; the Rumanian invasion; the two Putsche of the ex-King Charles ; and the perpetual friction with the surrounding Successor States' 1 -the tenacity of her will to live was remarkable.

1

She made very real and determined efforts to restore her financial and economic position without external aid. The 'relief-credits' given by foreign Governments to Austria amounted to some £25,000,000. Those asked for and given to Hungary amounted to only some half-millionone fiftieth part-and under her strong and courageous though misguided and unfortunate Finance Minister, Hegeduš, a really heroic effort was made to balance the budget and restore the value of the crown.2

On the other hand, the same vitality which had nerved Hungary to make economic and financial efforts of which Austria had proved incapable had largely neutralized its own constructive efforts by flowing with still greater force into the political channel of irredentism. In the preceding volume it has been described how Hungary was, so to speak, the negative pole of the Little Entente ', and how this international vortex centring upon Hungary was one of the first political formations to emerge out of the chaos in Eastern Europe after the War. If Hungary in her weakness was capable of inspiring sufficient fear in her neighbours to call the

1 These political vicissitudes have been described in the History of the Peace Conference of Paris and in the Survey, 1920–3.

2 Sir Arthur Salter (from whom all the above quotations in the text are taken) gave three reasons of M. Hegeduš's failure, namely: the disorganization left behind by the political turmoils; the indefiniteness of the Reparation obligation, which had not yet been assessed; and the over-ambitious attempt not merely to stabilize the crown but to improve its value.

'Little Entente' into being, would these states agree to allow, or rather to assist, Hungary to recover her strength?

This issue was raised when, on the 22nd April, 1923, Hungary formally requested the Reparation Commission to lift the charges imposed on her assets by the Trianon Treaty (Art. 180) so as to leave them free as security for an external loan. The Commission, while not rejecting the request in principle, laid down conditions which proved, on trial, to make the negotiation of a loan impracticable; but the question thus raised was discussed on the 28th July, at the Sinaia Conference,1 by the members of the Little Entente ' two of whom-Rumania and Jugoslavia had relatively important claims upon Hungary for Reparation, while all alike were deeply concerned on the political side. At this meeting the three Governments agreed that the Hungarian request might be granted on the following conditions: there must be a financial control to prevent the proceeds of any loan from being misapplied; most favoured nation treatment' as compared with Hungary in regard to Reparation obligations must be granted to the members of the Little Entente' themselves, all of whom (but especially Czechoslovakia) were debtors to the Principal Allied Powers and Belgium on account of costs of liberation' and of the transfer of Hungarian and Austrian state properties; Hungary must give her neighbours political guarantees of her loyal and pacific intentions; the question of disarmament must be solved definitively; and on the Austrian precedent, a fortiori, these political stipulations must be embodied in a protocol, reciprocally binding upon all parties, to be signed at Geneva.

The Sinaia decisions were greatly to the credit of M. Beneš and his colleagues, but

In addition to general causes of distrust there were a number of specific disputes which had embittered Hungary's relations with her neighbours for several years and defied all attempts at settlement. Before the work could begin officially, it was necessary that these countries should not only acquiesce in Hungary's restoration, but positively desire it and actively collaborate in it through their organ the League, whose action they had power to block. This was a hard condition, very irksome to all those who were trying to prepare the way for League action. But it has proved an extremely valuable one. Every one knew that reconstruction could not begin until every country interested desired it every one knew that this condition could not be realized until the outstanding disputes had been ended. The reconstruction scheme has thus given an impetus and a time-limit for the settlement

1 See Survey, 1920-3, p. 302.

of disputes which had dragged on for years. More than this, the League offered an unequalled opportunity for discussion and settlement. For months before September [1923], for example, both Dr. Beneš and Count Bethlen had recognized that it was desirable that they should meet and discuss their differences. But a meeting proved impracticable... The Assembly of the League offered exactly the opportunity required. Both Dr. Beneš and Count Bethlen were at Geneva for a month as members of the Assembly. Being there for this purpose they had the opportunity of meeting frequently and quietly for long and intimate discussions. Throughout the month the questions in dispute were then discussed between Count Bethlen on the one hand and Dr. Beneš (Czechoslovakia), M. Titulescu (Rumania), and M. Ninčić (Jugoslavia). Some of the questions were settled; the rest were placed in the way of settlement. Many of these questions were trivial in character; but even these had assumed an importance out of proportion to their original character through the political feeling which had gathered round them. They included questions of the nationality of a large number of persons who had migrated from Czechoslovakia to Hungary between 1918-21; as to the possession of certain archives of the old Empire; as to the counter-claims between Hungary and Rumania in relation to the Rumanian occupation; as to frontier difficulties which the Delimitation Commission had failed to settle; as to armistice and restitution claims, and as to liberation bonds and Reparation claims which the Reparation Commission and the interested Governments had failed to settle; as to transit difficulties where the new frontiers divided a railway station from the industries of the towns it served.

Before the Fourth Session of the Assembly closed, such progress had been made that on the 29th September, 1923, the representatives of the three Little Entente' states took the initiative in proposing 1 that, should an invitation be received from the Reparation Commission, the Council should authorize the Financial Committee and the Secretariat' of the League to take the necessary action, on the understanding that the representatives of the three states in question should be permitted to sit as members of the Council when the reconstruction of Hungary was under discussion. Both points in this proposal were accepted by the Council on the same day;' and on the 17th October the Reparation Commission 3 again expressed its readiness in principle to raise the charge on Hungarian assets and revenues in order to allow the financial reconstruction of Hungary, but this time, instead of repeating the conditions in its earlier decision on which it had been found impracticable to raise a loan, the Commission responded to the suggestion of the League and indicated that, if it drew up a reconstruction plan, the

1 League of Nations Monthly Summary, Supplement, May 1924, Doc. 2. 2 Ibid., Doc. 3. 3 Ibid., Doc. 4.

2