any dispute arise, whether in Morocco, the Orient, or elsewhere. They must have their way at any cost. To get their way they will risk a war.'

The Tsar pondered a moment: 'I cannot believe that Kaiser Wilhelm wishes war. If you only knew him as well as I do! If you knew how much charlatanism there is in his poses!'

'Perhaps I am taking Kaiser Wilhelm too seriously in fancying that he desires, or even that he would passively accept, the consequences of his own challenging policy. But if a war were to threaten, could he prevent it? No, sire; honestly I do not think he could.'

The Tsar was silent a moment, and puffed his cigarette. Then he remarked in a firm voice:

"This makes it all the more important that we should be able to count on the English in case of a crisis. Germany would never dare to attack Russia, France, and England together, unless it had completely lost its

reason.'

After President Poincaré's departure, the Tsar described his last interview with him to the French ambassador:

Asking me to sit down with him on the aft deck of his yacht, the Tsar related his conversation with Poincaré:

'I was delighted with my talk with your president. We were in perfect agreement. I am no less a pacifist than he, and he is as determined as I am to do everything possible to preserve peace. He suspects that Austria and Germany are designing something against Serbia, and believes that we must meet it by joint diplomatic action. I stand with him there. We must be both resolute and united in dealing with this question, and in discovering ways to settle it amicably. The more difficult it proves to be, the

more urgent it is for us to be united and firm.'

'Such a policy seems to me wisdom itself. I fear that we shall have to apply it very soon.'

'You continue to be alarmed?' 'Yes, sire.'

'Have you further grounds for your disquieting anticipations?'

the unex

'I have at least onepected return of my colleague Szapary (the Austro-Hungarian ambassador at Petrograd), and the cold hostile reserve he manifested the day before yesterday toward our president. Germany and Austria are preparing an explosion for us.'

'What can they want? To win a diplomatic victory at the cost of Serbia? To inflict a reverse on the triple Entente? No, no! In spite of all appearances, Kaiser Wilhelm is too prudent to embark his country in such a mad adventure. And the Emperor FrancisJoseph only wants to die in peace.'

The ambassador reports several interviews which he had with Sassonoff, at that time Russian Minister of Foreign Affairs. Under the date of July 24, he writes:

At half-past twelve, Sassonoff and Buchanan (the British ambassador), met at my house to talk over the situation. Our discussion was interrupted by luncheon, but was resumed immediately after that. Basing my arguments upon the toasts exchanged by the Tsar and the president, upon the reciprocal declarations of the Ministers of Foreign Affairs of the two countries, and last of all upon yesterday's communiquée to the Havas agency, I advocated unhesitatingly a firmer policy.

'But if that policy should involve us in war?' said Sassonoff.

'It will not involve us in war unless the Germanic powers have already made up their mind to employ force

to assert their supremacy in southeastern Europe. Firmness does not exclude conciliation. Still, our adversary must be willing to negotiate and to give and take. You know my personal ideas as to Germany's designs. The Austrian ultimatum seems to me to precipitate the dangerous crisis which I have foreseen for a considerable period. From now on, we shall have to assume that war may break out at any moment. That possibility must be kept in view in every diplomatic move we make.'

Buchanan suggested the possibility that his government would remain neutral. He feared in that case, that France and Russia might be crushed by the Triple Alliance.

Sassonoff objected:

'As matters stand now, England's neutrality would be equivalent to suicide.'

'You do not understand our present government's leaders,' replied Sir George sadly. 'Ah! if the conservative party were in power, I am sure that with all the evidence we now possess it would comprehend what our national interests dictate.'

I emphasized the decisive part England might play in cooling off Germany's belligerent ardor. I cited the opinion that the Tsar expressed to me four days previously: 'Germany would never dare to attack Russia, France, and England together, unless it had completely lost its reason.' Therefore, it was urgent that the British government should formally identify itself with our cause, which was the cause of peace. Sassonoff spoke warmly in support of my position.

A little later, M. Paléologue had a conversation with Sassonoff, just after the latter had concluded a very lively interview with Count Pourtalès, the German ambassador.

'Do you know what he had the pre

sumption to say to me?' said Sassonoff. 'He blamed me and all us Russians for not loving Austria, and for troubling without scruple the last years of its venerable emperor. I replied: "Of course we don't love Austria. Why should we love it? It has never done anything but injure us. As to its venerable emperor, he owes the fact that he still wears his crown to us. Please bear in mind the way he thanked us for that in 1855, in 1878, and in 1908! To blame us for not loving Austria is, I must say, a little too much!"'

"That is unfortunate, my dear Minister. If negotiations between Petrograd and Berlin continue on that basis, they will not last very long. We shall soon see Kaiser Wilhelm donning his "shining armor." Please be calm. Leave no means for a peaceful settlement untried. Remember that my government is a government of public opinion, and that we cannot do anything without public opinion behind us. Last of all, bear in mind also English opinion.'

'I will do everything possible to avoid war. But, like you, I am very much disturbed by the turn things have taken.'

'May I assure my government that you have not ordered any military measures?'

'None, I assure you. We have merely decided to withdraw quietly eighty million rubles which we had on deposit in German banks.'

Next comes the account of a conversation on July 28, 1914, almost at the hour of the crisis, between our ambassador and Pourtalès, the German ambassador.

At three o'clock that afternoon I went to the Foreign Office. Buchanan was in conference with Sassonoff.

The German ambassador was wait

him frankly:

'Well, have you decided to calm down your ally? You alone are in a position to make Austria listen to prudent counsel.'

He protested in a jerky voice:

'Here is where the calming should be done. You should stop exciting Serbia.'

'I pledge you my word of honor that the Russian government is perfectly calm and is ready to agree on a conciliatory programme. But don't ask it to let Serbia be annihilated. That would be asking an impossibility.'

tears. Shaking with repressed anger he repeated:

'We cannot abandon, we shall not abandon our ally. No, we shall not abandon her!'

Just at this moment the British ambassador came out of Sassonoff's office. Pourtalès rushed in, his face suffused with anger, without even shaking Buchanan's hand as they passed.

Sir George paused to say: 'What a state he is in! The situation is worse than ever. I do not doubt but what Russia will go to the limit. She is thoroughly in earnest. I have just ap

don our ally.'

'My dear colleague, let me speak frankly. It is a serious moment, and I think we have sufficient regard for each other personally to entitle me to be very frank. Unless the controversy between Austria and Serbia is pacified in a day or two, we shall have war. It will be a world war; such a catastrophe as the world has perhaps never seen. Such a calamity can still be avoided, since the Russian government desires peace, the British government desires peace, and your government also claims to desire peace.'

At these words Pourtalès burst out: 'Yes indeed, I call God to witness! Germany wants peace! For forty-three years we have been safeguarding European peace. For forty-three years it has been a point of honor with us not to abuse our strength! And yet people accuse us to-day of wishing to unchain the dogs of war! History will prove that right is on our side, and that our conscience is free from blame.'

'Have you already reached the point where you must appeal to the judgment of history? Is n't there then any chance of safety left?'

Pourtalès was so choked by emotion that he could not speak. His hands

military act which Germany might interpret as a provocation. We must throw on Germany the whole responsibility for initiating any attack. English public opinion will never consent to war, unless Germany is clearly the aggressor. Please emphasize this to Sassonoff.'

'I will do precisely what you suggest.'

At this moment the Austrian ambassador arrived. He was very pale. His stiff attitude toward us was in marked contrast with his ordinary engaging and courteous affability. Buchanan and I tried to get him to talk.

I asked, 'Have you received better news from Vienna? Can you tell us something reassuring?'

'No, I know nothing new. The mill is grinding.' Without attempting to explain further, he repeated his apocalyptic metaphor: "The mill is grinding.'

Finally, on July 29, Russia took its first military measures.

At eleven o'clock that night, Nicolas Alexandrovich Basily, Vice-Director of the Chancery of the Russian Foreign Office, presented himself at my em

bassy. He reported to me that the commanding tone which the German ambassador adopted that afternoon had determined the Russian government: first, to order that night the mobilization of thirteen army corps against Austria-Hungary; second, to start secretly a general mobilization.

The last order made me jump: 'It is not possible to limit yourself, provisionally at least, to a partial mobilization?'

'No. The question has been thoroughly gone over by a council of our highest officers. They recognize that under present conditions the Russian government has no choice between partial mobilization and general mobilization; for partial mobilization is technically impossible without throw

ing the machinery for a general mobilization entirely out of joint. Consequently, if we confine ourselves to-day to the mobilization of thirteen army corps against Austria, and Germany should decide to-morrow to come to the military aid of its ally, we would be powerless to defend our frontiers on the Poland and East Prussia border. Is n't France as interested as we are in having us able to intervene promptly against Germany?'

'You are appealing to very strong arguments. I hope, nevertheless, that your General Staff will not take any measures before conferring with the French General Staff. Please tell Sassonoff for me that I wish to urge this most seriously upon him, and that I would like his reply this very night.'

HAD economic science not failed completely in dealing with this subject, public opinion would already have been clarified as to the ultimate cause of our depreciated currency.

Until we settle that, we cannot act intelligently regarding any other public question. Two answers are possible, which lead to two diametrically opposite methods of handling our domestic and foreign problems. A false solution

will carry us farther from our goal with every step we take.

Our nation is like a man facing death from two diseases. A quack will recognize that each is dangerous, but he will not inquire which is the more dangerous, and will treat the symptoms first of one and then of the other, thereby merely aggravating the patient's condition. On the other hand, a skilled physician will first ascertain the funda

mental cause of both diseases, and devote himself to removing that, even at the cost of temporarily aggravating superficial symptoms.

We all know that inflation and an unfavorable balance of trade coöperate to depreciate our money. We have hardly begun to inquire which of these is the fundamental evil, and which the secondary.

A shallow but attractive theory has been propounded by men who base their claims to being authorities in economics chiefly on their practical knowledge of the provisions trade. They insist that when business pays high profits the nation is prosperous; they overlook that nowhere else does business return so high a rate of profit as in backward and ruined countries.

Others say: Just stop printing banknotes and things will get better. How are you to do it? Well, economize. What do you mean by economizing? The government must cut down its expenses. People must work more and spend less.

Quite possibly more work could be done and less money might be spent by some government departments. But is it feasible to cut off unemployment relief? Is it possible to lower domestic freight rates by raising rates on articles exported? Is it possible to cease buying grain abroad, and to increase the price of bread at home? Is it possible to pay from taxes alone interest on the public debt, reparation claims, and current government expenses? Is it possible to discontinue supporting our public schools, and scientific and religious institutions? Let us assume that all this is possible. Aye, that it has been accomplished. We would have, as a result, increased unemployment, higher prices, famine, revolt, demoralization of the public service - but the value of our money would rise. We might temporarily accomplish that.

We are leaving out of account, however, that factories must curtail operations in exact proportion with the decline of our export trade.

Does that secure the real object we are seeking?

No. For the value of our money would immediately begin to fall again.

We have forgotten to take into consideration the balance of trade. We have forgotten that when we woke up on New Year's day this year, we knew only one thing certainly as to our future: that we could live out the year only by managing to procure food stuffs and raw materials from abroad to the value of about five billion marks in gold-and to pay for them. Five billion marks in gold, however, are at a moderate estimate fifty billion marks in paper, and fifty billion marks represent the product of about four hours' work a day in all our industrial establishments.

Have people ever stopped to figure this out? Our industries employ some eight million workers. They labor annually about sixteen billion working hours. Under our present defective industrial organization, they produce goods to the value of about one hundred billion paper marks. One half of this sum must be devoted to purchasing abroad indispensable food stuffs, textile fibres, and metals; ten, or perhaps twenty, billion will inevitably be wasted in the purchase of superfluous and injurious foreign luxuries. Thirty billion it is proposed to collect for us each year as a minimum payment to our enemies. This leaves nothing whatever for housing, clothing, tools, and implements, and the support of the government.

As a matter of fact, we have not supported ourselves since the war ended. We have consumed more than we have produced, and have made up the balance from the proceeds of such