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By Charles Hodges

HE interplay of politics and business is one of the most complex aspects of present-day international relations. If statesmanship to-day begins with the one, it is apt to end, sooner or later, with the other. The pulse of the world's money markets particularly of that of the colossus of the New World -is anxiously felt by the European leaders who are seeking to place their political houses in order. National security, also, may hang upon a stock market battle for control of corporations which, in their turn, control mineral wealth deemed vital to defense. But there is another side to the picture. Business, as well as supporting the State, seeks the State's protection, and governmental interference becomes a sovereign remedy for everything from over-production to hard hitting foreign competition.

It is economic statesmanship that has come to hold the key to world stabilization. Whether the stabilization prob

lem primarily concerns a single country, as in the case of Mexican reconstruction, or whether it involves half-a-dozen Great Powers who seek the final settlement of the question of reparations, the ment of the question of reparations, the fundamental solution remains within the sphere of applied economics.

1. SCANNING AMERICAN
PROSPERITY

Nothing is more baffling to European nations than the amazing upward swing of American prosperity. But Europe's confidence in the New York Stock Market, which affects economic trends at home and abroad, is shaken.

The post-election sentiment of European money centres has grown steadily more critical of the New York situation. London blames the American speculative wave for the gold drainage that has affected Britain's own financial situation; the hope is expressed, quite naturally and with growing conviction, that a reaction is inescapable, and will come in

1929. This view squares with Berlin's convictions. Rome, on the other hand, having felt that the Republican success was discounted in the market prior to the American election, now is reconciled to the continued upward swing. Paris, however, would appear to be more inclined toward the view that real credit inflation threatens the United States.

One international consequence of the New York boom is that European markets are tending to follow American leadership; and this is arousing much comment. The London market has been notably responsive to Wall Wall Street optimism. Another international consequence, the curtailment of foreign loan flotations in the United States, has somewhat changed the terms of the reparations problem. Not only does it raise the question of how Germany is going to meet the burden of the Dawes Plan, heretofore apparently largely carried with money obtained from heavy Reich borrowing abroad; it also casts a

shadow over any 'final' settlement of reparations based upon the coöperation of American investors.

2. INTERNATIONAL MINERAL
STRATEGY

Stock market struggles can also affect national security. The battle for the control of the International Nickel Company, involving British and American financial interests, signifies, according to reports from Canada, more than a trading coup executed in the Toronto, Ottawa, and New York markets. The Mond Nickel Company, owned by Lord Melchett's British chemical combine, is said to have become the dominant element in the world's production of a mineral of high strategic importance on account of its use in steel manufacture.

While it is true that the Canadian and American nickel companies have been working out a merger in which control will be vested in a Dominion corporation, and that a substantial Canadian interest has been built up in the United States concern, there would appear to be no prospect of the complete elimination of American ownership. The new order of things seems to be joint BritishAmerican management of a single mining enterprise.

3. EXPATRIATING INDUSTRY

Just as a citizen of a country may go abroad and divest himself of his original nationality, industry likewise finds reasons for virtually expatriating itself.

When the Ford interests, for instance, locate their principal European plant in Britain, something in the nature of a change in economic citizenship' takes place. Only American management and mass production remain unaltered in an American plant domiciled in England, manned by British labor, and using capital of which forty per cent is to be raised by popular subscription in London.

The American General Electric interests, on the other hand, are understood to have accomplished much the same result by extending their British holdings in a deal with the MetropolitanVickers Electrical Company, without upsetting the existing English stock ownership. This roundabout control is in deference to British susceptibilities, since public opinion clamors against America's profiting by the electrification of British industry. Even more spectacular reports have been received concerning General Motors' acquisition of the premier German automobile plant, the famous Opel Works; and this may be come the most challenging instance of the migration of capitalistic enterprise.

WORLD BUSINESS

Tariffs, taxation, and proximity to markets all play their part in such extension and transformation of American interests abroad.

4. EUROPEAN-AMERICAN
UTILITIES COMBINE

A European-American undertaking of another sort is the international public utility combination recently organized in Brussels. Headed by an American and a German, the pre-War German General Electric interests have been brought together again, reorganized on a truly international scale. American, British, Belgian, German, French, Swiss, Dutch, and Spanish groups have been united for the world-wide development of electrical utilities. Apart from the small nominal capital of the Trust Financier de Transports et d'Entreprises Industrielles, the new combination is said to involve shares having a market is said to involve shares having a market value of about $250,000,000.

5. OLD WORLD LABOR CRISIS The steel trade, the industrial Titan of Germany, has decided to put the labor laws of the Reich to a basic test. Rejecting the demands for a wage increase made on behalf of almost 250,000 workers in the Ruhr, the Krupp, Thyssen, Kloekner, and Phenix interests have led a battle against the government's arbitration machinery, on the ground that it has always favored labor at the expense of industry. The struggle, complicated by far reaching legal questions, has become a major problem of the Müller Government. The Reichstag promises to be the court of last resort.

6. RUMANIA CHANGES FRONT

The coming to power in Rumania of the peasant leader, Maniu, is treated elsewhere in this number. But the international significance of this Rumanian governmental change, apart from the problem of Balkan peace, lies in the fate of the stabilization loan just negotiated by the ousted Brătianu ministry. Brătianu believed that the $250,000,000 loan arranged for with European bankers was essential to keep Rumania from financial collapse. The new government has been inclined to seek a more advantageous arrangement by obtaining a guarantee from the League of Nations; but Bucharest now appears reconciled to an international loan of $80,000,000 which is immediately available. The attitude of the Maniu cabinet is favorable to the development of international business in Rumania, a notable change in front particularly interesting to American oil

concerns.

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7. YUGOSLAVIAN STABILIZATION

A somewhat similar situation has prevailed in Yugoslavia. The internal crisis between Serb and Croat, threatening the disruption of the triune kingdom, appears to be well on the way to a solution promising reforms which will satisfy Croatia. Yugoslavia, as one of the three Balkan nations comprising that god-child of French diplomacy, the Little Entente, has been the object of much attention from Paris. King Alexander accordingly has visited the French capital with the ostensible object of getting his teeth fixed; his ulterior purpose was presumably to obtain a French loan and to discuss Balkan affairs. Advances of French money, it is stated on good authority, have been held up until the Yugoslavian monarch can give guarantees as to the prospects of domestic tranquillity.

8. MEXICO ASKS FOR NEW DEBT ARRANGEMENT In the New World, Mexico joins the ranks of the nations who are seeking international financial assistance. The Latin American republic, however, has already reached a basic understanding with her creditors; and the present difficulty lies in Mexico City's inability to meet the annual increase in the scheduled debt payments which began in 1926 and only reached their full extent this year. As in the case of the initial 1922 agreement with the International Committee of Bankers, which collapsed at the opening of 1924, the scale of payments agreed upon in fresh negotiations in 1925 has proved too high for the revolution-torn nation. The new conferences, of the friendliest kind, have been transferred from Mexico City to the American financial capital. Half a billion dollars is the amount now involved.

9. THE BREAKDOWN OF THE BRITISH RUBBER PLAN The last stage in the collapse of the British plan for the restriction of rubber production closed on November 1st, when London officially announced the termination of the so-called Stevenson restriction scheme. Designed to limit the output of the British plantations, the rubber legislation failed, after having brought about a momentary advance in world prices, because of two factors. The first was the effective American defense organization, in particular the development of unprecedented rubber reclamation processes. The second lay in the canny refusal of the neighboring Dutch East Indies producers to coöperate in maintaining the British policy.

The Macaulay Company M. LUCIEN ROMIER THE AUTHOR OF Who Will be Master - Europe or America? which is here reviewed.

WHO WILL BE MASTER - EUROPE OR AMERICA? By Lucien Romier. Translated by Matthew Josephson. New York: The Macaulay Company. 1928. $2.50. DES AMÉRICAINS CHEZ NOUS, UN ROMAN. Par Raoul Gain. Paris: Editions Montaigne. 12 Francs.

NA series of intensely pointed chapters, Lucien Romier gets at the very vitals of American civilization. President, now, of the Société d'Économie Nationale and long a famous figure of intellectual France, M. Romier was formerly the editor of Le Figaro. He made a long tour of the United States in 1927, to observe the advance of our industrial progress, in the interest of the French Government, and of his careful observation this book is the result. It is an appraisal of our strength and our weakness; while we may regret much of what he has to say about us and while we may stoutly express our honest disagreement in detail, we cannot but be fascinated both by the magnificent sweep of his chapters and by the quite exceptional powers of insight and perception that they reveal. As for Raoul Gain he knows Americans and knows them well; one would even conclude from his book that he

must at some time or other have known America, for the idiom of his Yankee characters comes marvelously close to perfection. On the other hand, the characters themselves are the same old figures at which the French have laughed these past hundred years.

It is interesting that these two books should appear together, for the problem which M. Romier has in part attempted to elucidate is implicit in M. Gain's work. Nor can this work be dismissed as of little consequence. It appears already to have become a best seller in Paris and if its portrayal of the American type is grotesque, it is every last page of it frighteningly clever. It assumes the American's exclusive interest in the almighty dollar and his unfailing lack of those qualities, spiritual and intellectual, which, in France, mark off the gentleman. A single quotation may suffice to show its flavor. Nathaniel Birdcall is 'below' in his private yacht off the coast of France, feverishly at work over his varied commercial 'projects, costs, and accounts,' when suddenly the vessel comes in collision with a fishing trawler. Then (the reviewer has attempted to preserve the spirit of the original rather than to translate the passage literally):

'And here's Birdcall up from below. The impact has jerked him up to the bridge. He grasps the situation without need of being told. He realizes at once that the papers spread out on his working table are more valuable than the lives of those on board. To gather up his plans and his papers and his figures that now is the first thing to be done. After that he will send out signals of distress calling for succor to save his boat, himself, his daughter- and perhaps the other men, if that seems feasible.'

For better or worse, the French have always regarded us so. None would fail always regarded us so. None would fail to perceive that this, with M. Gain, is a delightful bit of exaggeration, but by the same token your average Frenchman, as likely now as thirty years ago, would recognize as profoundly characteristic the trait which M. Gain has caricatured. M. Romier presents a rather different picture-one that does not deny the one that does not deny the validity of the first but does demand for the American civilization a high degree of respect. The essence of it all,' he says, 'the European will most often fail to grasp: I mean the magnificent and arduous labor of human regeneration which has been going on and is still which has been going on and is still going on at the other side of the Atlantic.' And in this vein he continues: "This is a tremendous lesson which the American example teaches us: the ease with which supposedly old races may be rejuvenated when transplanted into a

new mode of life. It is an example from which we may derive new springs of hope for all humanity.' He admits - rather, he asserts as one of his major premises

that the very basis of American morals' is to 'make money.' But the 'spirit of money-making,' he argues, has wrought a great good in America: historically it has been 'the guarantee of tolerance' and it has produced 'for the first time an almost complete and comparatively happy example of mass civilization.'

It is this 'mass civilization' in which M. Romier is interested. In his discussion of it he adheres to the now rather well known doctrine of dynamic wealth, 'which not only recognizes the existence of the economic masses but organizes all social life in direct relation with the actual nature of the masses'; which 'compels us to range ourselves in disciplined battalions for production and consumption. . . . Men seem like the prisoners of a collective passion for consuming, whose increasing wants and capacities they are compelled to satisfy: impersonal links in an endless chain.'

Examining the present condition of humanity, M. Romier begins his essay by observing in general two main facts which are apparently, but not actually, opposed to one another. Of these, one is the 'universality of material influences,' and the other the persistence of racial and national traits. The Machine Age has found Europe organized in rather small political entities, each with its distinctive culture and each arrayed in economic competition with all the others. M. Romier continues, however: 'Europe has kept her richest heritage, which is her inventive genius. This is, perhaps, due to the fact that she has not only been unwilling to relinquish her old framework but has also preserved the independence of her spiritual and traditional institutions. The problem for Europe is to preserve those supreme and strategic faculties, while at the same time adapting herself to the phenomena of mass life which threaten to become an overwhelming force from now on and to whose conditions America has already adjusted her own civilization.'

"The instinct-to-survive of immense numbers of men,' he says, 'drives them more and more toward mass life, and it is impossible to conceive of the endurance of any forms of civilization which would not satisfy the essential needs of masses as such.' And '. . . we observe... a universal tendency toward the seizure of the political field by economic forces.' Again: "The State, guardian and servant of political ends, is subject to impulses of a very different character. . . Under the pressure of economic it assumes progress, more and more the appearance of representing only a combination of interests.' In short, the authority of the State is challenged by the immense power of industry and is already in decay. Nevertheless, the State is not the nation, and ... the nation may more effectively defend its existence by holding to the idea of the Fatherland, the Fatherland being considered, not as the mere community of interests, but as a fountain head of precious traditions, which must be safeguarded, and of moral and intellectual impulsions whose vigor must be sustained.'

All this is vital to the thesis which M. Romier is developing: that Europe has the native capacity and skill to match the American civilization at every point; that her present political organization, however, has still to be adapted to it; but that Europe, unless she meanwhile loses it, has something which can more than offset the American advantage of an earlier start - those old traditions which can save Europe, he thinks, from the perils inherent in the very notion of 'mass civilization,' the dangers represented in America by the

sex problem,' the 'instability of the family,' and the threatened loss of pure learning. It would be well to consider carefully what M. Romier has to say on this last point. He speaks of that learning not immediately practical because completely theoretical - which can scarcely guarantee a man his livelihood, but which none the less must precede the applied learning whereon all future progress must be based. He turns to that problem of the reëmployment of highly specialized craftsmen after a new invention has made their specialty no longer useful. And he takes up the problem of the new proletariat, pointing to 'the terrible truth... that ... each and all engineers, employés, common laborers, all who are simultaneously producers and consumers are become slaves... bowing before the merciless law of economic return!' M. Romier hopes that with his spiritual heritage to strengthen him, the European may devise a system under which,

owners,

rather than be dominated, he may dominate the machine to the end that all civilization may not be 'at the mercy of physical accidents.'

Through all his chapters runs a single dominant idea, which is that the United States is a social organism rather than a body politic.' In this he discovers the key to a full understanding of our civilization and, of course, its application to a Europe divided into many nationalities is obvious. It is precisely because of this 'enfeeblement of her political system,' he argues, that the United States to-day 'represents the most advanced type of economic society.' The American conception of liberty means nothing other than the freedom of economic and social activities from obstruction by the whole political game.' Again, he says: 'In academies and schools the particular importance of such or such an episode in the political history of the United States is still being discussed with dreadful earnestness. But the truth is that the American people owes nothing of any significance to politics . . .' And once more M. Romier strikes his dominant: 'In truth, to understand America we must always bear this fact in mind, that the social structure of the United States does not compose a unified, historical nation, nor a body politic; it is a community of purely economic origin.'

To all of which one may, of course, reply by asking what, after all, is a nation? But, in fairness to the author, the present writer must quote this final passage: 'Apparently the people of the United States have no call to be nationalistic, since they are not in the true sense a nation; nor to long for unity, since they happen to be marvelously unified. Yet they dream strangely on unity and speak in the accents of nationalism.'

In closing, the reviewer pays tribute to Mr. Matthew Josephson for a splendid piece of translation.

and this story, as Mr. Deák tells it, is somewhat as follows. In 1921, the Rumanian Government passed the Garoflid law which, as a measure of agrarian reform, provided for the expropriation of estates in Transylvania. Although the law on its face did not discriminate between Rumanians and Hungarians, the Hungarian Government protested that it was a violation of certain provisions of the Treaty of Trianon and of the minorities treaty which Rumania had signed. At bottom, the issue is whether a state can infringe upon the property rights of aliens in the passage of social legislation. This is a question which is of particular interest to the United States because of its large investments in countries whose social consciences are slowly awakening.

In February, 1923, Hungary placed the question before the Council of the League, and there asked that the dispute, which was legal in nature, be referred to the World Court for a decision. When Rumania declined this suggestion, Mr. Adatci proposed that the validity of the Rumanian land law be referred to the World Court for an advisory opinion. This suggestion also Rumania declined to entertain. The Council thereupon decided to postpone the settlement of the dispute until a League rapporteur could undertake to bring about a direct settlement between the two parties. Negotiations for this purpose were conducted at Brussels, as a result of which an understanding was arrived at on certain points. The Hungarian Government, however, declined to ratify the understanding; and the League Council was confronted by another deadlock. It now passed a resolution discharging the case from its docket, expressing the vague hope that the Rumanian Government would remain faithful to the Treaty of Trianon. Thus the Council did not settle the matter at all.

Following this failure, Hungarian landowners brought suits against Rumania in the mixed arbitral tribunal established to hear claims arising out of the peace settlement. Both sides employed an imposing array of legal talent to argue whether or not the tribunal had any jurisdiction over this type of claim, and, if so, whether the claim could be legally supported. In January, 1927, the tribunal decided that it did have jurisdiction; but, before it could proceed to an examination of the merits of the case, Rumania withdrew its arbitrator, in high dudgeon.

In the Treaty of Trianon, Rumania had solemnly promised to accept the decisions of the mixed arbitral tribunal as 'final and conclusive.' Now she flouted the tribunal and the treaty by with