Britain and 169 in North America. The level of British wages last July was 180. [These percentages refer to the pre-war standard.] Overcompensation, therefore, exists in Great Britain, but it is considerably less there than it is in Sweden, which has a relatively mild unemployment crisis.

In view of these facts, it is quite impossible to maintain that the failure of business to readjust itself to the new gold standard is the principal reason for British unemployment. A return to that standard has naturally brought certain troubles with it. But even if the currency had remained untouched, Great Britain would have encountered practically the same difficulties she faces at present, on account of her failure to adjust herself to new controlling factors in world economics.

Political discussion, like economic discussion at times, overlooks the fact that methods of production have been revolutionized since the World War and that more progress has been made toward reducing production costs within this short period than during any other equal period, perhaps, in the history of the world. This progress, which involves a permanent change in market conditions in several branches of production, is the combined result of technical progress and improved business-organization. Complete adjust ment to this new situation demands extraordinary alertness and adaptability, not only on the part of the heads of business undertakings, who must be ready in many cases entirely to reequip their plants and to change their locations, but also among the working classes themselves. The country that is most alert and ready in these respects, provided it possesses adequate capital, will quickly outdistance its rivals and will be able to keep its factories fully employed. Any policy that hampers this adaptability inevitably delays

economic recovery and is the chief cause of unemployment and business depression.

So far as I can see, we have here the key to England's present difficulties. To attribute them primarily to the Bank of England, or to the return to a gold standard in general, is merely to distract attention from the real errors of economic policy I think the Baldwin Cabinet has unquestionably committed. The Government's measures to subsidize industries and to grant doles to idle workers are in defiance of the irresistible changes occurring in conditions of production, and a futile attempt to preserve an impossible status quo. For example, what could be worse under such conditions than to encourage the workingman to stay right where he has always been? This artificial immobilization of labor and industry is not only a disaster for England, but it has set a most unfortunate example for the rest of Europe, which looks upon England as a model to copy in such matters. Sweden is already suffering from imitating England. Hitherto we have followed a comparatively prudent unemployment policy and have made considerable progress toward overcoming our crisis. But the Socialists clamor for us to follow England's footsteps and start on a dole system.

Germany is facing a similar problem of readjustment. But conditions are different in that country, and the practical obstacles in the way of a quick recovery are greater than elsewhere. When she returned to a gold standard it was natural that her money, in view of the prevailing situation, should have a gold parity not appreciably lower than its domestic purchasing power justified. This necessitated a radical increase in home prices. That occurred. Between July 1924 and July 1925 the average price-level, according to the

reduce her costs of production until she can keep her people continuously and profitably employed. That is the goal toward which she must aim. Unfortunately, many persons in that country do not realize this, and still imagine that they can revive business by driving down prices through some sort of currency-juggling. That is false. Ir respective of the general price-level which is a purely monetary question Germany, like every other country, mus learn how to lower her costs of produc tion by improving her technical equip ment and commercial organization.

Germany's situation is relativel more difficult than that of the rest o Europe because it is harder for her t procure the capital she needs to re organize and reëquip her factories That handicap will continue to hampe her for a long time, since her repara tions payments will be a constant drai upon her resources. The only way tha she can revive her industries is by a cumulating capital at home. Let h beware of attempting what Englan has tried to do- that is, to mainta the economic status quo. Any mea ures that interfere with the industri revolution now occurring will on weaken her. Adaptability to new co ditions is the indispensable prerequisi of her future prosperity.

[ADDITIONAL interest attaches to the following discussion of the moot question of how far diplomacy should be controlled by the popular branch of the government by the fact that its author was the Japanese Ambassador to the United States at the time of the temperamental episode attending the passage of our Exclusion Law. The article is not addressed to foreign readers, having appeared originally in Gaiko Jiho, the Tokyo 'Diplomatic Review.']

THE age when it was regarded as the proper function of diplomacy recklessly to push aside, threaten, and ensnare other nations on the pretext of protecting the interests or honor of one's country, and when wiles and chicanery were considered an essential part of diplomatic dealings, has fortunately passed. Times have so far advanced that increasingly greater importance is attached in diplomacy to international justice, mutual concession, forbearance, and coöperation.

This is the logical result of the modern idea that political policies should be governed by the popular will. Since every right carries with it corresponding responsibilities, however, the greater the share the common people take in the government the more necessary it is for them to be informed regarding administrative and diplomatic questions. Unfortunately, however, the common people of every country, although they are more or less conversant

1 From the Japan Weekly Chronicle (Kobe Anglo-Japanese weekly), February 11

VOL. 329— NO. 4265

with questions of domestic government, still lack knowledge and training in international affairs.

In former times, when diplomatic relations were still under the care of the crown or of a privileged minority, the welfare and the interests of the ordinary man were often sacrificed to mistaken patriotism or personal ambition. Nowadays, however, no government can launch upon a war without the heartiest support of a majority of its citizens; but, on the other hand, a government may be rushed into war against its will by the pressure of an excited populace. With our present democratic institutions, where the favor of the voters counts for everything, political parties greedy for power or unscrupulous politicians eager for self-aggrandizement may embark their country upon dangerous diplomatic ventures for the sake of momentary selfish advantages. Not infrequently the settlement of a dispute between two governments is rendered extremely difficult, notwithstanding the earnest efforts and conciliatory attitude of their authorities, because the common people are carried away by narrow-minded patriotism or mutual antagonisms and insist upon having their own way, often to their ultimate immeasurable loss. And this misfortune is due directly to lack of diplomatic knowledge and training among the masses.

We see, consequently, many cases where the leading statesmen of a country are quite ready to adopt enlightened diplomatic measures and to arrange a

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peaceful solution of international difficulties, but feel forced to insist upon the extreme demands of their people and fear to admit the reasonable claims or contentions of the other negotiating Power, lest they be thrown out of office by a blind majority, wrong-headedly bent upon having its own way regardless of the merits of the case at issue.

International controversies can seldom be settled agreeably to the contentions and claims of either party alone. On the contrary, they are adjusted by mutual concession and compromise. It is unnecessary to insist that international disputes should be settled amicably, but nations have still to learn that in order to do this the public mind in each country must be reasonable and temperate. In other words, each nation as a whole must face the facts of its relations with its neighbors in a large-minded and tolerant way. It must be capable of weighing arguments fairly and of holding its diplomats accountable for doing the

same.

Let me repeat once more: the only way to attain this object is by increasing the diplomatic knowledge and training of the people. The better each nation understands its own rights the more reluctant it will be to abuse those rights or to make unreasonable demands that are not justified by them; and the more thoroughly it realizes its own international obligations the less apt it will be to become angry because other countries insist upon the fulfillment of those obligations. As the public of every country becomes more familiar with the customs of international intercourse, with the exercise of selfcontrol, with the spirit of coöperation and courtesy among nations, which generations of human experience have taught us are essential to maintain the peace of the world, then negotiations between governments will be made

much smoother. The people of each country will refrain more carefully from retarding or hindering a settlement of controversies by uselessly wounding the feelings of other nations or breaking faith with them. A more comprehensive knowledge of the history and conditions of our neighbors will also help us to understand their attitudes and will lessen our ill-will and prejudice against them.

Every civilized country to-day has courts of justice to decide cases involving the rights and obligations of private citizens, and officials whose duty it is to enforce obedience to the law. Nevertheless the peace and order of society depend primarily, not on fear of the police and the law courts, but on the law-abiding habits of the people and the mutual respect for the rights of others that have become an instinctive part of their conduct. In like manner, the true foundation of international peace is not the fear or awe in which one nation stands of another, but the spirit of justice and forbearance which regulates the conduct of nations toward each other, the will of every country to respect the rights of its neighbors as well as to protect its own rights, its solicitude to be fair and courteous in dealing with them.

Since the foreign policy of every government is determined by its national interests, conflicts of interests inevitably arise between nations; but it is a great mistake to assume that such conflicts must necessarily be settled by force. No controversy that could not be amicably settled would ever arise. between countries possessing a perfect knowledge and training in international affairs. Enlightened statesmen realize to-day that no vital interest of any country is incompatible with the vital interests of another country. When nations pursue foreign policies that lead to war, it is because their concepts

of international justice are still primitive and distorted.

Some people argue that our present system of popular parliamentary government suffers from the incurable defect of being ever at the mercy of a shallow, arbitrary, selfish, irresponsible, fickle public opinion. When a popular government makes mistakes in regard to domestic matters in response to misguided public sentiment, the harm done is comparatively small and can be remedied; but when these mistakes are committed in the domain of foreign affairs they may lead to irretrievable disaster. Therefore, these men argue, diplomacy should be taken out of the hands of the masses. Experience shows that there is something in this argument; but the day has come when the people cannot be denied the right to exercise an influence upon important measures that widely affect their own welfare, simply because these measures relate to diplomatic matters.

Moreover, while public opinion is undoubtedly more excitable and prone to dangerous errors in dealing with foreign questions than in dealing with domestic questions, it is nevertheless fairer and safer than is generally supposed when properly informed and given time for reflection. The French people to-day would not approve Louis Napoleon's Mexican expedition or his Prussian war. The British public of the present generation would never tolerate the Opium War in China, and looks back upon the last South African War as a blunder. American sentiment would to-day condemn such measures as led to the Mexican War fought by that

country seventy-five years ago; and not a few Americans doubt the justice of their last war with Spain. These historical facts indicate that every progressive nation is adopting a more enlightened attitude in respect to its own interests, and is becoming more open-minded to the decrees of international justice.

I believe therefore that it is incumbent upon the modern statesman to take the public into his confidence and to defer to its opinion, although diplomats must be allowed broader discretion in dealing with matters calling for prompt attention than we allow to officials dealing exclusively with domestic questions.

In short, the aim of modern diplomacy is to win the confidence and good-will of other countries. This is particularly true of Japan, which is peculiarly dependent on the friendly coöperation of other nations for her welfare and progress. Nothing is more fatal for us, therefore, than to cultivate narrow-minded exclusivism, unintelligent self-conceit, and benighted egoism. In the same way that modesty and courtesy do not lessen but enhance the prestige of individuals, so a nation wins honor by being truthful, courteous, and friendly in its dealings with other nations and does not thereby sacrifice one particle of its independence and dignity. If a nation cannot keep its own household in order, and if it cannot observe the highest courtesy of international good-breeding, challenging and self-assertive diplomacy will never heighten its prestige or increase its influence in world affairs.