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Hungarian units en bloc and even calling up recruits in the new territories. There was also a state of anarchy in certain Austrian and Slav districts along the Armistice line, while the Italian forces in the Balkans had to be kept up to strength for the occupation of all Albania, now that the Austrian forces had left, to garrison Bulgaria and to provide contingents for Constantinople and other points in European Turkey. The internal situation also required careful handling, as the Socialist and anarchist elements, now that the war regime and the censorship were relaxed, took advantage of the general weariness of the people to foment revolutionary agitations. The economic situation was serious. On Nov. 26 Sig. Nitti presented the budget state- ment for 1917-8, which showed a revenue of 19,496 millions (of which 12,000 millions were borrowed) and an expenditure of 25,339 millions, leaving a deficit of 6,271 millions. The Cabinet obtained a vote of confidence from the Chamber on the 27th (325 to 33), after which Sig. Orlando and Baron Sonnino left for London for a series of preliminary meetings in view of the coming Peace Conference. On Dec. 12 the first demobilization order was issued, and the classes from 1878 to 1884 were disbanded. Owing to a disagreement with his colleagues over foreign policy, and particularly over the questions of the Alto Adige and Dalmatia, Sig. Bissolati resigned from the Cabinet. Sig. Dari, the Minister of Public Works, also resigned on account of ill- health, and was succeeded by Sig. Bonomi. On Jan. i 1919, the state of war was declared at an end throughout Italy except in the Veneto. On the 3rd President Wilson arrived in Rome, and was received with a frenzied enthusiasm as the man who had most contributed to bringing the war to an end. But the ministers who had occasion to discuss politics with him suspected that he was by no means too favourable to Italy's claims.

The ministerial crisis which had been brewing since Bissolati's resignation came to a head on Jan. 18, and resulted in the resignation of Signori Sacchi, Nitti, Villa, Miliani and Gen ' Zu P el]i from the ministries of Justice, 1919. Treasury, Transport, Agriculture and War; their portfolios were assumed by Signori Facta, Stringher, De Nava, Riccio and Gen. Caviglia, while the newly constituted ministry for the liberated territories was entrusted to Senator Fradeletto. The Italian delegation to the Peace Conference, which held its first meeting in Paris the same day, was composed of Sig. Orlando, Baron Sonnino, the ex-ministers Salandra and Barzilai and the ambassador Marquis Salvago-Raggi.

The Italo- Yugoslav conflict soon broke out in an acute form. An initial mistake of the Italian delegation was their failure to protest against the presence of Herr Zolger, the ex- Austrian minister, among the Yugoslav delegates. On Feb. 17 the Yugoslav delegation in Paris proposed to refer all territorial disputes to the arbitration of President Wilson, but Baron Sonnino replied that Italy could not accept arbitration on a question for which she had fought for three years and lost half a million of her sons, and it must now be submitted to the Conference. The following day the Yugoslavs presented their territorial claims, which corresponded to the mini- mum mentioned above, plus Montenegro and North Albania. On the Armistice line frequent incidents occurred between Italian and Yugoslav troops, and the latter even expelled the Italian military mission from Laibach, where it had been sent to regulate through traffic to Czechoslovakia. As a result of the report of a special Inter-Allied Commission the Italian mission returned to Laibach. On Feb. 24 Italian officers were insulted by Croat roughs at Spalato. At Belgrade the Government refused to accept the credentials of the new Italian minister, Don Livip Borghese, because they were addressed to the King of Serbia and not to the King of the Serbs, Croats and Slovenes, Italy not having recog- nized the new state. The discussion of the Adriatic question at the Peace Conference was adjourned and the peace with Germany given precedence. The Italian delegation practically agreed to all the proposals of her Allies in this connexion, and raised no objection to the division of Germany's colonies solely between France, Britain and Belgium, without asking for any concessions in return. For this the delegation was afterwards criticized in

Italy, where bitter and sometimes extremely violent attacks on the Allies were made in a section of the press, for their supposed unfairness in support of the Yugoslav claims.

When the Adriatic question itself came up for discussion the Italian delegation maintained that the Pact of London assigned certain territories to Italy, and that on these there could be no controversy; Fiume, admittedly, was not ^ /a/te comprised in them, but as the population had by Question. an overwhelming majority demanded union with Italy, its wishes deserved every consideration. To facilitate a settlement Italy was disposed to agree to certain modifications of the Pact of London. The French and British Governments seemed at first inclined to agree to this view. But President Wilson insisted that the territories inhabited by a Yugoslav majority must be assigned to the Yugoslavs even if the Pact assigned them to Italy, and that Fiume must also be given to them because it was the best outlet for them on the coast, regardless of the wishes of the inhabitants. Matters had reached a deadlock by April 22, but conversations still continued appar- ently in a friendly tone, when suddenly, on the 23rd, Wilson published an appeal on his own account to the Italian people, over the head of their Government, in which he set forth his reasons for opposing Italy's claims. The arguments contained in the message were said to have been communicated privately to Orlando a few days previously, but the President had stated that he had no objection to further wrisoa's discussions, so that there was nothing to suggest Bomb- this new move. The message caused widespread astonishment, as an unprecedented violation of the rules of cor- rect diplomacy. Orlando at once declared that he must go to Rome to consult Parliament and the country. 1 On the 24th he left Paris, followed two days later by Sonnino and Salandra. There were enthusiastic demonstrations throughout Italy in favour of the Government and against Wilson, and the Fiume problem became now a question of national honour. On the 29th the premier recounted the story of the Fiume negotiations to the Chamber, which supported his policy by 382 votes to 40. The Government found support even in the Socialist camp and among the rinunciatari. Sig. Bissolati confirmed his conviction that Fiume must be Italian on ethnical grounds, and the labour organizations, in reply to appeals from the British La- bour party and the French C.G.T. to uphold Wilson's policy, declared that they could not accept a one-sided Wilsonism, unbending towards Italy and accommodating where the in- terests of other Powers were concerned.

The poet D'Annunzio took up the question of Fiume and Dal- matia with his accustomed ardour, and the Nationalists urged the Government to annex both. But Orlando refrained from hasty action. The other Powers were very anxious that Italy should sign the Treaty with Germany, for, although it could have been signed without her, her absence would have strengthened

1 Italy's attitude with regard to President Wilson's 14 points has often been misapprehended. When President Wilson originally asked the Allied Powers whether they were prepared to accept his 14 points and subsequent declarations of policy as a basis for an armistice and eventually for peace, their delegates (premiers and ministers for foreign affairs) met in Paris at the end of Oct. 1918 to concert a reply. At one of these meetings Sig. Orlando formally declared that he must make reservations as to point 9 concerning the future frontiers of Italy, as it was " liable to interpretations which Italy could not accept." Lloyd George and Clemenceau replied that the question concerning Italy did not arise, as the Armistice with Germany was the sole object of the discussion. Orlando ac- cepted this statement, but at a subsequent meeting, on Nov. I, at which experts and American representatives were also present, he repeated his reservations, saying that he wished to make the matter clear also in this plenary sitting. Again Lloyd George and Clemen- ceau replied, with some impatience this time, that the matter con- cerned Germany alone and not the frontiers with Austria. Orlando again accepted this declaration, adding that he would renew the exception at the proper time and place. When Orlando left the Peace Conference on April 24 1919, in consequence of Wilson's action, the press in Britain and America said that Italy had spoilt her case by accepting the 14 points. But the fact is that the above-mentioned reservations of Orlando, stated also in the presence of American delegates, although published in Italy and in a few foreign papers, were ignored by the great bulk of foreign public opinion.