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

Paris Peace Conf. 180.0501/30

Supreme Economic Council: 30th Meeting [Held at Brussels on 20th September, 1919, at 10 a.m. and 4 p.m.]

Brussels, September 20, 1919, 10 a.m.

The Supreme Economic Council held its 30th Meeting on the 20th September, 1919, at 10 a.m., and at 4 p.m., at the Palais des Academies at Brussels, under the Chairmanship of M. Jaspar.

The Associated Governments were represented as follows:—

British Empire.	The Et. Hon. G. H. Roberts.
	The Rt. Hon. Cecil Harmsworth.
	The Earl of Crawford & Balcarres.
	Sir Hamar Greenwood.
France.	M. Clémentel.
	M. Loucheur.
	M. Claveille.
	M. Noulens.
	M. Vilgrain.
	General Payot, representing Marshal Foch.
Italy.	H. E. Maggiorino Ferraris.
	Comm. Nogara.
Belgium.	M. Wauters.
	M. Renkin.
	M. Franqui.
	Colonel Theunis.
	M. Lepreux.

[296.]

M. Clémentel opened the Session and congratulated the Council on its meeting at Brussels in which he saw a symbol of the deep friendship existing between the Allies. On his proposal, the Council asked M. Jaspar to take the Chair.

M. Jaspar replied congratulating himself on the fact that the Allies were meeting in Council in a place occupied so short a time ago by the enemy. He associated himself with the regrets expressed by M. Clémentel that the American Delegates had not been able to be present.

The minutes of the 29th Meeting were approved, it being intimated that the order of minutes 293 and 295 had been inverted in the French version.

Minute 280 (c) was amended to read as follows:—

“It was agreed that a Raw Materials Committee composed of one representative from each of the Governments should prepare a report for submission to the Supreme Economic Council.”

297. Establishment of Permanent Committee.

The Council was informed that the Permanent Committee set up by it on the 1st August (Minute 295) had been constituted. The representatives nominated by the Associated Governments were:—

British Empire	Mr. Wise.
France	M. Avenol.
Italy	Dr. Giannini.
Belgium	Count de Kerchove.

The Government of the United States had not yet nominated its representative. M. Clémentel, as acting President of the Council, had notified to the Government of the United States the names of the above-mentioned delegates and had requested the name of the representative of the American Government.

The Council examined a note prepared by the Permanent Committee on the subject of the procedure and the powers of the Committee. This note was, after modification, approved by the Council (Doc. 271).¹

298. Exchange of Goods Between the Countries of Central Europe.

Arising out of para. 273 of the minutes of the previous meeting, the Council took note of a decision (Doc. 272) of the Supreme Council according to which the raising of the blockade rendered needless any fresh action.²

299. Typhus Relief in Eastern Europe.

Arising out of para. 275 of the minutes of the previous meeting, the Council took cognisance of a note from the British Delegation (Doc. 273) on the subject of the supplies furnished by their Government to the Polish Government.

The Chairman stated that the Polish Minister had visited him in order to draw his attention to the critical situation of his country.

300. Resumption of Communications with Germany.

Arising out of para. 279 (b) of the minutes of the previous meeting, Gen. Payot informed the Council that conferences were being held at Paris between the Allied delegates and the Germans on the subject of the re-establishment of through train services to Germany.

301. Supply of Coal to Austria.

The Council noted a decision of the Supreme Council³ on the subject of the guarantees demanded by the Austrian Government for its supply of coal (Doc. 274.)

It was noted that the question was settled by Article 224 of the Peace Treaty; no action, therefore, was necessary.

302. Relations With Roumania.

The Council took note of a decision of the Supreme Council⁴ suspending until further orders the despatch of food supplies to Roumania (Doc. 275).

303. Allied Economic Policy in Russia.

Arising out of para. 258 of the Minutes of the 26th meeting, the Council took note of the decision of the Supreme Council⁵ relative to a communication to be addressed to the German Government and to Neutral Governments (Doc. 276).

The Council was further informed that this decision had so far produced no result.

304. Organisation of the Communications Section.

The Council noted an extract from the minutes of the Communications Section expressing the opinion that this section should, until further orders, continue to function.

The Council approved this view and referred to the Permanent Committee the question of the measures necessary to carry it into effect.

305. Organisation of the Finance Section.

The Council noted an extract from the minutes of the Finance Section and a recommendation of the Permanent Committee (Doc. 277) according to which the Finance Section was to take from henceforward the name of the Finance Committee and should refer to the Organisation Committee of the Reparation Commission and to the Supreme Economic Council.

M. Loucheur (Chairman of the Organisation Committee of the Reparation Commission) stated that the proposal of the Finance Section had already been agreed by the Organisation Committee.

The Council approved the proposal before it and decided that the Permanent Committee should regulate the details of its execution in agreement with the new Finance Committee.

306. Supply of Coal to Europe.

A. Arising out of para. 280 (b) of the minutes of the previous meeting.

(1) The President stated that, in accordance with the desire expressed by the Council at its last meeting, the Belgian Government had taken measures to restrict the consumption of coal in Belgium. He hoped to learn that this policy had been similarly applied in other countries.

(2) The Council was informed that a European Coal Commission had been established by the Supreme Council.^5a

In this connection, the Council examined a note from the Communications Section and a recommendation by the Permanent Committee (Doc. 278) suggesting that some of the functions of the Communications Section should be transferred to the European Coal Commission and that the European Coal Commission should be subordinate to the Supreme Economic Council.

After discussion, it was decided that:—

(a) The responsibility for the production of coal now rests upon the European Coal Commission. Therefore, the agents attached to the various Transportation Missions of the Communications Section should, so far as they are concerned with the production of coal, be responsible to the European Coal Commission.

(b) As regards the transport of coal, the European Coal Commission will act in liaison with the various Transportation Missions of the Communications Section;

(c) As regards the general question of the relations between the European Coal Commission and the Supreme Economic Council, the only effective guarantee of the stability and smooth working of the European Coal Commission is that it should work in close liaison with the various Sections of the Supreme Economic Council.

(d) The European Coal Commission and the Communications Section will be invited to prepare a draft Budget for the Missions in Central Europe with a view to the provision of the necessary resources.

B. The Council took note of a letter from the Austrian Delegation to the Peace Conference (Doc. 279) requesting the admission of an Austrian Delegate to the European Coal Commission. The Council was informed that the European Coal Commission had already replied that an Austrian Eepresentative could be, if necessary, heard by the Commission, but that Austria, not being a producing country, could not become a member of the Commission.

It was decided that, in these circumstances, no action on the part of the Council was necessary.

307. Traffic on the Danube.

Arising out of para. 278 of the minutes of the previous meeting, the Council took note of a telegram (Doc. 280) in which Admiral Troubridge requested the immediate nomination of the American Arbitrator who, according to the Peace Treaty, was to decide the ownership of contested river shipping.

The French delegates observed that the question at issue was one concerned with the execution of the Treaty which was a function either of the Separation Commission or of the Commission for the execution of the Peace Treaty.

On the proposal of the British Delegation it was decided to transmit the telegram to the Supreme Council without an expression of opinion.^5b

308. Request for Loading on Return Journey Steamships Carrying Cereals From the Argentine to Germany.

The Council noted a letter from the Allied Maritime Transport Executive (Doc. 281) approved by the Permanent Committee, requesting that, in a case where no allied cargo was available, German export goods might be loaded for the return voyage on ex-enemy ships which had been utilised under allied management for the import of cereals from the Argentine to Germany.

The Council approved the proposals of the Allied Maritime Transport Executive and of the Permanent Committee.

309. Suppression of the Black Lists.

The Council took note of a letter from the British Foreign Office requesting a decision as to the definitive suppression of the Black Lists at present under suspension.

The Permanent Committee recommended that the suppression of the Black Lists should be agreed immediately and should take effect, either at once, or at the date when the Peace Treaty came into force.

The Council decided that the Black Lists suspended by the decision of the 22nd April (Minute 106) should be at once suppressed.

310. Constitution of the Consultative Food Committee.

Arising out of para. 280 (a) of the minutes of the previous meeting, the Council noted and approved the memorandum (Doc. 282) establishing the Consultative Food Committee.

It was explained that, according to the wish expressed by the United States Delegates, this memorandum had been communicated to Mr. Hoover before his departure from Europe.

311. Supply of Food to Germany and Austria.

A. The Council took note:—

(1) of a note (Doc. 283) addressed by the Organisation Committee of the Reparation Commission to the Supreme Council and by the Supreme Council referred for observation to the Supreme Economic Council;

(2) of a report by the Consultative Food Committee (Doc. 284) on the German requests for food and fodder.

(3) of a letter from the Austrian Delegation relative to the requirements of the Austrian Republic (Doc. 285) and of a report by the Consultative Food Committee on the same subject (Doc. 286.)

The Chairman observed that it would be necessary to define the respective functions of the Organisation Committee of the Reparation Commission and of the Supreme Economic Council and of its dependent bodies.

The Chairman of the Organisation Committee of the Separation Commission recalled that, under the terms of the Peace Treaty, ex-enemy States could request the Allied and Associated Governments to allow them to receive and to pay for, as a first charge upon reparations, certain quantities of raw materials which the Allied and Associated Governments should judge to be necessary in order to increase their powers of contributing to reparation. It was clear that the question of finance was exclusively the function of the Reparation Commission.

The British Delegates observed that the German demand in particular envisaged two solutions for the payment of foodstuffs, either payment as a first charge on reparation funds (in which case the Reparation Commission must obtain the approval of the Governments of the Allied and Associated Powers), or the utilisation of credits placed at their disposal, in which case the Reparation Commission could not alone handle the question.

The question also arose—what was the best method of purchase with a view to reducing to a minimum the quantities demanded and, in particular, to avoiding the indirect effect of excessive German purchases upon the markets of the world.

The British Delegates observed that, since a decision had just been taken that the same Financial Committee should advise the Reparation Commission and the Supreme Economic Council, a satisfactory liaison would seem to be established on this question between the Organisation Committee and the Council, and that it only remained to decide the relations between the Organisation Committee and the Consultative Food Committee. They further observed that what had just been said concerning the supply of foodstuffs should apply equally to raw materials.

After discussion it was decided that a note should be addressed to the Supreme Council in the following terms:—^5c

“The Supreme Economic Council requests the Supreme Council to give instructions to the Organisation Committee of the Reparation Commission, and later to the Reparation Commission itself, to proceed as follows for all questions concerning purchases of food and raw materials to be authorised under Article 235 of the Peace Treaty with Germany and under similar clauses in other Peace Treaties.

The programmes of and orders for the purchase of raw materials and of foodstuffs under these articles should be submitted to the examination of the Raw Materials Committee and of the Consultative Food Committee attached to the Supreme Economic Council.

These Committees will, at the same time, fix the conditions of purchase which seem to them likely to prevent speculation and unnecessary increase in the world cost of living.”

It was further understood that, pending the reply of the Supreme Council, the Consultative Food Committee should pursue its current investigations.

B. The Council took note of a letter from the Austrian Delegation (Doc. 287) relative to the diversion to Trieste of ships carrying cereals destined for Rotterdam.

The Chairman stated that the projected exchange of cereals between the Belgian and Austrian Governments could not be carried into effect. In consequence the Council considered that the question did not call for any action.

[C.] The French Delegates called the attention of the Council to the very critical situation of Austria as regards coal. They stated that the European Coal Commission had under consideration the measures necessary in this respect and that the question would probably be referred to the Supreme Council.^5d

312. Provision of Raw Materials to Europe.

Arising out of para. 280 (a) of the minutes of the previous meeting, the Council noted the report (Doc. 288) presented in the name of the Raw Materials Section.

The French Delegates explained the report. The situation of Egyptian cotton was less dangerous than might have been imagined. Stocks detained with British consumers, instead of being insufficient to requirements by 50%, would be as a matter of fact sufficient to meet the needs of British consumption and part of the consumption of the neighbouring countries.

They thought, however, that they could not altogether desist from their request that the British Government should find the means of assuring to the countries which had suffered through the War their just share of supplies. They recalled the fact that this idea emanated from the British Government itself.

The three following resolutions submitted unanimously by the Raw Materials Section were approved by the Council:—

(1) In order to meet difficulties which appear possible in the case of certain commodities for which a shortage may arise, the Committee regard it as desirable to establish a continuous exchange of information about production, quantities available and the distribution of Raw Materials.

(2) The Committee regard it as necessary to call the attention of the Organisation Committee of the Reparation Commission to the shortage of flax and to the advisability of opening negotiations with the Germans and Austrians with the view of securing from them a certain quantity of that material in exchange for other materials of which they stand in need.

(3) The Committee is of the opinion that, in a general way, the difficulties relating to the supplies of Raw Materials are only an aspect of the general question of European supplies which has been submitted to the Council at the present meeting and which concerns particularly the question of credits.

The Council next examined the following declaration submitted by the French, Italian and Belgian Delegations:—

The French, Italian and Belgian Delegates find that, in addition to the difficulties mentioned above, the supplies of raw materials are also impeded by certain specific measures as to discrimination of prices for export, or export duties.

The result of such measures is:—

(a) that the life of certain industries is dangerously affected;

(b) that the equitable treatment of commercial conditions is all the more compromised because the question is one of a supply which is fundamental for the economic life of the various countries.

The French Delegates in their own name and in the name of their Italian and Belgian colleagues, wished to draw attention to the extreme gravity of a policy which in effect consisted of giving a considerable premium to the national industrial products of countries which possessed raw materials, either in the form of import taxes on these raw materials, or in the form of differential prices fixed for the same commodity, according to whether it was consumed in the country or sold abroad.

They saw in this policy the very greatest danger of customs competition. They feared that such a policy (which certain countries had already shown an intention of applying on their own account) would tend to become general, and to end in the re-establishment of economic barriers such as the world had not known for centuries.

The consequences of such a state of things would inevitably be grievously felt by countries which had suffered by the war and which would be most especially hit by existing measures, or by those which it could be foreseen might be taken.

The British Delegates expressed their regret that the very precise instructions which they had received did not permit them to associate themselves with the declaration under discussion. They would not fail to report to their Government the exact terms of the declarations which had been made and to do everything in their power to impress upon it the very great importance which the Allied Delegations attached to the re-opening of the question at issue.

313. German Import Policy.

The Council noted a recommendation from the Permanent Committee transmitting the summary of a note from the British Delegation on the subject of the policy adopted by Germany in the matter of import (Doc. 289.)

The French Delegates asked whether the question at issue was one of permanent measures or of measures taken for the period of the Armistice. If it was a question of permanent measures, it would be necessary to examine the question according to the terms of the Treaty, and the competent body for this was the Commission for the execution of the Treaty.

They proposed, therefore, that a meeting should be held with the Germans at Versailles and that explanations should be verbally demanded from them.

It was decided that the Organisation Committee of the Reparation Commission should be asked to arrange, as soon as possible, a conference with the Germans at Versailles, or at Paris, on the understanding that the Organisation Committee of the Reparation Commission should be warned five days in advance of the date of the meeting.

314. Customs Duties To Be Applied to Occupied Territories.

The British Delegates explained that the Inter-Allied Rhineland Commission had forbidden the German Authorities to apply to Allied goods at their entrance into occupied territories the increased customs duties established by Germany during the war. This appeared to the British delegates to be contrary to the moral obligations entered upon with the Germans. They requested, therefore, that the decision of the Commission should be revoked.

The French Delegates observed that the Peace Treaty gave to the occupying authorities the right to fix customs tariffs differing from those of non-occupied Germany, in the interests of the population of the occupied territories. But it had been understood that for the time being this right would not be used except under certain circumstances.

In view, however, of the fact that the question at issue was one of measures taken under Armistice conditions, they agreed with the views of the British Delegation, and it was decided:—

(a) that the Inter-Allied Rhineland Commission had not exceeded its powers.

(b) that the Commission should, nevertheless, be informed that the Supreme Economic Council considered it highly desirable that the measure taken by it should be revoked and that the German Authorities should be authorised, for the time being and without prejudice to the stipulations of the Peace Treaty, to apply to occupied territories the customs tariffs in force for non-occupied territories.

315. General Economic Situation of Europe.

The Council examined a note prepared at the request of the Permanent Committee by the French Delegate on the Permanent Committee.

At the request of the representative of the British Treasury several modifications of detail were made in this draft and it was decided that the text thus elaborated (Doc. 290) should be transmitted to the Supreme Council in the name of the Supreme Economic Council.

316. Delivery to the Allies of German Tank Steamers.

The President of the Allied Maritime Transport Executive explained the question at issue and asked the Council to ratify the proposals contained in the note of the Transport Executive (Doc. 291). In particular he called attention to the note of the American Delegate (Annex B to Doc. 291) requesting that the Supreme Economic Council should itself be asked to decide as to the revocation or the maintenance of the provisional exemption of these ships accorded by the Brussels Agreement.

The Council, in virtue of the Powers conferred upon it by the Supreme Council at the time of the Brussels Agreement, approved the proposals of the Transport Executive, viz:—

(1) That the provisional exemption of German tank steamers agreed to at Brussels should be revoked. This revocation shall be understood to be without prejudice to any measures provisionally taken by the Allied Naval Armistice Commission.

(2) That the ships should be delivered for management to the Allied and Associated Governments under the usual Armistice conditions.

(3) That if the German Government so desires, the ships should be employed for at least one voyage to transport petrol to Germany.

Attention was called to the fact that the American Delegate on the Transport Executive had stated that, if the Supreme Economic Council approved the revocation of the exemption, no objection would be made by his Government to this resolution.⁶

The French Delegation declared that it would insist that the French Ministry of Marine should agree that the Vesta should be handed over to Italy.

317. Serbian Demand for the Allocation of Ex-Enemy Ships.

The Council took cognisance of a note from the Delegation of the Kingdom of the Serbs, Croats and Slovenes demanding the allocation of ex-enemy ships (Doc. 292).

The President of the Allied Maritime Transport Executive remarked that the principal question at issue was a question of reparations and that the immediate provisional allocation of a certain amount of tonnage would present serious difficulties, in view of the fact that all ex-Austro-Hungarian ships were actually allocated for management and that it would be necessary to withdraw some of them from the managing powers in order to allocate them to Serbia.

It was decided to ask the advice on this subject of the Organisation Committee of the Reparation Commission.

318. Place of Next Meeting of the Council.

The Italian Delegation declared that they had not yet received instructions from their Government on the subject of the next meeting of the Council. They, nevertheless, expressed their hope to see the Council hold its next meeting in Rome.

It was decided that the next meeting should take place in any case in the month of October and that the Permanent Committee should be charged with the duty of fixing a definitive date.

Appendix 271

[Note Prepared by the Permanent Committee Regarding the Procedure and Powers of the Committee]

The attention of the Council is drawn to Minute 295 of its Thirtieth [Twenty-ninth] Meeting when it was decided to establish a Permanent Committee sitting in London to deal with matters of routine or current business.

The Council is informed that the Permanent Committee is constituted as follows:—

Belgium	Count Kerchove
France	M. Avenol
Great Britain	Mr. Wise
Italy	Dr. Giannini
U. S. A.

The Secretariat is composed as follows:—

Belgium	M. Herry
France	M. Frederix
Great Britain	Mr. James
Italy	M. Bertelli
U. S. A.

The Permanent Committee held its preliminary Meeting at Trafalgar House, London, on Friday September 5th.

The Permanent Committee held its First Meeting at Trafalgar House on Saturday September 13th. A copy of the Minutes of the First Meeting of the Committee is attached for information.

The Committee further draws the attention of the Council to the attached note on the procedure of the Committee which was approved at the First Meeting.

The Committee attaches the greatest importance to the immediate co-operation in its work of the Government of the United States.

[Enclosure 1]

First Meeting 13th September, 1919, [of the] Permanent Committee, Supreme Economic Council

• Present:—
  • M. Avenol (France) (In the Chair)
  • Mr. Wise (Great Britain)
  • Count Kerchove (Belgium)
  • Dr. Giannini (Italy)
• In Attendance:—
  • Colonel Maxwell (Communications Section)
• Secretariat:—
  • M. Frederix (France)
  • Mr. James (Great Britain)
  • M. Herry (Belgium)
  • M. Bertelli (Italy)

1. Chairman—It was agreed that M. Avenol should preside at the Meeting.

2. Procedure and organisation of the Permanent Committee—Memorandum (No. 18) circulated.

Memorandum No. 18 was agreed subject to slight modifications and it was decided that it should be circulated for information to the Council together with a covering note officially informing the Council of the constitution and membership of the Permanent Committee and its Secretariat.

3. Request of Greek Delegation for Railway material—Letter from the Greek Delegation (No. 2) circulated.

The Chairman said that the sanction of the French Treasury was awaited for the delivery of this material.

Colonel Maxwell stated that the Communications Section had not received this demand. He agreed that it should be granted.

It was decided that subject to the concurrence of the French Treasury and of the Italian Delegate on the Communications Section, the request of the Greek Delegation should be granted.

4. Material necessary for the repair of a Bridge over the Save—Letter from the French Ministry of Public Works (No. 8) circulated.

The Chairman read a telegram from General Gassouin suggesting that the intervention of the British Ministry at Bucharest should be requested.

Col. Maxwell stated that when the question was discussed by the Communications Section on the 13th August, General Mance had stated that orders had been given that the material in question should be delivered as soon as possible.

The Committee agreed that it was of great importance that delivery of material for this Bridge should go forward and it was decided to request the Communications Section to see that it did go forward. The British Delegate undertook to approach the British Minister at Bucharest in the same sense.

5. Future of the Communications Section—Extract from the Minutes of the 35th Meeting of the Section (No. 13) circulated.

The Committee agreed that the Communications Section should continue in the form suggested and decided to send Extract No. 13 and its own decision to the Council for information.

6. Congestion of Polish base at Dunkirk—Extract from the 36th Meeting of the Communications Section (No. 14) circulated.

The Committee agreed to refer the question to the A. M. T. E. with a request that the A. M. T. E. would take action and report action taken to the Committee.

7. Credits for materials to the Baltic Provinces—Extract from the Minutes of the 37th Meeting of the Communications Section (No. 15) circulated.

At the request of the French Delegate consideration of this question was deferred until such time as the French Ministry of Public Works had considered the relevant Minutes of the Communications Section.

In the meantime it was agreed to ask the Finance Section to consider what action could be taken in the way of providing credits for the materials required in the Baltic Provinces. A list of these materials (e. g. copper, white lead and other materials for railway repairs) had already been transmitted by Col. Maxwell to the Finance Section.

8. Discussion whether Poland should be considered at Peace or at War—Extract from the Minutes ef the 35th Meeting of the Communications Section (No. 16) circulated.

It was agreed to refer the question back to the Communications Section with the statement that, subject to the right of the Communications Section to re-open the question, the Committee considered that no further action should be taken.

9. Responsibility for European Coal production and transport—Memorandum by the Communications Section (No. 17) circulated.

It was decided to refer memorandum No. 17 to the Council with the following recommendations

(a) That the responsibility for the production of coal now lies with the European Coal Commission. Therefore the Officers attached to the various Transportation Missions of the Communications Section should, so far as they are concerned merely with the production of coal, transfer their responsibility to the European Coal Commission.

(b) That, as regards the transport of coal, the European Coal Commission will act in liaison with the various Transportation Missions of the Communications Section.

(c) That as regards the general question of the relations between the European Coal Commission and the Supreme Economic Council, the Permanent Committee considers that the only effective guarantee of the stability and smooth running of the work of the European Coal Commission is that it should be part of the organisation of the Supreme Economic Council.

10. Appointment of Arbitrators for distribution of Danube Shipping.

Colonel Maxwell read a telegram from Admiral Troubridge to the Communications Section and an extract from the Minutes of the Communications Section, stating that in view of the fact that navigation was now being resumed on the Danube, and in view of the importance of re-establishing this navigation on a firm foundation, it was desirable that the appointment of the Arbitrators nominated under the Peace Treaty to arrange the definitive allocation of Danube shipping, should be antedated.

The Committee agreed to recommend to the Council that it should submit a recommendation in this sense to the Supreme Council.

11. Supply of Pharmaceutical products to Poland. Report of British Relief Missions (No. 1) circulated.

It was agreed to submit report No. 1 to the Council for information.

12. Request for the admission of an Austrian delegate to the European Coal Commission—Letter from the Austrian Delegation (No. 3) circulated.

The Secretariat stated that this question had already been discussed by the European Coal Commission, which had decided that, since Austria was not a producing country, she could not properly be represented on a Commission on producing countries. At the same time it was intimated that an Austrian representative could be heard, should need arise, both by the European Commission and by the Sub-Commission of Mahrisch-Ostrau.

It was agreed to refer letter No. 3 to the Council with a recommendation that a reply should be sent on the same lines as the reply of the European Coal Commission.

13. Resolution of the Supreme Council for information—Resolutions No. 4 circulated for information.

(a) Relations of Germany and Neutrals with Russia

(b) Guarantee Clauses for the supply of coal to Austria

(c) Interruption of supplies to Rumania

(d) Allied Economic Policy in Russia

(e) Exchange of goods between the States of Central Europe.

These reports were referred to the Council for information.

14. Request to load on return journey Steamers carrying cereals from the Argentine to Germany—Letter and enclosure from the A. M. T. E. (No. 5) circulated.

Letter No. 5 was referred to the Council with the recommendation that the request therein contained should be agreed to.

15. Future of the Finance Section—Extract from the Minutes of the 22nd Meeting of the Finance Section (No. 6) circulated.

It was agreed to refer to the Council the recommendations of the Finance Section, with the recommendation that they should be agreed to subject to the deletion in paragraph 2 of all words after “reconstruction”.

16. Diversion to Trieste of Wheat destined for Austria via Rotterdam—Letter from the Austrian Delegation (No. 9) circulated.

It was stated that, as regards the S. S. Contessa Adelina, the question had been already settled, since the boat had received orders to proceed to Trieste.

As regards the supply to Austria by Belgium of 5,000 tons wheat it was stated that since the Belgian Government was unable to supply this quantity this part of the question might be considered as having lapsed.

It was agreed to refer this question as a matter of urgency to the A. M. T. E. with the request that they would formulate a recommendation before the next Meeting of the Council.

The Italian Delegate stated that, for the Contessa Adelina, it was necessary to give definite orders immediately and it was, therefore, decided that this steamer should proceed to Trieste. In connection with the supply of 5000 tons of Wheat to Austria by Belgium, the Italian Delegate stated that, in order to avoid any question about the discharge of these steamers at Trieste, he proposed to the Italian Government to give 5000 tons out of the Government stocks, to be replaced out of the cargo of the first steamer arriving in Trieste.

17. German Import Policy—Memorandum by Mr. Waterlow (No. 11) circulated.

It was agreed that a summarised version of Mr. Waterlow’s memorandum should be referred to the Council with the recommendation that the Germans should be requested to communicate to the Allied and Associated Governments a complete list of commodities the import of which into Germany it was desired either to prohibit or to restrict.

It was further agreed to recommend to the Council that immediate arrangements should be made for a full discussion of the question between representatives of the German Government and representatives of the Allied and Associated Governments. At this discussion the Reparation Commission should be represented.

18. Abolition of Black Lists—Letter and enclosure from the British Foreign Office (No. 12) circulated.

It was agreed to refer this question to the Council with the recommendation that either at once, or as soon as the Peace Treaty entered into force, the Black Lists should definitely be abolished.

19. Powers of the Organisation Committee of the Reparation Commission as regards the authorisation of Finance for supplies to Austria and Hungary. Memorandum for the Supreme Council by the Organisation Committee of the Reparation Commission (No. 7) circulated.

Memorandum No. 7 was referred to the Council.

20. Food requirements of Germany—Report from Consultative Food Committee (No. 10) laid on the table.

The British Delegate summarised the main points of the Consultative Food Committee’s report.

The Food Committee had examined the German requirements of foodstuffs and fodder and had come to the following conclusions:—

(a) The requirements set out did not appear to be excessive.

(b) The requirements would appear to involve between 250 and 300 millions sterling.

(c) This finance could be obtained by Germany either in the form of credits or in the form of a postponement of reparation under Article 235 of the Peace Treaty.

(d) The question of tonnage could be solved if finance were available.

(e) It was essential that Germany should purchase under the general direction of the Consultative Food Committee.

(f) In the event of a decision being taken to allow Germany to obtain some or all of the finance required, the Consultative Food Committee should be authorised to discuss details of purchases, etc., with the German experts.

It was agreed to forward the Consultative Food Committee’s memorandum to the Council with a further memorandum informing the Council of the constitution and functions of the Consultative Food Committee.

21. General Food situation of Europe.

The Chairman stated that the problem raised by the previous discussion (No. 20) could only be presented, not solved by the Committee. It was in reality a European problem, not purely a German or Austrian problem.

It was agreed that the Chairman should draft a memorandum on the general situation for submission to the Council. This memorandum to be discussed at a special meeting of the Committee to be held on Tuesday September 16th at 12.30 p.m.

[Enclosure 2]

Note on Procedure of the Permanent Committee of the Supreme Economic Council

1. The Terms of Reference of the Permanent Committee are as follows:—To dispose of matters of routine or current business, referring to the full Council questions of great importance or cases in which a difference of opinion has occurred.

2. The Headquarters of the Permanent Committee shall be in London at a place to be fixed from time to time by the Committee and all communications to the Permanent Committee should be addressed there. Any documents received by the Council will be referred to the Committee.

3. The Committee shall consist of one representative of each of the Governments who are represented on the Council. The Committee shall have the right to limit numbers present, but, subject to this, any representative may when necessary invite experts or members of other Committees responsible to the Supreme Economic Council.

4. The Secretariat shall have no executive power, but shall be responsible for the preparation of the Agenda and Minutes, circulation of papers and the communication of decisions to all persons concerned.

5. Each Member of the Permanent Committee shall have the right to preside in turn at its meetings.

6. The Committee shall meet at least weekly or more frequently if necessary. For the present, Friday at 3 o’clock shall be the time of the weekly meeting.

The Committee will usually meet in London, but it may decide, if necessary, to meet elsewhere.

7. No decision shall be operative if any member of the Committee dissents from it. It shall always be open to any member of the Committee, either to postpone expression of his opinion until after he has consulted his Ministers or to request that consideration of the matter be deferred until the next meeting of the Supreme Economic Council.

8. The Members of the Committee shall be provided with full minutes and papers of all Committees or other bodies affiliated to or working under the authority of the Supreme Economic Council. References to the Council from such bodies shall, in the first place, be considered by the Permanent Committee, who shall, unless the matter is reserved by any Member of the Committee, endeavour to reach a decision or to narrow down the points on which a decision is to be obtained from the Council.

9. The Committee shall be responsible for preparing the Agenda for the Periodical Meetings of the Council and shall, whenever possible, draft recommendations or alternative recommendations for the consideration of the Council.

10. Papers for consideration by the Committee shall be circulated to the Members of the Committee not later than the day before the meeting of the Committee.

Appendix 272

American Commission to Negotiate Peace,
Paris, August 11, 1919.

My Dear Major Wright: With reference to your letter of July 22nd, in which you requested me to bring to the attention of the Supreme Council certain proposals from the Allied Railway and Food Administrations at Warsaw on the subject of the interchange of goods between the central European states, I have to inform you that this matter was considered at yesterday’s meeting.⁷ It was decided that the raising of the blockade had rendered unnecessary any action by the Council on this question.

Very sincerely yours,

Leland Harrison

Major Boykin Wright,
American Secretary, Supreme Economic Council
51, Avenue Montaigne, Paris

Appendix 273

31 July, 1919.

Supply of Drugs for Poland: British Action

1. Early in March 1919, Col. Tallents, Chief of British Mission to Warsaw, forwarded a report on the health conditions in Poland and included a list of disinfectants and apparatus needed for the campaign against epidemics as well as a list of drugs urgently required.

2. In that month the British Red Cross granted £100,000 for medical supplies for Poland.

3. A credit of £100,000 was applied for by the British Director of Relief Missions and approved by the British Treasury for the purchase of drugs and disinfection apparatus, from supplies which the War Office had available for export. Of this amount £29,600 has been allocated to the purchase of 148 disinfecting apparatus, and the remaining £70,400 to the purchase of drugs amounting to approximately one third of the original programme for which application was made by the Polish Government. Details of these supplies are being furnished by the Army Contracts Department.

4. In addition to these supplies, the British Director of Relief Missions is endeavouring to arrange such credit as may be necessary to purchase certain supplies of hospital material available from British Government stocks. It is tentatively reported that stocks value £60,000 are available, but this figure is expected to be substantially increased when final report is received. Furthermore it has been proposed that £10,000 should be placed at the, disposal of the British Red Cross Society in consideration of the £10,000 which they had allocated to the Polish Sanitary Campaign.

5. Motor Transport for anti-typhus campaign approximate value £1,300,000 is available from British stocks in England. It is anticipated that the whole supply necessary could probably be made from British stocks in France, Italy and Great Britain. This information has been passed to British Red Cross and Mr. Hoover, as finance for purchase of this transport is not available out of British credits.

Appendix 274

Resolution of the Supreme Council 22nd August, 1919: Clauses of Guarantees for the Supply of Coal (Peace Treaty With Austria)

It has been decided that the question of obtaining sufficient guarantees for the supply of coal by Tcheco-Slovakia and Poland to Austria, to the States arising out of the ancient Austro-Hungarian Monarchy, and to the territories ceded by the Allied and Associated Powers, will be referred to the Coal Committee, which will make a report after consultation with the Economic Commission.

The above mentioned Committees will also state in what convention these clauses of guarantee should be inserted according to their opinion.

Appendix 275

Resolution Passed by the Supreme Council 25th August, 1919: The Supply of Provisions to Roumania

It is decided following on the resolution carried on the 23rd August 1919 (H. D. 37)⁸ that the United States of America, Great Britain, France, Italy, and Japan will cease to send any kind of provisions to Roumania until further notice.

It is further decided to send the following telegram to the Roumanian Government through the Chargé d’Affaires at Bucharest.

Telegram Sent by the Supreme Council to the Roumanian Government

(Through the French Chargé d’Affaires)

Paris, 25th August, 1919.

Reports of the Inter-Allied Commission of Generals at Bucharest [Budapest] show that the Roumanian Military Authorities continue to empty Hungary of supplies of every kind in spite of the assurances given by the Roumanian Government by its representative in Paris.

The Peace Conference has received this information with the greatest surprise and awaits with great impatience for the reply of the Roumanian Government to the telegram addressed to it on the 23rd inst. by the Supreme Council which has definitely confirmed the views already expressed on several occasions: The Peace Conference feels obliged to warn the Roumanian Government from henceforward that if the proceedings of the Roumanian Authorities in Hungary are not completely and immediately modified, such an attitude will entail the most serious consequences for Roumania.

G. Clemenceau

Appendix 276

Resolution of the Supreme Council 19th August, 1919

It has been decided to send a communication to the German Government and the neutral States in the name of the Principal Allied and Associated Powers asking them:—

(a) To refuse clearance papers to all ships going to or coming from Russian Bolshevist ports;

(b) That a similar embargo be placed on all goods consigned over land to Bolshevist Russia;

(c) To refuse passports to any person going to or coming from Bolshevist Russia;

(d) To forbid banks to do business with Bolshevist Russia;

(e) To refuse as far as possible to accept at any telegraphic offices or wireless telegraphy stations, messages addressed to or coming from Bolshevist Russia and to refuse to forward correspondence to or from Bolshevist Russia;

Addendum to the Resolution of the 19th August With Reference to Blockade of Russia

and to inform them:

(f) That the Allied and Associated Powers intend to enforce in their countries similar measures to those which the neutral States are asked to adopt;

(g) That the vessels of the Allied Navies which will keep watch over the intended embargo of the ports of Bolshevist Russia will act in the name of the Allied and Associated Governments.

Appendix 277

Supreme Economic Council, Finance Section,
26, Rue de Bassano, Paris, 22 August, 1919.

[Extract From the Minutes of the Finance Section]

Sir: With reference to para. 269 of the minutes of the Supreme Economic Council, when it was agreed that the Finance Section should collaborate with the Organisation Committee of the Reparation Commission on financial questions which are in process of execution and the solution of which is urgent, I am directed to inform you that the future of the Finance Section was discussed at its last meeting, and it was recommended that the Finance Section should be renamed the “Finance Committee” and that its terms of reference should be:—

(1) To advise the Reparation Organisation Committee on financial questions arising out of execution of the Peace Treaties and Armistices with the Central Powers, pending the constitution of the Reparation Commission.

(2) To advise the Inter-Allied Economic Council on financial questions connected with relief and reconstruction should any such questions arise (pending the removal of the Inter-Allied Economic Council to London).

I am therefore to request that those recommendations may be submitted to the Organisation Committee of the Reparation Commission at their next meeting, and that the Finance Section may be informed of their decision.

I am [etc.],

C. B. S. Monfries.

Secretary.
M. H. W.

The British Secretary,
Organisation Committee,
Reparation Commission, Paris.

Recommendation by the Permanent Committee, September 13th, 1919

15. Future of the Finance Section—Extract from the Minutes of the 22nd Meeting of the Finance Section (No. 6) circulated.

It was agreed to refer to the Council the recommendations of the Finance Section, with the recommendation that they should be agreed to subject to the deletion in paragraph 2 of all words after “reconstruction”.

Appendix 278

Note [From the Communications Section] for the Permanent Committee of the Supreme Economic Council

The Secretary of the Communications Section raises the following question:—

In the fifth paragraph of the Minutes of the 1st Meeting of the European Coal Commission, it was decided to send to all European nations including Allies, Enemies and Neutrals, three sets of questions concerning the production of coal and the means of increasing it.

Up to the present the responsibility for the production of coal has lain with the Transportation Missions of the Communications Section with the various countries. The question of the future responsibilty of these officers would seem to be a matter for the Supreme Economic Council to consider. Presumably these officers will be taken over by the European Coal Commission, but it would be desirable that some ruling should be given on this point by the Supreme Economic Council.

Recommendation by the Permanent Committee Sept. 13th, 1919

9. Responsibility for European Coal production and transport—Memorandum by the Communications Section (No. 17) circulated.

It was decided to refer memorandum No. 17 to the Council with the following recommendations.

(a) That the responsibility for the production of coal now lies with the European Coal Commission. Therefore the Officers attached to the various Transportation Missions of the Communications Section should, so far as they are concerned merely with the production of coal, transfer their responsibility to the European Coal Commission.

(b) That, as regards the transport of coal, the European Coal Commission will act in liaison with the various Transportation Missions of the Communications Section.

(c) That as regards the general question of the relations between the European Coal Commission and the Supreme Economic Council the Permanent Committee considers that the only effective guarantee of the stability and smooth running of the work of the European Coal Commission is that it should be part of the organization of the Supreme Economic Council.

Appendix 279

St. Germain-en-Laye, August 19, 1919.

[Letter From the Austrian Delegate (Renner)] to the Chairman, of the Supreme Economic Council, Paris

No. 1072

Sir: According to information which the German Austrian Peace Delegation received, the Coal Commission actually sitting in Moravian Ostrau will be dissolved on Sept. 1st. 1919. This measure will add a new and dangerous element of anxiety to the perilous position of our coal supply.

For some time already German Austria has from the above mentioned mines only received part of the quantities to which she is entitled on the basis of former stipulations, quantities which, besides, are far from sufficient for her most urgent requirements. The dissolution of this commission will further appreciably aggravate the present deplorable state of affairs.

On the other hand, according to the same information, an international coal commission will be established in Paris, in which Germany is said to be represented by a technical expert. In view of the fact that our whole economic existence depends on the possibility of obtaining the most indispensable quantities of coal, that Delegation begs that the Supreme Economic Council concede also to German Austria the right to be represented in this Commission by a technical expert.

I am [etc.]

Renner

Appendix 280

Telegram From Budapest to Communication[s] Section, Supreme Economic Council, Paris

The opening of Danube has caused great activity in shipping circles. New Danubian states and British shipping companies engaged in negotiations for transfer of shipping from former owners are unable to complete transactions and commence operations owing to doubtful title of ships in river. It is imperative for welfare of all Danubian countries and river navigation that the American Arbitrator referred to in treaty should commence his arbitrage with the least possible delay. No. 44.

Admiral Troubridge

Budapest
103pm

Appendix 281

Ministry of Shipping,
St. James Park, London, S. W. 1, 20 August, 1919.

Sir: I am directed by the Allied Maritime Transport Executive to forward to you a copy of a letter which has been received from Messrs. W. H. Muller & Co., London, in regard to the shipment of German cargoes on ex-German vessels now under Allied management, and to ask whether, in view of the Supreme Economic Council, this request should be granted when no Allied outward-bound cargo is available.

I am [etc.]

N. A. Guttery

For Secretary, Allied Meantime Transport Executive

The Secretary,
Supreme Economic Council, 26, Rue de Bassano, Paris.

[Enclosure]

Holland House, Bury Street, E. C. 3, 14 August, 1919.

Messrs. The Royal Commission on Wheat Supplies,
Trafalgar House, Waterloo Place, S. W. 1.

Dear Sirs: We have received the following letter from Messrs. Wm. H. Muller & Co., the Hague:—

“Our representative in Germany raises the question whether it would not be possible that some of the steamers which discharge German grain in one of the German ports, and which return to the Argentine, take some outward cargo of German goods to South America. As we understand that the blockade has been lifted and Dutch liners are now allowed to accept German outward cargo, it is not absolutely impossible that you come to an agreement with Captain Elliot, or at least that Captain Elliot raises this question before the Economic Council. This, of course, would mean the beginning of the direct export from Germany oversea.

We are simply forwarding this proposition to you as we have received it from German side and shall be glad to receive your reply.”

We shall be glad if you will enable us to reply.

Yours faithfully,

For Wm. H. Muller & Co. (London) Ltd.

Appendix 282

Memorandum on Establishment of the Consultative Food Committee

1. A Consultative Food Committee shall be established authorising a representative of each country which is a party to this agreement. It shall meet periodically and its Headquarters shall be in London.

2. The functions of the Committee shall be

To provide a means of consultation on questions of food policy, and the co-ordination of action in connection therewith, with the intention of bringing producers and consumers into close relation so as to avoid profiteering which reacts on the general cost of living throughout the world.

3. Each party to the agreement will be solely responsible for providing its own finance and tonnage.

4. In so far as the Food Committee may set up arrangements for co-operation in purchasing it will act through such executive buying agencies as it may select.

5. In all cases written confirmation will be given to the appropriate buying agency that the necessary finance is available when a request is made to purchase in overseas markets.

6. The expenses of each Executive Buying Agency will be borne by the parties to the Agreements in proportion to their purchases.

7. Detailed procedure in respect of Wheat and Flour, Meat and Sugar, will for the present be as set out in annexes 1, 2 and 3 of this Memorandum (not attached). These annexes will however be subject to revision from time to time by the Consultative Food Committee, which may, if necessary, draw up additional provisions in respect of other commodities.

8. The arrangements set out in this memorandum shall continue at least to cover all shipments made before Jan. 1st. 1920.

Appendix 283

General Secretariat of the Peace Conference,
Paris, 2 September, 1919.

The General Secretariat of the Peace Conference has the honour of forwarding to Monsieur Clémentel a copy in duplicate of a note addressed by the Organising Committee of the Reparation Commission to the Supreme Council with reference to the Powers in connection with the allocation of finance for the Food supply of Austria and Hungary.

[Enclosure]

Note From the Organisation Committee of the Reparation Commission to the Supreme Council of the Allied and Associated Powers

Paris, 2 September, 1919.

Object: The powers of the Organisation Committee with regard to the authorisation of finance for supplies for the Austrian Republic and Hungary.

At a Meeting on the 12st August the Organisation Committee of the Reparation Commission considered 2 questions submitted by the British Delegation with regard to:—

1. The supply of cereals to the Austrian Republic

2. Supply of medical materials to Hungary

In examining the questions of principle raised by these two topics, the Organisation Committee points out that in accordance with Articles 177,193 and 196 of the draft Treaty with Austria, the principal Allied and Associated Powers have the right to authorise the establishment of credits for the supply of Food Stuffs and raw materials to Austria: these credits may be drawn from funds allocated to reparation. Article 193 would appear to indicate that the Reparation Commission has power to grant this authorisation. Up to the present time the Supreme Economic Council has been occupied with examining questions of this kind, but it appears that the whole of the Organisation brought into existence for this object will shortly disappear. It is possible that several months will elapse before the Austrian Treaty comes into force. Until then there will be an interval during which Austria may have urgent need of supplies of foodstuffs and raw materials; at any rate during this time arrangements may have to be made in view of future requirements.

Neither the Organisation Committee nor the Reparation Commission when it is operating in virtue of Treaty with Germany, will be competent to act in this matter, unless the necessary powers to do so are specially delegated to them by the Supreme Council. The Organisation Committee proposes that during the intermediary period either it or the Reparation Commission should be invested with the necessary powers to grant such credits. It should be pointed out that the Committee does not possess the necessary machinery to judge of the necessity of such credits. It is proposed that an arrangement be made with the Supreme Economic Council whereby one or more of its Officers who have collaborated in this work in Austria will pass, when it terminates its relief work, into the services of the Committee.

There is ground for hope that it will not any longer be necessary to have recourse to special measures in order to assure supplies and that all the necessary measures can be taken by the Organisation usually charged with supply, with the obvious reservations that the necessary credits are granted. If nevertheless special measures are still found to be necessary, the Committee desires to point out to the Council that it is not considered suitable to amalgamate its functions of providing supplies to those which are already in charge of the Reparation Commission.

It may be necessary to provide similar powers in regard to Hungary.

By Order of the Organisation
The Inter Allied Secretaries

Appendix 284

Memorandum Submitted by the Consultative Food Committee to the Supreme Economic Council

Under Article 235 of the Peace Treaty the Allies have agreed to allow Germany to postpone payment of such portion of the first thousand million pounds sterling by reparation as may be necessary to enable her to purchase such quantities of food and raw material as the principal Allied and Associated Governments consider essential for her if she is to be in a position to pay reparation.

In the formal reply of the Allied and Associated Governments to the German objections to the Peace Treaty it was stated that the portion of the concession in this clause must be subject to the Germans complying with such conditions as the Allied and Associated Governments might find it necessary to lay down with a view to protecting their own interests.

The Organising Committee of the Reparation Commission at one of their early meetings with the Germans at Versailles asked for a list of the Feeding Stuffs and raw materials which the Germans desired should be within the limits of this clause.

On the 6th of August Herr Von Lersner submitted a list of Feeding-stuffs, Fodder, Fertilisers and raw materials, of which a copy is attached, which he stated would be required by Germany in the near future. The lists of Feeding-stuffs and Fodder have been carefully considered by the Consultative Food Committee and the following conclusions have been reached:—

1. Having regard to pre-war requirements of Germany and the information available as to German Harvests and the state of German Live Stock, the requirements stated do not appear to be at all excessive, based on a pre-war consumption, and assuming that an allowance has been made for the accumulation of a small stock of these commodities, in addition to consumption. But it is not possible to give a complete answer to this point until more information is available with regard to some of the items.

2. It is not possible to consider the demands in detail until the information is available as to the finance which will be at Germany’s disposal. In round figures the Feeding-stuffs, Fodder and Fertilisers in the lists submitted apart from Raw materials would cost about two hundred and fifty million sterling for the full amounts supplied’. Herr Von Lersner, Chief German Delegate at Versailles, is unable to give any information as to how the money can be provided. Apparently it must come either from credits supplied by the Allied and Neutral Governments or from the postponement of the reparation in Clause 235 of the Treaty.

3. The Consultative Food Committee desires to ask the Supreme Economic Council for information as to the amount of finance that will be available for Germany for the purchase of Food-stuffs.

4. No information is available as to the tonnage that will be at the disposal of Germany. It is assumed, however, by the Consultative Food Committee that if finance is available Germany would be able to charter considerable quantities of tonnage in the open markets. This question, however, would apparently have to be considered by the Shipping Section.

5. If Finance and Tonnage are at Germany’s disposal for the whole year it is, in the opinion of the Consultative Food Committee, essential that Germany should be required to make her purchase under general or specific direction from the Consultative Food Committee. In respect of some commodities, e. g. meat, feeding cakes, and feeding-stuffs it is improbable that more than a proportion of the German demands could possibly be supplied. In respect of these and also other commodities the fact of Germany buying on this scale might have serious effects on the markets.

6. The Consultative Food Committee recommends that as soon as the decision is reached as to the amount of finance available to Germany for food it should be authorised to discuss programme and purchase in detail with the German Experts. For this purpose the most convenient course would be for the Germans to send their experts to London.

[Enclosure]

The President of the German Peace Delegation [(Von Lersner) to the Chairman of the Organizing Committee of the Reparation Commission (Loucheur)]

Versailles, 6 August, 1919.

Translation

Your Excellency: I have the honour to transmit to you the attached 6 Provisional Lists of foodstuffs, fodder, fertilisers and raw materials which will be required by Germany in the near future.

The German Government proposes to give information later as to what purchases against credit it is intended to make on free markets.

For such purchases we will make arrangements with the Allied and Associated Governments in virtue of Article 235 of the Peace Treaty.

I should be very much obliged if you would inform me whether among the goods mentioned on these lists there are any which could be supplied from countries of the Entente, and what would eventually be the quantities and qualities, as well as the prices which would be asked.

Be so good as to accept [etc.]

Von Lersner

[Subenclosure]

List I

Foodstuffs required by Germany during the next four months. (One quarter to be supplied each month.)

Foodstuffs

	Tons
Meat	120,000
Fats	60,000
Cereals (Including rice and dried vegetables.)	8,000,000
Milk	to the value of 6,000,000 marks in gold.
Potatoes	quantity not yet fixed.

List II

Fodder and Fertilisers necessary for Germany during the next twelve months (to be delivered one-twelfth each month.)

fodder and fertilisers

	Tons
Oil Cake	900,000
Wheat Bran	600,000
Maize	1,200,000
Barley (Quantities of Barley which cannot be furnished may be replaced by corresponding amounts of maize.)	850,000
Animal and fish meal	600,000
Various fodders	600,000
Basic Slag	1,000,000
Raw phosphate (Basic slag may be replaced by raw phosphate in the proportion 2 to 1 and conversely.)	1,500,000

List III

Raw Materials Necessary for Germany for the Next Two Months

textiles

	Tons
Cotton:	42,000
Base fully middling 28 mm with range to 1/3 inferior up to fully low Middling and 1/3 superior up to fully good middling, twist 28/30. The whole should if possible be of good colour, and be ready for immediate delivery or shipment.
	Bales
East India Cotton	20,000
Make Cotton	20,000
If only inferior qualities can be delivered specifications and patterns would be desirable, so that the possibility of utilisation could be examined. In no case should “Linters” be delivered.
Qualities of Cotton Thread.	Tons
From 20/30 and 36/42 down to 16	2,000
Fine thread from 80 upwards	1,000
Linen	6,000
All qualities of Belgian, Russian and Irish, for medium warp, principally good specimens from Slanetz. If linen cannot be delivered, it may be replaced by corresponding amounts of Neapolitan.
Linen Thread
Only warp of 30/60	3,000
Hard fibres.	1,500
Manila or Sizal
Soft Hemp	5,000
Raw hemp from Bologna, Naples, India and Russia, one quarter of same from Strapatura.
Jute	15,000
Not more than a third directly from English stock, the rest directly shipped from Calcutta.
Ramie	300
Raw Ramie of the best quality
Coco fibre	600
Silk	350
Of all sources and kinds
“Bouretts Schappe” (Shoddy)	350
“ “ (Silk waste (French chape))
Schappegespinst (Spun Silk waste)	350
All usable types.
Wools.
Washed	15,000
Carded and Comber Wools	2,000
All usable types.
Material for Art weaving.	7,000
Of these 20% should be materials for Art weaving in cotton: 80% of wool. Of the latter, 40% for stockings, 49% Thibet, 20% for underclothing.

List IV

Raw Materials Necessary Monthly for Germany

leathers

	Tons
Large Hides.	7,900
Of these, according to method of employment two-fifths in heavy hides, of a weight of 25 kilograms and upwards (weight of fresh skin) one-third of under and up 25 kilos (weight of fresh skin)
	Pieces
Kip	637,000
Of this according to method of employment two-thirds in hides of 5 kilograms and upwards (flaying weight) and one-third of up to 5 kilograms (flaying weight)
	Tons
* Fresserfelle (scraped hides)?	200
Horse Hides	8,500
According to method of employment three-quarters of the size 220 cm. and upwards, one quarter up to 220 cm.	hides
Sheep and Lambskins.
Having regard to the great lack of wool, it is requested that only very fleecy sheepskins be delivered.
	Skins
Goatskins	500,000
Kid-Skins	615,000
Two-thirds in lambskins of 0.4 kilograms and upwards, and one-third of kid skins.
	Tons
Vegetable tanning matter	100,000
Or
Pure tanning matter	25,000

List V

Raw materials required by Germany in the next six months

metals

	Tons
Lead (one-third would be accepted in ore)	48,000
Nickel	900
Tin	6,000
Sheet tin	15,000
Copper (electrolite)	24,000
Copper (in ore)	24,000
Zinc (in ore)	18,000
Antimony	1,800
Aluminium	9,000
Mercury	300
Bismuth	7,200
Silver	18
Platinum	150	kgs.

List VI

Raw materials required by Germany

various

	Tons
Raw Rubber	2,500
Bones	4,200	trucks
Raw glue	3,400	trucks
Resin	16,000	tons
Turpentine	3,000	“
Copal	750	“
Shellac	300	“
Amianthe	3,500	“

Appendix 285

St. Germain-en-Laye, 14 September, 1919.

The Austrian Chargé Affaires to the Chairman, Supreme Economic Council

Translation

Sir: Never has the situation of Austria as regards the supply of wheat and flour been so critical as at the present moment. In view of the great difficulties under which the collection of the home crop is labouring, the utilisation in favour of non-producing districts of the exportable surplus of the neighbouring agricultural countries cannot be effected until later on. The Austrian Government has attempted to supplement the insufficiency of its own resources by acquiring wheat in Italy and in the Argentine. But the goods from these countries will not in any case be available in Austria before the end of September, at the earliest.

Moreover, the wheat which will be delivered to Austria by the Serbo-Croato-Slovene state in virtue of the convention recently concluded, will not, in consequence of the bad state of the means of transport, be imported for some time.

In face of this situation, which is getting worse from day to day and which at this moment is compromising in some districts the continuation of the regular supply of bread, my Government is reduced to the necessity of begging the Supreme Economic Council to come to its aid and to remove the imminent danger of a real famine, by furnishing to it at Trieste, as soon as possible the quantities of wheat, or flour necessary for a month’s requirements of the districts which are deficient. These quantities amount to 50,000 tons flour, or 56,000 tons Wheat.

The choice of Trieste as the place of delivery is imposed by the relative rapidity of the communications linking Austria with this port, which alone can guarantee the efficacy of the proposed measures.

Confident in the humane sentiments of which the Supreme Economic Council has given many proofs, in connection with our present sad condition, my Government directs me, Sir, to address you an urgent appeal to be good enough to accede to the request formulated above, and this to prevent the dangers with which, in the event of its abandonment by the Council, the tranquility and public order of the Austrian Republic would be threatened.

I am [etc.]

Mayrhauser

Appendix 286

15 September, 1919.

Memorandum Submitted by the Consultative Food Committee to the Supreme Economic Council [Regarding] German Austria Food Requirements During 1919–1920

Under Article 181 of the Peace Treaty a first charge upon the total sum due in reparation from German Austria is payment for “such supplies of food and raw materials as may be judged by the Governments of the Principal Allied and Associated Powers essential to enable Austria to meet her obligations for reparation”.

The Council of Five also agreed on 17th July that the provision of food and raw materials as fundamental to Austria’s recuperation and ability to make reparation will be one of the first considerations of the Reparations Committee.⁹

No specific demands for importation during the cereal year 1919–1920 have yet been made to the Reparations Commission by the Austrian Government and owing to the divergent estimates of the period over which home produced supplies will meet the needs of the population, and the immediate necessity of arranging importation of commodities in short supply, a detailed statement of requirements and the amount of available finance should be furnished by the Austrian Delegates at an early date.

A provisional list of the importation requirements of foodstuffs from overseas during the cereal year beginning 1st September 1919 which the Consultative Food Committee regard as reasonable is attached. The estimated total carrying capacity is slightly over 500,000 tons and the landed cost of these commodities amounts approximately to £30,000,000. In accordance with the decision of the Council of Five on 17th July the Consultative Food Committee ask for an indication from the Reparations Commission of where and what credits will be provided, either through the Allied and Associated Governments or otherwise to provide the food which Austria will need during the next few months.

Having agreed with the Austrian Representatives a basis of importation the Consultative Food Committee will desire to be informed what tonnage will be at the disposal of German-Austria and whether the Shipping Section of the Supreme Economic Council intend to grant special shipping facilities in the way of direction of tonnage at reduced rates, or whether it is considered expedient that Austria should charter tonnage in the open markets at commercial rates of freight with the credits provided through the Allied and Associated Governments or otherwise.

In the opinion of the Consultative Food Committee the purchases of foodstuffs and fodder to be made for German-Austria should be coordinated with those of the United Kingdom, France, Italy, Germany and any other nation associated with this consultative purchasing organisation and all purchases should, as in the case of Germany, be subject to the sanction of the Consultative Food Committee.

As Austria will presumably rely on the producing countries for the provision of credits for the purchase of foodstuffs, it is important in the interests both of producing and consuming countries that the fullest cooperation should exist between the Consultative Food Committee and the Governments of the great producing countries.

The Consultative Food Committee recommend that as soon as the decision is reached as to the amount of finance available for German-Austria for food, the Committee should be authorised to discuss purchases to be made under the programme in detail with the Austrian experts. For this purpose the most convenient course would be for the Austrians to send their experts to London.

[Enclosure]

Schedule of Estimated Imports of Foodstuffs Required by German-Austria From Overseas 1919–1920

	Metric tons
Bread grains (Assuming home crop provides for consumption 48,000 metric tons)	350,000
Rice	50,000
Meat	45,000
Fats	65,000
Condensed Milk	12,000
	522,000

Appendix 287

Supreme Economic Council
London, 9 September, 1919.

Captain Elliot,
Food Section, Supreme Economic Council.

Dear Captain Elliot: I am directed by M. Clémentel to call your attention to the enclosed letter received from the Austrian Delegation at St. Germain with reference to S. S: Contessina Adelina v and to the replacement of wheat supplied by the Belgian Government to the Austrian Government.

As I am leaving to-day for Paris, I would be very much obliged if you could arrange to let me have an answer to this letter in the course of the day.

Believe me [etc.]

Sonolet

[Enclosure]

Delegation of the Republic of German Austria,
8 September, 1919.

Sir: According to telegraphic information received from London and from Rotterdam by the Government in Vienna, the Steamer Contessa Adelina of the Allied Maritime Transport Executive, carrying a cargo of wheat from the Argentine to Rotterdam for German Austria would appear to have been diverted to Trieste by order of the Supreme Economic Council. Now the cargo of this said vessel formed part of the 20,000 tons of wheat bought in the Argentine by the German Austrian Government, which was to be transported by the ships belonging to the said Company, viz: Maria Immacolata, Contessa Adelina, Carl Leonhari and Rovuna were due to arrive at Rotterdam towards the end of the present month.

In order to provide for the urgent needs of the Austrian people from the present time until the end of the period mentioned, the Belgian Government has consented to place 5000 tons of wheat at our disposal, subject to a guaranteed replacement of the amount supplied from the transports arriving at Rotterdam from the Argentine during this present month.

In consequence of the above mentioned order of the Supreme Economic Council the first transport on which this arrangement was made will not arrive, the agreements concluded on this subject with Belgium will prove illusory and our supply of bread will once more be endangered.

The undersigned Delegation begs therefore to request the Supreme Economic Council most urgently to be kind enough to issue the necessary orders whereby the instructions which caused the Steamer Contessa Adelina to proceed to Trieste may be withdrawn and to give assurance that she will proceed without fail to the harbour of Rotterdam.

Any other measure would endanger the supply of our people, to whom the Allied Powers and especially the Supreme Economic Council itself have been good enough to lend their support in a very generous and humanitarian way.

The undersigned delegation therefore awaits a prompt and sympathetic reply.

I am [etc.]

Eichoff

Appendix 288

Report of the Raw Materials Committee

The Supreme Economic Council instructed the Raw Materials Section some months ago to consider the development of the world situation so far as certain products are concerned, for which a deficit in the world production was to be feared, or a shortage of supply in certain of the Allied and Associated countries.

Since that time the lamentable diminution in the production of coal has led to the creation of a special Committee to study the means for securing the supply of Europe with coal.

The Raw Materials Committee has, therefore, abstained from considering the consequences which the shortage of fuel may have on the distribution or the consumption of raw materials.

I. Deficit of Production

It is clear that in the majority of the countries in the world the production of raw materials has suffered from the instability of political and social conditions which has affected certain countries and, at the same time, from the general diminution in the output of labour.

Nevertheless, as the volume of production has been diminished during a long period by the utilisation for military purposes of a large part of the means of transport, and as, on the other side, the consumption of industrial products in the world has diminished considerably, the equilibrium between available supplies and requirements is not upset, despite the decrease in production.

cotton

The case of American cotton is one example. In spite of the decrease of production, the available supplies of American cotton can be regarded as sufficient.

The visible stocks on the 1st August, 1919, can be split up as follows:—

Cotton being shipped to Europe	467,000	bales
In the ports of the United States	1,434,000	“
In the interior of the United States	780,000	“
Total	2,681,000	bales
As compared with at the same date in 1913.	348,272	bales

The above table does not include stocks which may be in the possession of American consumers and which there is no reason to suppose are larger than in 1913.

In accordance with these figures there would appear to be therefore a stock of American cotton larger than in 1913 by more than 2,000,000 bales.

But it should be observed:—

(1) that the excess of stocks is less than the deficit of production. The estimates for the coming crop of the United States were, on the 21st August, about 11,230,000 bales as compared with an average crop of 14,518,000 bales during the three years preceding the war.^*

(2) further, it is necessary to add to the visible stocks in America on the 1st August, 1913, all the stocks which existed in the consuming countries of Europe, either in warehouses or in factories. Now these stocks, which can be estimated at at least three months consumption, are non-existent in the majority of European countries in consequence of which there is a further deficit of about a million bales, as compared with the supplies of 1913.

It is true that the industrial consumption has diminished considerably. At the present moment the application of the Law for the eight-hours working day has led in the majority of countries of the world to a reduction which can be estimated at about 20%.

Further, in certain countries whose industries consume large quantities of American cotton, especially in Germany and in Poland, there is a complete cessation of production in many parts.

In conclusion it does not appear that there will be a shortage of American cotton in the world, at least if the resumption of the cotton industry continues to take place slowly.

Amongst the textiles an appreciable deficit can be expected in the case of Egyptian cotton and a very large deficit in the case of flax.

(a) Egyptian Cotton.

The average production of the three years preceding the war was about 7,530,000 Cantars or a million bales of 750 lbs.

The estimates for the present harvest assuming that this harvest has not been affected by internal conditions in Egypt are about 6,000,000 cantars, or 800,000 bales, i. e. a diminution of 20%.

The existing visible stocks do not compensate for this difference. If account is taken both of the floating stocks on their way to Europe and of the visible stocks in Alexandria, the excess over the stocks existing at similar dates in 1913 does not appear to be greater than 100,000 bales; moreover, they consist to a considerable extent of inferior qualities.

Further, the excess observed in the case of visible stocks is without doubt largely compensated by the absence of stocks in the hands of consumers. It appears that the consumers’ stocks in England only represent 50% of their amount in normal times and in other European countries they are practically non-existent. The prices cannot be considered at the moment as an indication, because they had been fixed for a long time by the Cotton Control Commission and it is only since the 31st July last that the market has become free once more. It may be observed, however, that since this date the prices have increased by 10% in spite of the fact that the demand of the consuming countries of Central Europe is still practically excluded.

It is for these reasons that certain delegations hold that in order to supply the requirements of the industries of the different consuming countries it would be desirable that England should forthwith fix in one form or another exportable quotas in proportion to the known requirements and in accordance with the principle of priority which the United Kingdom formulated for the Allies and Neutrals by the declarations of May 1918.

(b) Flax.

There exists in the case of flax a serious decrease in world production which it is impossible to estimate exactly at the present moment by means of figures.

Russia, which in normal times produced nearly 85% of the flax harvested in Europe, has undergone a great decrease in production, and Esthonian flax, of which it was thought a part might be obtained, has become for the moment inaccessible as a result of the recapture of Paskow.

The production of Poland which is very greatly reduced will probably not yield an exportable surplus. In other European countries the production or available supplies are similarly reduced.

France has only sown 13,586 hectares as compared with 30,475 in 1913.

Holland will only export half its normal quantity.

Per contra in Ireland the crop is estimated at 15,700,000 tons as compared with 12,672,000 tons in 1913.

To sum up Western Europe can only count with certainty upon a supply which is less than its normal consumption by at least 25%. The movement of prices is an indication of this: in particular the price of English flax has increased to £320, as compared with £60 before the War.

The Sub-Committee is of opinion that in order to prevent certain countries being entirely deprived of this raw material it is desirable to consider an equitable distribution of the supplies by mean of an agreement with all the producing countries. It holds in particular that it would be desirable to enter upon negotiations with the countries of Central Europe, which already before the war produced more than Great Britain, France and Belgium taken together, which have increased considerably their production during the course of the war and which, although their production in 1919 is less than in 1918, would doubtless be disposed to exchange a part of this production against a more liberal supply of raw materials from overseas.

(c) Oilseeds.

The estimation of the relation between the supplies and the demand for oleaginous materials presents greater difficulties than with regard to textiles. On the one side in certain countries which previously depended upon Germany for part of their supply, the margarine industry has made considerable progress, while in certain countries in the case of vegetable oils suitable for human consumption, there has taken place a considerable increase in demand, the extent and duration of which it is impossible to estimate at all accurately.

On the other hand, as it is possible to substitute to a very great extent one variety of oil for another for the great majority of uses for which oil is required, the possibility exists to make up the shortage of those sources which a failure in planting or in the harvest renders short of supply, by having recourse to other sources, in which the available quantities appear to be limited only by the labour necessary to collect them.

But as it cannot be expected that Russia will make an [any?] important contributions to the world resources and as the available freight for the transport of products from distant countries is the limiting factor, however great the actual oilseed resources are, it is probable that the quantities to which access can be had will not exceed even if they are not actually insufficient to satisfy the requirements of the importing countries including that which is necessary to reconstitute in certain countries the working stocks.

The difficulty of finding means of payment and of transport and the slowness of resumption of industrial activity would seem to restrict demand and to decrease to a certain extent the difficulty which there would appear to be of securing normal supply for all countries.

(d) Phosphates.

It appears that in North Africa the production of phosphates has diminished and that the exportation is reduced in addition on account of the lack of transport.

Various Delegations have put forward the desire that, under a form of licences or quotas, there should be secured a distribution of the exportable surplus of phosphates from North Africa, account being taken both of pre-war demands and of known requirements.

II. Reserve Products

wool

It is difficult to appreciate the situation with regard to wool. It does not appear that the clip of 1919 is deficient in the large overseas producing countries—Australia, South Africa and South America—but the domestic production of the countries which have been devastated by the war has diminished considerably, thus the average sheep flocks have fallen from 17,000,000 to about 8,000,000.

It does not appear to be possible to estimate with certainty the stocks in producing countries; in South America they appear to amount to 80,000 tons, but an appreciable proportion has been bought by the enemy countries and would appear to be immobilised from this fact.

The English and Australian stocks have not been published recently, but it is known that they are relatively important.

The resumption of industrial activity in the principal consuming countries has proceeded with such slowness that if the position as a whole is considered, neglecting the qualities demanded, the supplies appear sufficient for the consumption, at any rate until the end of next year.

It is only after the industry has been working for some time to its full capacity that the excess of the world demand over the world supplies will be exhibited. It seems at the moment probable that at the end of the current year the world’s stocks will amount to some 750,000 tons, over and above the clips in the Southern Hemisphere which may come in during the last months of the year. The annual consumption estimated for 1920 is about 1,400,000 tons, or about the same as in 1913. The fact that owing to the particular conditions in certain countries demand has increased, especially for the finer wools, enables it to be stated with certainty that the supplies of merinos and fine crossbreds will be inferior to requirements, while low quality crossbreds will be in abundant supply and in excess of demand.

That prices have shown an appreciable increase, although the demand from Central Europe is still weak, is attributed by certain people to the fact that the conditions of the market are artificial.

Certain Delegations point out in effect that the Australian clip purchased by the United Kingdom has only been put on the market at irregular intervals and in parcels of fixed quantities. Those countries which are large consumers complain that they have not been able, owing to this circumstance, to supply their requirements. For example in 1919, in the course of the first six months, France only imported 42,000 tons of greasy wool as compared with a six-monthly consumption which, after the reconstruction of the destroyed machinery and taking into account the machinery of Alsace, comprises 150,000 tons. It is pointed out that already at the end of the month of August the abandonment of the system of allocation in the British auction sales has abolished one of the limitations restricting the supply of wool, and the complete liberty which it is hoped will shortly be given to the Wool Market will contribute in part to diminish the difficulties with which certain countries are confronted at the present moment.

III. Obstacles in the Way of Supply

(1) Artificial prices.

The Belgian, French and Italian Delegations have drawn the attention of the Committee to the menace, in connection with the supply of certain raw materials, which may be constituted by a regime of artificial prices resulting either from a dual tariff for internal prices and export prices, or from the imposition of export duties which in effect have the same result.

Certain producing countries have been led to impose duties upon the exportation of products of which there is, moreover, no shortage in their own country. This is in particular in the case of Spain which has just set up a very high export tax on hides and leathers.

These taxes on exportation which hit raw materials are an even greater danger for the supply and the resumption of industry than prohibitions of export. On the basis of certain propositions which have been made to the Economic Commission of the Peace Conference and which have been referred by it to the Supreme Economic Council or to the League of Nations, the above-mentioned Delegations on the Statistical Committee consider that they must call the attention of the Raw Materials Section to the dangers which any regime formed to institute or to maintain artificial prices would appear to present from the point of view of world supply. The British Delegation makes a reservation with regard to this recommendation. See Note Annex 1.

(2) Tonnage.

The problem of supplies for certain countries appears in the case of certain products which are essential for their re-construction to depend solely upon the question of tonnage.

The problem of the supply of wool, which is of vital importance for all the countries which have been devastated by the enemy, would appear only to be capable of being solved by the institution of a traffic which would permit them to utilise the reserves of wool which exist either in the Baltic countries or in certain Colonial countries.

(3) Means of Payment.

Finally, the Statistical Committee has been unanimous in recognising the inferiority in which certain Allied and Associated countries find themselves in regard to their supply of materials results above all from the financial situation. The unequal distribution of the resources of the world, even in respect of those products which are not deficient, appears to be in a great measure the effect of the unfavourable situation of the exchanges or the insufficiency of means of Payments.

IV. Exchange of Information

The Statistical Sub-Committee has been unanimous in recognising the opportunity for setting up a continued exchange of information amongst the different delegations of which it is composed, both with regard to production and stocks and to relative estimates of consumption. The ease of leather is especially apposite from this point of view.

It is impossible at the moment to estimate even approximately the resources of leather and hides of various sorts in a great number of countries in the world.

The Majority of European countries which have taken part in the war have suffered considerable diminution in their herds, and, in certain countries in which the herds have not decreased in numbers, young beasts, which it would be unprofitable to slaughter, take the place of the older animals slaughtered during the war. In almost all the countries there is a notable diminution in slaughter and the slaughter depends further on the possibilities which they possess for the importation of frozen meat.

With regard to the producing countries which export frozen meat there are some whose production has increased appreciably during the course of the War. There is an increase by about 15% in America where the herds amount to 67 millions and an increase by about 40% in Canada, but the exportation from these countries depends to a considerable extent upon European orders which in turn depend upon the volume of the refrigerated tonnage.

The production of skins and leather in the great producing countries of North America, South America and Australia is thus difficult to estimate at the present moment and will vary not only in accordance with the demands for purposes of consumption but also in accordance with the volume of tonnage and the quantity of finance available.

One of the forms of mutual aid which the Allied and Associated countries can render to one another at this moment is to secure as exact information as possible upon the increase or decrease of the available supplies of each sort of raw material brought about by variations not only in production but by the intensification or slackening of foreign trade.

The Statistical Sub-Committee considers it useful not only to undertake a constant interchange of information but to consider the eventual publication of the documents thus collected.

Note. Annex 1. The British Delegation does riot associate itself with the recommendation as to export duties, on the ground that its discussion involves important questions of policy, which have already been discussed between representatives of the nations concerned in this report, and in regard to which the attitude of the United Kingdom is unchanged.

Appendix 289

Summary of Note by British Delegation on German Import Policy

Allied Governments and Allied Traders are anxious on the subject of German Economic Policy.

On the one hand it is desirable that from a financial point of view Germany should only authorise the import of really necessary goods. On the other hand, Allied Traders are interested in selling to Germany as much as possible.

According to a note dated 19th August from a representative of the German Foreign Office, importations are authorised or prohibited by an Imperial Commission. Very lengthy lists of prohibited imports are ready for issue but are not yet published. In all probability this results from the fact that the Germans have not yet made up their minds as to their future economic policy, but it is none the less desirable to have prompt and precise information on the question.

Communications have already been addressed to the Germans on this subject, both through the Armistice Commission and through the Inter-allied Rhineland Commission, but so far without result. It is suggested that the Supreme Economic Council should agree upon the terms of a note to be presented to the Germans at Versailles, which should insist on prompt action by the German Government.

It is understood that the Allied Policy has always been that German import regulations must apply equally to occupied territory and to the rest of Germany.

It should further be pointed out that the Germans are at present imposing considerable restrictions upon imports from occupied territory to unoccupied Germany, with the result that there is in the occupied territory a great congestion of goods imported from allied countries. The Council should consider whether the Germans should not be jointly summoned to remove these restrictions.

Appendix 290

Note by the French Delegation for the Permanent Committee [Regarding the] General Economic Situation of Europe

I. The labours of the Consultative Food Committee have established the fact that it is not because of any insufficiency in foodstuffs that the world is threatened with famine. As regards Raw Materials (the report of the Raw Materials sub-committee was not to hand at the time of drafting this Memorandum) it does not seem as if the deficits which may cause grave difficulties to certain industries are such as to threaten the general stability of the world. Neither does it appear that seagoing tonnage, although there are grave obstacles to its utilisation caused by the bad working of the land transport, is at the moment insufficient to the needs of international relations. Amid the ruins and disorders resulting from five years of war, one general cause can be isolated. If this cause were to disappear many of the difficulties would remain to be overcome. But if [it?] persists, all efforts will be in vain.

II. All over the world, the vast operations of credit, necessitated by the war, have depreciated currency. But the disproportion between the respective depreciations of each national currency is considerable. Each country has depended to a different degree on the outside world for its war supplies. Some countries have been able to maintain a great part of those of their industries which are productive of exchangeable securities. Others have had to divert the greater part of their industries [to?] the production of war material. These latter are dependent on the former for their Raw Materials and for a great part of their manufactured products. This break in the former equilibrium of exchange has caused a break in monetary relations. The disparity in value between the various national monetary tokens is daily increasing in proportion to the unstable equilibrium of exchange. Their mutual relations vary from day to day. It is sufficient to follow the exchange quotations of countries which have the same monetary system (e. g. French francs, Belgian and Swiss francs, pesetas, lire, lei, etc.) to realise that their enormous variations make international exchange impossible.

III. Money having virtually ceased to be exchangeable between them, or rather money having ceased to perform its function as a medium of exchange, each country which has available products or services possessing an international value tends to place them under its control, in order to use them for the regulation of its own imports. On the other hand, in order to limit at home as much as possible the rise in the cost of life, which is a consequence of the general monetary depreciation, each government is tending to use this control either to limit exports and create an artificial abundance or to fix double prices, the lower price for its nationals, the higher price for foreign countries, the latter calculated so as to compensate the loss made by the effect of the former.

IV. The solution of European difficulties is, therefore, above all a financial solution. It is necessary that a current of credit should be able to develop in a continuous circuit throughout Europe. No European country can be the source of this current. Each of these countries is itself confronted with great difficulties, almost all are under the necessity of borrowing on their own account. Many of them, whose resources, though unequal, are great, can only utilise those resources for themselves. But if they were themselves propped, some of them would be able to place their experience and their organisation at the disposal of Europe.

To sum up, the supply of the greater part of Europe, above all of the new states of Eastern Europe, of Germany and of Austria, cannot, it seems, depend on the European Powers in their present state for these Powers are all at the moment debtors.

It is the business of the Supreme Economic Council to affirm that the well-being and security of the two hemispheres are closely related and inter-dependent, and the work of reconstruction is obligatory upon all, each to the measure of his power.

20 September, 1919.

Appendix 291

[Note by the Allied Maritime Transport Executive Regarding] Use of German Tankers

The question of the use of German tank steamers was referred to the Allied Maritime Transport Executive by the Committee on Organisation of the Reparation Commission (see memorandum Appendix “A”), for an expression of their opinion.

The position is, briefly, that German tank steamers were not exempted from delivery under the Armistice Convention of January, 1919, but it was intimated to the Germans at the Brussels Conference that delivery would not for the time being be insisted upon. At that time no relief requirement for oil has been intimated by the Germans.

On the 30th July, 1919, the German representative on the Rotterdam Commission asked permission for eight of these tank steamers to proceed in ballast to United States’ ports and return with oil to Germany. They were informed as follows:—

“If Germany wants oil their proper course is to deliver these tank steamers to the Allied and Associated Governments; application should thereafter be made through the usual channels for the desired quantity of oil to be imported into Germany.”

Following upon that, the provisional exemption of the following fourteen German tank steamers has been canceled and delivery to the Allied and Associated Powers has been demanded by the President of the Allied Naval Armistice Commission:—

	G. T.
Burgermeister Petersen	2788
Emil Georg V. Stauss	4567
Frits V. Stauss	4560
Helios	3477
Hera	4705
Loki	5457
Mannheim	3578
Niobe	6776
Pawnee	4972
Pechelbronn	5080
Sirius	3809
Wm. A. Reidmann	9800
Willkommen	3140
Wotan	5703
	68,412

Of these it is understood that eleven vessels have now been made ready by the Germans for despatch to the Firth of Forth for delivery to the management of the Associated Governments—crews being already on board, and the Allied Sub-Commission at Hamburg reports that the owners are claiming that hire should start from the 14th instant (in the case of those actually ready to be despatched) and that if the vessels are not immediately despatched great delay would be occasioned.

The question of the Allocation of these vessels was considered at the meeting of the Allied Maritime Transport Executive on the 17th instant, when the United States’ delegate intimated his desire to put in at once a note giving the position of the United States’ Government in the matter. This note is attached (see Appendix “B”).

The United States’ note which was to the effect that neither the president of the Allied Naval Armistice Commission nor the Allied Maritime Transport Executive had the power to revoke the Armistice conditions or to cancel any of the provisional exemptions made in the Brussels agreement was discussed at the meeting and the following resolutions were proposed:—

(1) That the provisional exemption of the German tank steamers made at Brussels should be revoked. This revocation to be without prejudice to any previous action taken by P. A. N. A. C.

(2) That the vessels should be delivered to the Allied and Associated Governments for management under the usual Armistice terms.

(3) That, if desired by the German Government, the vessels should be employed, at any rate for one voyage, for the conveyance of oil to Germany.

The U. S. Delegate, while not opposing the resolution desired to reserve the decision of his Government in regard to the whole matter, but he intimated, after some further discussion, that, should the Supreme Economic Council approve the revocation, no objection would be raised to the resolution.

It was pointed out by the French Delegation, and agreed to by the Executive, that the result of the American protest would be the detention of the steamers in Germany, since it would not be possible for the other Allies to agree to safe conducts being granted by P. A. N. A. C. for the steamers to sail under the German flag, and it was further reported that the Naval Sub-Commission at Hamburg had stated that 11 of these vessels were ready for sea and that if they were not despatched immediately great delay would probably be caused.

With regard to the Allocation for management, the Chairman considered that, in view of the very small time for which these steamers were likely to be under Allied management, and the peculiar condition of the restricted tank steamer market, it was not necessary to insist on a too rigid distribution of the tonnage on the principles likely to be followed under the Peace Treaty. So far as Great Britain and the U. S. A. were concerned, neither of those countries could be said to be at the moment in a serious need of tank tonnage, and, though both countries would naturally reserve their rights as to a ton for ton allocation under the Peace Treaty, the Chairman suggested that, with regard to this temporary allocation for management, it would not be unfair that the other European Allies (France, Italy, and Belgium) should have the preference up to the limit of their losses during the war and in view of the small amount of tanker tonnage under their control.

(For Table of Losses see Appendix C).

Following out this principle the Chairman proposed that:—

23,000	tons	gross	should	be	allocated	to	France,
10,000	“	“	“	“	“	“	Italy and
12,000	“	“	“	“	“	“	Belgium,

the Secretariat to arrange the best possible division of the steamers in concert with the Allies, keeping to the figure named above as near as possible.

With regard to Italy, the question of the Vesta was raised, and it was pointed out that the previous decision of the A. M. T. E. was that she should be allocated to Italy, and that France should obtain the first of the German tank steamers to be delivered. The present situation constituted a nouveau fait and the Chairman appealed to France to deliver up the Vesta to Italy, stating that, in the event of her delivery, the Italian allocation would be diminished by her gross tonnage.

The alternative would be for the French allocation to be similarly reduced.

With regard to the tank tonnage in excess of the total of these allocations, of which 16,000 tons is now in sight and further steamers may come forward, the Chairman proposed that Great Britain and the U. S. A. should have preference in their management, and he proposed that they should be divided between those two countries in exact proportion to their losses—viz. four to Great Britain and one to the U. S. A.

These proposals were generally approved by the Executive, Senateur Berenger promising to take up the question of the Vesta with his Government at the earliest possible moment.

The American delegate intimated that he had not received specific instructions on the question and was, therefore, not in a position to give his concurrence.

The Chairman pointed out, however, that, in the original discussions as to the allocation between the Allies, the U. S. A. did not claim any cargo tonnage beyond that in South America.

The French Delegation pointed out that before the war there were forty-seven tank steamers flying the German flag. Of these twenty-four had been taken over by America early in the war, three had gone under the British flag, and fourteen are now spoken of. There appeared, therefore, to be a discrepancy. The Secretariat were instructed to clear the matter up at once, the French representative promising to give a list of these ships.

Appendix A

29 August, 1919.

Dear Kemball Cook: At the meeting of the Committee on Organisation of the Reparation Commission, held this morning, the American delegate raised the question of permission being given to the Germans to use certain tank steamers which were not requisitioned under the Armistice. This matter is being referred officially by the Committee to the Executive for an expression of their opinion. The American delegate pointed out that Germany was being pressed to increase her production of coal, and that for this purpose she stated that she required supplies, e. g. of Kerosene. He stated further that the Standard Oil Company are prepared to grant private credits to Germany, and that it was essential that she should have every facility for the transport of the oil.

Yours Sincerely,

C. B. S. Monfries

P. S. I attach for your information copies of a memo by the Americans and a note of Peel’s.

C. B. S. M.

[Enclosure 1]

Major Monfries: This is the American memo, on the tank ships to be sent on to London for our A. M. T. E. representative.

It seems to me that these ships ought to be taken over at once, and put to work.

That they should be allowed to sail under the German flag is another matter, to which I hope we shall not consent.

I think that it certainly would be very desirable from the point of view of reparation that the Germans should get these petroleum products on credit.

It is important that arrangements should be made as quickly as possible. I suppose that A. M. T. E. will advise on what conditions the ships shall be put into use.

S. Peel

28.8.19

[Enclosure 2]

August 28, 1919.

M. Loucheur, President
Committee on Organisation of the Reparation, Commission,
136, Champs-Elysees, Paris.

My Dear M. Loucheur: As suggested by you, I take pleasure in giving herewith a résumé of my observations this morning relative to the German tank steamers. I should be happy if you would communicate these observations to your representative in London with such comment as seems to you proper.

Under the terms of the Brussels Agreement there was left to Germany for her use tank steamers. Of these tank steamers a certain number (11, I believe) are owned by a German corporation, the entire interest in which belongs to the Standard Oil Company of the United States.

In view of the fact that the blockade of Germany has been lifted and that these vessels have been left for German use, the Standard Oil Company now wished to arrange through its subsidiary, to have these vessels put into service presumably between Germany and the United States.

From a reparation standpoint such a procedure seems to me desirable. It has been recognised by our Committee, and, in fact, established by the Treaty that Germany must obtain certain essential materials in order to put herself in a position to perform her reparation obligations. The importance of this is recognised as being such that the Reparation Commission is authorised to permit such materials to be paid for out of Germany’s initial reparation payment.

Among the products which Germany most requires are petroleum products, and it is particularly to be noted that in the list which the Germans submitted at our request, giving imports necessary to stimulate coal production, kerosene lubricating oil, etc., were particularly mentioned.

I understand that the Standard Oil Company is prepared to supply such products through these tankers, on credit and without the German Government asking to have the value of such imports deducted from the original 20,000,000,000 mark payment. Accordingly, it seems to me very advantageous that authorisation should be given for the employment of these vessels for the importation into Germany on credit of such petroleum products as are admittedly essential for the rehabilitation of Germany’s commercial and economic life. The procedure which I suggest seems to me to offer the occasion of accomplishing this in the way which will be the least onerous for the Allied and Associated Governments. Furthermore, it seems to be entirely in accordance with the spirit of our preceding arrangements with the Germans that these vessels should be used as indicated. If at the time of the negotiations of the Brussels Agreement, and, subsequently, after the Scapa Flow incident (when the matter was reconsidered), it was decided not to deprive the Germans of the use of these vessels, and if the blockade has been lifted the only logical course appears to be to allow the vessel[s] to be used by Germany. Certainly to compel the vessels to lie idle is an economic waste which could not be justified.

Of course, all that I say is subject to the stipulations of the Treaty relative to vessels flying the German flag, it being noted, however, that in any case those provisions do not become applicable until two months after the coming into force of the Treaty.

I am [etc.]

John Foster Dulles

Appendix B

17 September, 1919.

The American Delegate protests against any action, further discussion, or consideration at all of the matter in respect to the disposition of the 14 German tankers by the Allied Maritime Transport Executive; for

1. The Allied Maritime Transport Executive has no jurisdiction in the premises to allocate for management among the Allied Governments any of the German tankers in question on the ground that the provisional exemption granted at the Brussels Conference in March, 1919, has not in fact been revoked. The purported revocation of this exemption was irregular, and was made without proper authority.

(a) Assuming that these vessels in question are German owned, there was no valid or authoritative revocation of the provisional exemption, for it was made by an individual, to wit, the President of the Allied Naval Armistice Commission, without the sanction or cooperation of the United States and French Delegates on this Commission. It is the province of the Allied Naval Armistice Commission to carry out the Naval Armistice terms. That Commission did not make the terms of the Armistice, and therefore has no power to change those terms. The Brussels Agreement is an incorporated part of the Armistice terms, and as part of the Armistice terms there was made a provisional exemption of the German tank vessels.

Therefore, the Allied Naval Armistice Commission has no more power to change the terms of the Brussels Agreement than to change the terms of the Armistice by revoking said exemption.

2. The A. M. T. E. has no jurisdiction to grant permission or refuse permission for these German tankers to leave German waters since the provisional exemption has not been revoked. They are, therefore, still under German jurisdiction.

3. The A. M. T. E. itself has not the power in the absence of any proper authority expressly delegated by the Allied and Associated Governments to assume the authority to order any body or commission to revoke the provisional exemption above referred to, which was only granted by the authority of the Allied and Associated Governments. The authority to revoke this provisional exemption can only be derived from the body or commission granting the exemption, or upon the power expressly delegated by the Allied and Associated Governments.

4. When a question of jurisdiction of the A. M. T. E. is raised, the A. M. T. E., as a subordinate body deriving its powers from a superior source, cannot finally decide its own jurisdiction, but must refer the matter for decision to its convening authority, to wit, the Supreme Economic Council, of which body the Allied Maritime Transport Executive is in fact one of the sections.

E. O. Tobey

,
American Delegate, A. M. T. E.

Appendix C

War Losses in Tank Tonnage

Nation	No. I	II	III
	No. of Vessels	Gross Tonnage	Respective proportions (percentages) of aggregate losses reckoned in tonnage sustained by each nation
Great Britain	54	274,006	73,428
France	2	19,317	2,498
Belgium	4	12,191	3,267
Italy	2	6,109	1,637
United States of America	15	71,535	19,170
Total	77	373,158	100,000

1 In regard to the losses of France it should be pointed out that several tankers owned by French refiners but sailing under the British Flag have also been lost by War risk, and if these are included in France’s figure—her loss would amount to approximately 23,000 gross tons.

Appendix 292

Letter From the Serbian Delegation to the Supreme Economic Council

Translation

The Delegation of the Kingdom of the Serbians, Croats and Slovenes has just learned that the Inter-allied Supreme Economic Council will sit in Brussels to examine among other important questions that of the allocation and employment of enemy tonnage, that is to say all merchant shipping which formerly belonged to Germany and Austria Hungary.

The Delegation of the Kingdom of the Serbians, Croats and Slovenes profits by this occasion to recall to the Supreme Council the repeated notes which it has had the honour to address to it with a view to obtaining the liberty of ships of the former Austro-Hungarian Merchant Marine belonging to Jugo-Slav shipowners.

These notes have up to the present remained unanswered, in spite of the extreme urgency of this question which is so vital for our country.

Our demand is based on the expressed and formal stipulation contained in the Armistice with Austria,¹¹ placed there at the proposal of M. Vesnitch, who was at that time the representative of the Kingdom of Serbia.

There was added to Article 5 of the Naval clauses another clause according to which a special Commission should decide what units of the Austro-Hungarian fleet should be excepted from the blockade.

As can be shown from the Minutes of the proceedings of the 31st October 1918, all the great Powers, and in particular France and Italy, were in agreement with M. Vesnitch that the Austro-Hungarian ships belonging to Jugo-Slav and Italian shipowners should be liberated. The words referred to above were nothing else than the expression of this goodwill and of the perfect agreement which existed on this subject.

The Italian Government was actuated by the same principle, since its delegate M. d’Amelio at the Sessions of the 28th and 31st March 1919 of the Second Sub-Commission on Reparation under the Chairmanship of Lord Cunliffe, agreed to the proposal of the Jugo-Slav delegates, made with the object of liberating the pool of ships belonging to shipowners from Jugo-Slavia and from Italia Irredenta. On their side England and the United States also confirmed the principle enshrined in the above mentioned Article 5 of the Armistice with Austria, for, apart from repeated verbal declarations made by the delegates of these two great powers concerning the decision taken at the Session of the 22nd May 1919,¹² on the initiative of Mr. Lloyd George, Mr. Lansing in his letter of the 9th July 1919 addressed to M. Patchich, expressly confirmed that the United States had accepted the clause according to which the whole Ex-Austrian Hungarian Merchant Fleet was transferred to the Reparation Commission, but with the reservation that a greater amount of tonnage should be kept in the Adriatic than would be the case if the principle of “Ton for ton” were to be applied.

In the same letter Mr. Lansing informed us that he had given by telegram, through the medium of the Embassy in London, special instructions to the American delegate of the Inter-allied Maritime Transport Executive, with the object that a reasonable proportion of the ships to be disposed of should be allocated to our State. This is precisely what we demand at the moment, excepting that the Reparation Commission or a special agreement should do justice to the claims of our shipowners.

The Jugo-Slav State which contains 12 million inhabitants cannot exist without having a fleet of which it can freely dispose, in, order to satisfy its most urgent economic requirements. Our people up to the present grievously lacks this indispensable necessity to its economic life. This state of things cannot be prolonged without serious consequences. It is for this reason that we addressed to the Inter-allied Supreme Economic Council the urgent demand to be good enough to give to the Inter-allied Maritime Transport Executive in London the necessary instructions to ensure that a reasonable proportion of the ships at their disposal should be allocated to the Kingdom of the Serbs, Croats and Slovenes.

Patchich

1. i. e., appendix 271.
2. See HD-28, minute 5, vol. vii, p. 650.
3. See HD–36, minute 3, ibid., p. 785.
4. See HD–37, minute 1, and HD–38, minute 3, vol. vii, pp. 811 and 836.
5. See HD–33, minute 2, ibid., p. 720.
6. See HD–24, minute 3, ibid., p. 533.
7. See HD–64, minute 5, vol. viii, p. 462.
8. See HD–64, minute 3 and appendix C, vol. viii, pp. 461 and 472.
9. See HD–66, minute 4, vol. viii, p. 509.
6. But see HD–62, minute 1, vol. viii, p. 403; also Foreign Relations, 1920, vol. ii, pp. 546–549.
7. See minute 5 of meeting of August 11, 1919, HD–28, vol. vii, p. 650.
8. Minute 1, vol. vii, p. 811.
9. Possibly this is a mistake in the German. [Footnote in the original.]
9. See HD–9, minute 2, vol. vii, p. 173.
10. Figures of Professor Todd. [Footnote in the original.]
11. Vol. ii, p. 175.
12. See CF–24/1, minute 5, vol. v, p. 834.