Paris Peace Conf. 180.03401/98


Notes of a Meeting Held at President Wilson’s House in the Place des Etats-Unis, Paris, on Saturday, June 28, 1919, at 12 Noon

  • Present
    • United States of America
      • President Wilson.
    • British Empire
      • The Rt. Hon. D. Lloyd George, M. P.
      • Brig-General H. O. Mance, C. B., C. M. G., D. S. O.
    • France
      • M. Clemenceau.
      • M. Claveille.
    • Italy
      • H. E. Baron Sonnino.
      • M. Crespi.
      • Captain Guido Jung.
    • Japan
      • H. E. Baron Makino.
Sir Maurice Hankey, K. C. B. } Secretaries.
Count Aldrovandi.
Captain A. Portier.
Professor P. J. Mantoux.—Interpreter.

President Wilson asked M. Crespi to be good enough to explain the situation.

M. Crespi said that an agreement had almost been reached and all felt that it was very necessary to reach one. The only objection was that questions of private financial interests between Companies and States should not find a place in a Treaty of Peace. This principle had been asserted by the Supreme Council which had declared that no clause in the Treaty should mention any private interest. The Italian Delegation had a new proposal to make on this question, of which the following was the text:— Railroads of the Former Austro-Hungarian Monarchy

“With the object of ensuring regular utilisation of the railroads of the former Austro-Hungarian Monarchy owned by private companies, which, as a result of the stipulations of the Treaty, will be situated in the territory of several States, the administrative and technical reorganisation of the said lines shall be regulated in each instance by an agreement between the owning Company and the States territorially concerned. Any differences on which agreement is not reached, including questions relating to the interpretation of contracts concerning the expropriation of lines, shall be submitted to an arbitrator designated by the Council of the League of Nations.”

[Page 747]

M. Crespi thought that this proposal covered all the difficulties, as it referred technical questions as well as those regarding the interpretation of the contract between the various Companies to an arbitrator appointed by the League of Nations.

M. Claveille said that he had certain observations to make. He wished to have a hearing, because if the proposals just made were accepted, the result would be that only States territorially concerned would have a share in the ultimate agreement. It was only just that France should not be detrimentally affected. The capital invested in these Companies was largely French. More than three-quarters of the bond-holders were French, and they represented a capital of more than a milliard and a half. He made no mention of the shares which were mostly held by Austro-Hungarians. When this railroad system was partitioned it was inconceivable, seeing that the capital invested in it belonged to France, that France should have no share in the discussion. He thought a remedy to this could easily be found by a slight alteration in the proposal just made, namely, by substituting for the words “states territorially concerned” a list of the States, including France.

President Wilson said that the text used the word “contracts”. He presumed that this meant contracts between the companies and the heirs of the Austro-Hungarian Monarchy.

General Mance observed that each Company would have to make new contracts with the new States.

President Wilson said that if the rights were not transferred automatically by the Treaty, the inclusion of new parties would from the legal aspect be wrong.

M. Crespi said that he could not accept the addition proposed by M. Claveille. There were bond-holders in Italy also. Their interests were quite well represented by the directors of the Company, whose business it was to look after the interests of its creditors. It would be contrary to all commercial laws to allow shareholders to intervene in the administration of a Company.

M. Claveille said that the Board of Directors was Austro-Hungarian and a centre of Germanisation. It represented worthless paper, the only paper of any value being French. The bond-holders therefore in equity had a right to intervene, and it was intended to put them aside at the very moment when the railway system was to be partitioned. He thought this proposal unacceptable.

M. Clemenceau said that France was simply being denied what she had a right to. A milliard and a half was being taken from her pocket.

Mr. Lloyd Georoe said that the British interest was relatively small as compared with the interest of France. He quite understood the [Page 748] reasons brought forward by the French representatives, but on the other hand he had been impressed by M. Crespi’s argument. It was a serious matter to have France and Great Britain represented in matters regarding Austrian. Czecho-Slovak, Italian or Yugo-Slav railways, simply because these countries had invested capital in these concerns. It was alleged that the Board of Directors was Austro-Hungarian and more or less controlled by Germany, but this must surely have been the case at the time when French and British shareholders invested their capital. M. Crespi had shown the danger of introducing into this matter any State whose intervention could put a stop to everything. He said this after a prolonged conversation with his experts. He repeated that it was a very serious thing that France and Great Britain should intervene in matters regarding the administration of railroads in foreign countries merely because their subjects had invested money in them. He thought M. Crespi had gone a long way in accepting arbitration by the Council of the League of Nations for technical matters as well as for the expropriation of the lines.

M. Claveille said that it was not merely a question of purchase. The railroad was nearly 2,000 kilometres long, and France, by reason of the capital invested, owned three-quarters. This railroad was to be partitioned among four Powers, each of which would be in a position to make a separate contract. This might result in the destruction of the work accomplished by France. Could the country which had paid the bill be excluded from the debate? This appeared to him inadmissible. France did not ask to settle the question alone, but only to take a share in the discussion.

M. Clemenceau said that it amounted to taking money from French pockets. He regarded this as scandalous. This would be very deeply felt by public opinion in France, and such an action could not be represented as in the interests of justice.

M. Crespi said that there was a misunderstanding. The arbitration of the League of Nations was accepted for the solution of the whole matter.

M. Clemenceau said this was no doubt so, but it was also true that if the four contracting States agreed, there would be no arbitration, and the game would be lost to France. After the war waged by France, and the losses sustained by her in it, such a situation was quite unendurable, and he refused with the utmost energy to accept the proposal. He regretted having to take such a decision, but the uncompromising spirit shown forced him to do so.

President Wilson said that such a question could not remain an open one, as it was part of the Treaty with Austria, which could not indefinitely wait for settlement.

Mr. Lloyd George said that General Mance had explained the French point of view to him, and he thoroughly understood it. He [Page 749] would observe that under the previous regime the Austro-Hungarian State had the right to expropriate the Company at any moment. He would ask therefore what change had been brought about by the new situation.

M. Claveille said that the proposal was unacceptable, both in form and in substance. It would amount to this—that the four States could come to an agreement, though they owned but a very small share of the invested capital. It was indeed extremely likely that they would reach an agreement. Arbitration would then not be resorted to, and French interests would be eliminated without even a hearing. The question of expropriation was not as simple as it seemed. The railroad stretched over four States, and afforded access for Czecho-Slovakia to the Adriatic. France had taken a considerable share in this. According to the Treaty, the four States were free to purchase or not to purchase the line. They would be in a position to share it and to partition the material constituting it. It could not be permitted that French savings, which had invested a milliard and a half, should have no voice in the final settlement. France had already lost 10 milliards in Russia. She had suffered more than any other country in the war, and now she was to be robbed of a milliard and a half. If this were done, there would be an overwhelming torrent of indignation in public opinion.

President Wilson asked whether it was not obvious that the four States would have every interest in developing the lines, as they were essential to their economic life.

M. Claveille said that he did not expect them to destroy the line, but he thought they would appropriate it at a low rate.

Mr. Lloyd George said he could not see any difference between the new situation and that which existed before the war. If Austria-Hungary still existed, she would be able to expropriate, and France could not make any resistance. It seemed to him that expropriation was less likely at the present time since it required the previous agreement of the four States.

M. Claveille said that there was yet a further point that had not been mentioned. The Company until 1875 had owned lines in Italy. At that period the Italian lines had been expropriated. Since then Italy had paid an annual indemnity of 29,000,000 francs. According to the Treaty, he gathered that this sum was to be paid in future by the Austrians. In regard to Austria, France took her place, with all the other Allies, among the creditors, and it was well-known how little would be received under this head. Hitherto, payment had been made by the Italian Government in Paris. This showed to what extent French interests were concerned in these lines.

M. Crespi said that the Italian Government had always paid in Rome.

[Page 750]

M. Claveille said he was ready to demonstrate the contrary.

M. Crespi said that in the Convention it was stated that payment should be made in gold in Rome. If no gold were available, payment should be made in Paris or London, [preferably?] in Paris.

M. Clemenceau said that France would be ready to accept payment in Rome, but not to be referred to Austria, which would pay nothing.

Mr. Lloyd George said that this discussion might reopen the whole question. It appeared to him impossible to delay the Treaty of Peace with Austria merely because of shareholders. If this were to come about, it would be necessary to make it quite clear that it was for reasons of this sort that France had opposed the settlement of the question. This was his view.

M. Clemenceau said that he held a different view. Moreover, he was quite ready, as far as he was concerned, to reveal all the details of the question to public opinion.

(The discussion was adjourned, and no solution was reached.)