The Ambassador in Belgium (Whitlock) to the Secretary of State

No. 973

Sir: I have the honor to transmit herewith an account of the first two meetings of the International Financial Conference which took place on September 24th and 25th respectively.

This Conference was called by the Council of the League of Nations during its meeting in London last February for the purpose of devising means of averting the financial crisis that appears to be so threatening at the present time.

On September 24th at three o’clock in the afternoon, the Conference began its first meeting in the Chamber of the House of Representatives of the Belgian Parliament.

Twenty-nine States are taking part in the work of the Conference which is presided over by Mr. Ador, former President of the Swiss Confederation. In addition, the United States is also represented and Finland, Luxemburg, Estonia, Livonia [Latvia?], and Lithuania have been invited to follow these debates. Germany has sent three representatives.

The Committee of organization is composed of Mr. Ador, the President of the Conference, four Vice-Presidents, including Mr. Wouters d’Oplinter, the Belgian Minister of Economics, and eight others.

On September 24, Mr. Ador made his opening address, stating that the Council of the League of Nations should be thanked for its happy thought in calling this Conference, as this action proves that the League of Nations is determined to play an important part in the affairs of the world. Europe, which has so cruelly suffered and has been impoverished by many years of warfare, and by huge loss of life, has also been overwhelmed with a great financial disorder due to the rising prices, heavy taxes, the diminution of production and the difference in purchasing power of the various currencies in different countries.

Therefore, continued Mr. Ador, one should not imagine that the many causes of the diseases with which humanity is now suffering will disappear in a day. Nevertheless a conscientious study of the economic and financial situation should be made, as well as an attempt to encourage an increase in production, to remedy a situation which, if prolonged, would ruin the world.

Mr. Ador then described the program of the Conference which consists of: [Page 98]

—A general statement by each country of its foreign debts and the balancing of its receipts and its expenses as well as the status of its commerce and finance.
—Following this a study should be made of the great problems. This will form the constructive part of the work of the Conference.
—The determination of the principles that must govern the handling of public finances, especially those that are peculiar to the very difficult period which we are now traversing.
—The examination of the questions of fiduciary circulation, of the inflation of paper money, and of the restriction of the use of gold, which have such a very great influence on the rise in prices and the depreciation of foreign exchange.
—In order to relieve the exchange situation, an attempt should be made to find means to increase production, develop exports, and to stimulate private initiative.

Mr. Ador added that he hoped that elimination of economic barriers would give all the opportunity to devote themselves to work and thus relieve their own situation.

Following this he made a definite statement to the effect that the Conference will not be permitted by the Council of the League of Nations to interfere with certain questions which have arisen from the war, or with certain settlements provided by the peace treaties, which are still in suspense and which are being negotiated by the Governments affected thereby. The Financial Conference should preserve strictly a character of an assembly of technical experts.

Mr. Delacroix, the Belgian Prime Minister made a short speech of welcome in the name of the King, the Government and of all Belgium, adding that he hoped that the Conference would complete a durable work.

On Saturday morning the second meeting was held, at which the various representatives of the countries that were neutral during the war gave a statement of the finances of these States.

Mr. Gluckstadt, the Danish representative, remarked that while Denmark has not contracted any foreign obligations during the war, the taxes have been increased on account of economic and social complications that have arisen therefrom. Although the internal debt has arisen from 87 million kroner in 1914 to 518 million kroner in 1919, there has been not much increase in paper money. Nevertheless a decrease has occurred in the foreign trade of Denmark which affects the country adversely, and has depreciated the value of the crown in comparison with British and American money.

Mr. Patyn, representative of the Netherlands, stated that the national debt of his country has arisen from 1.162 million florins [Page 99] in 1913 to 2.679 million florins in 1920, while the public expenses have tripled in this period. This has occasioned a great increase in taxes so that persons with large income are paying out about one half of their revenue to the Government. Although the florin has maintained its value very well, nevertheless it is at present declining in common with other European moneys in comparison with those of the United States and South America.

Mr. Volckmar, the Director of the Norwegian Bank of Commerce, pointed out that his country is also suffering from the enormous increase in State expenditure which has jumped from 166.7 million kroner in 1913, to 759.8 million in 1920. Taxes on income and capital are the principal sources on [of] income for the State.

Mr. Marcus Wallenberg, Director of the Stockholm Enskilda Bank followed Mr. Volckmar. He remarked that Sweden obtained her principal revenue in the same manner as Norway, and that the State’s expenses had also greatly increased. In common with other countries the Swedish exports have decreased.

Mr. de Haller, the Swiss representative, former Director of the Swiss National Bank, stated that the purchasing power in Switzerland had greatly decreased and that the cost of living is two and a half times as much as in 1914. The high rate of Swiss exchange affects the countries [country’s] industries as it injures Swiss exports.

At the afternoon session, Mr. de Cortina, the Spanish representative stated that his country is also traversing a difficult period. The receipts of the Government are far insufficient to meet the budget expenses, and no means have been devised for doing so. This condition has been caused by the effects of the war and by the inflation of the currency. In comparison with the United States, the Spanish money has depreciated about 30%. During this last year, the foreign commerce has shown an unfavorable balance of 16 million pesetas, while the commerce with the United States showed a considerable increase of imports and a diminution of exports.

Finally the delegates of Finland, Czechoslovakia, Esthonia, Lettonia [Latvia?], Servia and Poland reported in detail concerning the manner in which the war had ravaged their countries, indicating the difficulties that these countries were encountering in the restoration of their national industries. They were most insistent that this Conference find the means of equalizing and stabilizing the means of exchange.

The Polish delegate, Mr. Ladislas Clyrobski [Grabski?], the Minister of Finance, stated that in his country, the old taxes have already been increased tenfold and yet they are insufficient, as Polish money is depreciating more rapidly than the taxes are increasing.

I have [etc.]

Brand Whitlock