Paris Peace Conf. 180.03101/49

BC–42

Secretary’s Notes of a Conversation Held in M. Pichon’s Room at the Quai d’Orsay, Paris, on Saturday, 1st March, 1919, at 3 p.m.

Present Also Present
America, United States of America, United States of
Mr. R. Lansing Mr. Baruch
Mr. E. M. House Mr. Strauss
Secretaries British Empire
Mr. A. H. Frazier The Rt. Hon. E. S. Montagu, M. P.
Mr. L. Harrison France
Mr. G. Auchincloss M. Klotz
British Empire M. Luquet
The Rt. Hon. A. J. Balfour, O. M., M. P. M. Clementel
The Rt. Hon. Viscount Milner, G. C. B., G. C. M. G.
Marshal Foch } For question 1 only
General Weygand
Secretaries Italy
Lieut. Col. Sir M. P. A. Hankey, K. C. B. M. Crespi
The Hon. T. A. Spring-Rice
France
M. Clemenceau
M. Pichon
Secretaries
M. Dutasta
M. Berthelot
M. de Bearn
Italy
H. E. Baron Sonnino
Secretaries
Count Aldrovandi
M. Bertele
Japan
H. E. Baron Makino
H. E. M. Matsui

Joint Secretariat

America, United States of Lieut. C. Burden.
British Empire Major M. Caccia, M. V. O.
France Captain A. Portier.
Italy Lieut. Zanchi.
Japan M. Saburi.
Interpreter:—Prof. P. J. Mantoux.
[Page 174]

1. M. Clemenceau having declared the meeting opened, enquired whether the Conference would agree to consider the report of the Committee, appointed to draft the Naval and Military Peace conditions to be imposed on Germany, on Monday afternoon next. The Military conditions had been submitted by Marshal Foch yesterday, and copies had been distributed to the representatives of the five Great Powers. The principle involved had been duly accepted both by President Wilson and Mr. Lloyd George. Consequently, he thought that a decision might be reached without delay. When the Armistice had last been renewed, no term had been fixed. The Great Powers had reserved the right to terminate the Armistice at three days notice, and the Germans had been given to understand that the final military Peace conditions would be presented to them with as little delay as possible. The Allied and Associated Powers would, therefore, place themselves in an awkward position if the final Military Peace terms could not be presented within the period of one month from the date of the last renewal of the Armistice. Naval and Military Conditions to be Imposed on Germany

Mr. Balfour felt some difficulty in accepting M. Clemenceau’s proposal. He thought that some confusion of idea appeared to exist. He quite agreed that the object of the Conference had been to come to some preliminary arrangement with Germany, as soon as an agreement had been reached on the Naval and Military Peace terms to be imposed on Germany. He himself had, in fact, proposed at a previous Meeting that the Military instalment of the preliminary Peace should be presented to Germany separately. But, he thought M. Clemenceau had objected to that procedure; and in the absence of M. Clemenceau and in deference to his view, the Conference had agreed that the Preliminary Peace with Germany should not only include the final Naval and Military terms, but also territorial questions, financial arrangements and questions relating to the economic future of Germany. That decision in his opinion meant that whether the Military terms of peace would be decided on Monday or not, it would make no difference in regard to the termination of the Armistice.

M. Clemenceau said he quite agreed with Mr. Balfour that no preliminary Peace terms could be presented to Germany until the territorial, financial and economic questions had also been settled. The Conference could, however, only take up one subject at the time. The Military question should therefore be settled first, and then the other questions could be taken up in succession, with as little delay as possible.

Marshal Foch pressed for an early decision to be reached on the final Naval, Military and Air conditions to be imposed on Germany. He enquired whether the Allied Military Advisers, as well as the Naval Experts, should attend the Meeting on Monday next. He understood [Page 175] the Naval clauses would then also be ready for consideration by the Conference.

(It was agreed that the Naval, Military and Air preliminary conditions of Peace should be discussed on Monday afternoon next, and Marshal Foch was requested to invite the Naval and Military Experts to attend.)

2. M. Crespi, who had acted as Chairman of the Financial Drafting Committee in the absence of M. Salandra, read the following report, dated February 26th, 1919:— Report of the Financial Drafting Committee: (a) Report of Drafting Committee

“Several questions which the Financial Drafting Committee might have included in the programme of financial questions to be considered by the Financial Commission fall within the competence of other Commissions already appointed by the Conference and are being considered by them.

The Financial Drafting Committee has therefore excluded them from the list which they now submit.

They recommend that when another Commission or the Supreme Conference itself is dealing with a question which has a financial aspect it should seek the advice of the Financial Commission.

Questions To Be Dealt With in the Treaties of Peace

A. Financial Questions.

1.
In cases where an Enemy State cannot meet all its obligations the question must be considered whether the State should be allowed to choose for itself the order in which they shall be met or whether the Allies should insist on settling the order. The matter must be considered in connection with, inter alia:
(1)
Reparation demands.
(2)
Public debts and other obligations incurred prior to the War.
(3)
Public debts and other obligations incurred during the War.
(4)
Debts and obligations internally held.
(5)
Debts and obligations externally held.
(6)
Liabilities incurred during the Armistice.
2.
The question must also be considered whether in any circumstances the debtor State shall be allowed or obliged to modify the rights of creditors holding security for the payments of their debt.
3.
Question of the liability of Allied nationals to contribute to special war taxes levied or imposed in the enemy countries.
4.
In cases of territorial re-adjustment, the following questions arise:—
(a)
The re-apportionment of any part of the public debt.
(b)
The re-apportionment of any part of the other debts or obligations of the State.
(c)
The assumption of any liability or obligation in connection with the currency organisation. (See also Monetary Questions).
(d)
Terms of transfer of State or other public property in the ceded area, and re-apportionment of debts or obligations of public bodies other than the State.
(e)
Financial measures to be adopted as to public utility enterprises, such as railways belonging to private companies operating in the ceded territory.

B. Monetary Questions.

1.
The currencies in which any new national obligations created by the Peace Settlement must be stated should be determined.
2.
It must also be decided whether the currencies in which existing national obligations are expressed should be modified.
3.
Currency questions arising out of territorial re-adjustments.
4.
The effect of any forced surrender of gold upon the currency of enemy countries.

Other Questions Which Have Been Raised

1.
Inter-Allied agreements as to the consolidation, re-apportionment, re-assumption of War Debts.
2.
Temporary Inter-Allied agreements for the support of the foreign exchanges.
3.
Credits requested by certain Allies secured on the reparation payments to be exacted from the enemy.
4.
Inter-Allied co-operation in seeking credits from neutrals.
5.
Allied financial interests in Russia.
6.
Protection of rights and interests of Allied holders of concessions in enemy countries:—
(a)
Preservation of pledges and guarantees.
(b)
Problems arising out of the internationalisation of ports, waterways and railways.
7.
The elimination of enemy elements from the international organisations for control now existing in various countries (such as Turkey, Morocco, China).
8.
Settlement of pre-war debts between Allied and enemy nationals.
(a)
Question of establishing a clearing house.
(b)
Disposition of the proceeds of liquidations of businesses and of sales of enemy property and interests.

Subject to Additions

The Committee will report separately at a later date on Mr. Klotz’s project for a Financial Section of the League of Nations.”

Lord Milner said he wished to make an observation which he thought would apply equally to the financial and to the economic commission. The programme which each Commission had to work through was very large and very important, and it was necessary that the questions to be dealt with should be settled promptly. Many of those questions, however, concerned the Allies among themselves far more than the enemy. The Commissions would eventually have to decide all those questions, but he thought they should, in the first instance, devote themselves entirely to those points which would [Page 177] have to be embodied in the preliminary Peace. He, therefore, asked the Conference to accept the following resolution:—

“The Commission is instructed to report not later than March 22nd, on all matters on which it is necessary to include in the preliminaries of Peace.”

Mr. House suggested that the Commission should be instructed to report not later than March 15th, instead of March 22nd.

M. Crespi agreed. There were not many financial questions to be included in the preliminaries of Peace. He thought, therefore, that a report could be submitted by March 15th.

(It was agreed to accept the following resolution:—

“The Commission is instructed to report not later than March 15th on all matters which it is necessary to include in the preliminaries of Peace.”)

(c) Commission of Financial Commission Mr. Montagu invited the attention of the Conference to the fact that the Financial Commission had not yet been appointed. It still remained to be decided who would sit on that Commission. If it were agreed that the 5 members of the Financial Drafting Committee should now constitute the new Financial Commission, he thought one delegate from each of the five Great Powers would be too small an allowance, especially if the final report had to be submitted not later than March 15th next. Moreover, some representation would have to be given to the smaller Powers.

M. Klotz thought the question could with good practical results be referred to the Financial Drafting Commission, but the Commission thus constituted should have power to appoint Sub-Commissions who should be empowered to hear experts, as well as the representatives of the smaller Powers, whenever any question affecting them came up for consideration.

Mr. House said he accepted M. Klotz’s proposal. In his opinion, the work would be carried out far more expeditiously with a Commission of 5, with power to appoint Sub-Commissions.

Mr. Lansing proposed that the present Financial Drafting Committee should constitute the Financial Commission, containing the same personnel, with the power of appointing Sub-Commissions from outside their number, as they thought fit.

Mr. Montagu, whilst agreeing that it would be a good arrangement to have Sub-Commissions to represent special interests, thought that the questions to be considered were so important that one representative of each of the five Great Powers would not be sufficient. Should the one representative, for instance, be ill, either one Power would remain unrepresented, or everything would have to be held up. Therefore, whilst keeping the proposal for Sub-Commissions, he [Page 178] would propose that the number of representatives of the main Commission should be increased to two.

Lord Milner said that, in order to reconcile the various opinions expressed, he would suggest that the proposal, contained in the report of the Economic Drafting Committee, which would be considered that afternoon, should also be accepted in the case of the Financial Commission. That is to say, that the Commission should be constituted of two members for each of the five Great Powers, together with five members elected by the remaining States. There would, therefore, be 15 representatives on the Financial Committee, 10 to represent the Great Powers, and 5 the remaining States.

(It was agreed that the Financial Commission should be constituted of 2 members for each of the five Great Powers, together with five members elected by the remaining states.)

(It was agreed that the members of the Financial Drafting Committee should form part of this Commission and that the names of the remaining five representatives of the Great Powers should be handed in to the Secretary-General on or before Monday next, March 3rd, 1919.)

(It was also agreed that the Secretary-General would invite the small Powers to meet on Monday next to elect their five representatives to serve on the Financial Commission.)

3. M. Klotz, Chairman of the Allied Commission on Reparation read, with the permission of the Conference, the following resolution adopted by the Commission at a meeting held on February 19th, 1919:— Reference by the Allied Commission on Reparation

“The question having been submitted to the Committee for Reparation of Damages as to what principles Reparation should [be] based on.

The French Delegation having presented the following motion:

“The right to reparation of the Allied and Associated Powers is entire.”

“The enemy must repair all damage, a right of priority being reserved to certain claims.”

and, concerning the first part of this motion, the question having been put and discussed as to whether the right of the Allied and Associated Powers to include in their claim for reparation all war costs be limited by the American note under date of November 5th, 1918,1 to the German Government and by the Memorandum of the Allied Governments therein included.

The Committee have unanimously agreed to submit to the Supreme International Council of War such as it was constituted on November 4th, 1918, together with the proceedings of the Committee, the following question:

“Would the acceptance of the first part of the Motion of the French delegation to wit: ‘the right to reparation of the Allied [Page 179] and Associated Powers is entire’ be contrary to the intentions of the principles of the Supreme War Council (constituted as it was at that date) as they have been expressed in the memorandum reproduced by the American note of November 5th, 1918?”

M. Klotz, continuing, said that it would be impossible for the Commission to apportion among the interested Allied and Associated Powers the total sum to be paid by Germany, unless a ruling were obtained as to the interpretation to be given to the word “reparation”: that is to say, whether damage suffered by private individuals alone should be included, or whether State losses and war costs should also be taken into account.

Mr. House held that the question of the allocation between the Powers of the lump sum to be paid by Germany on account of reparation for damages could be settled at a later date, as no allusion would have to be made to the matter in the preliminaries of Peace. He would, therefore, prefer that the consideration of the question should be adjourned until President Wilson’s return.

Mr. Lansing suggested that alternative texts should be prepared for inclusion in the Articles of Peace, embodying the two hypotheses suggested by M. Klotz.

Mr. Balfour said that the preliminary Peace would give merely the lump sum to be paid by Germany, the dates of payment and the manner in which payment should be made. No mention of the eventual distribution of this lump sum amongst the Allies would be made in the preliminary Peace. Consequently the question raised by M. Klotz would in no way delay the work of the Commission, since it merely had to decide what was the maximum amount that Germany could pay. In his opinion, there would therefore be no objection whatever in adjourning the question raised by M. Klotz until M. Orlando, President Wilson and Mr. Lloyd George were here.

M. Klotz said he was willing to accept Mr. Lansing’s proposal that two texts should be drafted giving effect to the two suggested interpretations of the word “reparation”. He would report that decision to his Committee.

(It was agreed that the Commission of the preliminary Peace Conference on Reparation be instructed to prepare its report on the alternative hypotheses that war costs are or are not included in the claim of the Allied and Associated Powers for reparation.)

4. Reports of Economic Drafting Committee M. Clementel said that at the meeting of the Conference of the great Powers held on 21st February, 1919, (I. C. 146, Minute 4),2 it had been agreed that the first part of the terms of reference of the Economic Drafting Committee, under the heading “Transitory Measures”, should be referred to the Supreme Economic Council, and that [Page 180] the “permanent subjects”, mentioned in the report, should be referred to a special Commission of the Preliminary Peace Conference.

It had further been agreed that the five Signatories of the report of the Drafting Committee should meet to consider and report as to the procedure and method of work of the Economic Commission, and on its composition, having in mind Lord Milner’s request that the Dominions and India should be accorded separate representation and that the small Powers should also be represented. In accordance with that decision the members of the Economic Drafting Committee had met together and prepared the following report:—

“As regards the composition of the Economic Commission it was stated on behalf of the British Empire Delegation that they did not press any suggestion for separate representation of the British Dominions and India. We accordingly recommend that the Commission should be constituted of two members for each of the five Powers, together with five members selected by the remaining States. We consider, moreover, that it is essential that the members of Sub-Committees dealing with technical subjects should not necessarily all be members of the main Commission. We think it desirable that the Commission, when established, shall have freedom to set up any Sub-Committees which they think necessary, as is the case with the other Commissions of the Conference, and we consider that, in the interests of speedy work, all the Sub-Committees should be as small as possible.

As regards the work of the Economic Commission we attach the programme already approved by the Delegates of the Great Powers at their meeting on Friday 21st, February, after excluding the transitory measures which have been transferred to the Supreme Economic Council.”

Terms of Reference to the Economic Commission of the Peace Conference

(As Agreed by the Economic Drafting Committee)

i. permanent commercial relations.

To consider what common measures are possible and desirable with a view to the removal of Economic barriers, and the establishment of an equitable basis of the principle of Equality of Trade Conditions in International Commerce.

Under this heading will arise such questions (among others) as Customs regulations, duties and restrictions; the treatment of shipping, including Port facilities and dues, unfair methods of competition, including false trade descriptions and indications of origin “dumping” etc., and the exceptions and reservations, transitory or otherwise, which may be found necessary to meet special circumstances.

ii. contracts and claims.

To consider:—

(1)
What provision should be made with regard to pre-war contracts, agreements or commercial obligations to which subjects or citizens of belligerent States were parties;
(2)
Whether claims should be admitted on either side for damage or injury arising out of the requisition, liquidation, sequestration or sale of enemy property or businesses, or the treatment or use of patents, trade marks, trade [Page 181] descriptions, or designs or copyrights, or regulations relating to trading with the enemy; and, if so, on what basis.

iii. ex-enemy aliens.

To consider what common action, if any, should be taken by the Allied and Associated Governments to prohibit or regulate the carrying on, either individually, or through companies, of certain businesses and occupations by ex-enemy aliens during the period immediately following the war.

iv. abrogation or revival of economic treaties.

To consider what Treaties and Conventions of an economic character to which enemy States were parties should be revived or abrogated respectively.

(Under this heading will be considered, among others the Conventions relating to Industrial Property, Copyright, Posts and Telegraphs etc.)

Note:—

The Economic Commission, before formulating proposals as to any economic questions having a special aspect in regard to which other Commissions have been or may be set up by the Peace Conference, should consult the competent Commission; and on the other hand such other Commissions should, in the same circumstances consult the Economic Commission before formulating any proposal relating to one of the above classes of questions which fall within the scope of the Economic Commission.

(It was agreed to approve the recommendations of the Economic Drafting Committee and the Terms of Reference to the Economic Commission of the Peace Conference, as above given.)

On the proposal of Mr. House, the following resolution was adopted:—

“The Economic Commission is instructed to report not later than March 15, on all matters which it is necessary to include in the Preliminaries of Peace.”

(It was agreed that the Financial [Economic?] Commission should be constituted of 2 members for each of the five Great Powers, together with 5 members selected by the remaining States.

It was agreed that the members of the Financial [Economic?] Drafting Committee should form part of this Commission and that the names of the remaining 5 representatives of the Great Powers should be handed in to the Secretary General on or before Monday next.

It was also agreed that the Secretary General would invite the small Powers to meet on Monday next to elect 5 representatives to serve on the Economic Commission, as well as 5 representatives to serve on the Financial Commission (see item 2 (c) above).)

(The Meeting then adjourned.)

Paris, 2nd March, 1919.