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Conservative party. Parliament resumed its sittings on Oct. 30 and unanimously endorsed the foreign policy of the Govern- ment. The country was meanwhile recovering from the first shock of the war, getting used to abnormal conditions, and even beginning to realize that there might be some material profit to be made out of it. The pro-German press raised frequent protests against the enormous increase in exports to France which the Customs reported. Metals, raw and manufactured, clothes and boots, all kinds of foodstuffs, horses and mules, poured into France, under the " neutral " eye of the Govern- ment. Before adjourning the Cortes, however, the Govern- ment introduced and passed a bill which gave them special powers to deal with such matters as customs tariffs, railway rates, State purchases of food, shipping and expropriation of foodstuffs. A navy bill was also passed, authorizing the building or purchase of 4 fast cruisers, 6 destroyers, 28 sub- marines, 3 gun-boats, 18 mine-laying and auxiliary ships, mines and submarine defences, aircraft, and several important naval land works in Ferrol, Cadiz and Cartagena. The Foodstuffs Act did not prevent a period of serious unrest in the spring, due to the scarcity artificially created, partly by excessive exports, partly by speculative holding up of stocks. Special Juntas, composed of the civil governor, the financial delegate and the mayor of the provincial capital, were set up in each province to administer all available stocks of food, and a policy of prohibi- tion of exports was even initiated in March (1915). Yet the great increase in exports had contributed perhaps more than any other cause to the rise in the value of the peseta, a rise which gave the Government an opportunity to repatriate the Public Debt, i.e. enacting that all Spanish Government stock held by foreigners which was payable in francs or sterling should become payable in pesetas in the Spanish market.

Though the Cortes was closed, great political activity was displayed, by all parties, with a view to a consolidation of the loose political forces of the day into that symmetric German form of two rotating parties the need of which seemed gand'a. to be felt as a habit by all concerned. This activity, which the Government had driven towards the press and public meetings by closing Parliament, was stimulated by an active German propaganda, soon to be imitated by similar endeavours on the part of the Allies. The mouthpiece of extreme pro-German views was Senor Vazquez de Mella, an eloquent and versatile Carlist professor and M.P., who on May 31 pronounced a strong pro-German speech in the Zarzuela theatre (Madrid), before a house full of Germans, Carlists and Maurists, and adorned by the presence of a cluster of aristocratic ladies, many of whom belonged to the Queen's household. But though the excitement produced by this and similar outbursts of partisan feeling did not go very deep, and though the mass of the people were not swayed out of the attitude which they had sponta- neously assumed, the Government thought there might be some danger in liberty, and they decided to deny all permits for meet- ings on neutrality and the war. Despite many complaints, for the measure was obviously illegal, the Government held fast to their decision.

It is worth noting that while this protest from all political groups, including the two sections of the Liberal party headed by Count Romanones and Senor Garcia Prieto, failed to shake the power of the Government, a crisis was precipitated on the refusal of the business com- munity to cooperate with the Government in the launching of a loan. The Finance Minister, Senor Bugallal, prepared an issue which was expected to yield 750 million pesetas (30,000,000), 283 of which were already covered by exchange for an equivalent sum in short-term bonds. The new money to be found did not therefore exceed 467 million pesetas, or a little over 19 millions sterling. Now, of this sum, no more than 52 million pesetas (just above 2 millions sterling) was subscribed, and it was no- ticed that small subscriptions far exceeded the sums sub- scribed by big owners of capital. Several explanations were put forward, but the main cause of the failure seems to have been a reluctance of business circles to subscribe under conditions

which were not considered generous enough for the subscriber. The resignation of the Government (June 22) as a result of this failure was quickly followed by a reinstatement of the same Cabinet, despite the insistent desire for retirement manifested by the Minister responsible, Count Bugallal. The situation of the Treasury was by no means flourishing. The estimates for 1915 had been set at 1,465 million pesetas against 1,281 million pesetas revenue. But as months went by, both sides of the account showed signs of moving in the wrong sense. The liquidation at the end of the year was to show that revenue would remain at 1,202 million while expenses, not including Government purchases of foodstuffs, were to rise up to 1,556 million. The Government had to fall back on Treasury Bonds negotiated through the Bank of Spain.

The difficulties were of course of a purely administrative order, for the work of the country was in full swing under the stimulus of war orders. As one sign of this growing industrial cooperation between Spain and the Allies, pjjj"^^^ the shipowners announced to the Government (Aug. 1915) that the premiums granted them by the Shipping Acts as a measure of protection were no longer necessary and would not be cashed. This was, of course, but a euphemistic way of hinting that such premiums were no longer worth the sacrifice which they entailed of the shipowner's liberty to trade as he pleased between foreign ports. Great shipping profits ensued, and torpedoings followed. On Aug. 17 the s.s. " Isidoro " of Bilbao was sunk by a German submarine. On Aug. 20 the s.s. " Pena Castillo " of Santander sank in obscure circumstances. Public opinion was divided as to the right attitude to take in these circumstances, and while it was generally recognized that some sort of protest should be made, the free hand claimed and obtained by shipowners for the carrying on of their highly profitable industry was a serious handicap to their case.

Though the war absorbed most of the political interest of the day, several efforts were made to reunite the Liberal groups into one party again, and these efforts having failed, owing mainly to the unwillingness of either leader to Fall of the surrender his claims to the leadership of the whole, e ramen^' Count Romanones, the more active of the two, pre- pared a plan of campaign against Senor Date's Govern- ment on the Military Reform Bills then being prepared by the War Secretary, Gen. Echagiie. General Echague intro- duced his bills, and Senor Dato declared that the Chamber would have to pass them before discussing the budget. Count Romanones was adamant against this condition imposed by a Government which had kept Parliament closed for the best part of the year, and the Government fell on Dec. 6.

This crisis is worth recalling for it marked a further step in the approximation of Don Melquiades Alvarez to the monarchy. King Alphonso having expressed a wish to hear Senor Alvarez' opinion along with that of the leaders, the Romano- chief of the Reformist party called at the royal ^to^Re- palace for the first time. The crisis ended in the forma- united tion of a united Liberal ministry (the two groups hav- Liberals. ing melted into one as they came nearer the warmth of office). Count Romanones took the premiership, and, in order to counterbalance the effect of his well-known pro-Ally views, as- signed the Foreign Office to Senor Villanueva, a notorious pro-Ger- man. Senor Barroso (Justice) and Senor Burell (Education) repre- sented the Garcia Prieto faction. Senor Urzaiz, an independent and outspoken Liberal, went to the Exchequer, probably at the suggestion of the King, who also caused Admiral Miranda, though a Conservative, to remain at the Navy Office. General Luque came back to the War Office, and Senator Salvador was appointed Minister of Public Works.

The programme of the Government was very much the same as that of its predecessor: neutrality, military bills, financial and economic reforms, and the budget. In a sense, the inclusion of Senor Urzaiz, who, though a Liberal, was a party unto himself, and of Adml. Miranda, a Conservative, initiated the period of mixed ministries, which was about to open as a logical conse- quence of the gradual weakening of the -old parties, and in its