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The country measured eight thousand square kilometres, and numbered one million inhabitants.

A pretty, quiet, leisurely country. The tops of the trees in its forests rustled dreamily; its broad acres showed signs of honest care; its industries were undeveloped to the point of indigence.

It possessed some brick-kilns, a few salt and silver-mines—that was almost all. A certain amount of tourist-traffic must also be mentioned, but he would be a bold man who described it as a flourishing industry. The alkali springs, which rose from the ground in the immediate neighbourhood of the capital and formed the centre of an attractive bathing-establishment, constituted the claims of the city to be considered a health resort. But while the baths at the end of the Middle Ages had been frequented by visitors from afar, they had later lost their repute, and been put in the shade by other baths and forgotten. The most valuable of the springs, that called the Ditlinde spring, which was exceptionally rich in lithium salts, had been opened up quite recently, in the reign of Johann Albrecht III, and as energetic business and advertising methods were not employed, its water had not yet succeeded in winning world-recognition. A hundred thousand bottles of it were sent away in the year—rather less than more. And but few strangers came to drink it on the spot. …

The Diet was the scene all the year round of speeches about the “barely” satisfactory results of the trade returns, by which was really meant the entirely unsatisfactory results, which nobody could dispute, that the local railways did not cover their expenses and the main lines did not pay any dividends—distressing but unalterable and inveterate facts, which the Minister for Trade in luminous but monotonous declarations explained by the peaceful commercial and industrial circumstances of the country, as well as by the inaccessibility of the home coal-deposits. Critics added something about defective organization of the State industrial administration. But the spirit of contradiction and negation was not strong in the Diet; the prevailing frame of mind among the representatives of the people was one of dull and true-hearted loyalty.

So the railway revenues did not by any means rank first among the public revenues of a private-investment nature; the forest revenues had ranked first for years in this land of woods and plough. The fall in them, their startling depreciation, however sufficient reasons there were for it, was a much more difficult matter to mend.

The people loved their woods. They were a fair and compact type, with searching blue eyes and broad, rather high cheek-bones, a sensible and honest, solid and backward stamp of men. They clung to their country's forest with all the strength of their nature; it lived in their bones, it was to the artists which it bred the source and home of their inspirations, and it was quite properly the object of popular gratitude, not only in regard to the gifts of soul and intellect of which it was the donor. The poor gathered their firewood in the forest; it gave to them freely, they had it for nothing. They went stooping and gathering all kinds of berries and mushrooms among its trunks, and earned a little something by doing so. That was not all. The people recognized that their forest had a very distinctly favourable influence on the weather and the healthy condition of the country; they were well aware that without the lovely woods in the neighbourhood of the capital the spa-garden outside would not attract foreigners with money to spend; in short, this not over-industrious and up-to-date people could not help knowing that the forest stood for the most important asset, the most profitable heritage of the country.

And yet the forest had been sinned against, outraged for ages and ages. The Grand Ducal Department of Woods and Forests deserved all the reproaches that were laid against it. That Department had not political insight enough to see that the wood must be maintained and kept as inalienable common property, if it was to be useful not only to the present generation, but also to those to come; and that it would surely avenge itself if it were exploited recklessly and short-sightedly, without regard to the future, for the benefit of the present.

That was what happened, and was still happening. In the first place great stretches of the floor of the forest had been impoverished by reckless and excessive spoliation of its litter. Matters had repeatedly gone so far that not only the most recent carpet of needles and leaves, but the greatest part of the fall of years past had been removed and used in the fields partly as litter, partly as mould. There were many forests which had been completely stripped of mould; some had been crippled by the raking away of the litter: instances of this were to be found in the public woodlands as well as in the State woodlands.

If the woods had been put to these uses in order to tide over a sudden agricultural crisis, there would have been no reason to complain. But although there were not wanting those who declared that an agricultural system founded on the appropriation of wood-litter was inexpedient, indeed dangerous, the trade in litter went on without any particular reason, on purely fiscal grounds, so it was put—that is to say, on grounds which, examined closely, proved to be only one ground and object, namely, the making of money. For it was money which was wanted. But to get this money, ceaseless inroads were made on the capital, until one fine day it was realised with dismay that an unsuspected depreciation in that capital had ensued.

The people were a peasant race, and thought that the way to be up-to-date was to display a perverted, artificial, and improper zeal and to employ reckless business methods. A characteristic instance was the dairy-farming … one word about that. Loud complaints were heard, principally in the official medical annual, that a deterioration was noticeable in the nourishment, and consequently in the development, of the country people. What was the reason? The owners of cows were bent on turning all the full-milk at their disposal into money. The spread of the dairy industry, the development and productiveness of the milk trade, tempted them to disregard the claims of their own establishments. A strength-giving milk diet became a rarity in the country, and in its stead recourse was had to unsubstantial skimmed milk, inferior substitutes, vegetable oils, and, unfortunately, alcoholic drinks as well. The critics talked about under-feeding, they even called it physical and moral debilitation of the population; they brought the facts to the notice of the Diet, and the Government promised to give the matter their earnest attention.

But it was only too clear that the Government was at bottom infected with the same perversity as the mistaken dairy-farmers. Timber continued to be cut to excess in the State forests; once cut it was gone, and meant a continual shrinkage of public property. The clearings might have been necessary occasionally, when the forests had been damaged in one way or another, but often enough they had been due simply to the fiscal reasons referred to: and instead of the proceeds of the clearings being used for the purchase of new tracts, instead of the cleared tracts being replanted as quickly as possible—instead, in a word, of the damage to the capital value of the State forests being balanced by an addition to their capital value, the quickly earned profits had been devoted to the payment of current expenses and the redemption of bonds. Of course there could be no doubt that a reduction of the National Debt was only too desirable; but the critics expressed the opinion that that was not the time to devote extraordinary revenues to the building up of the sinking-fund.

Anybody who had no interest in mincing matters must have described the State finances as in a hopeless muddle. The country carried a debt of thirty million pounds—it struggled along under it with patience and devotion, but with secret groans. For the burden, much too heavy in itself, was made trebly heavy through a rise in the rate of interest and through conditions of repayment such as are usually imposed on a country whose credit is shaken, whose exchange is low, and which has already almost come to be reckoned as “interesting” in the world of financiers.

The succession of financial crises appeared to be never-ending. The list of failures seemed without beginning or end. And a maladministration, which was made no better by frequent changes in its personnel, regarded borrowing as the only cure for the creeping sickness in the State finances. Even the Chancellor of the Exchequer, von Schröder, whose probity and singleness of purpose were beyond all doubt, had been given a peerage by the Grand Duke, because he had succeeded in placing a loan at a high rate of interest in the most difficult circumstances. His heart was set on an improvement in the credit of the State: but as his resource was to contract new debts while he paid off the old, his policy proved to be no better than a well-meant but costly blind. For a simultaneous sale and purchase of bonds meant a higher purchase than selling price, involving the loss of thousands of pounds.

It seemed as if the country were incapable of producing a man of any adequate financial gifts. Improper practices and a policy of “hushing-up” were the fashion. The budget was so drawn up that it was impossible to distinguish between ordinary and extraordinary State requirements. Ordinary and extraordinary items were jumbled up together, and those responsible for the budgets deceived themselves, and everybody else, as to the real state of affairs, by appropriating loans, which were supposed to be raised for extraordinary purposes, to cover a deficit in the ordinary exchequer. … The holder of the finance portfolio at one time was actually an ex-court marshal.

Dr. Krippenreuther, who took the helm towards the end of Johann Albrecht III's reign, was the Minister who, convinced like Herr von Schröder of the necessity for a strenuous reduction in the debt, induced the Diet to consent to a final and extreme addition to the burden of taxation. But the country, naturally poor as it was, was on the verge of insolvency, and all Krippenreuther got was unpopularity. His policy really meant merely a transfer from one hand to the other, a transfer which itself involved a loss; for the increase in taxation laid a burden on the national economy which pressed more heavily and more directly than that which was removed by the sinking of the National Debt.

Where, then, were help and a remedy to be found? A miracle, so it seemed, was needed—and meanwhile the sternest economy. The people were pious and loyal, they loved their princes as themselves, they were permeated with the sublimity of the monarchical idea, they saw in it a reflexion of the Deity. But the economical pressure was too painful, too generally felt. The most ignorant could read in the thinned and crippled forests a tale of woe. The consequence was that repeated appeals had been made in the Diet for a curtailment of the Civil List, a cutting down of the appanages and Crown endowments.

The Civil List amounted to twenty-five thousand pounds, the revenues of the Crown demesnes to thirty-seven thousand pounds. That was all. And the Crown was in debt—to what extent was perhaps known to Count Trümmerhauff, the Keeper of the Grand Ducal Purse, a regular stickler, but a man of absolutely no business instincts. It was not known to Johann Albrecht; at any rate he seemed not to know it, and therein followed the example of his forefathers, who had rarely deigned to give more than a passing thought to their debts.

The people's attitude of veneration was reflected in their princes' extraordinary sense of their own dignity, which had sometimes assumed fanciful and even extravagant forms, and had found its most obvious and most serious expression in every period in a tendency to extravagance and to a reckless ostentation as exaggerated as the dignity it represented. One Grimmburger had been christened “the luxurious” in so many words—they had almost all deserved the nickname. So that the state of indebtedness of the House was an historical and hereditary state, reaching back to the times when all loans were a private concern of the Sovereign, and when John the Headstrong, wishing to raise a loan, pledged the liberty of the most prominent of his subjects to do so.

Those times were past; and Johann Albrecht III, a true-born Grimmburger in his instincts, was unfortunately no longer in a position to give free rein to his instincts. His fathers had played ducks and drakes with the family funds, which were reduced to nothing or little better than nothing. They had been spent on the building of country-seats with French names and marble colonnades, on parks with fountains, on splendid operas and all kinds of glittering shows. Figures were figures, and, much against the inclination of the Grand Duke, in fact without his consent, the Court was gradually cut down.

The Princess Catherine, the sister of the Grand Duke, was never spoken of in the capital without a touch of sympathy. She had been married to a member of a neighbouring ruling House, had been left a widow, and had come back to her brother's capital, where she lived with her red-headed children in what used to be the Heir Apparent's palace on the Albrechtstrasse, before whose gates a gigantic doorkeeper stood all day long in a pompous attitude with staff and shoulder-belt complete, while life went on with peculiar moderation inside.

Prince Lambert, the Grand Duke's brother, did not come in for much attention. There was a coolness between him and his relations, who could not forgive him his mésalliance, and he hardly ever came to Court. He lived in his villa overlooking the public gardens with his wife, an ex-dancer from the Court Theatre who bore the title of Baroness von Rohrdorf, after one of the Prince's properties; and there he divided his time between sport and theatre-going, and struggling with his debts. He had dropped his dignities and lived just like a private citizen; and if he was generally supposed to have a struggle to make two ends meet, nobody gave him much sympathy for it.