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if they consider the objection justified, to come to an agreement with the employer by negotiation. Should no agreement be arrived at within one week the council may appeal to the Conciliation Board after a further period of 5 days. The individual worker who has received notice of dismissal enjoys the same right of appeal. Should the Conciliation Board consider the appeal against dismissal to be justified, and should the employer nevertheless refuse to continue to employ the worker in question, the committee shall then impose on the employer the obligation to give him compensation. The com- pensation shall be proportionate to the total number of years during which the worker has been employed in the factory, and may be reckoned for each year up to a maximum of one-twelfth of the amount of wages earned during the last year of employment. The total, however, must not exceed six-twelfths of that amount. In making this calculation the economic position of the worker and also the financial capacity of the employer must be considered.

The principle of the factory council was not accepted forthwith by the socialist sections of the community and by the trade unions. It is intelligible that the employer, who had been accustomed to autocratic position, would not feel well-disposed towards the institution of factory councils from which he apprehended unwar- rantable interference in his affairs. But the fact that the zealous advocacy of factory councils met with opposition from the advanced sections of the labouring classes calls for explanation. The idea of factory councils was connected in Germany, as in other countries, with a wave of syndicalism. At first it seemed as though, by means of the factory councils, industries would be brought under the control of the workers, so that, in this way, industrial property might be transformed into the property of labour. A demand of this sort has always been contrary to the fundamental principles of socialism, according to which the socialization of industry should be effected not by and for separate industrial establishments, but by means of an economic community of the entire nation, which should control all the separate industrial enterprises. The syndicalist de- mand, moreover, was really contrary to the fundamental principles for which the trade unions had fought. They had always been or- ganized on the basis of whole trades. They were united in a central organization, and their whole system was based on the perception of the fact that the regulation of wages and of conditions of labour depended on the state of the labour market, and that the labour mar- ket could be regulated for the benefit of labour only through trades unions on a large scale. The trades unions could not but fear that, if the real representation of labour became concentrated in the factory councils, the methods hitherto employed by the unions would be altogether superseded. And, indeed, the tendencies of the councils movement were in direct conflict with those of the trades unions.

It may now (1921) be asserted that these conflicting tendencies in Germany have been reconciled, although under certain circum- stances the old differences might be revived. The view has prevailed that it is the business of the factory councils not only to safeguard the interests of particular factories, but also to be responsible for safeguarding the interests of the whole industrial economy. More- over, the factory councils, as things have actually developed, have more and more become instruments of the trades-unions movement in the factories, so that the great impulses of the social movement continue, as before, to emanate from the trades unions. They have, in particular, kept a firm control of regulation of conditions of labour. The Factory Councils Law paved the way for this development. The factory council, from its whole structure, -is intended to be not merely a representative body for the workers in a particular in- dustrial undertaking. This, it is true, would be the historical de- velopment of the factory council from the fundamental ideas of the councils movement as described above. The factory council, however, is also to be conceived as an official institution designed to safeguard the interests of the whole industrial economy. This is expressly laid down in Sect. 68 of the Factory Councils Law, which says: " The factory council in carrying out its functions must en- deavour to see that neither party puts forward demands or adopts measures which would be prejudicial to the general interest." As regards the relative position of the trades unions, the Factory Councils Law is carefully framed so that in all cases of dispute the precedence of the trades unions shall be recognized. For this reason the wages contract takes priority of any other agreements between the factory council and the employer. For the same reason the representatives of the trades unions have the right to attend the meetings of the factory council and to take part in the general meet- ings of the factory workers. More especially, the right of the trades unions to represent the workers in negotiations with the employer is not affected by the right of representation enjoyed by the factory council. This point is determined by Sect. 8 of the Factory Councils Law, which says: " The right of economic associations of workers and salaried employees to represent the interests of their members is not affected by the provisions of this law."

What is the significance of the German factory council in the social movement of labour? That the rights of labour have been extended by the factory council is beyond all doubt. Where factory councils are in existence arbitrary conduct on the part of the employer in regard to matters fundamentally affecting con-

ditions of labour is rendered impossible, and the legal position of the worker in the industry is firmly established. Rights hitherto exercised by the employer without any restriction such as, for instance, the right to issue factory regulations, to fix penalties and to give notice of dismissal at will have been limited. The worker's sense of his own personality has thus been raised. But, above all, the worker's sphere of influence has been extended to a province from which he was hitherto excluded. This province is the conduct of the business. It is true that the powers of the factory council in this sphere are not so far-reaching as in the sphere of the regulation of conditions of work. The actual right to a voice in business decisions has nowhere been conceded to the factory council. The employer, however, is obliged to answer questions put to him with regard to these matters; he must dis- cuss them and must lay facts and figures before the council. Nevertheless, in forming an opinion on the right of the workers to a voice in the business conduct of an enterprise, it must be remembered that the precise limits within which the law permits such cooperation are of comparatively small significance. The manner in which the right is exercised by the workers is of far greater importance.

It is no mere coincidence that, since the institution of factory councils, a new educational movement on the part of the labour- ing classes has developed in Germany. This movement is con- nected with the fact that new functions have been assigned to the factory councils, functions which can only be performed by those who possess the necessary expert knowledge. So-called " courses of instruction for councils " (Ralekurse) are being instituted all over Germany with the object of enabling the working classes to acquire the knowledge and capacity requisite for the fulfilment of their new duties. This educational movement is becoming more and more systematic and conscious of its own significance. At the university of Frankfort-on-Main an " Academy of Labour " has been founded, to the support of which trades unions of all kinds are contributing large sums. The object of the " Academy of Labour " is to produce a new class of leaders for the new tasks of the labour movement by means of a com- prehensive scheme of education.

In this intellectual side of social politics to which the Factory Councils Law has given birth there lie the seeds of a highly impor- tant development. For social questions are not merely questions of power. The supremacy of capital over labour has not been due solely to the ownership of the instruments of production; it was, above all, based on intellectual capacity for business man- agement and leadership. The labour movement, by striving with purpose and system to obtain the intellectual equipment which is requisite, not only for acquiring the instruments of pro- duction, but also for managing them in the way that will be most beneficial to the entire community, is taking a step forward which may be of greater significance to the economic life of the nation than any laws and schemes for socialization. It is an undoubted fact that this intellectual movement, bound up as it is with the new rights of the factory councils and with the general and fun- damental principles of the councils movement, is a preliminary step in the socialistic transformation of economic life which is taking place before our eyes, although many of us may not be aware of it, or may not wish to become aware of it.

BIBLIOGRAPHY. Information on the general questions involved is given by Anschiitz in Die Reichsverfassung (zu Art. 165; 1921); by Sinzheimer in Das Rdtesystem. Eine Einfuhrung in den Rdte- gedanken (1920); Proceedings of the Constitution Committee of the National Assembly (1919-20). For particular information concern- ing the Factory Councils Law the Commentaries on the law should be consulted, especially those of Dersch (1920), Flatow (1921), Feig and Sitzler (1921). (H. Si.)

POLITICAL HISTORY

From IQIO to Outbreak of World War. The question of reform in imperial financial system, which in 1009 led to the resigna- tion of Prince Billow and the appointment of Bethmann Holl- weg as Chancellor, continued to exercise a predominant influence in German domestic politics until the Reichstag elections of Jan. 1912. Against the so-called "black and blue bloc" (the Catholic Centre and the Conservatives) which had carried the