The Ambassador in France ( Sharp ) to the Secretary of State
Paris , November 9, 1918—2 a.m.
[Received 7:15 a.m.]
[Received 7:15 a.m.]
5779. War Trade Board [from McFadden]: Number 578. The following is submitted for your consideration:
- First. In the event of the United States being unable, by discussion, to persuade the adoption by the Allies, of our interpretation of our principles or policies, at the peace conference, and in order to avoid undue postponement of the conclusion thereof, then what economic pressure can the United States exert which would lead to their acceptance?
- Second. The importance of the military and naval support of the United States will hereafter be greatly diminished, but our economic, financial support will be essential to the Allies, in the post-war period. For example: (a) The United States and Great Britain, in the postwar period will be logical and vigorous competitors for the world’s colonial and Far Eastern trades. The United States by reason of her supplies of raw materials, exportable surplus of certain characters of merchandise, merchant marine and financial resources should have the better of the competition as the United States will be independent economically of Great Britain (as we assume that Great Britain will be able to control the economic policies of her self-governing dominions), while Great Britain will be dependent upon the United States for certain food supplies (particularly wheat and fats), commodities especially cotton, oils, and certain metals, notably copper, not only for domestic needs but also in order to reestablish her foreign trade. (b) France, however, will not be a competitor for the world’s trade, for the reason that France is a manufacturer of articles de luxe in which the United States does not compete. France, in the post-war period will be economically dependent upon the United States for food, raw materials of all characters, metals, machinery merchandise and tonnage, together with the financial support necessary for the [Page 730] purchase thereof in America. As regards Italy, this nation will be even more dependent than France upon the United States in the postwar period for food, raw materials, metals merchandise, financial support.
- Third. The economic dependence of the Allies upon the United States was fully realized by them, and in consequence thereof, in April 1916, a permanent Inter-Allied Council (Comité Permanent Inter-Allié Pour l’Étude des Questions Économiques), was established in Paris, for the purpose of considering this subject. This Council occupies itself with three characters of economic questions: (a) The consideration of reconstruction of devastated districts; (b) the consideration of a policy of boycott of the Central Powers by the Allies in the post-war period; (c) the consideration of preferential trade agreements between the Allies in the post-war period. The writer was instructed by the State Department to make a study of the functions of this Council, and as a result thereof, recommend[ed] that the United States should avoid representation; in consequence thereof, the activities of this council have been discontinued, as it was recognized that unless the United States was willing to cooperate, nothing effective could be accomplished by the council.
- Fourth. The representatives of the British, French, and Italian
Governments at the Versailles Conference last week recommended
during the interval between the signing of the armistice and the
official declaration of peace: (a) the
continuation of the Allied programme committees, councils and
executives also; (b) the control and
administration of the enemy merchant marine to be exercised by the
Allied Transport Council; also (c) the
continuation of blockade as applied to enemy and neutral nations. In
compliance with the above we venture to point out:
- As [An?] international control especially as regards food will be necessary during the post-war period but the control and price fixing if any or [for?] commodities and merchandise for which Europe is dependent upon the United States should be determined in Washington not only on account of the best political and economic [interests?] of the United States but also in order that same may be kept free of all prejudice.
- Information received in Paris leads us to believe that it will be necessary for the Allied Governments to undertake a great relief work especially in connection with food supplies in enemy countries. It therefore occurs to us that the Belgian Relief might be expansion [expanded] into a great relief association, its administration being supplemented as might be necessary, and control and use of enemy tonnage being assigned to it for the transport of supplies for relief purposes from America to Continental Europe, together with the transportation of American troops and military materials on return voyages from France to the United States.
- As regards the blockade it will be the desire of the Allied Governments to continue same for an indefinite period in order to [Page 731] regulate the quantities of foods, raw materials, etc., to be furnished enemy and neutral countries with a view to providing supplies only sufficient for their domestic requirements, and also with the object of delaying as long as possible the reestablishment of their export trade.
- Fifth. We observe that the agreements between the Associated Governments and neutrals are to continue until the declaration of peace, but we are inclined to believe that it will be the policy of the Allied Governments to prolong negotiations with the object of delaying the final ratification of peace for the reasons: (a) They hope, during the interval between the armistice and the ultimate declaration of peace, that they will enjoy a decided advantage over neutrals and enemy countries in procuring the raw materials necessary to enable them to reestablish, in advance of enemy and neutrals, their domestic and foreign trades, and (b) they anticipate that, during this period, the American Army will remain in France, in consequence of which large sums of money must be expended in its pay and maintenance.
- Sixth. The political destiny of a nation, especially at the time, is dependent upon its economic prosperity. The Allied Governments will endeavor to demobilize as rapidly as possible their armies; but as the men are released work must be found for them, otherwise strikes, labor troubles, and general social unrest will result and in consequence thereof the economic dependence of England, France, and Italy upon the United States will be pronounced. Therefore we venture to observe that the influence and interests of the United States might be best safeguarded as follows: (a) Complete liberty of action as regards trade together with a noncommittal policy as to the distribution of raw materials, merchandise, et cetera controlled by the United States; (b) noncommittal policy as far as possible as regards blockade; (c) neutral agreements where necessary to be between Neutral Governments and the United States rather than between Neutral Governments and Associated Governments; (d) the expansion of the Belgian Relief into a relief association for the purpose of undertaking all relief work. Copy of this cable has been handed to Mr. Auchincloss. McFadden.