Paris Peace Conf. 180.03401/105
IC–170K
Notes of a Meeting Held at Mr. Lloyd George’s Plat at 23, Rue Nitot on Monday, April 7, 1919, at 4 p.m.
- Present
- America, United States of
- Colonel House
- Mr. Baruch
- Mr. Lamont
- Mr. McCormick
- Mr. Norman Davis
- Mr. Dulles
- Mr. Auchincloss
- France
- M. Clemenceau
- M. Klotz
- M. Loucheur
- M. Sergent
- M. Jouasset
- M. Lyon (?)
- British Empire
- The Rt. Hon. D. Lloyd George, M. P.
- The Rt. Hon. Lord Sumner
- Mr. J. M. Keynes, C. B.
- Lt.-Colonel Sir Maurice Hankey, K. C. B.
- Italy
- M. Orlando
- M. Crespi
- M. d’Amelio
- Count Aldrovandi
- America, United States of
Supreme Council 1. The Supreme Council had before them a revised edition of the clauses on reparation prepared by Mr. Lamont, Mr. Keynes and M. Loucheur as a result of the Meeting held on Saturday, April 5th. (Appendix I).
Article 1 This Article was accepted subject to the addition in line 1, after the word “affirm” of the following words: “and the Enemy States accept”. This addition had been agreed to at the Meeting on April 5th, but had been dropped out in the drafting.
Clause 1 Clause 1, as finally approved, reads as follows:—
“The Allied and Associated Governments affirm and the Enemy States 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.”
(As a matter of accuracy the above amendment to Clause 1 was introduced as the result of the discussion on Clause 2)
Clause 2 There was a prolonged discussion on various points in Clause 2.
M. Klotz took exception to two points in the draft of this clause. First, the statement that “The financial resources of [Page 45] the Enemy States are not unlimited.” He agreed that this might be expressed somewhere in the Treaty, for example, in a preamble, but he considered it would have a bad political effect on the population if stated in the Treaty.
Second, the phrase “To the extent of her utmost capacity”, the wording of which, he pointed out, in a previous draft had been “At whatever cost to themselves”.
In the course of the discussion, Mr. Lloyd George pointed out that it was necessary somewhere in the document for the reasons to appear why the Allies could accept less than the whole cost of the war. This phrase had not been put in for the benefit of the Germans but to enable M. Clemenceau and himself to justify to the French and British peoples their acceptance of less than the whole cost of the war.
In the course of a prolonged discussion M. Klotz put forward the following alternative draft:—
“The Allied and Associated Governments, recognising that financial resources of the Enemy States in the situation in which they are left at the conclusion of Peace, will not be adequate to make complete reparation for all the losses and damages mentioned in Article 1. demand that the German Government shall compensate all the losses enumerated in the annexed text”.
Mr. Lloyd George considered this draft would be bad from the point of view of public opinion which, both in France and Great Britain, desired very heavy damages. Public opinion would say: “Why do you take the situation at the time Peace is signed.” The facts that ought to be taken into consideration were not the ephemeral conditions existing on the signature of Peace, but the permanent diminutions of Germany, such as the loss of their coal-fields, iron-fields, ships and Colonies.
After an adjournment Clause 2 was agreed to in the following form:
“The Allied and Associated Powers recognise that the financial resources of the Enemy States are not adequate, after taking into account permanent diminutions of such resources which will result from other Treaty Clauses, to make complete reparation for all such loss and damage. The Allied and Associated Governments, however, require, and the German Government undertakes, that she will make compensation for all damage done to the civilian population of the Allied or Associated Powers and to their property by her aggression by land, by sea, and from the air as defined in the annexed schedule.[”]
Articie 3 At M. Klotz’s suggestion the word “concurrently” was substituted for the word “thereupon” in the fourth sentence. Subsequently, to meet a point raised by M. Klotz on Clause 4, the following alteration was agreed to in the fourth sentence:—
Delete the words “providing for the discharge of” and substitute [Page 46] the following words: “prescribing the time and manner for securing and discharging”.
Article 3 as finally agreed to reads as follows:—
“The amount of such damage (as set forth in the specific categories attached hereto) for which compensation is to be made by the Enemy States, 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 as above shall be concluded and notified to Germany [the Enemy States]1 on or before May 1st, 1921, as representing the extent of their obligations. The Commission shall concurrently draw up a schedule of payment prescribing the time and manner for securing and discharging the entire obligation within a period of 30 years from May 1st, 1921. In the event, however, that within the period mentioned, Germany shall have failed to discharge her obligation, then any balance remaining unpaid may, within the discretion of the Commission, be postponed for settlement in subsequent years: or may be handled otherwise in such manner as the Allied and Associated Governments, acting through the Commission, shall determine.”
M. Klotz drew attention to the last sentence of Article 3 and enquired whether the Allied and Associated Governments would have to be unanimous in giving their instructions to the Commission.
Mr. Davis said that the experts had not attempted to settle that. This sentence had only been inserted to meet M. Clemenceau’s point raised on Saturday that the Commission, as a Commission, should not have too much power and that the Governments should retain power.
M. Klotz considered it important to settle the question of unanimity.
Mr. Davis said that on this question of power it had throughout the discussion on the Reparation Commission been agreed by the American, British, French and Italian experts that the Commission should have powers to postpone the dates of payment.
Mr. Klotz insisted that the Commission’s question was as to whether the vote was to be a unanimous one or a majority vote.
Mr. Lamont said this was a point to be covered in the constitution of the Commission which had not yet been dealt with.
M. Clemenceau urged that if the Governments were agreed on the principle, it would be better to settle it here and now.
Mr. Lloyd George said that if, while principles were being discussed, details such as the composition and constitution of the Commission and how it was to vote had to be settled, the Supreme Council would never get to the end of its task.
[Page 47]M. Clemenceau did not wish to insert anything in the clause now under consideration, but thought it would be as well to settle the question. He said that so far as France was concerned, the French Government considered unanimity essential.
M. Orlando agreed.
Mr. Lloyd George said he was prepared to agree.
M. Klotz said that the question of sovereignty was raised by this. No Government could afford to cede its rights in this manner. The fate of the nation was in the hands of each Government which could not yield its responsibility to anyone. If the matter were handed over to a majority, the Government would be ceding its authority and its sovereignty.
(The principle of unanimity in the instructions by the Allied and Associated Governments to the Commission in regard to the manner in which any balance remaining unpaid by the enemy should be dealt with was accepted, subject to a reservation by Colonel House who said he had no authority from the President to settle the matter).
Article 4 M. Klotz drew attention to the words “and to modify the form of payments” which he said had been introduced into the draft for the first time by the United States Delegation. He recalled a word spoken by Mr. Lloyd George on Saturday on the question of guarantees. Mr. Lloyd George had suggested that the means of forcing the enemy Government to pay was a political question for Governments to consider, but he had suggested that they might take guarantees from the enemy in the form of bonds. This was a matter for technical experts. He did not wish to make any alteration in the text of the Article but he suggested that the form of the payments should be remitted to a small Committee to prepare texts as soon as possible.
Mr. Lloyd George agreed that the matter ought to be taken up. Lord Sumner, he said, had suggested to him that the question of bonds might be referred to the same experts as would examine the constitution of the proposed Commission.
Mr. Davis said that this was a matter which would develop gradually and that there was no time at present to work out a technical bond scheme. It had been assumed that the Commission itself would work this out.
Mr. Lloyd George then put forward the suggestion made to him by Mr. Keynes to meet the difficulty by the alteration in Article 3 referred to above.
M. Klotz wished to go rather further. He pointed out that this proposal would only affect the future. Meanwhile, the Allied Governments had to make their budgets and create funds for their own payments. Since the enemy would have to pay the debt ultimately, [Page 48] he required Germany to give a signature for her indebtedness in the form of a bond. If we could get some bonds now it would be equivalent to an admission on Germany’s part of her debt.
Mr. Lloyd George agreed with the idea. He read an extract from a memorandum prepared by Lord Sumner on the subject of the constitution of the Commission which corresponded closely with M. Klotz’ idea. It was for this reason that Lord Sumner had thought the matter would be best dealt with by the Committee appointed to consider the constitution of the Commission.
(Colonel House retired at this point).
Article 4 was eventually adopted without alteration.
Articles 5 and 6 were adopted.
Article 7 Article 7 was adopted subject to a reservation on the part of M. Clemenceau, who reserved the right to speak to President Wilson about the deletion of a passage of the original text concerning the restitution of cattle.
Article 8 Article 8 of the original text, which was merely a note drawing the attention of the Supreme War Council to certain points, was deleted and a new Article was substituted. (See the complete document at the end of Conclusions).2
Means of Payment M. Loucheur reminded the Supreme Council that at the last meeting he had undertaken to prepare a text on the subject of the means and nature of payment including proposals for a payment Payment in kind, especially by means of coal and by the use of German labour to make good the devastated areas.
He had prepared his draft but it had not yet been examined by the experts.
Mr. Baruch said that it had already been examined, so far as coal was concerned, by the Raw Materials Committee of the Supreme Economic Council.
Mr. Lloyd George said that there were two totally different questions, which ought to be examined separately; one was the question of the use of German labour to make good the devastated areas; the other was the question of payment in kind. The examination of these two subjects would require different sets of experts and, consequently, he pressed for two separate Committees. After some considerable discussion on this subject and on the proposals for other Committees,
It was agreed:
- (1)
- That the Raw Materials Committee of the Supreme Economic Council engaged on the examination of transitory matters should relinquish its enquiries into the question of payment in kind by means of coal, etc.
- (2)
- That the question of form of payment (e. g. payment in
kind—coal, etc.) should be considered by a small expert
Committee composed as follows:—
- M. Loucheur
- Mr. Baruch
- Sir H. Llewellyn Smith
- M. Crespi
- (3)
- That the question of utilising German labour for the
restoration of the devastated areas should be referred to a
special Committee composed as follows:—
- M. Klotz
- M. Loucheur
- Lord Sumner
- Lord Cunliffe
- M. Crespi
- M. d’Amelio
- 2 United States Representatives
- (4)
- That the following Committee should consider the constitution
of the Commission to be set up under the Articles of the Peace
Treaty:—
- M. Klotz
- Lord Sumner
- M. Crespi
- 1 American Representative
(See also final conclusion of these notes)
The Text of the Articles, as finally adopted is as follows:—
REPARATION
- 1.
- The Allied and Associated Governments affirm and the enemy States 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.
- 2.
- The Allied and Associated Governments recognise that the financial resources of the enemy States are not adequate after taking into account permanent diminutions of such resources which will result from other treaty clauses to make complete reparation for all such loss and damage. The Allied and Associated Governments however, require, and the German Government undertakes that she will make compensation for all damage done to the civilian population of the Allied or Associated Powers and to their property by her aggression by land, by sea and from the air, as defined in the annexed Schedule.
- 3.
- The amount of such damage (as set forth under the specific categories attached hereto) for which compensation is to be made by the enemy States, 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 [Page 50] amount of damage defined as above shall be concluded and notified to Germany on or before May 1st, 1921, as representing the extent of their obligations. The Commission shall concurrently draw up a schedule of payments prescribing the time and manner for securing and discharging the entire obligation within a period of 30 years from May 1, 1921. In the event, however, that within the period mentioned, Germany shall have failed to discharge her obligation, then any balance remaining unpaid may, within the discretion of the Commission, be postponed for settlement in subsequent years: or may be handled otherwise in such manner as the Allied and Associated Governments, acting through the Commission, shall determine.
- 4.
- The Inter-Allied Commission shall thereafter, from time to time, consider the resources and capacity of Germany and, after giving her representatives a just opportunity to be heard, shall have discretion to extend the date, and to modify the form of payments, such as are to be provided for in Clause 3: but not to cancel any part, except with the specific authority of the several Governments represented upon the Commission.
- 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 base 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, nor 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.
- 8.
- The German Government undertakes to make forthwith the restitution contemplated by Article 7 and to make the payments contemplated by Articles 3, 4 and 5.
- The German Government recognises the Commission provided for by Article 3 as the same may be constituted by the Allied and Associated Governments, and agrees irrevocably to the possession and exercise by such Commission of the power and authority given it by Articles 3, 4 and 5. The German Government will supply to the Commission all the information which the Commission may require relative to the financial situation and operations of the German Government, its States, Municipalities and other governmental sub-divisions, and accords to the members of the Commission and its authorized agents the same rights and immunities as are enjoyed in Germany by duly accredited diplomatic agents of friendly Powers. The German Government further agrees to provide for the compensation and expenses of the Commission and of such staff as it may employ.
The Supreme Council next examined the text in regard to Categories of Damage, which had been prepared since the last meeting. (Appendix 2).
Article 1 Article 1 was adopted subject to the addition in (g) of the following words:—(French scale to be adopted).
Article 2 Mr. Lloyd George suggested that Article 2b was too wide: a million Belgians might say that they had refused to accept wages from the Germans for 4 years and might claim compensation for the work they had abstained from. A very large sum might then be run up.
M. Orlando agreed.
M. Klotz gave the following illustration of the reason for inserting this clause:—
Supposing works existed within an area occupied by the enemy and the enemy wished to use them for making shells. The proprietor might have refused. While the factory was out of work the owners might have done their best to give an allowance to the workers. Surely it was, justifiable that recompense should be given to the employers who had paid the employment benefit in these conditions. Of course, however, it would be necessary to be very sure of the facts.
M. Clemenceau agreed with Mr. Lloyd George that it opened the gates to abuses.
M. Klotz agreed to drop Article 2 (b).
Article 2 (a) was retained.
Clause 3 was adopted subject to some re-drafting required as a consequence of the omission of Article 4, see below.
Mr. Lloyd George said that he had been given to understand the meaning of this Article to be that reparation would not only have to be paid for the actual destruction of non-military property but also for the consequent loss of business.
Article 4 The instance of a farm had been given to him. If a farm was destroyed, not only would the farmer get the value of the destruction inflicted but also the loss incurred owing to the farm not being in operation. He himself was very familiar with farmers’ accounts. When it was a question of preparing an Income Tax Return their profits were very low, (M. Clemenceau interjected that this is the case in France also) but for a claim in this connection their profits would be very high. Consider the case of shipping. The British Government proposed to put in a claim for the many millions of tons lost, but they had not hitherto proposed to put in a claim for compensation for all the consequential loss owing to the stoppage of business due to the loss of ships, loss of wages to the crews, loss of wages at the docks, etc., etc. These could be claimed [Page 52] under this clause. Consider yet another instance. The enemy had bombarded the East Coast of England and destroyed many lodging houses. Under this could be claimed not only the damage to the lodging houses but equally the loss of business. Yet another case. The colonial trade has been greatly interfered with by the submarine warfare. Australia had suffered greatly. Under this clause Australia could claim compensation for all the grain eaten by rats. If this clause was to stand we should have to revise our claims and he himself had understood that both he and M. Clemenceau had agreed not to include demands for loss of trade and business, but only compensation for life and property.
M. Clemenceau agreed.
M. Loucheur suggested that at least we ought to permit interest to be paid between the date of the Armistice and the date of payment.
Mr. Lloyd George said that if this was applied to ships also, it would be very favourable to us. Personally, however, he was opposed to these small claims that could be so easily forced up to a big bill.
M. Loucheur pointed out that it would be 10 years before the mines in North France would be fully repaired. Surely interest ought to be provided for these.
Mr. Lloyd George admitted that large claims like this were on a different footing.
It was agreed:—
- 1.
- To omit Clause 4
- 2.
- That M. Loucheur and Lord Sumner should prepare a new draft covering only large items such as the French mines referred to by M. Loucheur.
Mr. McCormick on behalf of the United States of America made a reservation that Belgium must be properly provided for.
Belgium and Reparation The Supreme Council next considered the two alternative draft paragraphs in regard to the compensation for Belgium.3
Mr. Lloyd George opposed any special articles in regard to Belgium. If these were adopted, there would be a suggestion that Belgium was getting something that was left out in the case of France.
M. Clemenceau agreed that there ought to be equal treatment for Belgium and France.
Mr. McCormick said that on behalf of the United States of America, he reserved the right to see that Belgium was protected as promised in Point 7 of the address of the President of the United States at the Congress made on January 7th [8th], 1918,4 and concurred [Page 53] in by the Allied and Associated Governments.
Mr. Lloyd George agreed that Belgium must be protected but objected to the suggestion in this clause that there was something special being provided for Belgium and not for France. The proper course was when all the clauses had been provided to let Belgium see them and state her case.
Reparation for Depreciation of Marks M. Klotz wished to put in a clause to provide compensation for the reimbursement made for enemy marks left in the occupied territories. The enemy paid for everything he required in marks at the rate of one franc, 25 centimes, consequently Belgium and France were full of marks.
The French Government had had to reimburse those who had suffered from the depreciation in the mark. Was it not right to ask that return should be made for this? He suggested that the question should be examined by the same Committee as was going to examine the case of the coalmines.
Lord Sumner said that the question had been raised at the Sub-Commission, of which he was Chairman. Three cases had been mentioned:—
- 1.
- The case of prisoners of war and repatriated prisoners who had had German marks in their possession which the French Government had redeemed.
- 2.
- Persons in the invaded territories who had had marks in their possession which have been redeemed.
- 3.
- Persons in Alsace-Lorraine.
The view of the Commission had been that the first case was not an unreasonable one for reparation. As regards No. 2, and more especially as regards No. 3, the question of policy had appeared to be raised, namely, that it was the interest of the French Government to put these people in a better position than those who remained under German rule. The Roumanians and the Poles had come forward with suggestions for reparation. The general conclusion that had been reached was that the amount involved was so large that reparation ought not to be adopted on economic grounds and it was really a matter for the Governments to deal with on political grounds.
Mr. Lloyd George raised the question as to whom compensation was to be paid. Was it to those who had the depreciated marks in their possession now? These had received the marks at a depreciated price. The paper had been passing from hand to hand and the mark had gradually gone down in value. The man who held it now was not the man who had lost the money. The man who had lost was the one who had taken the original mark at its face value. Hence, if you compensate people now you would not compensate their loss but other people’s loss.
[Page 54]M. Klotz pointed out that in all Belgium and in all France the first thing the Germans had done on occupying the Country was to put up a notice fixing the value of the mark at one franc, 25 centimes. It had remained at this value until the re-occupation by the Allies when the mark had fallen to 70 centimes. When the mark passed from hand to hand it was Belgium and France who had had to pay the price. It would have been impossible for the King of the Belgians to enter Brussels or for the President of the Republic to enter Lille unless these marks had been redeemed.
M. Clemenceau said he did not claim it for Alsace-Lorraine but he did for North France and Belgium, and proposed the Commission to examine the question.
Mr. Davis asked how much was involved.
M. Clemenceau said one milliard francs for France alone (£40,000,000).
Mr. Davis asked how much for Serbia and Poland.
M. Clemenceau said it was a matter obviously for a small Committee.
It was agreed that the question of reparation in regard to the redemption of the mark should be referred to the Committee set up to consider the organisation of the Commission to be formed under the Articles in the Treaty of Peace.
The list of categories of damage as finally agreed to was as follows:
Compensation may be claimed under Clause 2 under the following categories of Damage.
I. (a) Damage to injured persons and to surviving independents [dependents] by personal injury to or death of civilians caused by 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).
(b) Damage caused to civilian victims of acts of cruelty, 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 independence [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 to work, or to honour, and to the surviving dependence [dependents] of such victims.
(d) Damage caused by any kind of maltreatment of prisoners of war.
(e) As damage caused to the peoples of the Allied and Associated Powers 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 dependence [dependents] of such victims, the French scale to be adopted.
(f) Cost of assistance by the State to prisoners of war and to their families and dependents.
(g) Allowance by the state to the families and dependents of mobilised persons or persons serving with the forces. (The French scale to be adopted).
[Page 55]II. Damage caused to civilians by being forced by the enemy to labour without just remuneration.
III. To Be Redrafted Damage in respect of all property wherever situated belonging to any of the Allied or Associated States or to any of their peoples, with the exception of military works or materials, which has been carried off, seized, injured or destroyed by the acts of the enemy on land, on sea or from the air, or damage directly in consequence of hostilities or of any operation of war.
IV. Damage in the form of levies, fines and other similar exactions imposed by the enemy upon the civilian population.
(The Meeting then adjourned).
Villa Majestic, Paris, 8 April, 1919.
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