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

Paris Peace Conf. 180.0501/16

Supreme Economic Council: Sixteenth Meeting Held at the Ministry of Commerce [on 5th May, 1919, at 10 a.m.]

May 5, 1919, 10 a.m.

The Supreme Economic Council held its Sixteenth Meeting on Monday, 5th May, 1919, at 10 a.m. under the Chairmanship of Lord Robert Cecil.

The Associated Governments were represented as follows:—

United Kingdom.	Mr. J. M. Keynes,
	Sir Wm. Mitchell Thomson,
	Mr. E. F. Wise.
United States.	Mr. McCormick,
	Mr. Hoover,
	Mr. Norman Davis,
	Mr. Baruch,
	Mr. Robinson.
France.	M. Clémentel,
	M. Celier,
	M. Seydoux,
	M. de Lasteyrie.
Italy.	Prof. Attolico.
Belgium.	M. de Cartier de Marchienne.

130.

The Minutes of the Fifteenth Meeting were approved subject to the following addition to Minute 128 proposed by the American Delegates:—

Further resolved that imports of foodstuffs into the Northern Neutrals and Switzerland may for the present be permitted freely subject only to such regulations as may be prescribed by the country of exportation, but this action shall not, however, relieve the importing country from any existing guarantees against re-exportation to Hungary or Bolshevik Russia.

It was agreed that the Naval Authorities should be informed of the above decision so that they might be in a position to make such arrangements as they consider necessary.

131. Conditions in Hungary.

(i) Blockade.

The American Delegates enquired whether the Council would be prepared to recommend the removal of the blockade restrictions on Hungary immediately in the event of the political situation becoming such as would warrant this action being taken.

It was agreed:

(a) that from a blockade point of view there would be no objection to the lifting of the blockade on Hungary as soon as the political situation permitted.

(b) that, provided the necessary recommendation were received from the Council of Foreign Ministers, the Blockade Section should be authorised to take steps immediately to remove the blockade on Hungary;

(c) that the Council of Foreign Ministers should be notified accordingly.

(ii) Food.

The Director-General of Relief reported receipt of information to the effect that the situation in Hungary was improving and pointed out that the supply of food to that district was becoming an urgent problem. It appeared that a considerable quantity of breadstuffs, meat and fats existed in the Banat and surrounding countries in excess of that required for Greater Serbia and was available for export to Hungary, but that the Serbian Government appeared unwilling to facilitate the export of the commodities.

A Memorandum (119) from the Director-General of Relief on the revictualling of Hungary was submitted.

It was agreed:—

(a) that the Director-General of Relief should be authorised to inform the Serbian Government that it is essential that the revictualling of Hungary and Roumania should be conducted at least in part from the surplus of the Banat and surrounding countries;

(b) that the Serbian Government should be requested to co-operate with the Supreme Economic Council and the Food Section in securing the immediate and regular movement of these foodstuffs to Hungary;

(c) that the Finance Section should consider what financial arrangements can be made to allow of imports of foodstuffs to Hungary.

132. Situation in Latvia and Lithuania.

It being pointed out that stores of foodstuffs intended for the revictualling of the populations of Latvia and Lithuania were not yet being distributed owing to objections raised by the Allied Naval Authorities, although the representatives of the Food Section had expressed the opinion that distribution could with safety be commenced, it was agreed:—

(a) to report on the position again to the Council of Foreign Ministers;

(b) to request the Allied Naval Authorities to state immediately their reasons for postponing still further the landing of foodstuffs at Libau.

133. Relations With Germany.

With reference to Minutes 114 and 122 the Chairman reported receipt of a letter from the British Prime Minister stating that although the Council of Heads of States appreciated the importance of the entire suspension of the blockade on Germany they considered it would be preferable to take no action in the matter for the present.

134. Trade With Occupied German Territories.

(i) With reference to Minute 127 it was reported:—

(a) that the Sub-Committee on Germany had considered the resolutions passed by the Council in conjunction with certain regulations proposed by the Luxemburg Committee;

(b) that these regulations as amended and approved had been forwarded to the Rhineland Commission to put into operation;

(c) that the regulations had been forwarded to the Finance Section but that owing to an ambiguity in one of the clauses the matter had not yet been considered in detail;

(ii) The American Delegates reported receipt of information to the effect that considerable quantities of commodities other than foodstuffs were being exported from the occupied to the unoccupied territories particularly through Alsace and it was agreed that all the information available should be given to the French Delegates who undertook to make enquiries into the position and report to the Council at its next Meeting.

135. Requisitioning of Foreign Securities on the Left Bank of the Rhine.

The Financial Delegates reported that the Finance Section having decided that Germany should be permitted to requisition foreign securities on the Left Bank of the Rhine the German Delegates at Vilette had been notified to that effect. Subsequently, however, some confusion had arisen through a telegram on the same subject sent to the German Armistice Commission by Marshal Foch.

It was now proposed that a further telegram should be sent to clear up the situation and a draft prepared by the French Delegates (120) was submitted and approved subject to the following amendments:—

(a) the omission of paragraph 2 Clause (b).

(b) the addition at the end of the last sentence of the telegram of the following words:—

“it being understood that requisitioning shall be carried out on the same principle and by the same methods on both sides of the Rhine.”

136. Failure by Germany To Sign the Preliminaries of Peace.

Statements prepared by M. Seydoux (121) and by Captain McNamee (U. S. N.) (122) and submitted to the Blockade Section, embodying proposals regarding blockade measures which might be adopted in the event of the German Delegates refusing to sign the Preliminaries of Peace, were submitted.

The following resolution submitted by the American Delegates was adopted:—

“That the Blockade Section be instructed to prepare immediately, in consultation with the Naval and Military Authorities, and submit for consideration by the Council of Foreign Ministers a plan for the instant application,” in case of need, of the fullest possible pressure of Blockade upon Germany.”

137. Rationing of Raw Materials to Germany.

A resolution from the British Delegates (123) and an extract from the Minutes of the Finance Section (124) regarding the rationing and supply of raw materials to Germany, were considered.

It was agreed that it was undesirable at the present juncture and in view of the serious financial difficulties involved, to send a formal communication to the German Government requesting information regarding their requirements of raw materials but that there would be no objection to the Delegates of the Associated Governments on the Raw Materials Section discussing the question verbally with the German Delegates now at Versailles without in any way committing any of the Associated Governments.

138. Purchase by Allies of Commodities Available for Export From Germany.

(a) Dyestuffs.

A resolution (125) from the Raw Materials Section and a Scheme of Arrangement (126) for pledging German stocks of dyestuffs as security for an advance for supplies of foodstuffs to Germany were approved in principle subject to final approval of the details by the Sub-Committee appointed by the Raw Materials Section and to the approval of the Finance Section.

(b) Prohibition and Pre-emption Lists.

A resolution (127) from the British Delegates suggesting that the Allied and Associated Governments should waive their right of preemption, except as regards dyestuffs and coal, under the terms of the telegram of March 24th,¹ was submitted and approved subject to final acceptance by the French Delegates.

It was agreed that in the event of the French Delegates being unable to accept the above proposal a special Meeting of the Council should be held on Tuesday, 6th May.

139. Financial Restrictions on Germany.

Resolutions from the Finance Section (128) regarding the relaxation of financial restrictions on Germany were submitted and approved, it being understood that these concessions should be considered as applying only to the period of the Armistice.

140. Control of German Wireless Stations.

Extracts from the Minutes of the 19th Meeting of the Blockade Section (129) regarding the control of high-powered wireless stations in Germany were submitted.

It was agreed that the German Government should be informed that the Allied and Associated Governments are prepared to accept Clauses 1–8 only of the rules under which commercial communications will be permitted but that if any improper use of wireless communications is made the Allied and Associated Governments will be obliged to withdraw all facilities granted for postal and telegraphic communications between German and Neutral Countries.

141. Use of Enemy Tonnage.

It was reported:—

(a) that a communication had been received from the Transport Executive in London stating that enemy ships under French management were being sent to destinations not in accordance with the instructions given by the Executive;

(b) that certain of the boats under British management were being sent to Australia and other destinations where no finance was available instead of to the United States or the Argentine where food supplies already financed were awaiting shipment.

It was agreed that these matters should be referred to the Shipping Committee to make the necessary communications to the French and British Authorities and the Transport Executive.

142. Food Prices in Germany.

The British Delegates reported that difficulty was being experienced in selling food supplies shipped by the Allied and Associated Governments to Germany owing to the high prices and the depreciation of the mark, and it was agreed to refer the matter to the Finance Section with instructions that they should discuss with the German Delegates the question of prices for foodstuffs particularly as regards the high prices being asked for food distributed to the people.

143. Control of Traffic on the Danube.

With reference to Minute 126 resolutions submitted by the American Delegates (130) regarding the control and expedition of commercial and relief traffic on the Danube were considered and the principles included therein were accepted.

The matter was referred to a Sub-Committee composed of the following Delegates:—

U. K.	General Mance,
United States.	Mr. Hoover.
France.	M. Clémentel

to draft a telegram for transmission to General Franchet d’Esperey.

144. Commercial Traffic on the Elbe.

It was reported that arrangements had been made to re-open commercial traffic with Czecho-Slovakia by way of the Elbe under proper control.

145. Raw Materials for Poland and Czecho-Slovakia.

A resolution (131) and report (132) from the Raw Materials Section regarding the urgent requirements of raw materials of Poland and Czecho-Slovakia were considered.

The resolution amended as follows was accepted for transmission to the Council of Heads of States:—

“The Raw Materials Section desire to represent the extreme urgency of supplying raw materials to Europe. Without the supply of raw materials there is no hope for the peace of Europe. The Section therefore recommends that the matter should be immediately laid before the Council of the Heads of States with a request that they will give such directions to the Financial Authorities of the Associated Governments as will make possible a solution of this question.”

It was agreed that the resolution should be accompanied by a copy of the report which should be revised as regards financial detail by the Chairman of the Finance Section before despatch.

The American Delegates stated that their Government was not in a position to accept the financial proposals outlined in the report.

146. Coal for Poland and Austro-Hungarian Empire.

With reference to Minute 118 the French Delegates pointed out that in view of the difficulties of the situation in the Balkans it might be necessary for the distribution of coal to be modified from time to time to meet the exigencies of the military or political situation in these districts and enquired what steps could be taken to ensure that this would be possible.

It was agreed that any special circumstances requiring attention and action should be reported to the Director-General of Relief and the Communications Section who would do all in their power to carry into effect any special demands made upon them.

Appendix 119²

[Memorandum From the Director General of Relief (Hoover) Regarding] Food Supplies for Hungary

Assuming that political conditions should improve, it is essential that immediate steps be taken for the provisioning of Hungary. During May, June, and early July, about 120,000 tons of breadstuffs and 20,000 tons of fats and meats will need to be imported into the Hungarian region of the Armistice definition.

These foodstuffs can be secured from two different regions. First, from the Banat; and second, by imports from overseas through the Adriatic.

Our prolonged examinations demonstrate that there is an exportable surplus in the Banat and surrounding countries of approximately 150,000 tons of breadstuffs and 10,000 tons of meats and fats, in excess of any of the interior needs of Greater Serbia. This area of food surplus lies approximately 400 kilos, inland from the Adriatic and directly on the railroad routes from the Adriatic to Hungary, and lies within a range of sixty miles from the Hungarian frontier. This surplus food area is, of course, under the jurisdiction of the Greater Serbian Government, and the surplus mentioned above is in excess of any needs of the greater Serbian Government, except for the populations of Yugo-Slavia lying within a range of something like 100 kilos, from the Adriatic. This area might be called the coastal fringe, and is now being fed from imports from overseas, it having been considered from the beginning more logical to use the Banat surplus to feed the interior, including Hungary, and to use the overseas imports to feed the coastal fringe of Yugo-Slavia and such inland portions as Slavonia and Croatia. I have recently had urgent telegrams from the French military authorities asking that we should despatch foodstuffs from Trieste and Fiume for the cities of Szeged and Arad, which have been recently occupied by the military. We have taken measures to furnish some emergency supplies, but this entails 500 kilometres rail haul, passing directly through the Banat where the warehouses are filled with food.

The Greater Serbian Government seems loath to allow these supplies to be exported. Some fats and meats must necessarily be imported from overseas for Hungary. Both of these contingencies require financial arrangements. I would therefore propose—

(a) That the Financial Section determine the method by which overseas imports into Hungary can be imported.

(b) That the Director-General of Relief be authorised by the Supreme Economic Council to communicate to the Serbian Government the conviction of the Council that the provisioning of Hungary, Austria, and Roumania must be conducted from the surpluses of the Banat and surrounding countries, and that the Serbian Government should co-operate with the Supreme Economic Council and the Director-General organisation to secure the immediate and regular movement of these foodstuffs into Hungary, Austria, and Roumania.

Herbert Hoover

Appendix 120

Draft Telegram From Marshal Foch to M. Erzberger

In answer to your note of the . . . . . . . . . . ., I beg to inform you that the Allied and Associated Governments have made the following alterations to my telegram on the requisitioning of foreign securities on the left bank of the Rhine:—

1. The proceeds realised from the securities will be used in payment of foodstuffs (in which measure and within the limits) fixed by the Brussels Agreement.

2. The proceeds of the requisitioning on the left bank of the Rhine will not be specially used for the revictualling of the local population unless—

(a) The population is revictualled in accordance with the Brussels Agreement.

(b) And that, owing to the organising conditions of this requisition, the population will not be placed under inferior conditions to the rest of Germany.

3. The securities from the left bank of the Rhine will be centralised and kept in local banks to be determined by the German Government in agreement with the Allied Governments; for instance, Cologne and Mayence.

In these circumstances I am giving the necessary instructions for the Decree of the German Government, dated the 26th March, 1919, to be put into force immediately in the different zones of occupation.

Appendix 121

Draft Submitted by M. Seydoux [Regarding] Reinforcement of Blockade on Germany

In case the German Government should refuse to accept the Preliminaries of Peace, the following measures could be immediately taken if the Associated Governments decide to have recourse to means of economic coercion:—

1. Declare the effective and legal blockade of the Baltic Sea, which the Allies have never been able to do during the war.

2. Or if it is not considered desirable for the Associated Powers to declare such a blockade, inform the Northern Neutrals that, in conformity with the order passed in the Council of the 11th March and the Decree of the 13th March, 1915,³ merchandise coming from or sent to Germany will be stopped.

All traffic will thus be stopped between Sweden, Norway, and Germany.

3. Occupy the Kiel Canal and thus close in a large proportion the passage of Danish merchandise.

4. The occupation of the left bank of the Rhine and of bridgeheads would render negligible the traffic which could be established between Dutch Friesia and Germany.

Holland would take the engagement to prevent all constitution of stocks in this province and to forbid re-exportations, under penalty of immediate re-establishment of minimum rations for it.

5. As far as Switzerland is concerned, request the Federal Government to take same dispositions. The quantities of merchandise bought by Switzerland, and superior to its normal consumption, would be put in stock in France and not in Switzerland (as it had been stipulated in the Franco-Swiss Agreement of the 31st December, 1917).

6. Re-establishment of censorship.

7. Re-establishment of Black List and publication of the Inter-Allied Black List for Switzerland.

8. Complete closing of the Bavarian frontier, under the care of the Inter-Allied Committee of Vienna.

9. Invitation to the Allied Governments, Tchecho-Slovakia, &c., to reinforce their prohibitions of trade with regard to Germany.

10. Special measures to insure the supplying of Bohemia through Trieste and the Danube.

11. Immediate occupation of Danzig to insure the supplying of Poland.

April 20, 1919.

Appendix 122

Note by the American Delegates [Regarding] Reinforcement of Blockade on Germany

In the event of Germany refusing to sign the Treaty of Peace, the Allied and Associated Governments may decide to bring about the complete economic isolation of Germany.

The restrictive measures on trade adopted during the war have been only partially successful in shutting off all commerce with Germany.

Of these measures, it is doubtful if some are now legal; others are of doubtful efficiency; and practically all involve innovations in the application of international law that might fail of approval by the Prize Courts. The establishment of a formal blockade of the entire German coast, while feasible from a naval standpoint, would require the absolute prohibition of passage of all private vessels of the Allies and all neutral or enemy vessels through the blockade lines. Otherwise Prize Courts would refuse to sustain the validity of the blockade on the grounds that it was not “effective”.

The doctrine of continuous voyages as applied to blockade by the Allies is not recognized as valid by the United States, which does however recognise its validity as applied to contraband. Therefore we could not approve of a blockade that attempted to stop supplies bound for Denmark with an ultimate destination to Germany. A neutral cannot be blockaded.

By making all supplies for Germany contraband, as was done in the present war, it is lawful to seize anything with an ultimate German destination, whether bound for neutral territory or not. This, however, would not stop neutral ships entering German ports empty, and taking out cargoes of German goods. The black list is the only present remedy for this.

The time seems ripe to apply the principles of the League of Nations, by which the members of the League bind themselves to support each other in financial and economic measures necessary to restrain a recalcitrant nation, and it should be possible to obtain a general agreement among the Allied and Associated Governments, which now agree to the Covenant, to apply its principles at once to bring about the complete economic isolation of Germany.

1. By interdicting all commerce with Germany not approved by the Allied and Associated Governments.

2. By the economic isolation of all States adjoining Germany that refuse to abide by (1).

In this way all forbidden commerce with Germany by sea would be stopped by the Allied and Associated navies, and trade with neutrals could proceed freely, subject to an agreement that nothing should pass in or out of Germany across neutral borders.

The status and machinery of the general system of trade restriction would be practically the same as at the time of the Armistice of the 11th November, 1918, except that prohibition of trade with Germany would be absolute except as in future relieved by the Allied and Associated Powers.

As an alternative to the above plan, should Germany refuse to sign the Treaty and adopt an attitude of passive resistance, the most effective method of utilising economic pressure would be to take military possession of her ports and neutral frontiers, thereby controlling all her external communications.

L. McNamee

Captain, United States Navy

April 21, 1919.

Appendix 123

[Resolution From the British Delegation Regarding the] Rationing of Raw Materials to Germany

Resolution proposed by the British Delegation:—

“That the Raw Materials Section be authorised to empower the Committee on the Supply of Raw Materials and Sale of War Stocks to negotiate and fix rations of raw materials for import into Germany forthwith, subject to such control as may be advised by the Blockade Section.”

May 2, 1919.

Appendix 124

Extracts From Minutes of Finance Section

7. Raw Materials For Germany.—Proposed Telegram to the Germans (Annex).

Mr. Keynes said that all the liquid resources of Germany would be required for the payment of food; under the existing limitations of the Council of Four not even all these liquid resources were included in the available financial sources for payment of Supplies to Germany. The question therefore was whether the Germans should be told what surplus raw materials the Allies could deliver to them, though we knew perfectly well that at a later stage it would be necessary to inform them that they could in fact obtain none of these materials for lack of the means of payment. Such a course of action would naturally tantalise and provoke them, but it might have the advantage of making them face the financial facts and hold their financial resources more readily at the disposal of the Allies than they were doing at present. No doubt the Raw Material Committee, without regard to either of these considerations, wished to send the suggested telegram in order to make some progress towards the disposal of available stocks. But the whole question was really governed by political considerations and must ultimately be determined with a view to them by the Council of Four.

Mr. Davis thought it was a mistake to appear to be thrusting raw materials on the Germans which they had not asked for, and for which they could not make payment. The proposed telegram would tantalise them and would obscure rather than clarify the real difficulties of the financial situation. The obvious German reply would be that they would take the raw materials but required a credit if they were to pay for them.

Captain Jung said it was a matter of general policy, but that in his view this would be a most unfortunate moment to broach the subject with Germany. The inadequacy of financial resources should not be emphasised at a time when far-reaching claims for reparation were being put forward. A safer policy would be for the Allies to hold their hand for the present and to leave it to the Germans to raise the question of raw materials required in Germany.

Colonel Theunis and M. Avenol agreed that the question should be dealt with only at the request of the Germans, and that it would be a mistake to negotiate for the sale of raw materials when it was perfectly well known that there was no available finance.

M. Celier said that even in the case of food supplies the financial principle had been settled before negotiations were begun, and the Germans had been informed at the outset that they must pay in cash. So now it must be determined whether a credit could be provided for raw materials before the Germans were invited to consider supplies, and, if so, whether the Allies were prepared to grant a credit on the security of assets in Germany.

It was agreed—

(1.) That the Finance Section recognise the necessity of Germany’s obtaining raw materials without delay.

(2.) That there is no finance at present available for such supplies.

(3.) That the issue is a political, not a financial, issue and cannot be determined by the Finance Section, since the decision to be taken will react on the peace negotiations in an important way.

Annex

The attached draft telegram has been approved by the Committee on Supply of Raw Materials, subject to the concurrence of the Finance Section.

“Resolved, that subject to the concurrence of the Finance Section, the Committee on Germany should be requested to send a telegram at once to the German authorities to the following effect:—

“With reference to M. Clemenceau’s message to the German Armistice Delegation, communicated by General Nudant, D 160, of the 26th April, information is requested on the following points:—

• “(a) As to the estimated requirements for immediate importation of raw materials during May and June;
• “(b) As to which are the commodities most urgently required for the relief of unemployment.
• “(c) As to the allocation of the quantities required between unoccupied Germany and the occupied territory, not including Alsace-Lorraine.”

Appendix 125

[Resolution From the] Raw Materials Section

The following resolution was passed:—

“The Raw Materials Section approves of the scheme of arrangement pledging German stocks of dyestuffs as security for an advance for supplies of food to Germany, and, subject to financial approval, proposes to put the scheme in operation unless the Supreme Economic Council or the Council of the Heads of Governments sees any objection.”

Appendix 126

Scheme of Arrangement for Pledging German Stocks of Dyestuffs

In order to facilitate the financing of the necessary supplies of food to Germany it is proposed as follows:—

1. Germany will pledge to the Allied Governments all its existing stocks of dyestuffs (less the estimated requirements of their home-dyeing industry for three months taken at the pre-war rate of consumption) as security for an advance in the form of a credit to be employed in paying for the supplies of food furnished by the Allies to Germany.

2. The amount of such credit shall be 90 per cent, of the value of the stock so pledged, such value being ascertained by taking the several dyestuffs at the following prices:—

The price at which each dyestuffs shall be taken shall be either twice the lowest pre-war selling price of such dyestuffs to the United Kingdom or other such Allied market as may be selected for the purpose by the Commission, or the ascertained cost of production of the said dyestuffs, together with 5 per cent, profit, whichever is the higher.

3. Each of the parties shall be at liberty at any time and from time to time to acquire and take for its own use free from any pledge any portion of the stock then remaining pledged, subject to the following conditions:—

(a) Neither party shall be entitled so to acquire in any one month dyestuffs of a total value greater than one-fourth of the amount of the original advance.

(b) If any demand by either of the parties to acquire such dyestuffs shall include more than one-half of the stock of any particular dyestuff then remaining pledged, the other party shall have the option within one week to take up to one-half the stock of such dyestuffs in priority to the first-mentioned demand.

(c) The price to be paid for the dyestuffs so taken shall be the value of the same at the price at which they have been valued for the purpose of the advance. If such dyestuffs be acquired by the German Government they shall be paid for in cash before delivery and such cash shall be applied in repayment of the said advance. If they be acquired by the Allied Governments the acquisition shall operate as a satisfaction pro tanto of the advance.

4. All questions arising under this arrangement, whether as to price or as to the proper custody or protection of the stock pledged, shall be decided by the Inter-Allied Commission, and all expenses thereof in the administration of this arrangement shall be a first charge on the monies realised by the sale of the dyestuffs above-mentioned.

5. Should the amount of the advance not have been repaid before the expiry of six months from the date of the making of this arrangement the German Government shall pay in cash the balance of the advance and receive back any stock remaining in pledge.

April 30, 1919.

Appendix 127

[Resolution From the British Delegates Regarding the] Prohibition and Pre-emption Lists

Resolution proposed by the British Delegation:—

“That the German Government should be informed that the Allied and Associated Governments do not desire to exercise their right of pre-emption under the terms of the telegram of the 24th March, except in the case of dyestuffs and coal, and that therefore all other commodities except war material, gold, silver, and securities, may be exported freely.”

May 2, 1919.

Appendix 128

[Resolutions From the Finance Section Regarding the] Removal of Restrictions on Trade With Germany

(Extract from the minutes of the tenth meeting of the Finance Section)

9. Relaxation of Financial Restrictions.

In connection with the proposals recently considered by the Supreme Economic Council with regard to the immediate relaxation of the blockade,

It was agreed that the Finance Section make the following recommendations to the Council:—

(1.) That the financial Black List be suspended (if this has not been done already) and an announcement be made that neutrals are entirely free to extend credits of any kind to Germany or its nationals.

(2.) That German-owned cash, balances and bills already in neutral countries are freely available in payment for imports.

(3.) That the proceeds of exports from Germany be freely available in payment for all kinds of permitted imports.

(4.) That the Finance Section shall have discretion to grant licences for the export of gold and securities from Germany in payment for imports on application from the German authorities.

(5.) That the above be communicated to the Financial Commission at Villette and to the Committee of Neutral Financiers, and their suggestions be invited as to what further relaxations are desired by them.

Appendix 129

Control of High-Powered Wireless Stations in Germany

(Extract from the minutes of the Blockade Section)

The British Delegation submitted to the Council copies of telegrams (Annex 5 of the Agenda), from which it appeared that it was impossible under the terms of the Armistice for the Associated Governments to control the high-powered wireless stations in Germany. The Council noted said telegrams and referred the same to the Supreme Economic Council for its information.

[Annex No. 5]

Pursuant to Minute 92 of the fourteenth meeting of the Superior Blockade Council, and Minute 79 of the meeting of the Supreme Economic Council, held on the 9th April, the following telegram was sent to the Armistice Commission at Spa on the 11th April:—

“S. 204. Please communicate to the Germans following rules under which commercial communications on the subject of trade of the character authorised by the Associated Governments will now be permitted until further notice with all firms in neutral countries:—

“1. All available routes may be employed. 2. Communications regarding German imports must for the present refer only to foodstuffs. 3. Communications regarding German exports must refer only to commodities other than gold, silver, securities or other negotiable instruments and material of war. 4. Speculative transactions will not be permitted. 5. Telegrams must be en clair, and must be readily intelligible and contain no hidden meaning. They must be in French or in English, or in Italian in the case of messages exchanged via Italy or Italian colonies. Telegrams must refer solely to commercial matters. They must be signed with the name of the sender and addressed in full. In the case of telegrams sent via Italy or Italian colonies, Christian names must also be given. Registered addresses either in signature or address will not be permitted. The word ‘telegram’ is understood to include wireless messages. 6. Postal correspondence will likewise be permitted with regard to transactions of the character approved by the Associated Governments. It must be expressed in clear and unequivocal terms with the name and address of the writer shown clearly on the envelope. 7. Parcel post will not be permitted in either direction, but samples of the permitted commodities may be sent in postal packets. 8. The Associated Governments reserve power to detain any communication whatever without reason being given. No claim with regard to such detained correspondenece will be considered. 9. The German high-powered stations at Nauen, Hanover, and Berlin may be utilised for transmitting commercial telegrams under the conditions above laid down for communications by cable, but only under the control of Allied Commissions which will examine all messages to be transmitted through these stations, and will have power to stop them and to control the operating of the station. These stations can only be used for commercial service. 10. Censorships of Associated Powers are being informed accordingly.

The following telegram has now been received in reply:—

“Representative German Government to President British Armistice Commission

“Subject:—Extension of postal and telegraphic traffic between Germany and neutral countries.

“Spa, April 25, 1919.

“In note A.C. 1629 of the 12th April, 1919, the President of the British Mission announced the conditions under which an extension of postal and telegraphic communication between Germany and neutral countries would be permitted.

“The German Government agrees to the conditions laid down in paragraphs 1–8 of the note. With regard to paragraph 9, however, the German Government cannot accept the Allied control over high-powered wireless stations as required in that paragraph. Consequently, the German high-powered wireless stations will for the time being only be used for commercial communications to the same extent as-they have been used during the war and during the Armistice.”

Appendix 130

Resolution From the American Delegates Regarding the Control and Expedition of Commercial and Relief Traffic on the Danube

It is essential that the navigation of the Danube be placed entirely under one authority. It is recommended that this authority should be a commission, comprising representatives of the four Associated Powers under an Executive President, reporting to the High Command. The Supreme Economic Council considers that, on account of his wide experience on the Danube, Admiral Troubridge, R. N., should be the President of this Commission. The American representative will be appointed by the Director-General of Relief.

In addition to its military functions this authority should be charged especially to organise to the utmost possible extent the reopening of normal commercial traffic conditions on the Danube, and in this respect report direct to the Communications Section of the Supreme Economic Council.

In order to save time the Communications Section should communicate directly with this authority on economic subjects respecting the Danube, provided that copies of such communications are at the same time sent to the High Command.

In order to expedite commercial and relief traffic, the Relief Administration in Roumania, Serbia and the former Austro-Hungarian Empire should be authorised to issue permits for the unimpeded movement of vessels, these permits being recognised by the Danube Commission mentioned above, subject only to military exigencies.

Appendix 131

Report by the Committee of the Ram Materials Section on War Stocks

The Raw Material Section, in submitting the annexed report^* to the Supreme Economic Council, desire to represent the extreme urgency of supplying raw materials to the countries named therein. Without the supply of raw materials there is no hope for the peace of Europe. The Section therefore recommends that the matter should be immediately laid before the Council of the Heads of Governments with a request that they will give such directions to the Financial Authorities of the Associated Governments as will make possible a solution of this question.

Appendix 132

Report to the Raw Materials Section Regarding the Requirements of Raw Materials to Poland and Tchecho-Slovakia

The Committee on Supply of Raw Materials and Sales of War Stocks has been examining the requirements of the European countries in special need of relief, and now finds itself in a position to make the following recommendations:—

1. It is neither possible nor desirable on the information at present available to make complete and final allocations of each article, but the Committee hope to be able shortly to present a comprehensive memorandum setting out the most urgent requirements of Poland, Tchecho-Slovakia, Roumania, Serbia, &c. In the meantime, having hitherto given special attention to the cases of Poland, Tchecho-Slovakia, the Committee submit the following specific recommendations as being of extreme urgency. They are satisfied that the prompt supply of the commodities specified within the limits indicated is of very great importance; in the case of the Polish textile industry in particular, the advantages of providing employment can hardly be overestimated.

2. If action is postponed, and if it is necessary to wait until some comprehensive scheme can come into operation, it will be impossible to begin transport until after midsummer and the importations will not begin to react upon trade until the autumn. For a few months, at all events, it is useless to expect private credits to be forthcoming to a sufficient extent to meet the requirements of these countries. The Committee therefore urge most strongly that their respective Governments should now assign a fund which the Committee (which was intended by the Raw Materials Section to be an executive body) may allocate at their discretion for the most urgent needs. The financial machinery for such a credit is, of course, a matter for the Finance Section to determine; but the Committee suggest for consideration that the nitrates to be furnished should be paid for from the proceeds of the coming sugar crop, whilst the proceeds resulting from the manufacture and sale of other supplies, such as textile raw materials, should be segregated to an extent sufficient for the purchase of further stocks of raw material and for no other purpose during the term of credit. If the condition of the exchange renders it impossible to use the actual funds for the purchase of further supplies, the funds should be segregated by the banks which are operating the scheme, and should be held subject to the disposition of the authorised representatives of the Associated Governments.

Poland

(a) Nitrate of Soda.

This is the most urgent case. The nitrate can be employed during June as a top dressing for sugar beet if delivered at the end of May; it will largely increase the sugar content of the beet and will thus enable Poland to increase her exports and recover financial stability. The Syndicate of Polish Agriculturists can arrange the distribution by existing machinery. It is proposed that the nitrate should be supplied by the Nitrate Executive for joint account of the Governments interested in the Nitrate pool. The supply of 10,000 tons to Poland at once is recommended; cost about 250,000l. f. o. b. United Kingdom.

(b) Textile Raw Materials. Cotton, Wool, Jute, and Accessories.

The total amount of the credits required for the cotton, wool, and accessories, is estimated (on the basis of the detailed figures supplied by the British Economic Commission) at 5,000,000l. The quantity of cotton required has been calculated on the number of spindles capable of being put into operation without delay, on the assumption that for the present a single shift will be worked. As regards jute and jute sacks, an unlimited quantity of sandbags can be provided if required, and the low monthly ration of 700 tons per month for war jute is suggested.

(c) Agricultural Implements.

To be specified.

Conclusion.

The Committee recommend that a credit of 6½ million pounds should be provided in some way, if possible, to cover for a period of three months these most pressing needs, after which further credits will probably become necessary.

Tchecho-Slovakia

Exports.—The Committee understand that Tchecho-Slovakia is, or will shortly be, in a position to export a large amount of sugar; also machinery, timber, glass, hops, and kaolin.

(a) Requirements of the Metallurgical and Metal-working Industry.

Copper—Copper is urgently needed for various purposes, e. g., replacement of machinery parts which have been removed. The telephone service is stated to be suspended. Copper is also much wanted for electrical machinery. An import of 7,500 tons for three months is recommended, cost 600,000l., at 80l. per ton.

Anti-friction metal is specially required for the completion of locomotives. A detailed report on this subject, and on requirements of tin, will be furnished.

Ferro-manganese is much needed for improving the quality of the products of the extensive iron industry (30,000 workers); but it is understood that negotiations with Sweden for the supply of this commodity are now in progress.

(b) Cotton.

The mills are stated to be in good order, and the operatives have not been dismissed. On the basis of the number of spindles a monthly ration of 20,000 bales is recommended. Cost for three months, 1,500,000l.

(c) Wool.

On present information a credit of 1,500,000l. is recommended.

Conclusion.

Taking into account the requirements for accessories (e. g., belting) the preliminary total figure of 3,500,000l.

It is recommended that a credit should be provided, if possible, to cover these requirements.

1. See appendix 37, p. 89.
2. Appendixes 119 to 132 are filed separately under Paris Peace Conf. 180.0501/34.
3. Foreign Relations, 1915, supp., pp. 144 and 150.
4. See Appendix 132. [Footnote in the original.]