He made up his mind not to interfere, and marched resolutely off to church, a bit of blossoming grape-vine in the buttonhole of his new jacket. From her place beside her mother Caterina marked his smiling air as he walked up the uneven aisle, and grew tremulously happy again.

The service over, the white-haired parroco a simple old man, of peasant birth like the people to whom he ministered-turned to address his flock. His mind, like theirs, was full of the great event of the week, and after a brief preamble he began to speak of it in direct homely fashion. Out of the terrors of battle and the countless perils of the Dark Continent the good God had delivered their soldier, to bring him home again. "Let us thank Him for that He has restored the widow's son to his mother. Let us thank Him, too, for the deeds this young man has done, for doubtless it was the Christ who lent him courage-"

There the voice of the old man, who carried a tender heart under his shabby surplice and had known Andrea Baldi as a tottering child, failed him suddenly. Before he could again speak Andrea was upon his feet, crying, "No more! For the love of God, no more! I thought I could have carried it through, but I cannot bear this."

The priest's wrinkled hand dropped

from his eyes. "What does this mean, Andrea Baldi?" he asked apprehensively.

was

"It means"-Andrea's face deadly white, and his bronzed fingers clutched the worm-eaten prayer-desk before him convulsively, but he spoke loud and clearly-"that I have deceived you, Father, you and all here. I am no hero, as you think. It was not I who rallied those men at Adowa, it was not I who saved Captain Bentivoglio's life. I have done nothing-nothing that any man should honor me for doing. I fought with the rest, and when they fled in the great panic, I fled also-"

But here Antonia Baldi rose to her feet also and clutched her son's arm. "Andrea, what folly is this? Thou art ill or mad, my son. Do not listen to him, friends; the sun has touched his brain."

"No, my mother, not so. It is even as I have said."

A murmur ran through the church. "Andrea Baldi -Andrea Baldi-we read it in the newspapers-"

"You read the name-yes. But in the 165th there were two called Baldi and Andrea-I and another."

"Were?" the old priest repeated.

"He is dead, that other Andrea-who did the deeds you read of. He died of fever on his way to the coast." A pause. "Therefore, he being dead—”

"You were tempted; we understand." The old man's voice sounded wonderfully gentle. "But-you resisted temptation."

Andrea shook his head mournfully. "No. This very morning I resolved to keep silence-always. I do not know why I have spoken now."

"Because"-quickly-"God would not let you be silent, my son. Thus we may still thank Him on your behalf."

A few minutes later the excited inhabitants of San Martino were pouring out from the church into the sunny market-place. Antonia Baldi remained behind on her knees, sobbing; but An

drea set his teeth and prepared to follow. Best face the whole of it at once; the contemptuous looks, the insulting cries, Caterina's averted face

As he stepped into the porch he came full upon Caterina. She trembled, seeing him, but she did not turn her face away.

"Can you forgive me, Andrea?" "Forgive?" The young man drew back, faltering in his amazement. "For what I said three years ago-the Good Words.

day before you went away? Ah, to remember it fills me with shame! That ever I should have dared to dream you could be afraid!"

Andrea passed his hand unsteadily over his eyes. "Then you don't-you don't think me altogether a coward?” he stammered.

"I think you are the bravest man in Italy," Caterina answered, smiling through her tears.

Constance Smith.

It was, I think, in the time of Edward I, that our first formal intercourse with Persia commenced, and it continued, partly commercial, partly diplomatic, through the time of Elizabeth and Charles I, down to the commencement of this century, when the relations of England with Persia became closer and more intimate. They have since fluctuated, now more cordial, now less so; now inspired by an eager interest, and now showing a most lamentable apathy; but nevertheless friendly, often cordial, relations with Persia have been the rule ever since the commencement of the present century. It is especially with India that the destinies of Persia must remain bound up, as closely, or nearly as closely, as those of Afghanistan on her one border, and Siam on the other.

My object is not to give a description more or less picturesque of Persia itself, its inhabitants, its institutions, or its Government-but to remark on several of those questions which have lately attracted public attention, and the effects of which have been unduly exaggerated or over-estimated.

It is not my intention at the present

moment to refer to political matters when there is so much agitation in all parts of the world. I would rather attempt, so far as I may, to relieve the tension which now exists with regard to the relations of England, Russia and Persia, and avoid saying a single word which might inflame passions which have already been too carelessly excited. My object is to stimulate an interest in Persia among the financial and mercantile classes in England, and to encourage them to take a more active interest in the commercial development of the country, an interest that has been very largely shown of late years by Russia, France, Germany and Belgium. England, the great commercial country of the world, is hanging strangely back, and this is, in a great measure, due to a want of co-operation amongst its financial and mercantile classes. It is true that English commerce covers so large an area, and our interests are so numerous in every part of the world, that there is a certain plausibility in the argument that we may safely neglect one particular country or one special interest. But this is not the case, and when hostile tariffs

are closing door after door to English industry in every quarter, Englishmen, and especially English merchants, should second and encourage their Government in a consistent and determined effort to keep those doors open. Politics and political considerations are, of course, inseparable from any question in the East, and especially is it so with Persia.

Since I proposed to write this paper, the Russian loan to Persia has caused much perturbation in financial circles, and many excited articles have been written, both in this country and on the Continent, with the design of persuading the public that it constitutes an event of the first magnitude; that it practically places the whole foreign policy and finances of Persia for all time in the hands of Russia, and that it is a great and permanent blow to English interests in the East. Although some feeling of nervousness and suspicion is not unnatural when we look abroad and see the persistent and mallignant way in which we are attacked in the press of so many countries, yet it is as well for Englishmen, who have the reputation of being cool and levelheaded, to look things in the face like men of the world, and not to be frightened by shadows, or fancy that an ordinary financial incident of no great importance is a national misfortune.

In order to estimate this question fairly, it is necessary to consider the past history of Persian finance. If this loan were the blow that it has been represented to English interests, then, indeed, the object of my paper would be stultified, for it would be idle to stimulate the interests of English financiers in the development of Persia if the financial control of the country had already passed out of the hands of its Government. But this is in no way the case. When His Imperial Majesty, the late Shah, whom many of you have seen in London, last came to England,

Persia was in the enviable position of possessing no foreign debt whatever; but the Shah, who was an exceedingly able man, unfortunately discovered an amusement which is as fatal to a Government as gambling at Monte Carlo is to an ordinary individual; this was the game of granting concessions, by which you are able, if lucky, to obtain a great deal of money with no exertion. The consequence of this discovery was that with both hands he distributed concessions on all sides, and very soon came into conflict with the London money-market. One of his adopted schemes, known as the Lottery Concession, was especially unfortunate, and its memory is still odious to the Stock Exchange of to-day. Another concession, that of the Tobacco Monopoly, the Régie, was nearly as unfortunate, because falling into inexperienced and rash hands, it excited such a fierce opposition on the part of the Persian people, and especially the Persian priestly class, the Mullahs, that the Shah was not only compelled to abandon the concession for the monopoly of tobacco purchase, sale and manufacture in Persia, but had to pay large compensation to the company to which he had granted the concession. This necessity for the first time brought Persia into the loan market, and the Imperial Bank of Persia, which is the principal British institution in that country, and of which I happen, at the present moment, to be a Chairman, issued for His Majesty a loan which satisfied his liabilities, and which is now about to be paid off with the proceeds of the new Russian loan, to the advantage of all those who originally took the bonds. After this there was a lull, and then the Persian Government again falling into difficulties, applied to the Bank of Persia to supply funds. The London financiers were quite ready to advance the money on the security of the Customs of the Gulf ports collected and

administered by the Imperial Bank, which made an advance to the Persian Government on these terms, holding the Customs collections of Bushire and Kirmansháh. The negotiations for the issue of a larger loan of one million and a quarter sterling on the security of the Southern Customs collected by Bank officials were completed, but were, at the last moment, broken off by the present Prime Minister, who had been in exile at Kum, and who was recalled to power. For reasons which it is unnecessary to discuss here, the Prime Minister opposed the continued administration of the Customs by officials of the Imperial Bank, and offered instead control in the event of default in payment of the instalments of the loan. Although I personally consider that this security was amply sufficient for the Gulf Customs, the English moneymarket would not grant a loan on these terms. Russia was not then disposed to assist, and the English Foreign Office was unwilling to guarantee a loan. Long negotiations ensued, and attempts by the Persian Government to raise money in France and Belgium. At last the Russians have come forward, and practically guaranteed £2,400,000, thus relieving the stress of the Persian financial position, which was exceedingly great. His Majesty the Shah was anxious to visit Europe, and to see the French Exhibition. His health is not good, and it is necessary for him to visit baths in the Caucasus and Europe. He will also visit St. Petersburg and London. Large sums are now due to civil officials and the army for long unpaid salaries, and for many other purposes, and it is obvious that it was essential for the Persian Government to obtain money somewhere. As they could obtain it nowhere else, they had no option but to take it from Russia, which has given it on conditions much the same as the London money-market refused. If the loan did not come to

England I do not think that any one is to blame except the London financiers themselves. They insisted upon control, and they would not give anything unless England had the Customs collection in its hands. Russia has taken it without control, and although you may say that the difference in the two positions is that the loan is virtually guaranteed by the Russian Government, yet no guarantee was virtually necessary either by England or Russia, as the revenues on which the loan is secured are amply sufficient to meet the interest, which would be paid direct to the State creditor, the balance alone going to the Persian treasury. The paying off of all foreign loans, which is a part of the contract, is a clause which was equally found in our own loan proposals. This was an integral part, and was the principal justification for the loan, which was ostensibly incurred in order to pay off a 6 per cent. loan, by one at a lower rate of interest. The only clause to which exception can be taken is that which forbids the Persian Government to borrow elsewhere without the previous consent of the Russian Bank in Teheran until their advance has been repaid. I may state that this condition is apparently an onerous one, but Persia is now entering the ranks of civilized nations. As its resources and revenues increase, as they will increase, as its wants become more numerous, and as the Government discovers that if it is to prolong its existence, it must reform its administration, increase the productiveness of the country, build public buildings, irrigation works, roads, and railways, so, undoubtedly, will it require to come into the European money-market for the capital required. Then it will appear that the condition preventing the Persian Government from applying elsewhere for loans is one which is absurd, and which will be inoperative, and cannot be enforced. This loan will

not last very long. The claims now against it are exceedingly large, and Persia will soon be again in want of money. If, then, Russia prefers to lend her more money, I do not see why any one should object to it. If Russia chooses, when her own vast empire is still entirely undeveloped, to waste her money by putting it into Persian roads and railways, I do not think that any objection can be taken. But it will really be a question of European competition. In England, where there is an immense superfluity of wealth, and where we have practically financed half the bankrupt States as well as the flourishing States of Europe and America, there is every reason for English financiers and merchants to assist a country which is, in my opinion, developing, which will give a fair return for their investments, and which will, before very long, take a more prominent part in the history of the world. It is not to be supposed that countries like England, Germany and France will consent to Russia obstructing and preventing the industrial development of Persia, and neither the Shah nor his Prime Minister could desire such a result.

One question that might be askedbut to this I am not prepared to give a complete reply-is: Why did not Her Majesty's Government guarantee the loan which was proposed to us, and which then would have been willingly taken up by the London market? It is at present not my intention to criticize or defend Her Majesty's Foreign Office; I know by my own experience that their interest in Persian affairs is great and constant, and I have often, on behalf of the Bank of Persia, to express my sense of their vigilance on our behalf. I do not think they want any apology from me, but I should like to suggest two considerations which generally govern the decisions of Her Majesty's Government in such matters.

The first is this-that the English Government is a constitutional one, and that every foreign loan must be the subject of public criticism, and sanctioned, or at any rate approved, by Parliament. The position is altogether different with a country like Russia, where the will of the Tzar, or his Ministers, is sufficient, and where no public opinion, in the proper sense of the word, exists. Foreign loans, as is well known, are not popular with the House of Commons, and exceptional circumstances are required for the Government to be able to justify them. There have, indeed, been cases where such loans have been approved. One was a sum advanced to Morocco, and the Customs were there assigned as security for repayment under a Commissioner, and the money was duly paid. There was also a brilliant exception, due to the genius and courage of Lord Beaconsfield, when the Suez Canal shares were purchased. There was also the case which, perhaps, the Government are now beginning somewhat to regret, of the China Loan, but these are exceptions, and the policy of the Government is against guaranteeing loans in foreign countries. The basis on which this policy rests is undoubtedly sound. England owes its commercial supremacy to Free Trade, and although there are politicians of standing who may question this, the great majority of Englishmen admit the principle of Free Trade to be one of the bases of our national prosperity. I may say money is like all other commodities. There are a great many people who seem to think that money is a different commodity from sugar or salt, but it is nothing of the sort. England is now the great banker and the great clearing-house of the world, simply because this is the country in which there is Free Trade in money. Directly the Government intervenes by loans to foreign countries, or by guaranteeing