The railway line, the first in those regions, was thrown open to traffic in 1860; but, for various reasons of a political and geographical character, the enterprise did not prove as successful as was anticipated, though the import of English goods was trebled in the period from 1860 to 1875. After the acquisition of the Dobrudscha by Rumania (1878), the line and all the material were sold under very favourable conditions to the Rumanian Government in 1882.

We see, therefore, that England was well aware of the economic value of Rumania, whose situation had been put on a much more secure footing with the advent of the new régime. She also could not have overlooked the fact that Rumania, a purely agricultural state, had to rely fully upon foreign manufactures, which were of necessity of either English or German origin. Nor was England at any great disadvantage regarding transport, for the activity of the European Danube Commission, instituted by the Paris Convention of 1858, kept the Danube open to sea-going vessels bound to the principal Rumanian inland ports, Braila and Galatz. But I am not aware that any attempt was made by English finance to profit by the situation. They left it to the Germans, and the Germans did not hesitate to advance the necessary capital. The Strousberg concern was taken over by the Rumanian Railways Company, founded by Bleichröder and the Diskonto-Gesellschaft, the original subscribers receiving preferential shares in the new undertaking in exchange for their bonds, the Rumanian Government guaranteeing an interest of 7 per cent.

If it be true, wrote a French author a few years ago, that Prince Carol owed the throne in 1866 to Napoleon III, it is only just to say that it was due to Bleichröder and the Diskonto that he did not lose it in 1871. The German banks lost nothing by this throw of the financial dice. They secured a footing in Rumania; with time they were to take root even more deeply, and in the end were destined to succeed in placing Rumania completely under their powerful economic and financial control. In 1880 the railways were acquired by the state, Germany, not without profit to herself, again supplying the money necessary for that operation.

Encouraged by the benevolent attitude of German

finance, Rumania ventured on a policy of extravagant construction, spending for the army, for railways, for harbours, and for magnificent buildings, at a pace inconsistent with her revenue, always at the mercy of a bad harvest. A well-known Rumanian statesman, the late M. Sturdza, calculated in a speech in the Chamber (Feb. 1, 1902) that the state had incurred 12,000,000l. of excessive expenses. It became habitual to cover these expenses and the almost perennial deficits by loans; and the public debt rose in consequence from 21,600,000l. in 1876 to 29,000,000l. in 1886, though the state revenue had nearly doubled in that period as compared with the previous decade. During the following ten years the revenue again increased by almost 50 per cent., which did not prevent the public debt reaching 54,000,000l. in 1896, no less than nine external loans having been contracted between 1888 and 1898.

The danger of such a policy became unpleasantly apparent in 1899, when, on account of the complete failure of the harvest, the exports dropped to 5,960,000l., as compared with 11,320,000l. in the previous year. German finance again obligingly helped to tide over that crisis, not without using it, however, to strengthen its hegemony in Rumania. The Diskonto and Bleichröder succeeded in obtaining from the government in 1900 a 12

years' lease of the cigarette-paper monopoly for a payment of 600,000l. A similar sum served to buy the government's share in the National Bank of Rumania, till then free from foreign participation. Only the opposition of public opinion prevented further concessions. To cover the actual deficit, which on Sept. 1, 1901, amounted to 6,860,000l., the Treasury issued 7,000,000l. of 5 per cent. bonds, to be repaid at par on Dec. 31, 1904. The economic situation was not very favourable, and the government, which had undertaken not to float any loans during that period, found itself unable to repay the amount within so short a time; it had once more to appeal to German finance for the conversion in 1903 of that floating debt into a fixed 5 per cent. debt of 7,400,000l. In 1905 loan charges were absorbing 36.55 per cent. of the total revenue of the state (in England 14.65 per cent.); and their weight was felt the more because the early loans had been concluded under very onerous conditions.

The whole of the Rumanian public debt, which was 70,320,000l. on April 1, 1915 (in addition to a floating debt in Treasury bills of 24,000,000l., and advances by the National Bank to the amount of 16,000,000l.), has been financed by Germany, although the rate of interest was often higher, at the time of borrowing, in Berlin than in Paris and London. Even the considerable amounts covered in Paris, and the much smaller sums advanced in London, were offered for subscription through the intermediary of German banks, which thus both derived a profit from invested capital other than their own, and to some extent controlled it. Thus it was calculated that of the total debt of 63,160,000l., in 1906, Germany was holding 30,780,000l. and was receiving annually as interest, etc., 1,960,000l., representing 6.36 per cent.; while the corresponding figures for France were 18,490,000l. and 940,000l., the latter representing only 5:07 per cent. of the capital. Who was to blame for such a situation?

An attempt to reduce German political and economic influence was made in 1913. The diplomatic machinations of Austria had considerably weakened the bonds between Rumania and the Central Powers. The journey of Prince Ferdinand-now King of Rumania-to Petrograd, and the even more significant visit which the Tsar soon afterwards paid to the late King Carol at Constantza, unmistakably pointed towards a change in Rumanian foreign politics. In harmony with those events was the desire of the Rumanian government to float a loan on the Paris bourse, for which purpose M. Marghiloman, then Finance Minister, was despatched to Paris. This was soon after the conclusion of the Peace of Bucarest (August 1913), which had added to Rumania's greatly consolidated economic position an enhanced political prestige. Rumanian public opinion viewed the government's change of policy with much satisfaction, and in the light of the recent successes was nurturing sanguine expectations as to the result of M. Marghiloman's mission. Yet, notwithstanding the efforts of the latter, an agreement could not be arrived at, mainly, strange to say, on account of the unsympathetic attitude of French official circles. The transactions were followed closely by German financiers; and, at the critical moment, M. Marghiloman was approached

by the representative of the Diskonto with an offer so favourable that he could not do otherwise than break off negotiations with the French bankers. He proceeded that very day to Berlin, where he had no difficulty in arriving at an early settlement.

German finance has shown an equally enterprising spirit outside public transactions. To apportion nicely its share in the banking organisation of Rumania is naturally impossible; but it can be stated on good authority that it amounts to at least 50 per cent. of the total capital involved. Leaving aside the Banca Natională Română, which alone has the right of issuing notes, there are eight great banks in Bucarest-which means in Rumania. Of these, the Banca Generală Română was founded in 1895 by the Diskonto-Gesellschaft and Bleichröder, both of Berlin; the Banca de Credit Român was founded in 1904 by the K. K. Privilegierte Oesterreichische Länderbank and the Niederösterreichische Escompte-Gesellschaft, both of Vienna; while the Banca Comercială Română is a creation of the Anglo-Oesterreichische Bank and Wiener Bankverein, of Vienna, in cooperation with the Banque de l'Union Parisienne, Paris, and the Crédit Anversois, Antwerp. The latter, however, though founded in Antwerp in accordance with Belgian law, is but an offshoot of the Darmstädter Bank, and works entirely with German capital. A fourth bank, that of Marmorosch, Blank & Co., was founded in 1905 partly with Rumanian capital, in conjunction with the Pester Ungarische Kommerzial-Bank, of Budapest, and the Bank für Handel und Industrie and the Berliner Handels-Gesellschaft, of Berlin.

That there should not be a single bank controlled by French finance in a country whose life is so fully dominated by French influence, and whose business connexions with France are considerable, is a fact which speaks for itself. From that point of view English finance is seemingly better off, for it possesses such an institution in The Bank of Roumania, Ltd. Founded in 1866, it was the first bank to be established in Rumania; yet it never played an important part on the Bucarest market, because it preferred to adhere to the traditions of English banking rather than adapt itself to the

circumstances of the place. Moreover, it probably found but scanty encouragement at home, English investors having at their disposal a vast field of secure investment within the Empire, and being probably unaware how completely Rumania had grown out of Balkan conditions. One thing is certain-the institution never had the benefit of any official support. The influence which finance can wield is great everywhere, and perhaps greater in an agricultural country, where it is not counteracted by the organised strength of labour, and where a long period elapses between the outlay for production and the coming in of the return. It is infinitely more powerful in a country like Rumania, where the national circulating capital is hopelessly distanced by the pace of development, and where the leading classes (we must face the fact) show many of the characteristics proper to a plutocracy in the making. The apathy displayed under the circumstances by French and English official circles in cheerfully ignoring the German manœuvres in Rumania is nothing less than stupefying. German finance would hardly have embarked upon investments on such a large scale without the support of its government; and, in the light of political events, its activity clearly manifests itself as part and parcel of a definite policy. Having said so much, it is but fair to acknowledge that to the liberal assistance of German finance is largely due the astonishing progress made by Rumania within the last half-century.

With the path thus conveniently prepared by German finance, German industry and commerce would hardly have needed the facilities afforded it by its possible competitors in order to acquire control of the Rumanian market. The reports of H.M. consuls in Rumania so persistently harp upon the theme of the conservatism and torpidity of British traders, that one wonders whether the factor of 'tradition' plays a rôle in the matter. The British manufacturers refused to supply the cheap goods which are a necessity in a country with so large and poor a rural population, though it was obvious that, once the market for cheap goods was acquired, the Germans would have little difficulty in securing also the orders for better manufactures. The British neglected to study and adapt themselves to the