quarrel was adjusted, through the mediation of British diplomacy, by the recognition of the Banda Oriental as a sovereign republic. Twenty years later, Rosas, dictator of Buenos Aires, attempted to reverse this decision by force of arms. His fall, partly brought about by Brazilian intervention, settled the question. But it has left traces upon the vivacious local sentiment of those young countries.

Again, the war which Chile waged in 1879-83 against Bolivia and Peru ended in the occupation by Chile of Western Bolivia and also of the two southern provinces of Peru. The ultimate possession of these two provinces is still under discussion. Meantime, they remain in Chilian hands; and, although a friendlier atmosphere now prevails, diplomatic relations have never been resumed between Peru and Chile.

In these inter-state questions Germany seeks her opportunity for fishing in troubled waters. German diplomacy and propaganda have striven to reopen these old sores and to impede Latin-American consolidation by setting state against state, and by fomenting or reviving latent ambitions of hegemony or aggrandisement. Those who favour Germany are to win great territorial rewards, at the expense of their misguided neighbours, upon the achievement of that German victory which is represented as certain. Particular efforts have been made to embroil Argentina with her neighbours; a prominent feature of this programme is the dismemberment of Brazil.

But the most important of these political movements and the one which seemed to offer most promise to German schemes, is the long dispute between Mexico and her northern neighbour. This is a part of that process which since the beginning of the nineteenth century has radically altered the map of the Caribbean lands and has shifted the whole weight of political influence in that region. The chief effort of Germany is to exploit the historic rivalry between Anglo-Saxon America and Latin America, and to separate north from south by reviving the smart of past incidents and by stirring up apprehensions as to the future.

Here, again, it is necessary to glance back and summarise the chief actual events of that history[2]. When Latin-American independence was achieved, between 1820 and 1824, the United States had already become the dominant power on the Mexican Gulf by the acquisition of Louisiana and Florida, and in 1826 she exercised the privileges of that position by prohibiting Mexican and Colombian designs for the emancipation of Cuba. In 1845 Texas, which nine years before had seceded from Mexico, was admitted to the Union, and in 1846-48 half the territory of the Mexican Republic was transferred to the United States by a process of conquest confirmed by purchase.

A pause in advance followed, until events showed that Isthmian control was a national necessity to the United States. It suffices here to note the conclusion of a long diplomatic history. In 1903 the United States, having failed to obtain concessions of the desired kind from Colombia, supported the province of Panamá in her secession from Colombia, and speedily obtained from the newly formed republic a perpetual lease of the canal zone, together with a practical protectorate over the Republic of Panamá. The United States then proceeded to construct and fortify the canal. She also procured from Nicaragua exclusive rights concerning the construction of any canal through Nicaraguan territory, and erected in fact a kind of protectorate over that republic.

Meanwhile, in the Antilles events were shaping towards control from the north. A long-standing trouble concerning Cuba culminated in the Spanish-American War of 1898, which brought about the annexation of Porto Rico and the Philippines to the United States, while Cuba became a republic under the tutelage of that Power. Five years later the United States, in order to save the Dominican Republic from European pressure, undertook the administration of the revenues of that state. In 1915 she interposed to suppress a revolution in Haiti. Finally last year (1917) she purchased from Denmark the islands of St Thomas and Santa Cruz. Recent rumours as to a proposed further purchase—that of Dutch Guiana—have been officially denied.

These advances have not gone beyond the Caribbean area, where geographical conditions place the United States in a dominant position. Her relations with the more distant southern countries, not touching the Mediterranean Sea of the New World, fall into a different category and do not directly concern the immediate topic.

But in the Caribbean area the United States has established a Sphere of Influence, not indeed explicitly defined as such, but recognised in effect by other governments and accepted by some at least of the republics occupying that region. The events of the last twenty years further indicate that the United States is undertaking the obligation, usual in such cases, of imposing a "Pax Americana." As in similar instances elsewhere, this Pax Americana has not quite clearly marked its geographical limit, nor is it guided by any theoretical consistency, but rather by the merits of the case and the test of immediate expediency in each instance. Thus, whereas the United States enforces peace in Haiti and definitely undertakes to maintain internal tranquillity in Cuba, she has on the other hand withdrawn from interposition in Mexico. The outside world has, on the whole, treated these matters as the concern of the United States and respected the working of the Pax Americana.

Meanwhile, geographical proximity has favoured North American commerce, and in recent years more than half the trade of Central America was carried on with the United States.

It has been necessary to define the situation, because it is accepted by the Allies, while it is at the same time jealously assailed by Germany.

For Germany, too, has won a remarkable position in the same region by her economic efforts, which have also their political side. On the one hand Central America is in a kind of dependence upon the United States: on the other hand, it has been said, with obvious exaggeration, but with some epigrammatic truth, that Guatemala before the war had become a dependency of Germany in everything but the flag. German intelligence and industry had seized the opportunity offered in the recent development of a comparatively backward region. Peaceful penetration was a work of methodical effort, of organised combination. German firms, mostly of recent origin and sprung from small beginnings, always preferred to import from Germany in order to favour German trade. Indeed they were bound to do so by the terms of the credit granted to them by German banks or Hamburg export firms for starting their business. Young men came out from Germany—serious, plodding youths, working for small pay, taking few pleasures and immersed in business. German retail houses, either newly established or formed by the insinuation of Germans into native families or native firms, worked in close contact with the importing houses. The shipping companies worked with these latter and with the Hamburg firms. The chief German achievement in this region was the control of the coffee industry, which was acquired by the usual German combination of admirable industry, patience and intelligence with unscrupulous greed and cunning. Germans advanced money to the grateful owners of coffee estates on such terms that the native owner in course of time found himself bound hand and foot by ever-increasing debt; and the properties usually passed into the hands of the exacting foreign creditor, the former owner being often kept on as paid manager. In this way, besides doing a good stroke of business for himself, the German served Germany by increasing German interests in the country, providing cargo for German ships and helping to secure for Hamburg the coffee market of Europe. Every little