Papers Relating to the Foreign Relations of the United States, The Paris Peace Conference, 1919, Volume V

Edward M. House Papers

IC–170H

Notes of a Meeting Held in President Wilson’s House in Place des Etats-Unis, Paris, on Saturday, 5 April, 1919, at 11 a.m.¹

Paris, April 5, 1919, 11 a.m.

• Present
  • America, United States of
    • Colonel House (in the absence of President Wilson, indisposed).
  • British Empire
    • The Rt. Hon. D. Lloyd George, M. P.
  • France
    • M. Clemenceau.
  • Italy
    • M. Orlando.

Interpreter—Professor Mantoux.

(1) Plenary Meeting for Report of Labour Commission It was agreed: That a Plenary Session should be held on Friday, 11th April, 1919, at 3 p.m., to consider the Report of the Labour Commission.²

(2) Reparation At this point the following Financial Experts were introduced:—

• United States of America
  • Mr. Baruch.
  • Mr. Norman Davis.
  • Mr. Lamont.
  • Mr. McCormick.
• British Empire
  • Lord Sumner.
• France
  • M. Klotz.
  • M. Loucheur.
  • M. Sergent.
• Italy
  • M. Cresp.
  • M. Chiesa.

Shortly after the following Secretaries were introduced.

• United States of America
  • Mr. Auchincloss.
• British Empire
  • Sir Maurice Hankey.
• Italy
  • Count Aldrovandi.

The Conference had before them a Memorandum attached in the Appendix, which had been substantially agreed to by the American and British representatives, but which was not accepted by the French representatives.

Article 1 It was agreed to add in the first line after the word “affirm” the following words “and the enemy Governments accept”.

The Clause as amended reads as follows:—

“The Allied and Associated Governments affirm and the enemy Governments accept the responsibility of the enemy States for causing all the loss and damage to which the Allied and Associated Governments and their Nationals have been subjected as a consequence of the war imposed upon them by the aggression of the enemy States”.

Articles (2) & (3) M. Klotz read the following extract from the remarks by the French delegation on the Scheme of the American and British Delegations:—

“The note brought forward by Mr. Lloyd George on the 29th of March, 1919,³ and the memorandum of the British and American Delegations of the 1st of April⁴ asserted both the right for the Allied and Associated Governments of getting full reparation for all the loss and damages caused to the persons and to the property whatever may be the cost for the enemy States. But the terms of Article III were inconsistent with that principle, since they compelled the Inter-allied Commission to limit the amount of the payments to be made by the enemy by taking into account its financial capacity during 30 years.”

Mr. Lloyd George said that this was merely intended as an expression of opinion that Germany can pay in 30 years. If she can pay ha that time it is better than in 40 years. The Clause, however, was not intended to limit the sum to be paid to the amount that Germany could pay in 30 years.

M. Clemenceau said that the British Financial Experts had taken a different opinion.

M. Klotz explained that the view of the British Experts had been that the whole transaction was limited to 30 years. Hence, he said, if the Commission estimated that 50 milliard of dollars represented the amount that Germany could pay, and in fact, it was only found possible to make her pay 30 milliards, in 30 years there would be a dead loss to the Allied and Associated Powers of 20 milliards.

Mr. Lloyd George said that it was no use his arguing about a point which we were not endeavouring to sustain. Supposing Germany could pay 60 milliards in 40 years, but only 50 milliards in 30 years, we should not propose to limit the total that she must pay to 30 milliards, and this document did not say that we should.

Mr. Davis said, in this case, he did not understand this position, for the British delegates had made it quite clear that the document did so limit it.

Lord Sumner did not admit this.

Mr. Lloyd George said that according to Lord Sumner, our view was that Germany ought to pay within 30 years, but that if she could not do so, the Commission should have the right to extend the time of payment.

M. Loucheur said he entirely agreed with Mr. Lloyd George, but the British Delegation had not taken the same attitude in the discussions of the experts. The matter was explained clearly by the following example. Supposing the amount that Germany ought to pay was estimated by the Commission at 50 milliards of dollars, and the Commission found that Germany was only capable of paying 40 milliards in 30 years, it had been clearly explained that 10 milliards had been lost.

Lord Sumner said that the difficulty arose out of a misunderstanding of terms. Mr. Montagu had agreed to the insertion of a limit of 30 years because he had been given to understand Mr. Lloyd George had agreed to this limitation. (Mr. Lloyd George interjected, that of course he preferred a period of 30 years if it were practicable to obtain the sum within that time. Everyone had agreed to this.)

Lord Sumner continuing said that the French Delegates had then put the question—if the total was not paid in 30 years would the balance be remitted? The British Delegates had replied in the negative. He had then understood Mr. Davis to say that the balance would be immediately payable. Then a further amendment had been introduced, namely, Clause 4, which was put in to enable the total amount to be paid by some means. It was by no means the desire, however, of the British Delegation, that Germany should escape.

Mr. Lloyd George said that Lord Sumner had presented his view perfectly correctly.

M. Loucheur said if this were the case this meeting would hardly seem to have been necessary. The French Delegation were quite ready to accept Mr. Lloyd George’s view, but when Article 4 had been drafted it had not really applied to this but to something else. The hypothesis had been that the Commission would estimate the total amount that Germany could pay at 50 milliard dollars, but that the amount which she could pay in 30 years was only 40 milliard dollars. Supposing, however, it was found in practice that even the 40 milliard dollars could not be paid, then it was proposed that the time might be extended for the payment of even the 40.

Mr. Davis said he was willing to accept this draft which had been prepared by the British Delegation, but he wished to have no doubt as to what it meant. The Commission would have to decide: (1) the total estimate of the amount to be paid; (2) if they considered this amount in excess of what Germany could pay in 30 years they must say the amount we estimate she could pay in 30 years is what Germany is required to pay, but if in practice she cannot pay in 30 years she must be allowed more time but, nevertheless, must pay it. When President Wilson agreed to include Pensions he thought it would not run up the total amount which was limited by Germany’s ability to pay.

‘Mr. Lloyd George said that the difference of opinion was not very substantial. By May 1921 the claims for reparation would have been examined and adjusted. Suppose these amounted to 70 milliards of dollars and supposing the Commissioners thought that Germany could only pay 50 milliards of dollars. Germany might be able to pay 60 milliards in 60 years, but only 30 milliards in 30 years: in this case she would have to pay the balance after the end of the 30 years.

Mr. Davis said she would only have to pay the amount of the default.

Mr. Lloyd George asked whether, when you arrived at the capacity of Germany to pay, you took the amount of 30 years into account.

Mr. Davis replied in the affirmative.

Mr. Lloyd George said that in this case he took the French view. If you said that Germany could only pay 30 milliards in 30 years but could pay the total of 50 milliards if the time were extended, say to 50 years, then he would unquestionably say that 50 milliards was the right sum that Germany should pay.

Mr. Davis said that if you took so large a capital sum Germany would not even be able to pay the interest on it. It was essential to hold out a ray of light to Germany somewhere.

Mr. Lloyd George and M. Klotz pointed out that this was a difficult point.

M. Loucheur said that Mr. Lloyd George’s point was that Germany should pay according to the Commissioners’ view of her total capacity to pay, not on the limitation of what she could pay in 30 years.

M. Clemenceau said that the conclusion of the Commission ought to be confirmed by the Governments which alone could take the responsibility.

Mr. Davis said that the only difference now was between the view that the Commission should base its estimate on what Germany could pay in 30 years rather than what she could pay in 40 or 50 years. The American view was that for a period longer than 30 years the interest would eat up the amount she could pay. They felt that if the Germans were not given something to lead them into this scheme they would absolutely reject it.

M. Klotz agreed that you must hold out something to the Germans, but pointed out that you must also give the French and British people something that they could accept. They would not expect to pay what it was Germany’s acknowledged duty to pay. The Armistice laid down that Germany should pay reparation for damage, and it was very undesirable that she should get off what she could not pay in 30 years. It would require a genius to discover in 1921 the capacity of what Germany could pay 30 years later. It was only in 1930 or 1940, when we should be confronted with Germany’s incapacity to pay, supported on evidence, that a definite opinion could be expressed. Hence, he demanded that we should adhere to the excellent text of April 1st. If the Commission should definitely find that a prolongation of the period of payment was necessary, they could apply to the Governments concerned for instructions.

Colonel House said that all the experts seemed to think that a 30 years basis was a right one for the Commission to take in fixing the amount. Everyone was agreed that if the Germans could not pay in 30 years, then they must pay the amount in 40 years. He did not understand, therefore, what the discussion was all about.

M. Loucheur said that there was one obscure point. When the Commission met, what figure was it to arrive at? According to the American Delegates, this figure was the amount that Germany could pay in 30 years, but the French Delegates maintained that it was to ascertain the total amount that Germany could pay.

Colonel House said they would have to pay it in 50 years if not in 30 years.

M. Clemenceau said the question was whether the Commission was to fix in 1921 only what Germany could pay in 30 years, or what the total amount was that she had to pay.

Mr. Lloyd George said they were to work out their estimate of the total that Germany could pay, although it was, of course, desirable that she should pay in 30 years.

Mr. Davis said the Commission would be very liberal to the Allies in its estimate of what Germany could pay in 30 years. The Commission, however, must have some basis for its work.

M. Clemenceau said he did not accept that point of view.

Mr. Lamont agreed with Mr. Davis that the subjects being discussed were largely academic. We were arranging for a Commission to do two years hence what we had been trying to do lately, and had failed.

In all the Conversations of the Commission it had been agreed that it was not worth while considering a period exceeding 30 or 35 years. It was now only proposed to instruct the Commission to take the same time limit as had been taken in all recent discussions. It did not pay to figure the matter out beyond that. Of course if it turned out that Germany could not pay in that period, then time must be given to them.

Mr. Lloyd George then proposed the following re-draft of the last part of Clause 2 [3], proposed by Lord Sumner:—

“The Commission shall estimate Germany capacity to pay in the future, and shall also concurrently draw up a schedule of payments up to or within a period of 30 years, and this schedule of payments shall then be communicated to Germany”.

He pointed out that the sequence was as follows:—First, you determine Germany’s capacity to pay. Second, you try to get the amount within 30 years. And third, if you cannot get it in 30 years you extend the limit. But the basis of calculation was Germany’s total capacity to pay.

M. Klotz said that Mr. Lloyd George opposed the proposal to limit Germany’s capacity to pay to her capacity for 30 years. The first point was to determine Germany’s capacity to pay, and the second point was to spread the amount over a period of 30 years.

Mr. Davis said that you had either to fix for the Commission a limitation of years or a maximum of money to be paid.

Colonel House agreed.

Mr. Lloyd George rehearsed the argument against fixing a period of 30 years. There would be a general dislocation of business everywhere, and particularly in Germany. Germany’s ships would have been taken away; if Germany undertook to repair the damage done in Belgium and in Northern France, her workmen would have been taken away. It was not as though conditions were as in 1913. It would take Germany ten years to find her feet. If you said 30 years from the year 1929, it would be a different thing. But you could not tell Germany’s capacity to pay until she found her feet. He hoped, therefore, that we would not limit it to the next 30 years, but to a period of 30 years under normal conditions. He agreed that Germany must know what she was in for. But she could obtain this from the schedule giving the items on which she had to pay. After all, Germany had been in Northern France for four years and probably had a pretty good idea of the damage she had done. She knew what ships she had sunk. She could obtain the amounts of the pensions she would have to pay. Hence, she could form a rough estimate. If she were to say “I will take no estimates from the Allies, but will make good the damage myself”, she was in a position to get the requisite information.

Colonel House asked, then, why it was necessary to have a Commission.

Mr. Lloyd George said that there were a certain number of things in regard to which Germany would have no information, e. g. the amount to be paid for sailors and for the restitution of things die had stolen. The Commission would really work within the limits of this class of reparations, supposing that we accepted, as he understood M. Clemenceau had, Germany’s offer to make good the damage.

Colonel House said he understood that all estimates of Germany’s capacity to pay had been on the basis of Germany as she was in 1914; that she still possessed Alsace-Lorraine, Silesia, etc. At any rate, such had been the assumption in the American estimates.

Mr. Lloyd George said that was not the case. He had asked our Delegates, and he found they had made allowance. Lord Sumner’s paper, for instance, which was before the Conference,⁵ had made allowance for Silesia, the Saar Valley, etc.

Colonel House said that a few minutes ago agreement had appeared imminent. President Wilson had always understood that the estimate was to be based on what Germany could pay in a period of 30 years.

Mr. Lloyd George said he never understood this.

Mr. Davis said President Wilson had understood that by including pensions, the total amount was not increased, owing to the 30 years limit, but that their inclusion only formed a more equitable basis for distribution.

Mr. Lloyd George said this was not the case. He could not face his people and say that human life was of less value than a chimney. You could rebuild a house in a year or two, but you could not supply an efficient man in less than 21 years.

Mr. House said President Wilson accepted this view.

Mr. Davis said that nevertheless, you do not thereby increase Germany’s capacity to pay.

Mr. Lloyd George said he had always discredited the assumption of those who said it was possible for Germany to pay the whole of the war debt, but there was all the difference between this and making all adequate reparation.

He again read Lord Sumner’s re-draft of Clause 3.⁶ He pointed out that Germany expects to have to pay a very big bill. If we were to put in a bill for reparation and human life, she will know her position.

Colonel House suggested that the clause should be drafted in that form, and that nothing should be said about the 30 years limit.

(The Conference then adjourned for a consideration of Lord Sumner’s draft of Clause 3, and for Colonel House to prepare a fresh draft, based on the above remark.)

Villa Majestic, Paris, 5 April, 1919.

Appendix

1. The Allied and Associated Governments affirm the responsibility of the enemy States for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of the enemy States.

2. The Allied and Associated Governments recognize that the financial resources of the enemy States are not unlimited and, after taking into account permanent diminutions of such resources which will result from other treaty clauses, they judge that it will be impracticable for enemy States to make complete reparation for all such loss and damage. The Allied and Associated Governments, however, require that the enemy States, to the extent of their utmost capacity, make compensation for all damage done to the civilian population of the Allied or Associated Powers and to their property by the aggression of the enemy States by land, by sea, and from the air, (and also from damage resulting from their acts in violation of formal engagements and of the law of nations).

3. The amount of such damage for which compensation is to be made shall be determined by an Inter-Allied Commission, to be constituted in such form as the Allied and Associated Governments shall forthwith determine. This Commission shall examine into the claims and give to the enemy States a just opportunity to be heard. The findings of the Commission as to the amount of damage defined in Article 2 shall be concluded and communicated to the enemy States on or before May 1st 1921. The Commission shall also concurrently draw up a schedule of payments up to or within the total sum thus due, which in their judgment Germany should be able to liquidate within a period of thirty years, and this schedule of payments shall then be communicated to Germany as representing the extent of her obligations.

4. The inter-allied commission shall further have discretion to modify from time to time the date and mode of the schedule of payments in clause 3 and, if necessary, to extend them in part beyond thirty years, by acceptance of long period bonds or otherwise, if subsequently such modification or extension appear necessary, after giving Germany a just opportunity to be heard.

5. In order to enable the Allied and Associated Powers to proceed at once to the restoration of their industrial and economic life, pending the full determination of their claim, Germany shall pay in such instalments and in such manner (whether in gold, commodities, ships, securities or otherwise) as the inter-allied commission may fix, in 1919 and 1920 the equivalent of $5,000,000,000 gold towards the liquidation of the above claims, out of which the expenses of the army of occupation subsequent to the Armistice, shall first be met, provided that such supplies of food and raw materials as may be judged by the Allied and Associated Governments to be essential to enable Germany to meet her obligations for reparation may, with the approval of the Allied and Associated Governments, be paid for out of the above sum.

6. The successive instalments paid over by the enemy States in satisfaction of the above claims shall be divided by the Allied and Associated Governments in proportions which have been determined upon by them in advance, on a basis of general equity, and of the rights of each.

7. The payments mentioned above do not include restitution in kind of cash taken away, seized or sequestrated, or the restitution in kind of animals, objects of every nature and securities taken away, seized, or sequestrated, in the cases in which it proves possible to identify them in enemy territory. If at least half the number of the animals taken by the enemy from the invaded territories cannot be identified and returned, the balance, up to a total of half the number taken, shall be delivered by Germany by way of restitution.

8. The attention of the four Chiefs of the respective Governments is to be called to the following:—

(a) That necessary guarantees to insure the due collection of the sums fixed for reparation should be planned; and

(b) That there are other financial clauses which this conference has not been charged to deal with.

Annexure to Clause 2

(1) Personal Injury Personal injury to or death of civilians resulting from acts of war on land, on sea or from the air, or mistreatment by the enemy.

(2) Pensions Damage to the civilian population resulting from the absence, incapacitation or death of persons serving with the forces and which damage is met by pensions or allowances of like nature made by the State.

(3) Damage to Labour Damage to civilians resulting from their being forced by the enemy to labour without just remuneration, or to abstain from labour.

(4) Damage to Property Damage to or interference with non-military property as from the date of damage or interference directly caused by acts of war on land, on sea or from the air or illegal act of the enemy or war measures in the nature of requisitions or sequestrations, taken by the enemy.

(8) Fines, etc. Damage in the form of levies, fines and other similar exactions imposed by the enemy upon the civilian population.

(6) Violations of Law and Engagements Damage resulting from acts in violation of inter-national law (as fund by the Commission on Responsibilities) and in violation of formal engagements.

Note: Where the State or other public authority has already itself made compensation for the damage, it may present the claim in its own behalf.

April 2, 1919.

Interpretation of Clause 2

Compensation may be claimed under Clause 2 under the following categories of damage.

I

(a) Damage caused to civilian victims of acts of war (including bombardments or other attacks on land, on sea or from the air, and all the direct consequences thereof, and of all operations of war, by the two groups of belligerents wherever arising) and to the surviving dependents of such victims.

(b) Damage caused to civilian victims of acts, cruelties, violence or maltreatment (including injuries to life or health as a consequence of imprisonment, deportation, internment or evacuation, of exposure at sea, or of being forced to labour by the enemy) committed or ordered by the enemy wherever arising and to the surviving dependents of such victims.

(c) Damage caused to civilian victims of all acts of the enemy in occupied, invaded or enemy territory, injurious to health or capacity for work or to honour and to the surviving dependents of such victims.

II

(a) All pensions and compensations in the nature of pensions to naval and military victims of war, whether mutilated, wounded, sick or invalided, and to the dependents of such victims.

(b) Cost of assistance by the State to prisoners of war and to their families and dependents.

(c) Allowances by the State to the families and dependents of mobilised persons, or persons serving with the forces.

III

Damage in respect of all property belonging to any of the Allied and Associated States or to any of their subjects, with the exception of military works or material, which has been carried off, seized, injured or destroyed, by the acts of the enemy on land, on sea, or from the air, or damaged directly in consequence of hostilities or any operations of war.

1. For a somewhat different account of the proceedings of this meeting, see Philip Mason Burnett, Reparation at the Paris Peace Conference (New York, 1940), vol. i, p. 825.
2. For the proceedings of this plenary session, see vol. iii, p. 240.
3. Appendix III to IC–169C, p. 19.
4. The memorandum apparently referred to here has not been found in the Department files. It is printed in Burnett, op. cit., vol. i, p. 779.
5. It is uncertain what document is meant by this reference.
6. Ante, p. 25.