to Odessa, and now commenced independent military proceedings from there.  For payment kronen were used, drawn from Vienna.  The War Grain Transactions department was empowered, by Imperial instructions to the Government, to place 100 million kronen at the disposal of the War Ministry, and this amount was actually set aside by the finance section of that department.

This military action and its execution very seriously affected the civil action during its establishment, and also greatly impaired the value of our credit in the Ukraine by offering kronen notes to such an extent at the time.  Moreover, the kronen notes thus set in circulation in Ukraine were smuggled into Sweden, and coming thus into the Scandinavian and Dutch markets undoubtedly contributed to the well-known fall in the value of the krone which took place there some months later.

The Austro-Hungarian military action was received with great disapproval by the Germans, and when in a time of the greatest scarcity among ourselves (mid-May) we were obliged to ask Germany for temporary assistance, this was granted only on condition that independent military action on the part of Austria-Hungary should be suppressed and the whole leadership in Ukraine be entrusted to Germany.

It was then hoped that increased supplies might be procured, especially from Bessarabia, where the Germans have established a collecting organisation, to the demand of which the Roumanian Government had agreed.  This hope, however, also proved vain, and in June and July the Ukraine was still further engaged.  The country was, in fact, almost devoid of any considerable supplies, and in addition to this the collecting system never really worked properly at all, as the arrangement for maximum prices was frequently upset by overbidding on the part of our own military section.

Meantime everything had been made ready for getting in the harvest of 1918.  The collecting organisation had become more firmly established and extended, the necessary personal requirements were fully complied with, and it would doubtless have been possible to bring great quantities out of the country.  But first of all the demands of the Ukrainian cities had to be met, and there was in many cases a state of real famine there; then came the Ukrainian and finally the very considerable contingents of German and Austro-Hungarian armies of occupation.  Not until supplies for these groups had been assured would the Ukrainian Government allow any export of grain, and to this we were forced to agree.

It was at once evident that the degree of cultivation throughout the whole country had seriously declined—­owing to the entire uncertainty of property and rights after the agrarian revolution.  The local authorities, affected by this state of things, were little inclined to agree to export, and it actually came to local embargoes,