Paris Peace Conf. 185.001/6

Mr. Norman H. Davis to Colonel E. M. House

Memorandum for Colonel House:

Mr. Klotz, the French Finance Minister, sent for me today and he stated that he desired to discuss some very important conditions which the French Government proposed for insertion in renewing the Armistice. He is to furnish me with a detailed memorandum of the questions this afternoon, but as they are very desirous of having our answer tomorrow, I shall summarize his statements briefly without waiting for the written memorandum.

1. While the German Government has restored the Russian gold and the securities left in Belgium and Northern France, they have not returned the French bank notes and securities which were taken into Germany and the Germans claim this cannot be done before the end of this month.

2. The Germans have not complied with the Armistice conditions prohibiting the exportation of German securities or the use of German credit abroad.

3. The French Government is greatly concerned for fear the Bolshevists will get in control of Berlin and of all of the gold and plant for manufacturing bank notes, and in fact they now fear that the Germans are issuing bank notes illegally.

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4. They therefore propose that all of the gold and engraving and printing plants as well as the securities in the possession of the Reich Bank be removed from Berlin to Frankfort which is near the territory occupied by the Allied Armies where there is less danger of Bolshevism and any disorder could be easily stopped.

5. I told Mr. Klotz that I would endeavor to give him an answer tomorrow but that it would be necessary for me to discuss this with you and possibly with the President; that my first impression was that it might create a bad impression in Germany if this is considered merely a step on the part of the Allies to take the gold and securities from Germany and that it would be necessary to show the German people that such will not be the case, but that on the contrary it is being done for their own protection, and that they are to be treated fairly. I also told him the American Government fears also the spread of anarchy in Germany and that the President had been endeavoring to obtain allied co-operation in taking measures to prevent this by making adequate provision for preventing starvation, the breeder of Bolshevism; that also the results feared by him were a consequence of Bolshevism and that the moving of the gold and the printing plants would not prevent it.

Mr. Klotz expresses agreement with me, and in my opinion this is a proper opportunity to insist upon definite agreement on the part of the Allies to the feeding of Germany and to permitting Germany to pay for same, and if the proposal of the French is acceptable provisions should be made that the gold and securities will not be taken from Frankfort into France upon some imaginative uprising without the approval of the United States and the Allies.

N[orman] H. D[avis]