Chapter V: Part I: No. 3 (5)

In presenting the budget the Chancellor of the Exchequer stated that the expenditures in the past year exceeded the estimate by $2,030,000,000. He referred to America's assistance as follows:

The extent of the assistance of the United States and our advances
to the Allies last year amounted to $2,525,000,000. In addition to
this the United States have advanced to all the Allies no less a sum
during the year than $4,750,000,000. Of this sum approximately
$2,500,000,000 was advanced to us and $2,250,000,000 to the Allies.

The House will see, therefore, that, whereas this year we advanced
to the Allies approximately the same amount as last year,
$2,525,000,000 as against $2,700,000,000, the United States advanced
in addition $2,250,000,000; that is to say, the total advances by us
and by the Government of the United States are $4,775,000,000, as
against $2,700,000,000 by us alone last year.

The House would notice that our advances to the Allies are
approximately the same amount as the advances made to us by the
Government of the United States. This is satisfactory. It means that
it is only necessary for us to lean on the United States to the
extent that the other Allies lean upon us, or that, in other words,
after nearly four years of war we are self-supporting.

But it is almost absurd that we should be borrowing with one hand
while we are lending with the other. The result is that our accounts
are inflated apparently, and in fact to that extent our credit is
weakened. I have therefore been in communication with Mr. McAdoo,
the Financial Minister of America, and Mr. Crossley, the head of the
United States Financial Mission, and I suggested as regards advances
to the Allies a course which, if adopted, will have the effect of
lessening to a considerable extent our burden, while in no way
increasing the total obligations of the United States.

THE TOTAL BRITISH DEBT

In referring to the total debt the Chancellor of the Exchequer made the following statement:

The national debt, on the estimates which I have submitted to the
House, will at the end of the present year, (March 31, 1919,) amount
to $39,900,000,000. Previously, in counting our liabilities, I have
deducted altogether advances to Allies and Dominions. I do not
propose to adopt that course today. We cannot ignore what is
happening in Russia; though, even yet, I do not admit--I do not
believe--that we should regard the debt of Russia as a bad debt,
because, sooner or later, in spite of what is happening now, there
will be an ordered Government in that country.

By the end of this year the total amount due by the Allies to us
will be $8,110,000,000, and I should hope that we should be able to
deduct Dominion and obligation debts, making a total of
$5,920,000,000. The amount of our national debt at the end of last
year was $29,250,000,000. The amount of our liability on the basis I
have stated is $34,280,000,000, and, taking 5 per cent. on this
amount as the rate of interest, the total comes to $1,900,000,000.
This, added to the normal expenditure, makes a total amount of
$3,400,000,000.

Now, how is that to be met? Taking the Inland Revenue taxation
alone, it amounts to $2,700,000,000. The Inland Revenue officials
have assured me that they have made a very careful and a very
conservative estimate. Taking this estimate, there remains a
deficit on the full year of $550,000,000.

To make good this $550,000,000 I shall impose new taxation which, on
the full year, will bring in $570,000,000. The Inland Revenue, in
their estimate of result of existing taxation, take no account
whatever of the excess profits duty, but that duty, as I have
pointed out, is expected to yield $1,500,000,000.

Assuming--an assumption that may last for half an hour
[laughter]--that the income tax remains at 5s, that should reach
$375,000,000. Of course, that must be supplemented. It depends upon
the state of trade and credit, but I think I am quite safe in saying
that this amount, which they have left out of their reckoning, is
more than sufficient to counter-balance any error made with regard
to existing taxation.

GERMANY'S WAR DEBT

He followed this with a statement contrasting the financial condition of Great Britain with that of Germany, as follows:

Up to June, 1916, according to the statement of the German Financial
Minister, the monthly German expenditure was $500,000,000; it is now
admitted to be $937,500,000, which means a daily expenditure of
$31,250,000, which is almost the same as ours. But it does not
include such matters as separation allowances. As to the war debt,
the German votes of credit up to July amounted to $31,000,000,000.
Up to 1916 they imposed no new taxation at all, and in that year
they proposed a war increment levy. Assuming that their estimates
were realized, the total amount of taxation levied by the German
Government was $1,825,000,000, as against our own amount.

This amount is not enough to pay the interest of the war debt which
Germany has accumulated up to the end of the year. The German
balance sheet, reckoned on the same basis as ours, will, with
interest, sinking fund, pensions, and pre-war expenditures, be a
year hence $3,600,000,000; and with additional permanent imperial
revenue of $600,000,000 they will make their total additional
revenue $925,000,000 per annum, and this amount, added to the
pre-war revenue, makes a total of $1,675,000,000, showing a deficit
at the end of the year of $1,925,000,000.

If that were our position I should say that bankruptcy was not far
from the British Nation.

The German taxes have been almost exclusively indirect, imposed on
commodities paid for by the mass of the people and not upon the
wealthier classes, who control the Government and on whom the
Government is afraid to put extra taxation.

Trade After the War

Important Report by a Commission of British Experts and Economists

Great Britain's policy with reference to future trade is outlined in the final report of the Committee on Commercial and Industrial Policy After the War, of which Lord Balfour of Burleigh was Chairman, and which included in its membership Arthur Balfour, (ex-Master Cutler of Sheffield,) also the heads of the various Boards of Trade, the textile trades, with representatives of the shipping and shipbuilding industries, finance, engineering, metal trades, coal, electrical, iron and steel associations, national transport workers, and distinguished economists.

Shipping policy after the war is not dealt with in the report, but, in view of the world shortage of tonnage, the committee express the opinion that, while it may be desirable to impose for a limited period some restriction on the use of British ports by enemy vessels, any policy which might tend to check the use of English ports by foreign shipping generally would be inexpedient. They, however, urge that, in accordance with the Paris Conference resolutions, the exaction of reparation in kind from enemy countries should, in the interests of the reconstruction of industry and the mercantile marine, be carried out as fully as may be practicable.

In a general survey of the position of British industry and overseas trade in 1913, prior to the war, the committee found that the United Kingdom had taken only a limited share in the more modern branches of industrial production, and that certain branches had come to be entirely, or very largely, under German control, and in numerous branches foreign manufacturers had secured a "strong, or even predominant, position." They found that British merchants and manufacturers had also been encountering successful competition in overseas trade. They believe that the knowledge gained during the war will be a valuable asset in the development of British industry.

As to the measures which should be adopted during the transitional period, the committee reaffirm the main recommendations of their interim report, namely:

Transition Period

(a) The prohibition of the importation of goods from enemy origin
should be continued, subject to license in exceptional cases, for at
least twelve months after the conclusion of the war, and
subsequently for such further period as may be deemed expedient.

(b) The Paris resolutions relating to the supply of the Allies for
the restoration of their industries can be carried into effect if a
policy of joint control of certain important commodities can be
agreed upon between the British Empire and the Allies. Any measures
should aim at securing to the British Empire and the allied
countries priority for their requirements, and should be applied
only to materials which are mainly derived from those countries and
will be required by them. This policy should be applied as regards
the United Kingdom by legislation empowering the Government to
prohibit the export, except under license, of such articles as may
be deemed expedient, and, as regards the British Empire and the
allied countries, the Government should, without delay, enter into
negotiations with the various Governments concerned, with a view to
the adoption of suitable joint measures in the case of selected
commodities of importance.

The Government should consider, in consultation with the Allies, the
expediency of establishing after the war a joint organization on the
lines of Commission Internationale de Ravitaillement for dealing
with the orders of the allied Governments for reconstruction
purposes, and with such private orders as they may find it expedient
to centralize.

It is pointed out that the prolongation of the war and the entry into it of the United States have increased the importance of a considered policy directed toward assuring to the British Empire and the Allies adequate supplies of essential raw materials during the period immediately following the conclusion of peace, and that the extent to which the Paris resolutions which bear upon this vital question can be carried into effect depends upon the co-operation of the Governments concerned.

PROBLEM OF RAW MATERIALS

The committee reports that it will be necessary to continue for a considerable period after the war some portion of the control of home and foreign trade in order to secure adequate supplies of foodstuffs and raw material. It does not regard it as practical to attempt to make the empire self-supporting in respect of numerous raw materials. It notes that the Board of Trade already has set up a committee to investigate the question of the supply of cotton and it recommends special inquiries as regards each commodity. "The object to be kept in view should be that the empire may be capable in an emergency of being independent in respect of the supply of every essential commodity of any single foreign country."

The committee advises against the exclusion of foreign (other than present enemy) capital from sharing in the development of the empire's resources, but recommends:

(a) Complete disclosure, as far as is practicable, of the extent of
foreign holdings in any particular case.

(b) That mineral and other properties are not secured by foreign
concerns in order to prevent the development of those properties,
and to check competition in supply; and

(c) That in the case of commodities of great imperial importance,
the local Government concerned should have some measure of control
over the working of the properties.

These principles, if accepted, should be brought to the notice of
the Governments of other parts of the empire, with a view to the
adoption of a uniform policy.

ALIENS IN BUSINESS

The committee expresses the opinion that it would not be desirable to impose special restrictions against the participation of aliens in commercial and industrial occupations. It recommends, however, that such occupations as pilot and patent agent should be confined to British-born subjects, and suggests that foreign commercial travelers operating in the United Kingdom should be registered and hold licenses, that the registration of title to property should be compulsory, and that such registration should involve a declaration of the nationality of the owner.

The committee deems it unwise to restrain the establishment or the continuance of agencies or branches of foreign banks or insurance companies in the United Kingdom, but foreign insurance companies should be required to make a deposit proportionate to the business done. Foreign banks should be required to pay the income tax.

The committee considers it necessary to impose special restrictions on the subjects of enemy countries, and that this can best be done by means of stringent permit and police regulations, but it does not believe that attempts should be made to prevent enemy subjects from establishing agencies or holding interests in commercial or industrial undertakings.

A plan for the maintenance and development of industries essential to national safety, called "Key Industries," is proposed, as follows:

Synthetic dyes, spelter, tungsten, magnetos, optical and chemical
glass, hosiery needles, thorium nitrate, limit and screw gauges, and
certain drugs.

SPECIAL INDUSTRIES BOARD

The committee recommends the creation of a permanent special industries board, charged with the duty of watching the course of industrial development and recommending plans for the promotion and assistance of the industries enumerated above. With reference to industries generally the committee thinks that the individualist methods hitherto adopted should be supplemented by co-operation and co-ordination of effort in respect of

1. The securing of supplies of materials.

2. Production, in which we include standardization and scientific
and industrial research; and

3. Marketing.

The report recommends the formation of combinations of manufacturers, strong, well organized associations and combinations, to secure supplies of materials, especially the control of mineral deposits in foreign countries. In order to facilitate increased production it recommends:

That an authority should be set up which should have the right,
after inquiry, to grant compulsory powers for the acquisition of
land for industrial purposes and the diversion or abolition of roads
or footpaths.

That there should be a judicial body with compulsory powers to deal
with the question of wayleaves required for the development of
mineral royalties and the economical working of collieries and
mines.

The committee believes in the formation of organizations for marketing the manufactured products of the country and deems it inexpedient for the Government to enter into any policy aiming at positive control of combinations (trusts) in the United Kingdom. It recommends that combinations be legalized, so as to be enforceable between members. It welcomes the establishment of the British Trade Corporation to co-ordinate and supplement existing financial facilities for trading purposes. As a general rule the members think it would be undesirable that the State should attempt to provide capital for industrial purposes, but as the re-establishment of industry on a peace basis will be profoundly affected by taxation, currency, and foreign exchanges, they recommend that these matters be taken up by the Treasury, in consultation with the banking and commercial interests.

TARIFF REGULATIONS

With reference to tariff the committee recommends a protective tariff only on industries "which can show that, in spite of the adoption of the most efficient technical methods and business organization, they cannot maintain themselves against foreign competition, or that they are hindered from adopting these methods by such competition."

The general fiscal policy as finally adopted by the committee is as follows:

1. The producers of this country are entitled to require from the
Government that they should be protected in their home market
against "dumping" and against the introduction of "sweated" goods,
by which term we understand goods produced by labor which is not
paid at trade union rates of wages, where such rates exist in the
country of origin of the goods, or the current rates of that country
where there are no trade union rates. We recommend that action be
taken in regard to "dumping" on the lines (though not necessarily in
the precise form) adopted in Canada.

2. Those industries which we have described as "key" or "pivotal"
should be maintained in this country at all hazards and at any
expense.

3. As regards other industries, protection by means of customs
duties or Government assistance in other forms should be afforded
only to carefully selected branches of industry, which must be
maintained either for reasons of national safety or on the general
ground that it is undesirable that any industry of real importance
to our economic strength and well-being should be allowed to be
weakened by foreign competition or brought to any serious extent
under alien domination or control.

4. Preferential treatment should be accorded to the British oversea
dominions and possessions in respect of any customs duties now or
hereafter to be imposed in the United Kingdom, and consideration
should be given to other forms of imperial preference.

5. As regards our commercial relations with our present allies and
neutrals, the denunciation of existing commercial treaties is
unnecessary and inexpedient, but the present opportunity should be
taken to endeavor to promote our trade with our allies, and
consideration should be given to the possibility of utilizing for
purposes of negotiation with them and present neutrals any duties
which may be imposed in accordance with the principles laid down
above.

LIMITING PROTECTIVE PRINCIPLES

In view of the danger that the admission of the principle of protection, even to a limited extent, may give rise to a widespread demand for similar assistance from other industries, and consequently to an amount of political pressure which it may be very difficult to resist, the committee further recommends:

That a strong and competent board, with an independent status,
should be established to examine into all applications from
industries for State assistance, to advise his Majesty's Government
upon such applications, and, where a case is made out, to frame
proposals as to the precise nature and extent of the assistance to
be given.

Before recommending tariff protection for any particular industry it
should be the duty of the board to consider forms of State
assistance other than, or concurrent with, protective duties, such
as bounties on production, preferential treatment (subject to an
adequate standard of quality and security against price rings) in
respect of Government and other public authority contracts, State
financial assistance, and also whether the position of the industry
could not be improved by internal reorganization.

The board should also have constantly in mind the safeguarding of
the interests of consumers and of labor, and should make
recommendations as to the conditions which for these purposes should
be attached to any form of Government assistance, whether by means
of a tariff or otherwise.

The committee reports adversely on the changing of weights, measures, and coinage to the metric system.

Finland Under German Control

Events of the Period of Chaos and Foreign Invasion Preceding the Fall of Viborg

Civil war, later complicated by the German invasion, has been the central fact in the history of Finland since the declaration of its independence in December, 1917. The internecine strife was precipitated by the coup d'état which the Finnish Socialists effected in January, 1918. It so happened that the representatives of the propertied classes had the majority in the Diet which severed the century-old connection between Finland and Russia. As for the Government which this Diet has set up to rule the independent republic, all its members belong to middle-class parties. Headed by Mr. Svinhufud, a Young-Finn leader, it includes one Svekoman, two Agrarians, three Old-Finns, and six Young-Finns.

The dissatisfaction of the Socialist elements, which are very strong in Finland, with this régime soon grew so intense that they decided to overthrow it by armed force. The Red Guard, that is, detachments of armed workmen organized by the Finnish Labor Party, seized Helsingfors, dissolved the "bourgeois" Government, and formed a Socialist Cabinet under the leadership of Senator Kullervo Manner. The revolutionists did not, however, succeed in capturing Mr. Svinhufud and his associates. These fled north and established their headquarters at Vasa, (Nikolaystadt,) on the Gulf of Bothnia. Since then the half-starved country has been the arena of bloody clashes between the Red troops and the forces supporting the Vasa Government, which consist largely of middle-class elements and are known as the White Guards.

It is an open secret that Russia rendered substantial assistance to the Finnish revolutionists. Most of the weapons in their possession are from Russian arsenals, and Russian soldiers who lingered on in Finland even after the Bolsheviki had agreed to withdraw the Russian troops stationed there have been fighting shoulder to shoulder with the Finnish Red Guards. It is reported that on several occasions the Finnish Red Guards were reinforced by Red Guards from Petrograd. Moreover, in its organization the Finnish Socialist Workmen's Republic is a copy of the Russian Soviet Republic. The Red Finns have the same hierarchy of Soviets, and they affect the administrative terminology of the Bolsheviki.

RED FINLAND

The Finnish Socialists should not, however, be treated as identical with the Russian Bolsheviki. The difference between them is probably due to a difference of civilization, for culturally the dissimilarity between a Russian and a Finn is as great as it is linguistically and ethnically. It is noteworthy that unlike the Bolsheviki they regard their own rule as a transitional, provisional régime. Speaking on Feb. 14, 1918, at the first meeting of the Finnish Central Soviet, Kullervo Manner, President of the Commissariat of the People of Finland, said among other things:

One of the foremost aims of the great revolution of Finland's
workers is to build the proud edifice of a political democracy on
the ruins of the fallen power of the Junkers. * * * As soon as the
enemy of the people has been defeated throughout the country shall
the people of Finland be given an opportunity through referendum to
accept a new Constitution. The People's Commissariat intends shortly
to put before the Central Soviet a proposal for a fundamental law
through which will be laid the ground for a real representation by
the people and a firm foundation for the future of the working
class.

Although the Finnish Socialists are united with Russia by co-operation and common aspirations, they do not desire to join the Russian Federation. Finnish socialism identifies itself with the cause of Finnish nationalism. It was the Socialists that were the stanchest advocates of Finland's secession from Russia, and it was they that, by calling a general strike, forced the Diet to adopt immediately the Independence bill in November, 1917.

The notion of Finland's complete sovereignty forms the basis of the peace concluded early in March, 1918, between the Russian Socialist Federative Soviet Republic and the Finnish Socialist Workmen's Republic, "in order to strengthen the friendship and fraternity between the above-mentioned free republics." According to this pact, published on March 10, Russia hands over to the Independent Finnish Socialist Republic all its possessions in Finland, including real estate, telegraphs, railways, fortresses, lighthouses, and also Finnish ships which had been requisitioned by the Russian Government before or during the war. Article IX. provides for "free and unimpeded access for the merchant ships of the Russian and Finnish Socialist Republics to all seas, lakes and rivers, harbors, anchoring places, and channels" within their territories. The next article establishes uninterrupted communication, without trans-shipment, between the Russian and Finnish railways. Article XIII. contains the provision that "Finnish citizens in Russia as well as Russian citizens in Finland shall enjoy the same rights as the citizens of the respective countries."

GERMAN HAND IN FINLAND

If "Red" Finland has had the support of the Russian Bolsheviki, "White" Finland has found a most enterprising ally in Germany. The Vasa Government has been working in direct and now open contact with Berlin. It is overwhelmingly pro-German. The relation between the two Governments early assumed the character of vassalage on the part of the Finns. This is evidenced by the peace agreement which official Finland concluded with Germany on March 7. Its full text will be found elsewhere in this issue.

Since the beginning of the war the Germans have been conducting in Finland an active campaign of espionage and propaganda through a host of agents and sympathizers. The propaganda found a favorable soil among the propertied classes, and especially among the landed gentry of Swedish extraction. On the other hand, the persecutions which the Czar's bureaucracy inflicted upon the nation, and against which neither the French nor the British press uttered any adequate protest, drove some of the patriotic Finns into the arms of Russia's enemies. A number of Finnish youths escaped to Germany and entered the ranks of the German Army. The University of Helsingfors played a prominent part in this movement. In 1915 an entire battalion made up exclusively of Finns fought under the German colors, while no Finns served in the Russian Army, exemption from military service being one of the ancient Finnish privileges respected by the Imperial Russian Government.

After the March revolution, and especially after the fall of Riga, the efforts of the German agents, with whom Finland now fairly swarmed, were directed toward fomenting Finnish separatism. In fact, the Swedish press asserted that from the very beginning of the war the Germans had spent large sums of money in trying to fan the Finns' smoldering discontent with Russia. At the same time Germany endeavored to enlist the sympathies of the White Guards, (skudshär,) which the middle classes were hastily organizing, ostensibly for the purpose of assisting the militia and protecting the population from robbers. Berlin was so successful in its task that as early as October, 1917, the head of the Russian Bureau of Counterespionage in Finland spoke of the skudskär as "the vanguard of the German Army." The Finns who served in Wilhelm's army and were thoroughly indoctrinated with German military science and German ideals were returned to their native country, and it was they that took upon themselves to officer the White Guards. Some of the weapons and munitions used by the latter were secured from Sweden, but most of them came from Germany and were probably a part of the Russian booty. The above-mentioned Russian official declared, in an interview published in a Petrograd daily in October, 1917, that German submarines appeared regularly off the Finnish coast and delivered arms and ammunition to Finnish vessels.

ATROCITIES ON BOTH SIDES

The White Guards, commanded by General Mannerheim, fought the revolutionists with varying success but without achieving a decisive victory. Several towns in the south were the scene of prolonged battles in which many lives were lost, notably Tammerfors, the important industrial centre, where fierce fighting raged throughout the second half of March. The factory districts in the north were also the scene of stubborn fighting. A number of women were seen in the ranks of the Red Guards.

The two warring factions created a reign of "Red" and "White" terror in the country. Both committed frightful atrocities. On April 17, Oskari Tokoi, the Commissionary for Foreign Affairs in the Socialist Cabinet, protested to all the powers against the manner in which General Mannerheim treated his Red Guard prisoners. He pointed out that, while the Red Guards regarded the captured White Guards as prisoners of war, the Government troops, having taken a number of prisoners, shot all the officers and every fifteenth man of the rank and file. On the other hand, the corpses of many White Guards were found unspeakably mutilated.

Immediately after the outbreak of the Socialist rebellion, the official Government conceived the idea of appealing for foreign military aid against the revolutionists. On Jan. 30 such an appeal was reported to have been sent to Sweden. The cause of White Finland had many sympathizers in that country. The Finnish White Guards had a recruiting office in Stockholm, and a number of Swedish volunteers fought in their ranks. A considerable portion (12 per cent.) of the Finnish population are Swedes, mostly members of the higher classes. In addition, the two countries have common historical memories, for Finland was a Swedish province for six centuries, from the time of Erik VIII., King of Sweden, till the Russian annexation in 1809.

The Swedish Government did not, however, elect to intervene. It is not certain whether Stockholm refused its assistance because Finland refused to cede the Aland Islands to the Swedes as a compensation for their services, or because, as Mr. Branting asserts, Sweden was to intervene "as the creature and ally of Germany." The only step the Swedes took was to send a military expedition to the Aland Islands, in response to several appeals from their population, which is mostly Swedish. This measure was decided upon by the Swedish Parliament on Feb. 16 and was effected two or three days later.

The Aland Archipelago, consisting of about ninety inhabited islets and situated between Abo on the Finnish coast and Stockholm, belongs to Finland. Its strategic importance for Sweden is aptly characterized by an old phrase which describes it as "a revolver aimed at the heart of Sweden." The mission of Sweden's troops was to clear the islands, by moral suasion if possible, from the bands of Russian soldiers and Finnish White and Red Guards which for some time had been terrorizing the population. The Bolshevist garrison offered stubborn resistance to the landing of the Swedish forces.

THE GERMAN INVASION

At noon on March 2 a German detachment occupied the Aland Islands. The next day the German Minister at Stockholm informed the Swedish Government that Germany intended to use these islands as a halting place for the German military expedition into Finland, undertaken at the request of the Finnish Government for the purpose of suppressing the revolution. He gave assurances that Germany sought no territorial gains in effecting the occupation and would not hinder the humanitarian work of the Swedish Supervision Corps in the islands. On March 22 the Main Committee of the Reichstag rejected, by 12 votes against 10, the motion of the Independent Social Democrats to evacuate the Aland Islands and cease interfering with the internal affairs of Finland.

Mr. Branting, the Swedish political leader, denounced the talk that Finland, deserted by Sweden, turned to Germany in despair, as "gross hypocrisy." He is convinced that a secret agreement existed between Finland and Germany long before the outbreak of the civil war, and that Finland wants to be a dependency under Germany rather than a member of a Scandinavian federation of States. Some members of the Diplomatic Corps in Washington were also reported to believe that the civil war was merely a specious pretext for inviting Germany to restore order in the country, and that the negotiations which brought about the German intervention had been going on secretly for months.

March passed in preparations for the expedition. On the morning of April 3 the Russian icebreaker Volinetz, which had been captured by the White Guards, piloted a German naval squadron, consisting of thirty-six ships, into the Finnish waters of Hangö, which is the extreme southwestern point of the Finnish coast, within a few hours of Helsingfors. During the afternoon the Germans landed on the peninsula of Hangö a force which, according to an official German statement, comprised 40,000 men under General Sasnitz, 300 guns, and 2,000 machine guns. The next day the Berlin War Office issued the following statement: "Eastern Theatre--In agreement with the Finnish Government, German troops have landed on the Finnish mainland." Later more German detachments were landed at Abo.

According to one report, the Germans, upon their landing, opened negotiations with the Finnish Socialists, but their overtures were apparently rejected. The Russian Government immediately protested to Germany against the landing in Finland. The German Government replied by demanding that the Russian war vessels in Finnish territorial waters should either leave for Russian ports or disarm, according to Article 5 of the Brest-Litovsk treaty, on or before midday, April 12. The Bolsheviki ordered the commander of the Baltic fleet to carry out this demand. Four Russian submarines were fired upon and sunk by the Germans at Hangö during the landing and several other Russian warships were blown up by their own crews for fear of being captured by the Germans.

On April 13 the Finnish Official News Bureau gave out a statement to the effect that all German troops landed in Finland had been dispatched at the request of the Finnish Government. On April 17 the Germans landed 40,000 men at Helsingfors. Their naval squadron stationed in the harbor of the Finnish capital consisted of twelve vessels.

FALL OF VIBORG

The Red Guards offered a stubborn resistance to the invaders, but it soon became apparent that their cause was lost. Upon the landing of the Germans, the Socialist Government escaped from Helsingfors and established itself at Viborg, seventy-five miles northwest of Petrograd. On April 13 the German troops, aided by naval detachments, entered Helsingfors, "after a vigorous encounter with armed bands," as the German official announcements read. According to a Reuter dispatch, a three days' battle preceded the capture of the Finnish capital. It was taken by storm after fierce fighting in the streets. About the same time the City of Abo was taken by the White Guards. The Germans then proceeded to move on Viborg. On April 23 the Finnish Socialist Government protested to the allied representatives, including the American Ambassador to Russia, against the German interference. It declared that the Finnish Socialists would continue for the cause of freedom, with "a profound hatred and contempt for the executioners of nations and of the labor movement."

Viborg fell into the hands of the White Guards on April 30, after nearly all its defenders, 6,000 in all, were slaughtered. Among the prisoners taken was Kullerwo Manner, the President of the Socialist Government. On May 4 Berlin was able to announce complete victory in Finland. The official report follows:

Finland has been cleared of the enemy. German troops, in
co-operation with Finnish battalions, attacked the enemy between
Lakhti and Tevasthus in an encircling movement, and in a five days'
battle, in spite of a bitter defense and desperate attempts to break
through, we have overwhelmingly defeated him. The Finnish forces cut
off his retreat in a northerly direction. The enemy is closed in on
every side, and, after the heaviest losses, is laying down his arms.
We took 20,000 prisoners. Thousands of vehicles and horses were
captured.

A dispatch dated May 8 reported, however, that the country was far from pacified, and that the Red Guards continued to offer resistance at many points.

Speaking before the Main Committee of the Reichstag, on May 8, Friedrich von Payer, the German Imperial Vice Chancellor, defended Germany's intervention in Finland. The fundamental aim of this step was "to create in North Finland a final condition of peace, both military and political." He stated that the entire staff of the 43d Russian Army Corps was recently captured in Finland. He denied that Germany intended further to interfere in the inner affairs of Finland, and added that Germany had concluded economic and political treaties with Finland whereby both parties would profit.

UNDER GERMAN DOMINATION

While these military operations were being carried on, Finland was becoming a German province. Late in March an American and an English officer, visiting General Mannerheim at Vasa upon orders from their legations, were threatened by Finnish White Guard officers with personal violence and turned out of the dining room of the chief hotel. This incident was described as characteristic of the feeling existing among the majority of Finns. On April 1 Vasabladet, the chief Vasa newspaper, wrote: "No military or other similar persons from any of the countries at war with Germany ought to be allowed to stay within the borders of our country so long as we, with the help of God and Germany, are fighting our hard fight for liberty, order, and justice against the barbarous ally of the western powers." It appears from a case reported on April 26 that the viséing of foreign passports by Finnish officials depends now upon the consent of the Berlin authorities.

Finland was proclaimed a republic in December, 1917. It has always been one of the most democratic countries in Europe. It is asserted, nevertheless, that the experiences through which the former grand duchy has passed in the last six months have converted many classes of the population to monarchism. A Stockholm dispatch dated May 8 declared that a monarchy would probably be proclaimed in Finland, and that Duke Adolph Frederick of Mecklenburg-Schwerin, uncle of the Crown Princess of Germany, would be appointed King.

GREATER FINLAND

In the middle of April it became known that the Finnish statesmen had an ambitious plan for the territorial aggrandizement and political expansion of their country at the expense of Russia, and possibly also of Norway. A Stockholm paper published a statement that Germany had agreed to the establishment of a Greater Finland, to include the territory of the Petrograd-Murman railway to the arctic. The newspaper added that the Finnish railway system was to be enlarged with a view to establishing direct connection from North Cape to Budapest and Constantinople. Thus Finland would become the cornerstone of a "Mitteleuropa" stretching from the arctic coast to Asia Minor and beyond. A well-known Finnish painter stated in an interview that the Finnish troops, co-operating with the Germans, would take Petrograd as well as the south coast of the Gulf of Finland, which is ethnically Finnish. An announcement was made on May 8, before the Main Committee of the Reichstag, that no Germans were participating or would participate in the advance of Finnish troops on Petrograd.

A movement has been set afoot among Karelians, presumably by Finns, in favor of the Finnish annexation of Russian Karelia, on the basis of the principle of self-determination. Karelia includes parts of the Governments of Petrograd, Olonetz, and Archangel; its aboriginal population belongs to the Finnish race.

Peace Treaty Between Finland and Germany

Full Text of the Document

The Imperial Government of Berlin announced on March 7, 1918, that a treaty of peace between Germany and Finland had been signed. Two days later the full text was transmitted from Berlin to London through the wireless stations of the German Government. This treaty with Germany was made by the element in the Republic of Finland represented in a military way by the White Guards, who were pro-German and co-operated with the German army sent immediately afterward to make war in Finland against the Red Guards, who represented the Bolshevist element of the Finnish population. During April an armed conflict between the Reds and the Germans raged around Helsingfors, where the Bolshevist forces fought to annul this treaty, though with steadily diminishing prospects of success.

The full text of the treaty follows:

The Royal German Government and the Finnish Government, inspired by
the wish, after the declaration of the independence of Finland and
its recognition through Germany, to bring about a condition of peace
and friendship between both countries on a lasting basis, have
resolved to conclude a peace, and for this purpose they have
appointed the following plenipotentiaries: For the Royal German
Government, the Chancellor of the German Empire, Dr. Count von
Hertling; for the Finnish Government, Dr. Phil Edvard Immanuel
Hjelt, State Adviser, Vice Councilor of the University of
Helsingfors, and Rafael Waldemar Erich, LL.D., Professor of State
Law and of the Law of Nations at the University of Helsingfors, who,
after the mutual setting forth in good order and form of their
plenipotentiary powers, have come to an agreement on the following
provisions:

_CHAPTER I.--Friendship Between Germany and Finland and the Assuring
of the Independence of Finland_

Article 1. The contracting parties declare that between Germany and
Finland no state of war exists and that they are resolved henceforth
to live in peace and friendship with each other. Germany will do
what she can to bring about the recognition of the independence of
Finland by all the powers. On the other hand, Finland will not cede
any part of her possessions to any foreign power nor constitute a
charge on her sovereign territory to any such power before first
having come to an understanding with Germany on the matter.

Article 2. Diplomatic and consular relations between the contracting
parties will be resumed immediately after the confirmation of the
peace treaty. The freest possible admission of Consuls on both sides
is to be provided for by arrangements in special treaties.

Article 3. Each of the contracting parties will replace the damage
which has been caused in its own territory by the war, or which the
States or populations have brought about by actions contrary to
international law, or which has been caused by the consular
officials of the other party either to life, liberty, health, or
property.

_CHAPTER II.--War Indemnities_

Article 4. The contracting parties renounce mutually the making good
of war costs; that is to say, State expenses for the carrying on of
the war as well as the payment of war indemnities; that is to say,
of those prejudices which have arisen for them and their subjects in
the war zones by reason of the military measures connected with all
the requisitions undertaken in enemy country.

_CHAPTER III.--The Re-entry Into Force of State Treaties_

Article 5. The treaties which lapsed as a consequence of the war
between Germany and Russia shall be replaced as soon as possible by
new treaties for relations between the contracting parties, and they
shall be made to correspond to the new outlook and conditions which
have now arisen. Especially the contracting parties shall at once
enter into negotiations in order to draw up a treaty for the
settlement of trade and shipping relations between the two
countries, to be signed at the same time as the peace treaty.

Article 6. Treaties in which, apart from Germany and Russia, also a
third power takes part, and in which Finland appears together with
Russia or in the place of the latter, come into force between the
contracting parties on the ratification of peace treaty or, in case
the entry takes place later, at that moment. In connection with
collective treaties of political contents, in which other
belligerent powers are also involved, the two parties reserve their
attitude until after the conclusion of a general peace.

_CHAPTER IV.--Re-establishment of Private Rights_

Article 7. All stipulations existing in the territory of either of
the contracting parties, according to which, in view of the state of
war, subjects of the other party are subjected to any special
regulation whatever in the observation of their private rights,
cease to be of force on the confirmation of this treaty. Subjects of
either of the contracting parties are such legal persons and
societies as have their domicile in the respective territories.
Furthermore, subjects of either of the parties, legal persons and
societies which do not have their domicile in the territory, must be
regarded as on the same level in so far as in the territory of the
other party they were submitted to the stipulations applying to such
subjects.

Article 8. With regard to the civil debt conditions which have been
influenced by war laws, the following has been agreed:

1. The debt conditions will be re-established in so far as the
stipulations in Articles 8 to 12 do not decide otherwise.

2. The stipulation in Paragraph 1 does not prejudice the question as
to what extent the conditions created by the war (especially the
impossibility of settlement of debt owing to the obstacles in
traffic or commercial prohibitions in the territory of either of the
contracting parties) shall be taken into account in the
determination of claims of subjects of either party in accordance
with the laws applying thereto in the respective territories. In
this connection subjects of the other party who have been prevented
by the measures of that party, are not to be dealt with more
unfavorably than the subjects of their own State, who have been
prevented by the measures of that State.

A person who by the war has been prevented from carrying out in good
time a payment shall not be obliged to make good the damage which
has occurred owing thereto.

3. Demands of money, whose payment could be refused during the war
on the strength of war laws, need not be paid until after the
expiration of three months after the confirmation of the peace
treaty. In so far as nothing else has been stipulated in the
supplementary treaty, an interest of 5 per cent. per annum must be
paid on such debts from the original date on which they were due,
for the duration of the war and the further three months, regardless
of moratoriums. Up to the day on which they were originally due, the
interests agreed upon, if any, must be paid. In the case of bills or
checks submission for payment as well as protests against nonpayment
must take place within the fourth month after the confirmation of
this treaty.

4. For the settlement of outstanding affairs and other civil
obligations, officially recognized unions for the protection of
debtors and for the examination of claims of lay and legal persons
belonging to the union, as well as their plenipotentiaries, are to
be mutually recognized and permitted.

Article 9. Each contracting party will immediately after the
confirmation of the peace treaty resume payment of its obligations,
especially the public debt duties to subjects of the other party.
The obligations which became due before the confirmation of the
treaty will be paid within three months after the confirmation.

Article 10. Copyrights, trade protective rights, concessions and
privileges, as well as similar claims on public legal foundations,
which have been influenced by war laws, shall be re-established, in
so far as nothing else has been stipulated in Article 12.

Each contracting party will grant subjects of the other party who on
account of the war have neglected the legal period in which to
undertake an action necessary for the establishment or maintenance
of a trade protective right, without prejudice to the justly
obtained rights of third parties, a period of at least one year in
which to recover the action. Trade protective rights of subjects of
one party which were in force on the outbreak of war, shall not
expire in the territory of the other party, owing to their
non-application, till after the termination of four years from the
confirmation of this treaty. If in the territory of one of the
contracting parties a trade protective right, which in accordance
with the war laws could not be applied for, is applied for by an
agent who during the war has taken protective measures in the
territory of the other party in accordance with the rules, such
right, if claimed within six months after the confirmation of the
treaty, shall, with the reservation of the rights of third parties,
have priority over all applications submitted in the meantime, and
cannot be made ineffective by facts which have arisen in the
meantime.

Article 11. Periods for the superannuation of rights shall, in the
territory of each of the contracting parties, toward subjects of the
other party, expire at the earliest one year after the confirmation
of the peace treaty in so far as they had not expired at the time of
the outbreak of war. The same applies to periods for the submission
of dividend-warrants or warrants for shares in profit, as well as to
bills which have become redeemable or have become otherwise payable.

Article 12. The activities of authorities who on the strength of war
laws have become occupied with the supervision, custody,
administration, or liquidation of property or with the receiving of
payments, are without prejudice to the stipulations of Article 13,
to be wound up in accordance with the following principles:

1. Properties under supervision, in custody or under administration,
are to be set free immediately on the demand of the parties entitled
to them. Until the moment of transfer to the entitled party care
must be taken for the safeguarding of his interests.

2. The provisions of Paragraph 1 shall not modify the properly
acquired right of a third party. Payments and other obligations of a
debtor which, as mentioned at the beginning of the article, have
been received or caused to be received at the places mentioned,
shall, in the territories of the contracting parties, have the same
effect as if the creditor himself had received them.

Civil dispositions which have been made at the places mentioned at
the instigation of the parties or by them will have full effect and
are to be maintained by the parties.

3. Regarding the operations of the places mentioned at the beginning
of this article, especially those for receipts and payments, details
shall at once be given to the authorized parties immediately upon
demand. Claims which have been lodged to be dealt with at these
places can only be dealt with in accordance with the stipulations of
Article 14.

Article 13. Land or rights in land or in mines as well as rights in
the use or exploitation of lands, or undertakings, or claims for
participation in an undertaking, especially those represented by
shares, which have been forcibly alienated from the persons entitled
to them by reason of war laws, shall be transferred to the former
owner within a period of one year after the confirmation of the
peace treaty, and there shall be returned to him any profits which
have accrued on such property during the alienation or deprivation,
and this shall be done free from all rights of third parties which
may have arisen in the meantime.

_CHAPTER VI.--Indemnity for Civil Damages_

Article 14. Subjects of one of the contracting parties resident in
the territory of the other contracting party who, by reason of war
laws, have suffered damage either by the temporary or lasting
privation of concessions, privileges, and similar claims, or by the
supervision, trusteeship, administration or alienation of property,
are to be appropriately indemnified so far as the damage by the war
cannot be replaced by the actual re-establishment of their former
conditions. This also applies to shareholders who, on account of
their character as foreign enemies, are excluded from certain
rights.

Article 15. Each of the contracting parties will indemnify the
civilian subjects of the other party for damages which have been
caused to them in its territory during the war by the State
officials or the population there through breaches of international
law and acts of violence against life, health, or property.

Article 16. Each of the contracting parties will at once pay to the
subjects of the other party their just claims so far as this has not
already been done.

Article 17. For the fixing of the damages, according to Articles 14
and 15, there shall meet in Berlin a commission immediately after
the confirmation of this treaty which shall consist of one-third of
each of the contracting parties and one-third of neutrals. The
President of the Swiss Bundesrat shall be asked to nominate the
neutral members, from whom the Chairman shall be chosen. The
commission shall fix the principles, on which it is to work, and it
shall decide as to what procedure it shall follow. Its decisions
shall be carried out by sub-commissions, which shall consist of one
representative from each of the contracting parties and a neutral
umpire. The amounts fixed by the sub-commissions are to be paid
within one month of the decision being made.

_CHAPTER VII.--The Exchange of Prisoners of War and Interned
Civilians_

Article 18. Finnish prisoners of war in Germany and German prisoners
of war in Finland shall, as soon as practicable, be exchanged within
the times fixed by a German-Finnish Commission, and subject to the
payment of the costs entailed in such exchange in so far as those
prisoners do not wish to stay in the country where they happen to
be, with its consent, or to go to another country. The commission
will also have to settle the further details of such exchange and to
supervise their execution.

Article 19. The deported or interned civilians on both sides will be
sent home as soon as practicable free of charge so far as, subject
to the consent of the country on whose territory they are staying,
they do not wish to remain there or wish to go to another country.
The settlement of the details and the supervision of their execution
shall be carried out by the commission mentioned in Article 18. The
Finnish Government will endeavor to obtain from the Russian
Government the release of those Germans who were captured in Finnish
territory and who at the present time are outside Finnish on Russian
territory.

Article 20. Subjects of one party who at the outbreak of war had
their domicile or commercial establishments in the territory of the
other party and who did not remain in that territory may return
there as soon as the other party is not in a state of war. Their
return can only be refused on the ground of the endangering of the
internal or foreign safety of the State. It would suffice that a
pass be made out by the authorities of the home Government in which
it is to be stated that the bearer is one of those persons as
stipulated in Item 1. No visé is to be necessary on these passes.

Article 21. Each of the Contracting Parties undertakes to respect
and to tend the several burial places of subjects of the other party
who fell in the war as well as those who died during internment or
deportation and the persons intrusted by each party with care and
proper decoration of the burial places may attend to these duties in
accord with the authorities of each country. Questions connected
with the care of such burial places are reserved for further
agreements.

_CHAPTER VIII.--Amnesty._