Paris Peace Conf. 180.03401/3


Notes of a Meeting Held at President Wilson’s House in the Place des Etats-Unis, Paris, on Friday, May 9, 1919, at 10:30 a.m.

  • Present
    • America, United States of
      • President Wilson.
      • Mr. Baruch.
      • Mr. Norman Davis.
      • Mr. Hoover.
      • Mr. McCormick.
    • France
      • M. Clemenceau.
      • M. Clémentel.
      • M. Loucheur.
    • Belgium
      • M. Hymans.
    • British Empire
      • The Rt. Hon. D. Lloyd George, M. P.
      • The Rt. Hon. Lord R. Cecil, K. C, M. P.
      • Mr. J. M. Keynes, C. B.
      • Mr. J. A. Salter.
    • Italy
      • M. Orlando.
      • M. Crespi.
      • M. Giannini.
Sir Maurice Hankey, K. C. B. } secretaries.
Count Aldrovandi
Professor P. Mantoux—Interpreter.

1. The Economic State of Europe Lord Robert Cecil, speaking on behalf of the Supreme Economic Council, and on the invitation of President Wilson, stated the general economic problem confronting the Associated Governments. He said that the most important part of the problem was to get Europe to work again. A great proportion of the population were out of work in most countries in Europe. It was useless merely to provide food; in fact the danger to social order was likely to become worse and not better if people were merely fed. It was essential that raw materials should be made available. Poland might be taken as a typical case. Her great textile industry, on which Lodz for instance was absolutely dependent, was entirely stopped for want of cotton and wool, although her factories and their machinery were practically intact. The trouble was simply that she had no money to buy raw materials and no exports (a large part of which formerly went to Russia) to send in exchange for them. Even agriculture was affected by the absence of raw materials, as the want of proper boots and clothing for agricultural labourers reduced their capacity to work. The problem then was how to provide credit. Personally he would not advise giving unlimited funds or even limited funds uncontrolled to the Polish Government who might spend them on military undertakings.

[Page 522]

The problem, therefore, was twofold (a) to devise means of providing money, and (b) to devise means for seeing that it was used to set industry going. As far as he could see the position was getting worse and not better. What he had said of Poland, which he had taken merely as an instance, was generally true of Germany and other countries in Europe and the problem must be treated as a whole. Personally he regretted that there had not been a further relaxation of the Blockade some time ago. The problem was largely psychological and the continuance of the Blockade with a consequent feeling of distrust all over Europe was a large part of the difficulty. In the case of Belgium, for instance, it was clear that the provision of credit in itself was not sufficient as credits had there been offered without effecting a solution.

Mr. Lloyd George asked whether prices did not constitute a large part of the difficulty, i. e. the anticipation that prices would fall had the effect of holding back orders.

Lord Robert Cecil agreed that this was a part of the difficulty but he said it was clear that it was necessary for a serious attempt to be made at once to see that raw materials were obtained by the countries to which he referred. This was mainly a financial problem.

2. Blockade In addition, however, Lord Robert Cecil desired to make two following specific proposals with regard to the Blockade:

That semi-public communications should be at once entered into with the border neutrals with a view to securing from them such undertakings as would, if necessary, enable the Blockade to be re-imposed even more effectively than before.
That a public statement should at once be issued making clear what modifications in the Blockade have already been made and concluding with a statement that all the rest of the Blockade against Germany would be removed the moment Peace was signed.

(It was agreed that the above action (a) and (b) should be taken, it being understood that the removal of the Blockade would not apply to Bolshevist Russia.)

3. Payment by Germany for Foodstuffs Lord Robert Cecil, continuing, said that, personally, he had no specific financial proposal to make and considered the problem was one to which the experts should devote themselves at once. He wished, however, to refer to a special and important difficulty in the case of Germany. We had provided Germany with the full amount of food she had paid for. In addition we had large quantities afloat for which payment had not been arranged. The Germans had always warned us that they could not find sufficient money to pay for their rations up to the harvest, and the attempts to help the situation by allowing exports had broken down. A paper had been prepared by the Finance and Food Sections [Page 523] of the Supreme Economic Council for delivery to the President of the German Financial Commission. This paper after describing the exact present position concluded with the statement that shipments would at once be stopped unless the German Government took certain immediate measures to provide further gold. This memorandum included the following statement as to the present position:—

(i) Food delivered to May 10 £19,050,000
(ii) Foodstuffs afloat on May 10 or landed for delivery £14,850,000
(iii) Loading for May delivery £ 5,100,000
(iv) Balance collected for May delivery £13,750,000
(v) Foodstuffs collected for June delivery by German tonnage £10,670,000
(vi) Further United Kingdom supplies available for june £5,000,000
Total:— £68,420,000

The payment situation is as follows:—

(i) Original payments in gold and neutral currencies 6
(ii) First deposit in Brussels 11
(iii) Second Brussels deposit
(iv) Further deposit promised 10
Total:— 34½

showing a deficit of over £30 million even when the further deposit promised was paid.

In answer to a question by Mr. Lloyd George, Mr. Hoover stated that he thought that if the Germans could find £75,000,000 sterling in all (i. e. about £7,000,000 more than the amounts required for the supplies referred to above) they could with the addition of their foreign credits manage to carry through to the harvest.

Lord Robert Cecil continuing, stated that one difficulty resulted from the smuggling of German private securities abroad. Some of these were said to be taken by aeroplane; others to have got across into the occupied territory and so to neutrals.

Mr. Norman Davis said the German Government were in fact continuing to requisition securities.

Mr. Lloyd George asked whether a large part of the Brazilian debt was not in fact in German hands.

Mr. Keynes stated that the part so held did not amount to very much. The German Government had obtained about £1,000,000 from this source.

It was resolved that the Memorandum prepared for communication to the German Financial Commission should not be presented in view of the possible effect at this moment of a formal document of that [Page 524] character on the Peace negotiations. It was agreed, however, that the representatives of the Associated Governments should discuss the question verbally with the German representatives along the lines of the statement.

4. Credit Scheme for Europe. Committee Appointed President Wilson considered that the general financial problem could not be discussed to a conclusion at the present meeting but that further expert advice must first be obtained. On his motion it was resolved that:—

“a Committee composed of two economic advisers from each of the Principal Allied and Associated Powers be requested to submit a systematic suggestion with regard to the means of assisting the nations which are in immediate need of both food, raw material and credit”.

5. Controls of Danube Lord Robert Cecil subsequently raised the question of the control of the Danube. He stated that the river was at present partly under French and partly under British control, that there was general agreement that it was desirable to co-ordinate the control under a Commission of Four representing the four principal Associated Governments, but that a decision was required as to who should act as Chairman of this Commission. He himself hoped that Admiral Troubridge1 would be chosen.

Mr. Hoover explained the practical obstruction to barge navigation resulting from the present complicated permit system, and he agreed with the proposal.

M. Clemenceau stated that he considered it necessary that the whole should be under the supervision of the Military Authorities but that subject to that he thought it would be suitable that Admiral Troubridge should be Chairman of the Commission, and he agreed to write to General Franchet d’Esperey suggesting that he should propose the appointment of Admiral Troubridge to this position.

6. Food From the Banat for Hungary Mr. Hooover raised the question of the restriction on export of food from the Banat to Austro-Hungary. He pointed out that the need for food in the latter country was desperate and that the Associated Governments were in fact with Hungary much difficulty importing food from great distances.

At the same time there was actually a surplus of food in the adjacent Banat for which there were sufficient commodities in Austro-Hungary to provide payment. The Serbs, however, were refusing to allow the export of this food.

[Page 525]

(It was agreed that M. Clemenceau should communicate with the Serbian Government intimating that the Associated Governments regarded it as of great importance that facilities for the export of foodstuffs from the Banat to German-Austria and, if a stable Government were established, to Hungary, should at once be given.)

Villa Majestic, Paris, 9 May, 1919.

  1. Sir Thomas Troubridge, British admiral commanding on the Danube.