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

Paris Peace Conf. 180.0501/21

Supreme Economic Council: Twenty-first Meeting Held at the Ministry of Commerce [on 2d June, 1919, at 10 a.m.]

June 6, 1919, 10 a.m.

The Supreme Economic Council held its Twenty-first Meeting on Monday, 2nd June, 1919, at 10 a.m. under the Chairmanship of Lord Robert Cecil.

The Associated Governments were represented as follows:—

United Kingdom:	Sir Hubert Llewellyn Smith,
	Mr. Wise,
	Sir Wm. Goode,
	Sir Wm. Mitchell Thomson,
United States:	Mr. Hoover,
	Mr. McCormick,
	Mr. L. Summers.
France:	M. Clémentel,
	M. Claveille,
	M. Seydoux.
Italy:	Prof. Attolico,
	Signor Pirelli,
	Dr. Giannini,
Belgium:	M. Jaspar,
	M. de Cartier de Marchienne,
	Lieut. Col. Theunis.

192.

The Minutes of the Twentieth Meeting were approved.

193. Financial Arrangements for Austrian Food Supplies.

With reference to Minute 191 a letter dated 30th May (169) from the German-Austrian Delegation at St. Germain, giving guarantees for credits opened or to be opened by any of the Allied and Associated Governments for the revictualling of German-Austria, was read.

The French Delegates pointed out that the letter only referred to foreign securities whereas the Allied and Associated Governments had required that all available securities should be assigned for the payment of food. The desirability of drawing the attention of the Delegates of the German-Austrian Government to this fact was considered.

It was agreed:—

(a) that, in the absence of the Financial Delegates, the letter from the German-Austrian Delegation should be referred to the Finance Section for consideration at a special Meeting to be held on the morning of Tuesday, 3rd June;

(b) that, subject to any observations which the Finance Section might have to make, there was no objection to the letter being reported to the French Budget Committee at their Meeting on Tuesday, 3rd June.

194. Despatch of Supplies to Poland.

The Telegram from Marshal Foch to General Nudant dated 27th May (170) prepared in accordance with the decision reached by the Council at their previous Meeting (see Minute 189) and requesting that the German Government should be instructed to give full facilities for the transportation via Dantzig of all relief and reconstruction material destined for Poland, was submitted for the information of the Council.

195. Trade Between Germany and Austria.

A Minute of the Twenty-fourth Meeting of the Blockade Section (171) was submitted, recommending that an undertaking should be obtained from the Austrian Government before the conclusion of Peace with Austria to the effect that Austria would prohibit trade with Germany, except with the approval of the Associated Governments, until the date of the formal approval by the German Government of the signature of Peace by the German Delegates.

It was agreed that the principle involved in the above proposal should be approved and that the Blockade Section should be authorised to draft the actual recommendation to be placed before the Council of Heads of States.¹

196. Restriction of Trade With Hungary and Bolshevik Russia.

The following documents relating to the prevention of re-exports to Bolshevik Russia and Hungary after the raising of the Blockade of Germany upon the acceptance by Germany of the Peace Terms were considered:—

(i) A Resolution passed by the Blockade Section at their Meeting on 24th May (172);

(ii) Note from the French Delegate on the Blockade Section dated 30th May (173);

(iii) Note from the American Delegate on the Blockade Section dated 31st May (174).

The French Delegates reiterated their view, as outlined in the Note from their Delegate on the Blockade Section, and were supported by the Belgian Delegates in the proposal that an announcement should be made, as has already been done in the case of Hungary, that commercial relations with Russia can only be renewed when the country has a Government offering satisfactory guarantees of liberty and stability.

The British, American and Italian Delegates after some further discussion were unable to accept the proposal put forward by the French Delegates, it being their view that, while the maintenance of the blockade of Hungary would be a comparatively easy matter as long as a state of war exists, there would be considerable legal and technical difficulties in retaining control of trade with Bolshevik Russia after the formal acceptance by Germany of the Treaty of Peace, in view of the fact that there is no actual blockade of Russia and the Trade agreements with the Border Neutral Countries now in existence would terminate at that time.

It was agreed that a statement should be prepared for transmission to the Council of Heads of States setting forth the views of the British, American and Italian Delegates and those of the French and Belgian Delegates, with a request that the Council would give a decision regarding this matter.

197. Control of Traffic on the Rhine.

With reference to Minute 183 a note from the Communications Section (175) embodying detailed proposals for the continuance of the control of the traffic on the Rhine by the Commission Inter-Alliée de Navigation de Campagne after the signature of the Preliminaries of Peace and until the establishment of the International Rhine Commission, was submitted.

The Director-General of Relief pointed out that, since the last Meeting of the Council, the Council of Heads of States had appointed a Commission to consider the organisation necessary for the administration of the occupied territories on the Rhine after Peace, and submitted and [that?] the matter did not, therefore, call for further consideration by the Supreme Economic Council at the present time.

It was agreed:—

(a) to take no action in the matter for the present, it being understood that the Chairman would ensure that the Commission referred to above should consider the questions raised by the Communications Section;

(b) that the Communications Section should inform the Supreme Economic Council in the event of any difficulties arising in connection with the navigation on the Rhine.

198. Trade Between Alsace, the Left Bank of the Rhine and Unoccupied Germany.

With reference to Minutes 151 and 188 a Report from the French Delegate on the Blockade Section dated May 29th. (176) regarding the export of manufactured goods from Alsace to unoccupied Germany, was noted.

The French Delegates further mentioned that instructions had been given to the French Authorities in Alsace to suspend all exports to the Right Bank for the time being.

The American Delegates pointed out that the question was of the utmost gravity; that Switzerland has entered a formal protest claiming discrimination against border neutrals because of the shipment of commodities to Alsace, and the re-exportation into unoccupied Germany. They submitted that all reports of alleged abuses in connection with exports from Alsace and the Left Bank of the Rhine to the Right Bank should be rigorously examined, and that, in fairness to the smaller neutral countries, the delinquents should be required to give a full account of their action.

The French Delegates undertook to supply, as soon as possible, a full statistical statement of the export trade from Alsace with unoccupied Germany.

It was agreed:—

(a) That the Delegates of the Allied and Associated Governments should obtain all available data regarding the export trade from the Left to the Right Bank of the Rhine, and take adequate precautions to guard against all abuses.

(b) That in reply to their note regarding the S. S. S.^1a the Swiss Government should be informed of the present position as outlined in this Minute.

199. Importation Into Germany of Medical Supplies.

A Resolution from the Sub-Committee on Germany (177) recommending that the importation into Germany of any drugs or medical accessories not obtainable in Germany should, subject to the provision of the necessary finance, be permitted, was submitted and approved.

200. German Exports.

(a) A letter from the German Economic Commission dated 22nd May (178) regarding the interpretation of the prohibited lists of German exports and a note from the Sub-Committee on Germany dated 27th May (179) were submitted.

With reference to Minute 166 regarding the decision reached by the French Government that the proceeds of the sales of German coal to France should be credited to Germany in payment for food, the American Delegates stated that although the price to be paid for this coal had been mentioned no definite announcement had yet been made to the German Government. A considerable amount of money had now accumulated to the German account from this source but none of it could yet be used for the payment of food although considerable quantities of bacon and oilseeds were available out of French stocks, which the German Government desired to purchase as soon as they could complete the arrangements.

The French Delegates stated that there is now no discussion as regards price and that the only point at issue was whether the German food account should be credited with the total value of the coal supplied since the Armistice or with the value of that supplied since the beginning of the execution of the Brussels Agreement. They added that the French Government would give a definite reply within 48 hours.

It was agreed that, if necessary, a special meeting of the Council, should be held on Wednesday, 4th June, to consider the matter further.

(b) The Italian Delegates stated that they were endeavouring to arrange with the German Government for the supply of 1000 tons of coal per day from the Ruhr coal fields but that they had been unable to come to an agreement as to price pending a settlement between the French and German Delegates as to the price to be paid for German coal sent to France.

They added that now that the French Government had come to an agreement regarding this price, they proposed to proceed with their negotiations with a view to purchasing the coal for Italy at the same price.

Agreed.

(c) A note from the Italian Delegates dated 30th May (180) regarding the price to be paid for timber to be purchased from Germany, was submitted.

The Italian Delegates stated that after further consideration of the matter they had decided that they would be prepared to purchase the timber at prices other than the “German home price” but that the French Government had raised objections to this decision on the ground that it might prejudice future negotiations in respect of other commodities.

It was agreed that as the principles to govern the negotiations of the Allied and Associated Governments with Germany for the purchase of commodities on the pre-emption list had already been laid down by the Supreme Economic Council the point raised by the Italian Delegates did not require consideration as they were at liberty to come to any agreement with the Germans they wished, within the limits of the principles established by the Council.

201. General Food Policy After Peace.

A Memorandum by the Director-General of Relief dated 31st May (181) regarding measures to be taken subsequent to the completion of the existing relief programmes and the general food policy to be adopted for the coming cereal year, was submitted.

It was agreed

that the problems raised in the Director-General’s memorandum should be considered by a Sub-Committee composed of the following members:—

United Kingdom	Lord Robert Cecil
United States	Mr. Hoover
France	M. Clémentel
Italy	Signor Crespi
Belgium	M. de Cartier de Marchienne.

Appendix 169²

Delegation of the Republic of German Austria,
St. Germain, May 30, 1919.

[Letter From the German Austrian Delegation Regarding Financial Arrangements for Austrian Food Supplies]

To the President: Following on the meeting which took place between the Delegates of the Financial Section of the Supreme Economic Council in connection with the Peace Conference and several Technical Delegates of the Government of German Austria, I have the honour to acquaint you with the following declarations made in the name of the aforesaid Government:—

The Government of German Austria undertakes to secure the financial guarantee for the credits which have been opened, and are still to be opened, by the Governments of the Entente for the provisioning of German Austria with the aid of one or other of the following means, or of more than one:—

1. Payment of gold and silver money belonging to physical and moral persons of Austro-German nationality, which will be requisitioned for this purpose under the terms of a law which will be submitted for the approval of Parliament. It is understood that this clause does not apply to the metallic reserve of the Austro-Hungarian Bank.

2. Delivery of the foreign securities belonging to the Nationals of German Austria, and inscribed upon a list which will be drawn up by the creditor Governments after requisitioning of these securities under the terms of a law which will be presented to the Parliament by the Government of German Austria.

3. The handing over to the creditor Governments of the credits in foreign countries resulting from sales of timber coming from forests belonging to the State or to public or private persons, until the establishment of a mortgage upon the forests belonging to the same persons and having an area in excess of 500 hectares, under reservation of the sole liens (servitudes) or exploitation charges or mortgages in existence at the same date. Those forests will be accepted which belong to the Nationals of the creditor countries before May 15, 1919.

4. Handing over all the net product of the exploitation by the State of the salt mines situated in the territory of German Austria and the establishment of a first mortgage upon the said salt mines, upon the factories, and all installations dependent thereon in repayment, or provision for repayment, of the mortgages already after existence.

5. For one portion of the credits a guarantee to be given by the City of Vienna. The Government will use all its influence to secure the allocation of the net revenues of sites built on or not built on, and all the industrial concerns belonging to the town of Vienna, and to other towns of German Austria having a population in excess of 50,000 inhabitants, and the establishment of a mortgage upon the said properties.

The Government of German Austria will communicate as soon as possible, in any case before the end of June 1919, the decision taken by the Austrian Parliament with reference to the objects mentioned in paragraphs 1 to 4 inclusive.

The creditor Government, after having heard the financial experts of the German Austrian Government, will inform this Government as to the revenues or guarantees required by them in the above list in order to obtain financial covering for the food credits.

A special convention will fix the conditions of payment or the utterances of protests, as also the conditions of establishment of the guarantees required by them, the Government of German Austria to undertake at its own expense in due form all formalities necessary to this effect.

It is agreed that the guarantees thus handed over shall be liberated, and the mortgages thus constituted shall be written off pari passu with the partial repayments effected by the Austrian Government on account of the payment of the food credits which have been granted to it.

The Government of German Austria declares in general that it will earmark all its revenues of whatever sort to the liberation, at the times and places which will be determined, of the food credits which have been granted to it. In the meantime it remains to determine the methods of payment and the guarantees, as also the legal establishment, of the said guarantees and mortgages.

We assume that the total of the pledges will be fixed in relation to the total of the credits, the value of the pledges being determined either by objective rules (for example, in the case of gold by the standard and weight, in the case of securities by the Stock Exchange value, deduction being made of the usual margin for the securities in question) or by an estimate drawn up by a mixed commission, for example, in the case of forests.

The question then, for the moment, is to determine the pledges sufficient to cover the food credit of 45,000,000 dollars granted hitherto. In addition to the total of this credit it will be necessary to obtain supplementary credits for the provisioning of our country; the covering of this credit should be accomplished by means of one or other of the pledges enumerated above.

Our intention being to abandon as quickly as possible the system of food credits, it is absolutely necessary to put our factories in operation once more, which makes necessary the purchase of raw materials in foreign countries, a purchase which could only be made when the Governments of the Entente have determined their choice out of the list of guarantees which contains practically the whole of our realisable assets.

Further, we consider it necessary that the Governments should choose those guarantees which by their nature lend themselves less easily to other transactions, that is to say, the guarantees referred to above under 3, 4 and 5, and that we should be left with those portions of the guarantees which permit us most easily to obtain other credits.

It would also be desirable that the contract relative to the pledges should provide for a possible substitution by agreement with the creditor Governments in order to liberate certain portions necessary to obtain other credits, and to replace these portions by other pledges considered adequate by the Governments of the Entente.

We assume, finally, that the creditor States will avoid in realising the pledges referred to above any measures which might affect the monetary situation of German Austria, which is already very serious.

I have [etc.]

Renner

Appendix 170

A. G. H. Q., May 27, 1919.

Telegram [From] Marshal Foch, Commander in Chief of Allied Armies, to General Nudant, President of the Permanent Inter-Allied Armistice Commission, Spa

1. The German Government has recently held up a number of cars carrying Red Cross supplies to Poland via Dantzig.

2. Following a demand made by the Chief of the American Mission and Captain Harvey of the British Mission at Spa, the German Government issued an order permitting this transport to be made, but it has requested that it be guaranteed that only foodstuffs (denrées alimentaires) and Red Cross material shall be transported to Poland via Dantzig.

3. According to Article XVI of the Armistice Agreement, the Allies shall have free access to the territories evacuated by the Germans on the Eastern frontier, either through Dantzig or by the Vistula, in order to convey supplies to the populations of these territories and for the purpose of maintaining order.

4. In accordance with the request of the German Government, the Allies have recognised other means of transportation by the protocol of Apr. 4, 1919.^2a

But this protocol was only to affect the transportation of the troops of General Haller’s army, and all transportation of relief and reconstruction materials (de ravitaillement et de reconstitution) especially railroad materials, stocks of foodstuffs and commodities acquired by Poland from Allied countries must be made by Dantzig in accordance with Article XVI of the Armistice Agreement.

5. I request that you bring this communication to the attention of the German Government in order that no similar incident may occur in shipments made via Dantzig.

By order of the Major-General

Weygand

Appendix 171

[Extract of the Minutes of the 24th Meeting of the Blockade Section, May 24, 1919, Regarding Trade Between Germany and Austria]

The Blockade Section submit to the Superior Economic Council the following minute (sub paragraph c of paragraph 9 of minute No. 200) regarding trade between Germany and Austria, in order that the necessary steps may be taken with the Austrian Authorities.

Minute 200.—

Paragraph. 9.—Miscellaneous.—

(c) The Inter-Allied Commission in Austria should be instructed to use their best endeavours to secure from the Austrian Government a prohibition against trade with Germany.

It is recommended that an undertaking should be obtained from the Austrian Government, as soon as possible and in any case before the conclusion of Peace with Austria, to the effect that Austria will prohibit trade with Germany (except in so far as permitted by the Associated Governments) until the date of the formal approval by the German Government of the signature of Peace by the German Delegates.

Appendix 172

Extract of Minutes of the 24th Meeting, Blockade Section, May 24th, 1919

201. Restrictions on Trade with Bolshevik Russia and Hungary.

The Council considered an inquiry from the British Foreign Office as to what measures were contemplated for preventing re-exports to Bolshevik Russia and Hungary after the raising of the blockade of Germany upon the acceptance by Germany of the Peace Terms. Following an extended discussion of the advisability of maintaining the blockade against Bolshevik Russia, the Council adopted the following:

Resolution, that the Superior Blockade Council submits for the consideration of the Supreme Economic Council, the question as to whether after the acceptance of the conditions of Peace by Germany, measures are still to be taken to prevent commodities from reaching Bolshevik Russia or Hungary.

Appendix 173

Note [From the French Delegate on the Blockade Section] on Resumption of Commercial Relations With Bolshevist Russia

It has been agreed that when the German Government have definitely accepted the conditions of Peace presented to them by the Allies, the blockade will be raised. It now remains to be seen whether this measure ought to apply to Bolshevist Russia and to Hungary as well as Germany.

1. As regards Hungary, the question seems to have been settled by the decision of the Council of Four,³ following which a Note was published by the Press to the effect that the Blockade would be lifted as soon as a stable Government had been established in that country. It seems therefore that for Hungary, at least, the raising of the blockade does not depend on the date on which the blockade will be raised in Germany, but that it depends solely on the internal situation of the country.

2. There is no doubt whatsoever, but that it should be the same for Russia, and that the raising of the Blockade in Bolshevist Russia should coincide, not with the acceptance of the Peace Terms by Germany, but with the institution in Russia of a steady Government, giving adequate guarantees.

3. At the present time, Bolshevist Russia is practically surrounded by armies more or less under the direct control of the Allies. As a result, a situation has arisen altogether without precedent—the Allied Powers are not at war with Bolshevist Russia, but they encourage and support all the organisations which are fighting this country; they find themselves forced to revictual these organisations and to send to the rear of the fronts so established, supplies of foodstuffs, raw materials and war material necessary for the revictualling of the districts in the possession of or conquered by these organisations; it is thus that Finland and Esthonia have been reopened to trade as soon as these two parts of old Russia had formed a local stable Government; up to the present the conditions existing in Latvia and Lithuania have so far prevented the reopening of trade with these districts.

4. The supply of foodstuffs and raw materials plays an extremely important part in the fight against Bolshevism: It was chiefly on account of revictualling that the Allies were forced to abandon Odessa, the population—lacking foodstuffs—having become hostile to the Allies. It is evident, therefore, that in feeding the populations under the Bolshevist regime, the Allies will lose one of their most formidable weapons against Bolshevism, especially if the populations fighting against Bolshevism are not adequately supplied with foodstuffs, which does not seem to be the case.

5. There is also no doubt that the raising of the Blockade of Bolshevist Russia would have an extremely grave moral effect on the populations and troops fighting against Bolshevism. Such a measure would lead to implicit recognition of the Bolshevist regime at the precise moment when the Forces fighting against it seem to be at the point of attaining their goal.

6. As there is no declared blockade on Bolshevist Russia, it would be sufficient, it seems in order to raise the blockade to announce through the Press to the merchants of the whole world that trade relations can be renewed with Bolshevist Russia, as has been the case with regard to Czecho-Slovakia, Roumania, Serbia and other countries with whom the Entente was not at war; but in view of the present conditions in Bolshevist Russia, not only because those districts are surrounded by a front more or less continuous, but owing to the financial and shipping situations, this reopening of trade would have practically no result. We have seen how difficult it has been to re-open commercial relations with the South-Eastern countries of Europe in which there had been no blockade restrictions; these relations have been re-established since the month of February, in the widest sense of the word and without any delay. However, the re-establishment of trade is very slow, both on account of the difficulties of communications and of the financial state of the country, which prevents them from paying in a satisfactory way for the commodities despatched to them. It would be the same with Bolshevist Russia, the situation there being even worse.

6. [sic] It would, therefore, be necessary, if it is desired to re-open commercial relations with Russia, i. e. to import commodities and receive payment for same—to come to an agreement with the Authorities of the country—the Bolshevists—who are absolutely masters of the districts they occupy for the time being and who have destroyed all the commercial organisation existing outside their regime. This would be going against the policy of the Entente.

7. When trade is restarted with Russia, it will be necessary to address communications to the Authorities of the towns and villages, chiefly to the co-operative Societies which were so powerful there before the war; but as these Societies have largely been destroyed and annihilated by the Bolshevists, they must be re-established and this can only be done when the Bolshevist Regime has been supplanted by a Government which will re-organise the normal trade of Russia.

8. It is unnecessary to point out that if application is made to the Lenin Government to restart commercial relations with Russia, only Bolshevist officials and Armies will profit by the revictualling. All re-establishment of trade with Russia at the present time, without the agreement of the Russian people themselves, would have the fatal result of putting into the hands of the Government all the commodities sent to Russia. Nothing could further the Bolshevik cause more than such a measure.

9. Finally, it would be well to make the same arrangement with Russia as with Hungary and to make it known that commercial relations can only be restarted with Russia when this country has a Government offering satisfactory guarantees of liberty and stability.

M. Seydoux

30 May, 1919.

Appendix 174

Memorandum From Mr. McCormick Regarding Blockade of Hungary and Bolshevik Russia

1. As no formal blockade of Hungary and Bolshevik Russia has been proclaimed, the maintenance of blockade conditions, as far as the Associated Governments are concerned, depends primarily upon their domestic regulations regarding imports and exports and existing agreements with the border neutrals.

It seems advisable that these agreements with the border neutrals should be terminated at the time of the formal acceptance by Germany of the Treaty of Peace (or as soon thereafter as their terms permit). These agreements were made primarily for the purpose of restricting trade with Germany and it is understood that at the time of such acceptance by Germany, the existing blockade restrictions against her will be removed.

Continuance of blockade conditions against Hungary and Bolshevik Russia after that time would, therefore, require new agreements or other arrangements with neutrals to be made. So far as the United States is concerned, new legislation would be required to enable the War Trade Board after the conclusion of the war with Germany to continue to participate in any arrangements of a blockade nature, or to regulate imports or exports. It would not be practicable to attempt to secure such legislation for the sole purpose of maintaining a blockade against Hungary and Bolshevik Russia.

2. It is very doubtful whether the declaration of a formal blockade would be practicable or desirable. As between Russia and the United States at least, a state of war does not exist. The declaration of a formal blockade would be equivalent or preliminary to a declaration of war.

3. The remaining possibility is that the continuance of blockade conditions may be sufficiently maintained by the practical difficulties of importation through the territory contiguous to Hungary and Bolshevik Russia.

Hungary is surrounded by countries which, with the exception of German-Austria, are in sympathy with the aims of the Associated Governments and unlikely to facilitate importation into it.

In connection with the peace negotiations with German-Austria, an arrangement might be made which would cover trade between it and Hungary.

Bolshevik Russia is also surrounded in a somewhat similar manner. If Petrograd falls under Allied control, Odessa would be practically the only port to which shipments could be made. In view of these circumstances, and on account of lack of credits in other countries, it seems unlikely that, even in the absence of restrictions imposed by the Associated Governments, any very large importations would occur during the next few months.

Appendix 175

Note From the Communications Section for Submission to the Supreme Economic Council, on Procedure for Facilitating Relief and Economic Traffic on the Rhine

At present the navigation of the Rhine is controlled by the Commission Inter-Alliée de Navigation de Campagne which besides its functions of control is responsible for organising and directing the transport of supplies for the Armies of Occupation and the civilian population.

After the signature of the Preliminary Peace the Commission Inter-Alliée de Navigation de Campagne will continue to function as long as there are Allied troops in the Rhineland.

Under these conditions this Commission will continue to control the carrying out of all transports, and in particular those asked for by the Supreme Economic Council, subject of course to military necessities.

Requests for transport and suggestions of an economic nature which the Supreme Economic Council may make will be communicated to the High Command by Marshal Foch’s representative on the Communications Section.

Appendix 176

29 May, 1919.

Note for the Supreme Economic Council [From the French Delegate on the Blockade Section Regarding] Trade Between Alsace and Unoccupied Germany

The American Delegates submitted information received by telegram from the Alsace-Lorraine Administration on the subject of cotton fabrics from Alsace-Lorraine to Germany. The information in question being inadequate, M. Alicot, 1st-Class Germany Consul, was sent by the Blockade Department to investigate the matter on the spot. Exports of Cotton Fabrics to Germany

1. The decree of the 30th November, 1918, contains the following decision:—

“Article 2, That all trade whatsoever is prohibited between Alsace and Lorraine and enemy subjects residing in enemy or neutral territories subject to licenses eventually granted in the general public interest, by the authority charged with the administration of Alsace and of Lorraine”.

2. In order to put this decision into operation, a Commission was formed at Strasbourg by order dated 14th December, to decide upon licenses for trade between Alsace-Lorraine and the Right Bank of the Rhine. This Commission constitutes an executive body which regulates any particular demand for licenses.

The Executive body is composed of the following members: The President of the Commission of Field Railways of Alsace-Lorraine, a Delegate of the High Commission of the Republic of Strasbourg, the President of Field Navigation Commission of Alsace-Lorraine, and an Officer of the Intelligence Service.

3. It was absolutely essential to prevent the factories in Alsace and Lorraine from ceasing to work, in order to avoid the unemployment of several million of workmen. One must not lose sight of the fact that the greater part of these factories worked during the whole period of the war and still have large stocks of material left; these commodities can only be sold to the right bank as they were made for this destination alone and were not suitable for French or Neutral markets.

The Permit Commission therefore granted licenses for the export of these stocks of commodities in quantities sufficient to keep the factories working.

4. It appears evident that, after the sale of goods manufactured with the raw materials stocks in the factories before the Armistice, it was necessary to give the factories authority to sell in Germany the goods manufactured with raw materials brought into Alsace and Lorraine since the Armistice; there should be no question of stopping the manufacture of the commodities.

It must not be forgotten that the Swiss factories were authorised during the whole of the war to send certain kinds of their products to Germany; if these factories were unable to alter their machinery during the four years of the war, and were compelled to manufacture goods ordered by the Germans, it is only natural that the Alsace-Lorraine factories could not transform their machinery in a few months only, and they were therefore obliged to continue manufacturing the same kinds of goods, and consequently had to export them in the same way.

5. Besides the Inter-Allied Administration of the Rhineland had to take similar measures in connection with the factories of the right bank; steps have been taken to prevent unemployment and to continue manufacturing, and to leave to the factories their natural outlets.

6. Not only is the present life of the Alsace and Lorraine factories at stake, but their commercial future as well. In fact, under the draft Treaty of Peace the goods of Alsace and Lorraine will be allowed to be imported into Germany free of duty for five years. If the importation into Germany of goods from Alsace and Lorraine were entirely stopped during the period between the Armistice and Peace, the manufacturers of Alsace and Lorraine would find themselves supplanted on the German market, to the benefit of Switzerland, which would be the only country able to export.

7. It is none the less true that the concessions given have often been abused; that they have not always been applied to the essential needs of the factories alone, in fact steps had already been taken or considered before the Blockade Department investigated the matter.

8. A certificate of origin must be produced since the 11th April for all goods manufactured in Alsace and Lorraine going to Germany (by Germany is understood the right bank and the left bank, that is to say the whole of the districts with which the factories of Alsace and Lorraine freely traded before the war). This certificate, which is furnished by the Strasbourg Chamber of Commerce, certifies that the goods were manufactured in Alsace or Lorraine.

9. The Permit Commission will be re-organised and presided over by the Director-General of Commerce of Alsace and Lorraine, and will have an exclusively commercial and technical character.

10. Formal instructions have been sent by the Blockade Department to the High Commissariat of Alsace and Lorraine in order to bring about the cessation of exports of goods to the right bank of the Rhine.

Further, the authorities of Alsace and Lorraine did not hide from the Blockade Delegate that the Alsatian manufacturers bitterly complained of the heavy consignments of goods being sent to Germany from Switzerland, chiefly by the silk manufacturers at Basle, who get the goods through in contraband and by the help of Swiss agents. They also added that considerable quantities of goods of foreign production are sent from the Left to the Right Bank of the Rhine. A special enquiry was immediately made to verify these latter points.

Appendix 177

Resolution From the Sub-Committee on Germany [Regarding] Supply of Medical Stores to Germany

1. In order to counteract the spread of skin diseases, the International Red Cross Committee has requested that the Associated Governments should approve the importation into Germany of a specific quantity of drugs, namely, 150 tons of American vaseline, 10 tons of sulphur, available in Italy or America, and a reasonable quantity of American Sparadraps.

2. The Superior Blockade Council has approved the importation of the quantities quoted above.

3. The Sub-Committee on Germany makes the following general recommendation:

4. That the importation into Germany of any drugs or medical accessories not obtainable in Germany should, subject to the provision of the necessary finance, be authorised as a matter of principle.

Appendix 178

Versailles, May 22, 1919.

[Letter From the] German Economic Commission to the Supreme Economic Council

With reference to the communication of the Supreme Economic Council of May 14th,⁴ concerning the interpretation of the clauses contained in Note “C. I. P. A. 766–G,” dealing with German export, it is again emphasized, as has already been done in the “Memorandum handed over on the 2nd April in the Chateau Villette [”], that the interpretation of the prohibited lists is not in accordance with the intention of the Brussels Agreement.

In Appendix 3 of the Brussels Agreement, Section 4, reference is only made to a prohibited list, that is to say, it was contemplated that the Allied & Associated Governments desired to exclude completely certain sorts of goods from export from Germany. The German Delegates then expressed the desire that this list should be as short as possible and, at the request of the Allied and Associated Governments, declared itself ready to draw up a list of these export articles which they particularly desired should not be included on the prohibited list.

In the prohibited list, set out in the Note, “C. I. P. A. 766–G,” the intention of the Brussels negotiations was completely disregarded. Precisely those export articles, upon whose export Germany lays the greatest importance because it can hope in the event of their unrestricted export to make very large sums for the credit of the food account, were it is true not excluded in principle from export, but, by provisional prohibition with the two-thirds option for the Allied and Associated Governments, the export of these articles was rendered so difficult that in practice the development of a free export activity on the part of Germany in these articles is impossible. Experience hitherto has shown that, in the case of sales to the Allied and Associated Governments which have been the subject of negotiations in Rotterdam and Cologne, practical results have only been obtained to a very slight extent, if at all. Apart from the sale, after a very long delay, of a relatively small quantity of potash, it has for the first time been possible here in Versailles in a special case to arrive at an agreement with Italy for delivery of wooden sleepers.

The German Government is, of course, ready to make offers to the Allied and Associated Governments for all goods which they desire to take from Germany but, in view of the experience hitherto, it is not believed that negotiations between Government and Government in respect of such commercial transactions, especially under the restricted transport conditions of the Armistice, can have the practical success desired by both parties. In particular, the German Government must enter a protest against the prices, at which possible sales to the Allied and Associated Governments are made, being dictated by the Allied and Associated Governments. It is requested that action should be taken in this matter without delay.

German Economic Commission

R[ichard] Merton

Appendix 179

Note by the Sub-Committee on Germany [Regarding] German Exports

The attached letter No. W. 41/92, from the German Economic Commission at Versailles,⁵ on the subject of the interpretation of the clauses contained in Note C. I. P. A. 766–G, dealing with German export, is submitted to the Supreme Economic Council for information.

The Sub-Committee on Germany is of opinion that the attached letter requires no answer.

(27 May, 1919.)

Appendix 180

[Memorandum From Italian Delegation Regarding] German Exports

The Italian delegation wishes to call the attention of the Supreme Economic Council to the following communication from the German Economic Commission with reference to negotiations for the purchase of timber.

Message from Sub-Committee on Germany to Italian delegation:

“Herr Merton wishes to inform the French and the Italians that the Germans cannot uphold the offer which they made at y’day’s (29th) meeting as long as the question of principle is not determined i. e. the question whether the price should be of German home price or the price ruling in other countries. This withdrawal applies also to the offer originally made to the Italians.

Paris, 30 May, 1919.”

Appendix 181

Memorandum to the Supreme Economic Council [From the Director-General of Relief Regarding General Food Policy After Peace]

The time has arrived when it is desirable for the Council to consider steps to be taken for the liquidation of practical world food control which exists today. Obviously, such a liquidation depends upon three factors: (a) the consummation of peace prior to this harvest, (b) upon there being sufficient food supplies in the world during the next harvest year to meet the world’s needs, and (c) a sufficiency of shipping to handle the world’s trade. As to (a) we must assume that we shall have peace before the end of July. As to (b) I am convinced from a critical study of the world crop prospects that there will be a sufficiency of supplies. As to (c) I am informed that with the constantly increasing volume of shipping and the completion of repatriation there will be a much greater mobility in food shipping than any time during the past two years.

The machinery of world food control which developed during the war has relaxed to a great extent among the Allies and neutrals but has necessarily been much extended during the armistice in relation to areas now and formerly dominated by the Germans.

I

Of joint Allied controls, the Wheat and Sugar Executives are practically the only ones outstanding, except the co-ordination carried out through the Food Section. With completion of present wheat and sugar contracts, the combined buying of the Allies is probably no longer necessary and can be replaced by the independent buying each by their own national purchasing agency or by normal commerce. The matter should, however, be considered by these two inter-Allied agencies. The United States will not have the legal powers to enter upon any further joint sugar purchases. The Food Section of the Council will naturally dissolve with peace.

II

The remaining control of neutral imports and purchasing activities will necessarily end with peace and with the end of the blockade, nor is it commercially advisable.

III

There remains to be considered the measures in course with the formerly occupied and German territories.

a. As to Germany, I should propose that within a few days of peace no further ships should be loaded by the agencies of the Allied Governments but that the Germans should be informed that they must instruct their own agencies abroad to arrange their loading.

b. As to the liberated or ex-enemy States, Finland, Esthonia, Lavonia, Lithuania, Poland, Roumania, Bulgaria, Greater Serbia, Czecho-Slovakia, Austria and Belgium have been under relief administration in which credit purchase, transportation, and to a large extent internal distribution have been formed and administered by the agencies of the Associated Governments. In their political and economic situation no other measures could have saved wholesale starvation, and could have laid the foundations for stable Government. With the coming harvest their food resources will be greatly expanded. In fact, Bulgaria, Roumania, Greater Serbia, and old Turkey, outside of Armenia, will have sufficient of the principal staples and enough in surplus to exchange for their other food necessities. Belgium, Czecho-Slovakia, Poland, Austria and the Baltic States will require a margin of food imports throughout the next year.

I have been strongly convinced, however, that a continuation of exterior administration for even these latter States after peace and harvest will only undermine their initiative and self-reliance. They should rely upon themselves for purchase, transport and administration of supplies and thus reduce the problem in relation to the Allies to one of finance only.

Some two months ago, I advised each of these Governments that while I considered the first step in the situation was relief and the upbuilding of their own Food Ministries, that the second step in progress seemed to me to call for the creation of an Economic Commission with representatives at the principal centers of the world who could not only administer the purchase and transportation of foodstuffs and raw material, but could also negotiate for credits and mobilize the marketing of exports and exchange, and that the work of these Commissions should also involve the stimulation of private trading to the point of the third step, i. e., normal commerce. Some of them have taken such steps.

Herbert Hoover

Paris, May 31, 1919.

1. See CF–79, minute 3 and appendix III, vol. vi, pp. 587 and 590.
2. Société Suisse de Surveillance Economique.
2. Appendix 169 is filed separately under Paris Peace Conf. 180.0501/35.
3. Der Waffenstillstand, 1918–1919, band 2, p. 365.
3. See CF–23, minute 1, vol. v, p. 813.
4. See minute 158, p. 262.
5. See appendix 178, supra.