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

Paris Peace Conf. 180.03401/103

IC–170I

Notes of a Meeting Held at President Wilson’s House, Place des Etats-Unis, Paris, on Saturday, 5 April, 1919, at 4 p.m.

Paris, April 5, 1919, 4 p.m.

• Present
  • America, United States of
    • Colonel House.
    • Mr. Baruch.
    • Mr. Norman Davis.
    • Mr. McCormick.
    • Mr. Lamont.
    • Mr. Dulles.
    • Mr. Auchincloss.
  • British Empire
    • The Rt. Hon. D. Lloyd George, M. P.
    • Lord Sumner.
    • Lt Col. Sir Maurice Hankey, K. C. B.
  • France
    • M. Clemenceau.
    • M. Klotz.
    • M. Loucheur.
    • M. Jouasset.
    • M. de la Chaume.
  • Italy
    • M. Orlando.
    • M. Crespi.
    • M. Chiesa.
    • Count Aldrovandi.

Interpreter—Professor Mantoux.

Reparation(1) The discussion continued on the basis of the draft that had been considered at the morning meeting—(Appendix to I. C. 170 (H)).¹

Mr. Lloyd George drew attention to paragraph 6 of the annexure to Clause (2) proposed by the American delegation (Appendix I). The wording of this Clause is as follows:—

“(6) Damage resulting from acts in violation of international law (as found by the Commission on Responsibilities) and in violation of formal engagements.”

He asked what the meaning of this Clause was? He pointed out that under this could be included the whole of the trade lost owing to submarine warfare, as well as the whole costs of the war, since the violation of Belgium was a violation of international law. Under these circumstances, he himself, would be the last person to object to it, but he thought it right to point out what it entailed.

Mr. McCormick said that the intention was that under this Clause Belgium would be the only country to benefit, and she was entitled to the whole of her war costs.

Mr. Lloyd George said that if this Clause was adopted he would be bound to put in his claim as stated above. South Africa, for instance, maintained that the whole of her trade had been stopped by the submarine warfare. Under these circumstances she could claim reparation for the whole. He felt bound to give warning of this.

Mr. Dulles said that what the draftsmen of this Clause had had in mind was that the Commission on Responsibilities had made certain recommendations relating to all kinds of breaches of the laws of war, as well as the murder of Captain Fryatt, Nurse Cavell, and other cases, and it was thought that Belgium alone would benefit.

(At this point M. Clemenceau, M. Klotz and M. Loucheur entered)

Mr. Lloyd George pointed out that the Report of the Commission on the breaches of the laws of war also included the violation of Belgium as a breach, besides the submarine warfare.

Mr. Dulles said that the United States Delegation put in the reference to the report of the Commission on the Breaches of the Laws of War on the understanding that the Clause would only apply to direct and immediate damage. If it was interpreted as extending to stoppage of trade the Clause must be ruled out.

Mr. Lloyd George said that the cost of the war and the stoppage of trade were direct results from breaches of the laws of war, namely, the violation of Belgium and the submarine warfare respectively.

Colonel House suggested the Clause should be entirely eliminated with the understanding that Belgium should be properly provided for.

Mr. Lloyd George drew attention to the interpretation of Clause (2) provided by the British Delegation (Appendix II) which he said provided for reparation for everything in the King of the Belgian’s list. He himself had objected to nothing in the King of the Belgian’s list, neither had Colonel House, nor M. Clemenceau. Nevertheless, if the vague words were put in Clause 6 of the draft of the American Delegation, he and M. Clemenceau would both have to put in the claims they were entitled to under it. To say that Belgium was entitled to one class of damage, and France and the British Empire to another class, was impossible.

Mr. McCormick said that the United States Delegation had made this proposal as applying to Belgium which was entitled to all the war costs.

Mr. Lloyd George pointed out that France and Great Britain had paid every penny of Belgium’s war costs, even down to the salaries of the Ministers.

Lord Sumner pointed out that Belgium was not a party to the Treaty of 1839² which had only been signed by the Guaranteeing Powers, and hence was not specially entitled to all war costs.

Professor Mantoux at Mr. Lloyd George’s request then read the British draft of the interpretation of Clause 2 in French.

Colonel House said that if Belgium was properly provided for the United States Delegation would accept the British draft provided the French were willing to.

M. Klotz said that very long conversations had taken place on this subject. It was true that two texts had been evolved, namely, the American and the British. The American text, however, had been discussed line by line and in great detail, and had finally been agreed to by the French subject to additions and by the Italians subject to one addition. The British text had not been studied in the same detail, consequently if this were adopted the ground would have to be gone over again in detail. Hence he thought it would be better to work on the American text. The British representatives, however, would have the right to suggest additions.

Colonel House suggested that as the British text had been submitted at the same time as the American text and both had been discussed, there was no particular reason for adopting the latter.

Mr. Lloyd George asked if M. Klotz accepted Mr. McCormick’s interpretation of Clause 6 of the American text.

M. Klotz replied that he did not.

Mr. Lloyd George said that this was proof that it had not been properly examined. He then read Clause 2 of the British text. He said that Clause (2) of the British text appeared to him to be a better draft from the public point of view.

Mr. Lloyd George suggested that if the British text was to be taken as the basis it should be studied carefully and he suggested that a meeting should take place to consider the matter.

(It was agreed that the British text should be adopted subject to a detailed scrutiny and examination by the experts.)

M. Clemenceau then made the following statement:—

“I do not accept that the Commission should have, power to declare the capacity of payment of Germany. I would say this: Germany owes me X for damages to persons and property. The Governments will have the right to reduce that sum in the course of years if they deem it just. But we are not prepared to accept any reduction now. We shall see what is possible and what is not, we shall take into account the question of accumulated interest (we may have to abandon our claim to interest altogether). We are willing to let the door open to every liberal solution.

[“]But I ask, in the name of the French Government, after consultation with my colleagues, that what the enemy owes to us should be declared (if not by means of . . . . . sum, at least by determining categories of damages to be compensated for). We shall retain our faculty of allowing time to pay. Let us fix a limit of 30 years, as thought desirable by most of us. If everything has not been paid for during 30 years, then the Commission will have the right to extend the period.”

Colonel House suggested that this was a very important statement which might form the basis of an agreement.

At Colonel House’s request M. Clemenceau’s statement was read a second time.

Mr. Davis said that it seemed to him to be very similar to the proposal of the United States Delegation.³

M. Loucheur said that this was not the case. There was an enormous difference. Mr. Clemenceau said “What Germany owes she owes. The Commission shall have no right to reduce the amount but the Government will. The Commission will be only entitled to alter the time of payment. We instruct them to arrange for full payment in 30 years if possible.”

M. Clemenceau said he quite approved of this interpretation of his remarks.

Mr. Davis reminded the meeting of the history of this question. The Commission had begun by considering two things, namely, what Germany owed, and what Germany could pay. They had always acted on the principle that she could not pay all that she owed. The basis of their calculations, was, therefore, always the amount that Germany could pay, and the limiting period had generally been taken as from thirty to thirty-five years. After that period the amount became so large that the annual instalments were swallowed up in interest. The estimates of the amount that Germany could pay varied enormously, as much as from 25 billion to 50 billion dollars.

As no agreement could be reached as to the figure and as developments seemed to render the fixing of a figure inadvisable, it was decided to try and deal with the matter in another way. In doing so the principle previously adhered to of ascertaining what Germany could pay had been departed from. If some basis of calculation was not fixed, the principle would be dropped.

Mr. Lloyd George then gave an historical resume differing somewhat from Mr. Davis’s.

(After a short interval spent in an informal exchange of views and final drafting amendments, the following clauses, based on a draft prepared by M. Klotz to carry out ideas expressed by Colonel House at the morning meeting, were adopted:—

Note: Words inserted in the original draft are underlined.⁴ Words omitted from the original draft are in brackets.

(1) Deleted From the Original Draft The Allied and Associated Powers require and the Enemy Powers accept that the Enemy States at whatever cost to themselves make compensation for all damages done to the civilian population of the Allied and Associated Powers, and to their property by the aggression of the Enemy States by land, by sea, and from the air, and also for all damages resulting from permanent injury to the health of any of their nationals [and for all damages resulting from the original the acts of the enemy in violation of formal engagements and of the law of nations].

(2) The amount of damages as set forth in the specific categories annexed hereto, 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 Powers 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 this Commission as to the amount of damages shall be concluded and communicated to the Enemy States on or before May 1st, 1921.

The schedule of payments to be made by the Enemy States shall be set forth by this Commission, taking into account in the fixation of the time for payment their capacity for payment.

On Lord Sumner’s suggestion, it was agreed that the following preamble should be added to the schedule:—

“Compensation is to be made in accordance with this schedule as hereinbefore provided”.)

Clause 5 M. Klotz said that as the result of the previous discussion there would be consequential alterations in Articles 2, 3 and 4, but in regard to Article 5 he had some comments to make. He considered the wording of this article politically dangerous. He then read Clause 5 as follows:—

“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 $5000,000,000 gold towards the liquidation of the above claims, out of which the expense 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.”

What he objected to was the inclusion of money for the expense of the Army of Occupation and the supplies of food and raw material for revictualling Germany. If, after saying to our peoples that we were obtaining from the enemy a certain sum of money we were to deduct a considerable sum to pay for the Army of Occupation, the effect on public opinion would be bad. In two years the cost of an Army of Occupation would amount to 14 milliards. If you added to this the cost of revictualling Germany, nothing would remain. If it was impolitic for the French people it was, in his view, equally impolitic for the German people. If we asked them to make an immediate effort to supply a certain sum of money, it was not desirable to tell them that a quarter of it would go back to them. Hence he would like in some way to separate from the total figure, the amount for revictualling and for the cost of the Army of Occupation.

Mr. Lloyd George points out that the figure 14 milliards was calculated for an Army of Occupation of the size now occupying the Rhinish provinces. It would be absurd to maintain so large an army when Germany only had an army of 40,000 men. He asked if M. Klotz’s objection was to supplying food and raw material. Without those Germany could not make reparation,

M. Louoheur was quite in accord with Mr. Lloyd George in regard to the necessity of giving Germany food and raw material, otherwise they would not be able to pay. Nevertheless, it was necessary to fix a limit. His idea was to fix a sum which Germany should pay for food and raw material.

M. Lamont said that the text of Article 5 had been suggested after a very long discussion by the British Delegation. M. Loucheur had made his present suggestion in the course of this discussion. He had been met with the reply that the Allied and Associated Powers were fully safeguarded by the following words:—

“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.”

Mr. Lloyd George pointed out that under this clause the enemy could not obtain an ounce without our permission. The Allied and Associated Powers retained absolute control. To fix a definite amount was to encourage the enemy in making their reparation to say “We are ready to finish the job, but we cannot do so unless you give us another fifty million”. They would be continually doing this.

M. Loucheur questioned whether it was desirable to have the clause so worded in the Peace Treaty as to enable Germany to come to us at once and demand food and raw materials.

M. Klotz said the political objection was that if we asked for $5000,000,000, it would have the appearance to Germany of paying a far greater sum because part of it was to be paid for the Army of Occupation and for their own revictualling. He would prefer to fix a sum without saying how much Germany was to have. As the clause now ran the German people would not see that part of the money was for their own benefit, whereas the Allied population would expect to receive more than they would get. Hence he would rather reduce the figure and make a special allowance for the Army of Occupation and for revictualling.

Mr. Lloyd George preferred the present article. It would give us complete control over Germany for two years. It was better that the German assets should be controlled by us than by some German Government of very doubtful authority and stability.

M. Clemenceau said that undoubtedly there were great inconveniences in the present proposal, and these had been pointed out by M. Klotz, but he thought that Mr. Lloyd George had shown that there was still greater danger in dividing the figures.

Guarantees M. Klotz said that there was one serious omission from the draft. Nothing was said about guarantees. In the case of debts between individuals, securities or some other form of guarantee were always given for the payment of the debt. The question of political and military guarantee was outside the present enquiry. There were, however, some technical guarantees that could be taken, such as the revenue from ports, customs, railways, and the control of other sources of revenue. The British and United States experts when addressed on this subject said that no mandate had been considered. Nevertheless, he believed that these technical guarantees should be in the Treaty as well as military and financial guarantees.

Mr. Lloyd George said that, supposing you occupied the Customs Houses, what would you get? Goods? Or Marks? He could not see what would be gained by this proposal. It was really part of the whole question of the enforcement of the Treaty of Peace. It seemed to him, therefore, irrelevant to the Financial Terms. It was worth consideration, perhaps, whether some form of paper bonds should be issued, but that was entirely a different proposal and one for the Financial Experts.

M. Loucheur said that this was part of the question of the means of payment.

Mr. Baruch said that on the question of control they were waiting for the Report of the Commission. If, however a promise were received from Germany to pay, very little would be gained by occupying territory,

Mr. Davis said that the utmost that could be done would be to occupy a certain amount of territory.

Mr. Lloyd George suggested that something ought to be put in about the right to restitution.

M. Clemenceau said this was a very important point.

M. Loucheur said it was vital for the French, Belgian and Italian Governments to have the faculty of choice between the various means by which payment could be made.

One method of payment was the rebuilding of houses; another was to take certain classes of goods. In this latter connection the question of coal was of the utmost importance, both to France and Italy. France would have a deficiency of 18,000,000 tons of coal, even supposing she obtained the produce of the Saar Valley, and after making allowance for the normal importation from Great Britain. The same applied to Italy, which had been asked to put down the amount of coal she required from Germany. Another form was replacement of machinery taken away.

M. Clemenceau proposed that M. Loucheur should prepare a text on this subject for consideration on Monday.

Mr. Lloyd George suggested that the experts should meet to consider this text first.

(It was agreed that M. Loucheur should prepare a text which should be considered by the experts before the next meeting on Monday, which was arranged to take place at President Wilson’s house in the Place des Etats-Unis at 11.0 a.m.)

(The Meeting then adjourned.)

Villa Majestic, Paris, 6 April, 1919.

Appendix I

Annexure to Clause 2³

(Draft prepared by the American Delegation)

[Same as “Annexure to Clause 2” printed on page 29.]

Appendix II

Interpretation of Clause 2

(Draft prepared by the British Delegation)

[Same as “Interpretation of Clause 2” printed on page 30.]

1. Ante, p. 27.
2. British and Foreign State Papers, vol. xxvii, p. 1000.
3. This remark is attributed to Colonel House in another version of the minutes of this meeting. See Burnett, Reparation at the Paris Peace Conference, vol. i, p. 833. For the significance of the discrepancy, see ibid., p. 75, and Paul Birdsall, Versailles, Twenty Years After (New York, 1941), pp. 257 and 327.
4. Underlined words are printed in italics.
3. Of the draft contained in the appendix to IC–170H, p. 27.