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

Paris Peace Conf. 180.0501/32

[Supreme Economic Council: Thirty-second Meeting Held at Paris on 6th February, 1920, at 3:30 p.m., and 7th February at 10 a.m. and 3 p.m.]

Paris, February 6, 1920, 3:30 p.m.; February 7, 1920, 10 a.m. and 3 p.m.

The Supreme Economic Council held its 32nd meeting on the 6th February at 3.30 p.m. and the 7th February at 10 a.m. and 3 p.m. at the Palais de la Legion d’Honneur, in Paris, under the Chairmanship of M. Isaac.

The Associated Governments were represented as follows:—

British Empire	The Earl of Crawford & Balcarres.
	Sir Hamar Greenwood.
France	M. François Marsal.
	M. Thoumyre.
	M. Paul Bignon (part time).
Italy	Sig. Maggiorino Ferraris.
	Comte de San Martino.
	Comm. Volpi.
	Comm. Salvatore Orlando.
	Comm. Nogara.
Belgium	M. Jaspar.
	M. Wauters.
	M. Theunis.
U. S. A. were not represented.

344.

Sig. Maggiorino Ferraris opened the session and proposed that M. Isaac should take the Chair. This was unanimously agreed.

The minutes of the 31st. meeting were approved subject to a modification proposed by the Belgian Delegation in Minute 328, which was altered to read as follows:—

“The Council approved part I of the above-mentioned report. The Belgian delegates considered that to the Reparation Commission alone fell the task of studying all questions relative to the supply of food to Germany. It might, however, happen that the Reparation Commission would judge it expedient to request the advice of the Consultative Food Committee on all technical questions arising out of ex-enemy food programmes.”

345. Coal for Italy.

With reference to Minute 339, the Italian Delegation stated that the relatively favourable situation alluded to by them in November 1919 had not been maintained. They intimated again that a quantity of 500,000 tons per month was absolutely necessary for Italy. This statement was noted by the British Delegation.

346. Delivery to the Allies of German Tank Steamers.

With reference to Minute 325, it was agreed on the proposal of the Italian Delegation to draw the attention of the Reparation Commission to the danger, in view of the general shortage of such boats, of allowing these tank steamers to lie idle while their ultimate allocation was under discussion.

347. Report of the Raw Materials Committee.

With reference to minute 342, the French Delegation presented on behalf of the Raw Materials Committee a statement (Doc. 313) explaining that the Committee was not yet prepared to submit the report requested by the Permanent Committee on the subject of stocks, prices and measures of control in respect of coal, wool, cotton, flax and phosphates. The British and Italian Delegations undertook to supply the Raw Materials Committee with the data necessary for completing the report.

On the motion of the Belgian Delegation, it was agreed that, in view of the urgency of the matter, the Raw Materials Committee should report at the earliest possible date to the Permanent Committee.

348. Exchange situation in Europe.

The Council took note of—

(a) a note by the Permanent Committee enclosing a copy of the “Bankers’ Memorial” (Doc. 314);

(b) a memorandum submitted by the British Delegation (Doc. 315).

In respect of Doc. 314, the Italian Delegation proposed that a Conference of Financial representatives of the various European countries on the lines of the conference proposed in the document, should be summoned as soon as possible to discuss the exchange situation. They proposed that the various countries should be represented by not more than four delegates, of whom one should be a Treasury official.

The British Delegation said that they were not yet in a position to announce the policy of their Government. The British Government had received the memorial now before the Council and was fully alive to its importance, signed as it was by eminent representatives of all shades of political opinion. The memorial, which raised questions of the utmost moment which could not be settled without close investigation, was at present under careful examination by the British Treasury in consultation with the signatories of the memorial.

Pending the result of these conferences, they were not in a position to make a definite statement.

The French Delegation expressed gratification at learning that the British Government took the same serious view of the importance of this memorial as that taken by their Government. They concurred in the view of the British Delegation that close preliminary investigation was necessary. A memorandum of this nature, with such signatories, raising such complicated questions of international relations and internal policy, should at the outset be studied by each Government separately, after which an exchange of views might take place prior to the summoning of an international conference.

The Belgian Delegation would not oppose the views of the British and French Delegation[s]. They felt bound, however, to point out that the course proposed by their colleagues would seem to be not altogether adapted to the very pressing gravity of the situation, which called, above all things, for rapid action. They well understood the very natural anxiety of the various Governments to examine such a question separately, in view especially of the fact that questions of internal policy were closely concerned. They would, however, press upon their colleagues the view that a question of such wide international import should at the earliest stage be dealt with on an international basis.

The Italian Delegation pointed out the extreme urgency of a speedy solution of the exchange problem. They felt certain that the sorely tried people of Italy would not be able to bear another disappointment in this matter, which clearly was one of national existence and international solidarity.

After discussion on the motion of the Belgian Delegation the following resolution was agreed:—

“The Supreme Economic Council expresses the wish that the appropriate Ministers of the countries represented upon the Council should meet at the earliest convenient time to examine the measures to be taken to remedy the present exchange crisis.”

349. Report of the Finance Committee.

The Council took note of a memorandum from the Finance Committee of the Allied and Associated Governments (Doc. 316) relative to its activities since July 1919.

The French Delegation having emphasised the desirability of an early settlement of relief accounts with special reference to the outstanding accounts in respect of shipments via Trieste, the following resolution was agreed:—

“The Supreme Economic Council, having considered the report of the Finance Committee, requests it to expedite the liquidation of relief accounts, especially as concerns Germany and Trieste, in accordance with the arrangements made between the Allied and Associated Governments.

The Council takes note of the following paragraph in the report:—

‘The Committee has decided, subject to the approval of the Government of the United States …¹ that all definite contracts made with the German Government before this date should be carried out and accounted for to the exclusion of later contracts.’

and approves the decision thus taken.”

350. Questions of Relief.

The Council considered:—

(a) reports from the British Railway Mission in Vienna relative to the economic situation in Vienna (Doc. 317).

(b) a note by the British Delegation on relief measures for Christians in Turkey (Doc. 318).

As regards Doc. 317, the French Delegation referred to the recent visit to Paris of the Food and Finance Ministers of the Austrian Government, and pointed out that according to the statement made by these Ministers, Vienna would be totally without food after the 1st March, 1920. It was, therefore, vitally necessary that by some means or other a March/September food programme for Vienna should be established and fulfilled. This programme was under consideration by the Reparation Commission. The French Delegation mentioned that they had informed the Austrian ministers that it would be impracticable to supply Vienna unless local sources of supply were fully drawn upon.

As regards Doc. 318, the Italian Delegation mentioned that in their opinion this was not a question of importing breadstuffs from overseas. The Dette Ottomane held considerable stores of wheat in Asia Minor which could be rendered available, providing transport could be arranged and satisfactory financial arrangements arrived at with the Dette Ottomane.

351. Report of the Allied Maritime Transport Executive.

The Council noted and adopted a report (Doc. 319) from the Allied Maritime Transport Executive on the subject of its activities under the Supreme Economic Council.

352. Employment of Enemy Tonnage in Connection With the Reconstruction Requirements of Devastated Regions.

The Council considered a note (Doc. 320) submitted by the French Delegation on the subject of the assignment of enemy and ex-enemy tonnage, with special reference to the reconstruction requirements of the regions devastated by the war.

The French Delegation pointed out the difference which should exist in their opinion between benevolent relief and reconstruction of regions devastated by the war. The principle of priority accorded to this reconstruction had been too often repeated to be in any doubt, but the French Government, in the face of repeated demands, notably to the Reparation Commission, considered it useful to refer to it again.

The British Delegation, while expressing their sympathy with this point of view, were of the opinion that the question was one which should be dealt with by the Reparation Commission.

After detailed discussion, it was decided, on the motion of the Belgian and French Delegations, to communicate the French Delegation’s note to the Reparation Commission in the following terms:—

“The Supreme Economic Council communicates to the Reparation Commission the attached memorandum by the French Delegation, and draws the attention of the Commission to the priority which the Treaty recognises, both in general principle and in numerous specific clauses, for the needs of the devastated regions.”

353. Dissolution of the A. M. T. E.

The Council considered a note (Doc. 321) from the A. M. T. E. proposing that, in view of the fact that its functions had now been taken over by the Shipping Section of the Reparation Commission, the Executive should be forthwith wound up.

The French Delegation pointed out that the proposals before the Council did not cover Austro-Hungarian ships and that some provision should be made for dealing with them.

The following resolution was agreed:—

“The Supreme Economic Council approves the proposals of the Allied Maritime Transport Executive with reference to its dissolution, on condition:—

(1) that the Reparation Commission is in agreement on general lines;

(2) that that body, functioning as the Committee on Organisation of the Reparation Commission, accepts the temporary charge of the Austrian ships.”

The Chairman, on behalf of the Council, tendered to Mr. Kemball-Cook, Chairman of the A. M. T. E., the thanks of the various delegations for his invaluable services in that capacity.

It was also mentioned that the future of the Allied Maritime Finance Committee should be taken into consideration by the Permanent Committee.

The French Delegation suggested that the Committee should be made responsible to the Finance Committee of the Allied and Associated Governments.

354. Report of the Communications Section.

The Council considered and adopted a report (Doc. 322) from the Communications Section on the subject of its activities since the date of its inception.

The Chairman of the Communications Section pointed out that since the report had been submitted, the French Government had arranged with the Czecho-Slovakian Government for a supply of wagons for Czecho-Slovakia to ease the coal situation in the countries of Central Europe. He stated further that 1500 British Army wagons in France had been placed by the British Government at the temporary disposal of the Wagon Exchange Committee in Vienna.

The French Delegation announced the retirement of General Gassouin from the position of French representative of the Communications Section, and intimated that General Gassouin would be succeeded by M. Chargueraud.

On the motion of the British Delegation, the Council adopted a resolution expressing its hearty thanks to General Gassouin for the very distinguished services rendered by him to the Allied Governments and to Europe in general through his work on the Communications Section.

355. Food Supplies and European Requirements.

The Council considered and adopted a memorandum (Doc. 323) by the Consultative Food Committee dealing with the subject of European food supplies in relation to probable European requirements in the near future.

With reference to this report, the Italian Delegation proposed that the Wheat and Flour Sub-Committee of the Consultative Food Committee should be continued in operation to the end of the present cereal year.

After discussion on the methods of purchase it was decided to take no definitive action on the question and the following resolution was agreed:—

“The Supreme Economic Council decides to prolong up to the end of the present cereal year the Wheat and Flour Sub-Committee, and recommends the Consultative Food Committee to make as soon as possible any suggestions about the future situation, and meanwhile suggests with all urgency any possible action with the object of securing surplus stocks from Russia as soon as available.”

356. Troops and Prisoners of War in Siberia.

The Council considered—

(a) a note by the British Delegation (Doc. 324);

(b) a letter from the British Foreign Office (Doc. 325).

The British Delegation stated that two questions arose:—

(1) the question of friendly troops and of a comparatively small number of prisoners of war at present under allied control;

(2) the question of prisoners of war of various nationalities at present under Bolshevik control.

As regards (1), arrangements for maintenance and repatriation were already being completed by the Allied Governments, but the appropriations effected would probably be insufficient and some further action should be taken in the matter if considerable mortality and suffering was to be avoided.

With regard to (2), it was understood that the League of Red Cross Societies was prepared, if the Council of the League so desired, to devise means for the repatriation of these prisoners. Negotiations had been entered into between the International Red Cross on the one hand and the German and Austrian Governments on the other, in the course of which the latter Governments had shown their readiness to bear the greater part of the cost of repatriation.

It was agreed:—

(1) to refer the question of troops and prisoners of war in Siberia under Allied control to the Finance Committee of the Allied and Associated Governments;

(2) to refer to the Council of the League of Nations for consideration the question of the prisoners of war in Siberia under the control of the Bolshevists.

It was understood that any issues of a political nature arising in the discussion of these questions would eventually be referred by the delegates to the appropriate Department of their respective Governments.

357. Resumption of Trade Relations With the Russian People.

The Council considered:—

(a) a note by the Permanent Committee (Doc. 326) summarising the progress of the negotiations entered into under the supervision of the Permanent Committee between the All-Russian Co-operative Organisations outside Russia and the Central Union of Co-operative Societies in Moscow;

(b) a draft of a telegram submitted by the All-Russian Co-operative Societies outside Russia (Doc. 328) replying to a wireless communication (Doc. 327) of the 4th. February from the Central Union of Co-operative Societies in Moscow.

The Belgian Delegation stated that they found some difficulty in understanding the proposals made in Doc. 327. Apparently the Co-operative Societies in Russia proposed to send their own delegates out of Russia to confer with their colleagues in Western Europe. Apart from the question whether such a proposal did not go beyond the scope of the Supreme Council’s decision of the 17th. [16th] January,² was it not a difficult proposal to understand, inasmuch as a delegation from the Russian Co-operative Societies outside Russia was already on its way to Moscow for the purpose of a joint consultation? There was considerable doubt to what extent the Co-operative Societies in their present state were independent of the Soviet Government. What was the object of delegations with wide discretionary powers being sent from both sides at the same time? They feared that some political aim might lie behind this apparently pointless proposal. Against such political aims it was a considered agreement of the Allied Governments, as embodied in the Supreme Council’s decision of the 17th. [16th] January, to take special precautions. They proposed, therefore, that the phrases in the draft reply which appeared to welcome the sending of such a delegation should be deleted.

The British Delegation explained that the phrases referred to by the Belgian Delegation welcoming the sending of a delegation from Russia must be understood as referring only to the readiness of the Russian Co-operative Societies outside Russia to confer as much as possible with their Russian colleagues. Whether the Allied Governments would permit such conferences it was for the Allied Governments to determine.

They then proceeded to remind the Council that the policy now before it had been imposed on it by the Supreme Council. The Supreme Council had made the Supreme Economic Council the instrument for carrying out this policy. It was not, therefore, for the Supreme Economic Council to criticise the policy as a policy. They added that they intended to carry out the policy to the best of their ability in spite of the many difficulties in the way of its achievement, some of which had been already stated.

They were well aware that one of the chief difficulties was caused by the general feeling that somehow or other the resumption of relations implied in this policy might lead to the egress from Russia of bolshevist agents instructed to stir up sedition in the countries of Western Europe. In this connection they would remind the Council that in the draft telegram under consideration arrangements were suggested where the names of representatives of the Russian Cooperative Societies should be handed to the Allied Governments, and personal permits given. The number, therefore, of such representatives was obviously restricted to those acceptable to the Allied Governments.

As contrasted with the difficulties of the policy, they wanted to say a word or two about its necessity. The democracies of the West were becoming increasingly restive under the continual augmentation of prices and the shortage of foodstuffs and raw materials for industries. The danger incurred by failure to take all possible steps to ameliorate this situation was far greater than that incurred by allowing the possibility of one or two bolshevist agents leaving Russia. The proposals at present before the Council were an attempt to improve conditions of life in Western Europe by re-opening Russia as a producing country and they thought the Council would do well to weigh very carefully any difficulty in carrying them out before it admitted any such difficulty to be insuperable.

The Italian Delegation declared that the Allied Governments were unanimously favourable in principle to the resumption of trade relations with the Russian people. Further, the Italian Parliament had pronounced itself in favour of such a policy. The Italian Delegation were in substantial agreement in this matter with the views expressed by their British colleagues, but undoubtedly difficulty arose from the fact that the information at the disposal of the Allied Governments with respect to the exact position occupied in Russia at the moment by the Co-operative Societies was exceedingly vague. It had been stated on good authority that the Soviet Government had obtained complete control of the Co-operative Societies in Russia, except of the Railwaymen’s Co-operative Organisations. Care must be taken to distinguish the practical side of these negotiations from political implications. If, side by side with the produce of Russia, the Allied Governments must import the doctrines of Bolshevism, it might well be said that the imports were paid for at too high a price. The Italian Delegation would, therefore support any proposal tending to carry out the decision of the Supreme Council, while at the same time avoiding the political dangers pointed out by the Belgian Delegation.

The Chairman begged leave to speak on behalf of the French Delegation. He pointed out that a very clear distinction should be made between the various phrases used in the course of the current discussion, and, in particular, between the three phrases—the Russian Government, the Russian nation and the Russian Co-operative Societies. With the Russian Government there could be no question of relations so far as the French Government was concerned. Towards the Russian nation, so long their loyal allies, the French Government felt no hostility, but, on the contrary, the deepest sympathy for them in their present troubles. As regards the Russian Co-operatives, the question might well be asked, what were they at the present moment? Were they free from the political tendencies which had dominated their country for so long? This question was not yet decided. In view of this uncertainty, it behoved the Council to exercise the greatest care in discharging the very difficult functions which had been entrusted to it. He reminded the Council that the Supreme Council had decided that the negotiations arising out of its decision of the 17th. [16th] January should take place in Russia. In case, therefore, the proposal of the Moscow Co-operative Societies to send a delegation into Western Europe were to be considered, the proper authority was the Supreme Council of the Allied Governments.

The French Delegation would agree to any modification of Doc. 328 which would acknowledge this principle.

It was finally agreed that the representatives of the Co-operative Societies outside Russia should be informed that their telegram could only be forwarded in the altered form recorded as Doc. 329.

358. Relations With the League of Nations.

The Italian Delegation, referring to the decision taken at Rome (minute 337), proposed the adoption of a note by the Permanent Committee (Doc. 330).

The following text proposed by the French Delegation was adopted:—

1. It is agreed to notify officially to the Council of the League of Nations:—

(a) the decision of the Council of Heads of States of the 28th. June, 1919;

(b) the subsequent decisions of the Supreme Economic Council and of the Sub-Committee on Organisation;

and to enquire when and in what manner the League of Nations proposes to undertake the study of economic questions.

2. It is agreed that in case of necessity the Permanent Committee shall co-operate with the Council of the League of Nations if invited by the League and within the limits imposed by the League.

At the request of the Belgian Delegation it was stated that decision No. 2 above, was intended for the private guidance of the Permanent Committee and would not be communicated to the League of Nations.

359. Time and Place of Next Meeting.

The Italian Delegation suggested that it should be left to the discretion of the Permanent Committee to call the next meeting of the Council.

The British Delegation suggested:—

(1) that no meeting of the Council should be held before discussion by the Council of the League of the points raised in Minute 358;

(2) that, pending conversations between the Permanent Committee and the League of Nations, the work of the various branches of the Supreme Economic Council should continue, including for the time being the Finance Committee, the future of which was, however, under consideration by the British Government.

It was agreed that the Permanent Committee should call a meeting of the Council to report to it on the result of its conversations with the Council of the League of Nations.

Appendix 313³

Report of the Committee on Raw Materials and Statistical Information

The Permanent Committee decided on the 19th December, 1919, to request the Raw Materials Committee to prepare a report containing, in respect of coal, wool, [cotton,] flax and phosphates:—

(a) A table of the monthly resources at the command of each of the States represented on the Council, account being taken of its production and imports from all sources.

(b) A table showing the movement of prices in producing countries and in foreign markets which have been able, in virtue of a certain measure of monopoly and reservation, to be substituted for markets in the country of origin.

(c) Notes and references giving exactly the date of the establishment or the raising of the measures defined above.

In conformity with these instructions lists and tables have been prepared by each of the members of the Raw Materials Committee. The Committee has now proceeded to the systemisation of these labours in a series of general reports relative to the various products under consideration, which report, it is hoped, may be presented to the Permanent Committee at an early date.

The Raw Materials Committee desires to point out, however, at the present moment, that if certain facts detach themselves clearly, such as the results either of the requisition by certain countries of their produce, or of the application by these countries of differential export prices, the number of variable factors involved in the problem does not allow of the exact determination of the effect either of the controls exercised by the various countries over imported goods, or of the different state of the exchange, or of means of payment in each country, or of the resources and methods of each country in respect of the means of transport.

The Raw Materials Committee proposes that, even if the importance of these various factors cannot be determined with precision, nevertheless exchange of information on these questions should be actively maintained.

February 5, 1920.

Appendix 314

Note by the Permanent Committee [Regarding] Exchange Situation in Europe

The following memorandum to various European Governments on the financial situation of Europe is submitted by the Permanent Committee to the Council for such action as the Council may think desirable.

2/2/20.

[Enclosure]

Memorial to Various European Governments on the Financial Situation of Europe⁴

The undersigned individuals beg leave to lay before their Government a proposal that the Governments of the countries chiefly concerned, which should include the United States, the United Kingdom and the British Dominions, France, Belgium, Italy, Japan, Germany, Austria, the Neutral countries of Europe and the chief exporting countries of South America, should be invited forthwith (the matter being of the greatest urgency) to convene a meeting of Financial representatives, for the purpose of examining the situation, briefly set forth below, and to recommend, in the event of their deciding that co-operative assistance is necessary and advisable, to whom and by whom assistance should be given and on what general conditions.

They venture to add to the above recommendation the following observations:—

The war has left to conqueror and conquered alike the problem of finding means effectively to arrest and counteract the continuous growth in the volume of outstanding money and of Government obligations, and, its concomitant, the constant increase of prices. A decrease of excessive consumption and an increase of production and taxation are recognised as the most hopeful—if not the only—remedies. Unless they are promptly applied, the depreciation of money, it is to be feared, will continue, wiping out the savings of the past and leading to a gradual but persistent spreading of bankruptcy and anarchy in Europe.

There can be no social or economic future for any country which adopts a permanent policy of meeting its current expenditure by a continuous inflation of its circulation and by increasing its interest-bearing debts without a corresponding increase of its tangible assets. In practice every country will have to be treated after careful study and with due regard to its individual conditions and requirements. No country, however, is deserving of credit, nor can it be considered a solvent debtor, whose obligations we may treat as items of actual value in formulating our plans for the future, that will not or cannot bring its current expenditure within the compass of its receipts from taxation and other regular income. This principle must be clearly brought home to the peoples of all countries, for it will be impossible otherwise to arouse them from a dream of false hopes and illusions to the recognition of hard facts.

It is evident that Germany and Austria will have to bear a heavier load than their conquerors, and that, in conformity with the Treaty of Peace, they must bear the largest possible burden they may safely assume. But care will have to be taken that this burden does not exceed the measure of the highest practicable taxation and that it does not destroy the power of production, which forms the very source of effective taxation. For the sake of their creditors and for the sake of the world, whose future social and economic development is involved, Germany and Austria must not be rendered bankrupt. If, for instance, upon close examination, the Commission des Réparations finds that, even with the most drastic plan of taxation of property, income, trade and consumption, the sums that these countries will be able to contribute immediately towards the current expenses of their creditors will not reach the obligations now stipulated, then the Commission might be expected to take the view that the scope of the annual contribution must be brought within the limits within which solvency can be preserved, even though it might be necessary for that purpose to extend the period of instalments. The load of the burden and the period during which it is to be borne must not, however, exceed certain bounds; it must not bring about so drastic a lowering of the standard of living that a willingness to pay a just debt is converted into a spirit of despair and revolt.

It is also true that amongst the victorious countries there are some whose economic condition is exceedingly grave, and who will have to reach the limits of their taxing powers. It appears, therefore, to the undersigned, that the position of these countries, too, should be examined from the same point of view of keeping taxation within the power of endurance, and within a scope that will not be conducive to financial chaos and social unrest.

The world’s balance of indebtedness has been upset, and has become top-heavy and one-sided. Is it not necessary to free the world’s balance-sheet from some of the fictitious items which now inflate it and lead to fear or despair on the part of some, and to recklessness on the part of others? Would not a deflation of the world’s balance-sheet be the first step towards a cure?

When once the expenditure of the various European countries has been brought within their taxable capacity (which should be a first condition of granting them further assistance), and when the burdens of indebtedness, as between the different nations, have been brought within the limits of endurance, the problem arises as to how these countries are to be furnished with the working capital necessary for them to purchase the imports required for re-starting the circle of exchange, to restore their productivity and to reorganise their currencies.

The signatories submit that, while much can be done through normal banking channels, the working capital needed is too large in amount and is required too quickly for such channels to be adequate. They are of opinion, therefore, that a more comprehensive scheme is necessary. It is not a question of affording aid only to a single country, or even a single group of countries which were allied in the war. The interests of the whole of Europe, and indeed of the whole world, are at stake.

It is not our intention to suggest in detail the method by which such international co-operation in the grant of credit may be secured. But we allow ourselves the following observations:—

1. The greater part of the funds must necessarily be supplied by those countries where the trade balance and the exchanges are favourable.

2. Long term foreign credit, such as is here contemplated, is only desirable in so far as it is absolutely necessary to restore productive processes. It is not a substitute for those efforts and sacrifices on the part of each country, by which alone they can solve their internal problem. It is only by the real economic conditions pressing severely, as they must, on the individual that equilibrium can be restored.

3. For this reason, and also because of the great demands on capital for their own internal purposes in the lending countries themselves, the credit supplied should be reduced to the minimum absolutely necessary.

4. Assistance should, as far as possible, be given in a form which leaves national and international trade free from the restrictive control of Governments.

5. Any scheme should encourage, to the greatest extent possible, the supply of credit and the development of trade through normal channels.

6. In so far as it proves possible to issue loans to the public in the lending countries, these loans must be on such terms as will attract the real savings of the individual, otherwise inflation would be increased.

7. The borrowing countries would have to provide the best obtainable security. For this purpose it should be agreed that—

(a) Such loans should rank in front of all other indebtedness whatsoever, whether internal debt, reparation payments or inter-allied governmental debt.

(b) Special security should be set aside by the borrowing countries as a guarantee for the payment of interest and amortisation, the character of such security varying perhaps from country to country, but including in the case of Germany and the new States the assignment of import and export duties payable on a gold basis, and in the case of States entitled to receipts from Germany, a first charge on such receipts.

The outlook at present is dark. No greater task is before us now than to devise means by which some measure of hopefulness will re-enter the minds of the masses. The re-establishment of a willingness to work and to save, of incentives to the highest individual effort and of opportunities for every one to enjoy a reasonable share of the fruit of his exertions must be the aim towards which the best minds in all countries should co-operate. Only if we recognise that the time has now come when all countries must help one another, can we hope to bring about an atmosphere, in which we can look forward to the restoration of normal conditions and to the end of our present evils.

In conclusion the signatories desire to reiterate their conviction as to the very grave urgency of these questions in point of time. Every month which passes will aggravate the problem and render its eventual solution increasingly difficult. All the information at their disposal convinces them that very critical days for Europe are now imminent, and that no time must be lost if catastrophes are to be averted.

Restriction added by the French signatories to the Memorial:—

It is understood that a reasonable delay shall be allowed to each country to reduce its current expenses to the level of its receipts drawn from taxation or other normal sources of revenue, and that the recommendations in lines 109 to 120 can only be applied in each particular case as far as they are reconcilable with the stability and length of standing of the credit of the States.

• Roger Lehideux, Président de l’Union syndicale des Banquiers de Paris et de la province
• Darcy, Président du Comité central des Houillères de France
• Petit, Président du Tribunal de Commerce de la Seine
• Charles Laurent
• F. de Wendel
• Raphael Georges Levy

• United States:
  • William H. Taft, former President of the United States
  • Elihu Root, former Secretary of State and ex-Senator
  • Herbert Hoover, former Director, United States Food Administration
  • Myron T. Herrick, former Ambassador to France
  • Harry A. Wheeler, former President, United States Chamber of Commerce, and Chairman, International Trade Conference of United States Chamber of Commerce
  • Alfred E. Marling, President, New York Chamber of Commerce
  • William Fellowes Morgan, President, New York Merchants’ Association
  • Frank A. Vanderlip, Chairman, Banking Committee, New York Chamber of Commerce
  • Paul M. Warburg, Chairman, Acceptance Council and Committee on Banking of New York Merchants’ Association, and former Vice-Governor, Federal Reserve Board
  • R. S. Hawes, President, American Bankers’ Association
  • J. P. Morgan, Partner, J. P. Morgan and Co.
  • James A. Stillman, President, National City Bank, New York
  • A. Barton Hepburn, Chairman, Chase National Bank, New York
  • Charles H. Sabin, President, Guaranty Trust Company, New York
  • L. L. Rue, President, Philadelphia National Bank
  • James B. Forgan, President, First National Bank, Chicago
  • Festus J. Wade, President, Mercantile Trust Company, Saint Louis
  • F. O. Watts, President, Third National Bank, Saint Louis
  • John Sherwin, President, First National Bank, Cleveland
  • A. W. Mellon, President, Mellon National Bank, Pittsburgh
  • Emory W. Clark, President, First and Old Detroit National Bank
  • Frederick H. Rawson, President, Union Trust Company, Chicago
  • R. G. Rhett, President, People’s National Bank, Charlestown, South Carolina, Cleveland
  • H. Dodge, Partner, Phelps Dodge Corporation, New York
  • Darwin P. Kingsley, President, New York Life Insurance Company
  • Charles W. Eliott, President Emeritus, Harvard University
  • Arthur T. Hadley, President, Yale University
  • H. P. Judson, President, University, Chicago
  • Edwin A. Alderman, President. University of Virginia
  • Edwin R. A. Seligman, Processor, Economics, Columbia University
  • F. W. Taussig, Professor, Economics, Harvard University
  • Samuel Rea, President, Pennsylvania Railroad
  • Louis W. Hill, Chairman, Great Northern Railroad
  • Daniel Willard, President, Baltimore and Ohio Railroad
  • George H. McFadden, Partner, Geo. H. McFadden and Brother, Philadelphia
  • Julius H. Barnes, Partner, Barnes, Ames Co., and Director, United States Grain Corporation
  • John G. Shedd, President, Marshall Field Company, Chicago
  • Jacob H. Schiff, Partner, Kuhn Loeb Company, New York
  • George M. Reynolds, Chairman, Continental and Commercial National Bank, Chicago
  • Robert L. Brookings, President, Board Trustees, Washington University, Saint Louis
  • A. L. Mills, President, First National Bank, Portland, Oregon
  • Frank B. Anderson, President, Bank of California, San Francisco
  • Herbert Fleischhacker, President, Anglo and London Paris National Bank, San Francisco
  • Henry Suzallo, President, University of Washington, Seattle
• Denmark:
  • C. C. Andersen, Chairman of the Socialist Party in the Landsting (Upper House)
  • F. I. Borgbjerg, Member of the Committee of the Social Group of the Rigsdag (Parliament)
  • I. C. Christensen, Chairman of the Venstre (Liberal) Party of the Folketing (Lower House)
  • C. C. Klausen, Chairman of the Merchants Association
  • C. M. T. Cold, Chairman of the Danish Steamship Owners Society
  • A. Voss, Chairman of the Board of Industry
  • E. Glueckstadt, Managing Director of the Danske Land-mandsbank
  • J. Knudsen, Chairman of the Conservative Party in the Folketing

M. Mygdal	}	Presidents of the Board of Agriculture
A. Tesdorpf
A. Nielsen
J. P. Winther	}	Managing Directors of the National-Banken in Copenhagen
C. Using
M. Rubin
W. Stesensen

• I. Pedersen, Chairman of the Venstre Party of the Landsting E. G. Niper, Chairman of the Conservative Party of the Landsting
• C. Slengerik, Chairman of the Radikal Venstre Party of the Folketing
• H. Trier, Chairman of the Radikal Venstre Party of the Landsting

• Holland:
  • Dr. G. Vissering, President of the Bank of the Netherlands
  • C. E. ter Meulen, Banker, Member of the firm of Hope and Co.
  • J. van Vollenhoven, Manager of the Bank of the Netherlands
  • Jonkheer Dr. A. P. C. van Karnebeek, Minister of State, President of the Carnegie Foundation
  • J. J. G. Baron van Voorst tot Voorst, President of the First Chamber of Parliament
  • Dr. D. Fock, President of the Second Chamber of Parliament
  • Jonkheer Dr. W. H. de Savornin Lohman, President of the High Court of Justice.
  • A. W. F. Idenburg, formerly Governor-General of the Dutch East Indies, formerly Minister of Colonies
  • S. P. van Eeghen, President of the Amsterdam Chamber of Commerce
  • E. P. de Monchy, President of the Rotterdam Chamber of Commerce
  • C. J. K. van Aalst, President of the Amsterdam Bankers’ Association
  • G. H. Hintzen, Banker, Member of the firm of R. Mees and Zonen, Rotterdam
  • F. M. Wibaut, Socialistic Alderman of Amsterdam
  • G. M. Boissevain, Economist.
  • E. Heldring, Manager of the Royal Dutch Steamship Company
  • Professor Dr. G. W. J. Bruins

• Norway:
  • Otto B. Halvorsen, Speaker of Parliament
  • J. Tandberg, Bishop of Christiania
  • F. Nansen, Professor
  • H. Loeken, Governor of Christiania
  • B. Holtsmark, Leader of a Political Party
  • A. Jahresn, Leader of a Political Party
  • Joh. L. Emovinckel, Leader of a Political Party
  • K. Bomhoff, President, Bank of Norway

Alf Buercke	}	Presidents of Financial, Industrial and Commercial Associations
Thune Larsen
C. kierulf
V. Plahte
Carl Kutcherath
Carl B. Lorentzen
Joh. H. Aarensen
Ths. Fearnley
C. Platou

• T. Myrvang, President, Farmers and Smallholders Association
• P. Volckmar, President, Norske Handelsbank

• Sweden:
  • J. G. af Jochnick, President of the Swedish State Bank
  • V. L. Moll, First Deputy, Swedish State Bank
  • C. E. Kinarder, President, National Debt Office
  • J. C. son Kjellberg, President, Swedish Bankers Association
  • H. Lagercrantz, formerly Envoy, United States; President, Swedish Exporters Association
  • A. Vannersten, formerly Minister of Finance; President, Swedish Industrial Association
  • K. A. Wallenberg, formerly Minister of Foreign Affairs; President, Chamber of Commerce of Stockholm
  • M. Wallenberg, Managing Director, Stockholms Enskilda Bank
  • O. Rydbeck, Managing Director, Skandinaviska Kréditaktie-bolaget
  • C. Frisk, Managing Director, Svenska Handelsbanken

K. H. Branting	}	Member of Parliament
S. A. A. Lindman, formerly Prime Minister; Leader, Conservative Party
L. H. Kvarnzelius, Leader, Liberal Party
Count R. G. Hamilton, Leader, Liberal Party
E. Trygger, formerly Member of High Court of Appeal; Leader, Conservative Party
K. G. Cassel	}	Professors, Political Economy
D. Davidson
E. F. K. Sommarin

• Switzerland:
  • G. Ador, President, International Red Cross Committee
  • E. Blumer, President, National Council
  • A. Frey, President, Swiss Union of Commerce and Industry
  • R. de Haller, Vice-President of the Board of Directors, National Bank
  • J. Hirter, President, Council of National Bank
  • Dr. E. Laur, Secretary, Swiss Union of Peasants
  • A. Pettavel, President, Council of States
  • E. Licot, Federal Judge
  • G. Pictet, Banker
  • A. Sarasin, President, Swiss Association of Bankers
  • M. Schnyder, President, Association of Swiss Press
  • Dr. H. Tschumi, President, Swiss Union of Arts and Crafts

• United Kingdom:
  • Sir Richard Vassar Smith, Bart., Chairman of Lloyds’ Bank
  • Lord Inchcape, G.C.M.G., K.C.S.I., Chairman of the National Provincial and Union Bank, Chairman of the Peninsular and Oriental Steam Navigation Company
  • Walter Leaf, Chairman of the London, County and Westminster Bank
  • F. C. Goodenough, Chairman of Barclay’s Bank
  • Rt. Hon. Reginald McKenna, Chairman of the London Joint City and Midland Bank
  • Sir Robert Kindersley, K.B.E., Chairman of the National Savings Committee, Director of Bank of England, Partner of Lazard Bros
  • Sir Charles Addis, Chairman of the Hong Kong and Shanghai Banking Corporation, Director of the Bank of England
  • Edward Charles Grenfell, Partner in firm of Morgan, Grenfell and Company, Director of the Bank of England
  • Hon. Robert Henry Brand, C.M.G., Partner of Lazard Bros.
  • Right Hon. Lord Robert Cecil, P.C., K.C., former Chairman of Supreme Economic Council, and Assistant Secretary of State for Foreign Affairs
  • Right Hon. Herbert Henry Asquith, former Prime Minister
  • Right Hon. Sir Donald MacLean, K.B.E., Leader of the Liberal Party in the House of Commons

Right Hon. John Henry Thomas, M. P.	}	Leaders of the Labour Party
Right Hon. John Robert Clynes, M.P.

• Viscount Bryce, O.M., G.C.V.O., former Ambassador to the United States

January 15, 1920.

Appendix 315

Treasury Chambers, 16 January, 1920.

Sir: With reference to paragraph 323 of the Minutes of the Meeting of the Supreme Economic Council at Rome in November last, I am directed by the Lords Commissioners of His Majesty’s Treasury to transmit herewith to be laid before the Supreme Economic Council copy of the final report of the Committee on Currency and Foreign Exchanges dated the 3rd December last and an extract from the reply given by the Chancellor of the Exchequer to a Parliamentary question in the House of Commons on the 15th ultimo with reference to the Report.

I am [etc.]

M. G. Ramsey

The British Council Officer,
Supreme Economic Council, Trafalgar House.

[Enclosure 1]

Final Report of the Committee on Currency and Foreign Exchanges After the War

(Presented to Parliament by Command of His Majesty, 1919)

Terms of Appointment

The Lords Commissioners of His Majesty’s Treasury and the Minister of Reconstruction have appointed a Committee to consider the various problems which will arise in connection with currency and the foreign exchanges during the period of reconstruction and report upon the steps required to bring about the restoration of normal conditions in due course.

The constitution of the Committee will be as follows:—

• Lord Cunliffe, G.B.E., Governor of the Bank of England, Chairman.
• Sir Charles Addis, Hong Kong and Shanghai Banking Corporation.
• The Hon. Rupert Beckett, Beckett and Company.
• Sir John Bradbury, K.C.B., Secretary to the Treasury.
• G. C. Cassels, Esq., Bank of Montreal.
• Gaspard Farrer, Esq., Baring and Company.
• The Hon. Herbert Gibbs, Antony Gibbs and Sons.
• W. H. N. Goschen, Esq., Chairman of the Clearing Bankers’ Committee.
• Lord Inchcape of Strathnaver, G.C.M.G., K.C.S.I., K.C.I.E.
• R. W. Jeans, Esq., Bank of Australasia.
• A. C. Pigou, Esq., M.A., Professor of Political Economy, Cambridge University.
• G. F. Stewart, Esq., D.L., F.S.I., Ex-Governor of the Bank of Ireland.
• William Wallace, Esq., Royal Bank of Scotland.
• Mr. G. C. Upcott, of the Treasury and Ministry of Reconstruction, will act as Secretary to the Committee.

January, 1918.

The following words were subsequently added to the Terms of Reference:—

“and to consider the working of the Bank Act, 1844, and the constitution and functions of the Bank of England with a view to recommending any alterations which may appear to them to be necessary or desirable.”

On his appointment as Principal British Reparation Commissioner Sir John Bradbury resigned from the Committee. Mr. B. P. Blackett, C.B., the Controller of Finance, Treasury, was appointed a member of the Committee in his place.

Mr. Cassels was prevented by absence in Canada from attending the later meetings of the Committee.

Mr. H. E. Fass of the Treasury was appointed in July, 1919, Joint Secretary with Mr. Upcott to the Committee.

To the Lords Commissioners of His Majesty’s Treasury

My Lords, 1. We have the honour to present herewith our final Report on certain matters referred to us in January, 1918, with which we were not in a position to deal in our Interim Report in August of that year.

2. Foreign Exchanges.—We stated in the introduction to our Interim Report our opinion that a sound system of currency would in itself secure equilibrium in the Foreign Exchanges. We have reviewed the criticisms which have been made upon this part of our Report, but we see no reason to modify our opinion. We have found nothing in the experiences of the war to falsify the lessons of previous experience that the adoption of a currency not convertible at will into gold or other exportable coin is likely in practice to lead to overissue and so to destroy the measure of exchangeable value and cause a general rise in all prices and an adverse movement in the foreign exchanges.

3. The nominal convertibility of the currency note which has been sustained by the prohibition of the export of gold is of little value. The weakness of the exchanges is in a measure due to trade conditions, but an important cause of the depreciation in sterling in New York and other financial centers is, in our opinion, to be found in the expanded state of credit in this country. The existing expansion is not merely the legacy of the stress of war finance and Government borrowings, which even now have not ceased, but also, in part the result of maintaining rates for money in London below those ruling in other important financial centres. The difficulties of the Foreign Exchanges’ position are aggravated by the grant of long term loans and credits, whether directly or under guarantee or otherwise by the Government or by private lenders, to enable foreign States or their nationals to pay for exports from this country. Few of these loans and credits will be liquidated at an early date. The large payments which we have to make to America, North and South, for necessary imports of foodstuffs and raw materials from those countries make it essential that we, in our turn, should secure payment in cash for as large a proportion as possible of our exports visible and invisible. We recommend therefore that preference should be given to exports to countries which are able to make payment in the ordinary course of trade.

Increased production, cessation of Government borrowings and decreased expenditure both by the Government and by each individual member of the nation are the first essentials to recovery. These must be associated with the restoration of the pre-war methods of controlling the currency and credit system of the country for the purpose of re-establishing at an early date a free market for gold in London.

4. Bank of England.—The principles of the Bank Charter Act of 1844 were fully considered by us in our Interim Report. We have examined with care the opinions there expressed in the light of certain criticisms which have been made with regard to them. We see, however, no reason to alter our conclusions. We have again considered the principles governing the banking systems of the principal foreign countries and we are satisfied that they are not so well adapted to the needs of this country as those contained in the Act of 1844. Certain important alterations which experience suggested to be desirable have been made in the constitution and management of the Bank during the war, and we do not now think it necessary to make any further recommendation.

5. Government Borrowings on Ways and Means Advances from the Bank of England.—We desire to draw attention to the extensive use made during the war of the system of Ways and Means Advances from the Bank of England. We referred to this matter in paragraph 16 of our Interim Report and explained its effect in causing credit and currency expansion. The powers given to the Government by Parliament to borrow from the Bank of England in the form of an overdraft on the credit of Ways and Means were, as the name implies, intended to enable the Government to anticipate receipts from Revenue or permanent borrowings for a brief period only. Indeed Parliament by expressly providing that all such advances should be repaid in the quarter following that in which they were obtained showed that it had no intention of bestowing upon the Government the power of securing an overdraft of indefinite duration and amount. Under the exigencies of war finance the Government found it necessary to re-borrow in each quarter on the credit of Ways and Means the amount needed to enable them to comply with the statutory requirement that the previous quarter’s Ways and Means Advances should be repaid, with the result that the total outstanding advances remained for a long time at a high figure. We are glad to see that efforts are now being made to reduce this overdraft to more moderate dimensions.

We, therefore, hope, now that conditions are less abnormal, that the Government will confine its use of Ways and Means and Advances from the Bank of England to providing for purely temporary necessities. Such advances afford a legitimate method of tiding over a few weeks’ shortage, but are entirely unsuitable for borrowings over a longer period.

6. Foreign Banks.—Several of our witnesses have called attention to the conditions under which it is open to foreign banks to establish themselves in this country. We suggest that this is a matter which should receive the early attention of His Majesty’s Government.

7. Scottish and Irish Banks.—We have now taken evidence in regard to the application of the recommendations in our Interim Report to Scotland and Ireland. The status of legal tender was given to the notes of the Scottish and Irish Banks of Issue as an emergency measure to tide over the period at the outbreak of war when a serious shortage of currency was threatened, a condition of affairs which no longer obtains. Some of the witnesses on behalf of the Scottish and Irish Banks showed a marked desire to retain the privilege of legal tender status for their notes. In our opinion the grant of legal tender status could not be given permanently to the notes of Scottish and Irish Banks except under statutory conditions similar to those embodied in the Bank Act of 1844. The evidence before us indicates that rather than be subjected to such conditions the banks would prefer the restoration of the pre-war status. We accordingly recommend that the pre-war status be restored. We further recommend that when the position which we contemplate in our Interim Report is ultimately reached the cover held by the Scottish and Irish Banks for their excess issue shall take the form of any legal tender at that time in existence.

8. Currency Note Issue.—We have considered whether steps should not be taken at an early date to impose limitations upon the fiduciary portion of the currency note issue with a view to the restoration of the normal arrangements under which demands for new currency operate to reduce the reserve in the Banking Department of the Bank of England. In view of the fact that demobilisation is approaching completion and that as we hope fresh Government borrowing will shortly cease, we consider that effect should now be given to the recommendation made in our Interim Report that the actual maximum fiduciary circulation in any year should become the legal maximum for the following year, subject only to the emergency arrangements which we proposed in paragraph 33 of our Interim Report. The policy of placing Bank of England notes in the Currency Note Reserve as cover for the fiduciary portion of the issue as opportunity arises should, of course, be continued. We recommend further that the Treasury Minute made under Section 2 of the Currency and Bank Notes Act, 1914, providing for the issue of currency notes to Joint Stock Banks, which is in fact inoperative, should now be withdrawn.

The Committee wish to place on record their deep sense of obligation to Mr. G. C. Upcott, who served as Secretary to the Committee from the beginning with unfailing zeal, knowledge and ability. They are also greatly indebted to Mr. H. E. Fass, who was appointed Joint Secretary with Mr. Upcott in July, 1919 and rendered important and efficient service in the closing period of the Committee’s labours.

We have [etc.]

• Cunliffe (Chairman)
• C. S. Addis
• R. E. Beckett
• Basil P. Blackett
• Gaspard Farrer
• Herbert C. Gibbs
• W. H. N. Goschen
• Inchcape
• R. W. Jeans
• A. C. Pigou
• ^*
• Geo. F. Stewart
• W. Wallace

G. C. Upcott.	}	Secretaries
H. E. Fass.

3 December, 1919.

[Enclosure 2]

Question Asked in the House of Commons, Monday, 15th December, 1919

Lieutenant Commander Kenworthy, by Private Notice.

To ask the Chancellor of the Exchequer whether he can state what action he proposes to take on the Final Report of the Committee on Currency.

Answer

I trust that having regard to the importance of this matter, the House will excuse the length of my reply.

The Committee reaffirm the views set forth at greater length in their first interim report as to the importance of restoring at the earliest possible moment the pre-war methods of controlling the currency and credit system of the country and re-establishing the free market for gold in London. They point out that the difficulties of the foreign exchange position are aggravated by the grant of loans and credits to enable foreign states to pay for exports from this country when we in our turn have to pay cash for imports of necessities from America North and South, and they recommend that preference be given to exports to countries which are able to make payment in the ordinary course of trade.

The argument as to the exchanges is obviously true and we are fully alive to the importance of this aspect of the question. There are however other considerations arising out of our relations with our Allies and out of the economic condition of Europe to which due weight must be given in particular cases. Subject to the fulfilment of these obligations I agree with the Committee.

The Government further agree with the Committee’s view that increased production, cessation of Government borrowings and decreased expenditure both public and private are the first essentials to recovery. So far as I can foresee, the highest point of the National Debt will be reached in the course of the next month or six weeks and I have every hope that thereafter we may be in a position to effect a gradual but steady diminution of the gross debt …⁵

Appendix 316⁶

Report of the Finance Committee of the Allied and Associated Governments

In July of last year the Finance Section of the Supreme Economic Council reported that the following questions were outstanding:⁷—

(a.) As regards Germany—

1. The ultimate disposition of the gold delivered by Germany in payments for foodstuffs.

2. The procedure to be followed in the sale of the requisitioned securities transferred to Amsterdam by the Germans, and the division of the proceeds of this sale among the Allied and Associated Powers.

3. Utilisation by the Germans of Argentine securities for German purchases of foodstuffs in the Argentine.

4. Final examination of a proposition made by a consortium of Dutch banks to make an advance for which requisitioned securities would serve as guarantee.

5. Settlement of the French Account: provisioning of Germany by France.

6. Utilisation of proceeds of the sale of lignite briquettes to Switzerland (application of the Agreement of the 25th March).

(b.) As regards Austria—

1. Final settlement of the conditions of the new advance of 3,000,000 dollars allowed by the Government of the United States of America to the three Allied and Associated Powers.

2. Delivery of gold and securities. This delivery was demanded to take place on the 12th July in the case of gold, and on the 31st July in the case of securities.

3. Supervision of the transport of the gold and securities to Venice.

4. Nomination and despatch of experts to Venice to examine the gold and securities.

5. Nomination and despatch of forestry experts to Austria to fix the value of the pledge.

6. Settlement of the Food Accounts among the Allies in consequence of supplies provided by Italy for the account of France and Great Britain.

The Council decided at its meeting on the 20th September that the Finance Section should be liquidated, and that a Finance Committee should be formed which would report not only to the Supreme Economic Council, but also to the Committee on Organisation of the Reparation Commission.⁸ This Committee held its first meeting on the 4th September. This meeting is entitled in the circulated minutes as the twenty-fourth meeting of the Finance Section of the Supreme Economic Council.

The Permanent Committee of the Supreme Economic Council at its meeting of the 6th January requested that the Finance Committee would make a report to the Supreme Economic Council with regard to—

(a.) A statement of problems which were raised by the armistice concerning ex-enemy countries, and which had been definitely settled.

(b.) A second part dealing with problems concerning Europe as a whole, which had not yet been completely settled.

I am instructed to submit for the information of the Supreme Economic Council that the Finance Committee is of opinion that, apart from definite references from either of the bodies to whom they were instructed to report, their work was confined to the liquidation of the matters reported as outstanding in the document already quoted.

The Committee, further, does not consider that general problems concerning Europe as a whole fall within their province, unless a specific request has been addressed to them to study these from a financial point of view. They have therefore not considered the general financial effect of the situation in Russia, nor any of the problems connected with currency reform in one form or another.

Practically the whole of the problems which awaited solution in July last have been transferred to the province of the Reparation Commission, and successful progress has been made under the direction of the Committee of the Reparation Commission, and sufficient funds appear to have been provided for the provisioning of Germany and German-Austria.

Apart from the sanctioning of certain definite contracts between the German Government and the Nestle and Anglo-Swiss Condensed Milk Company and negotiations with regard to the partition of the cost of relief measures amongst the four principal Allied and Associated Governments, the only question concerning the Supreme Economic Council which has been considered by the Finance Committee since its inception has been the German Food Account under the Brussels Agreement. Unfortunately, owing to difficulties in establishing the actual amount of credit due to the German Government for freight on German tonnage as against the debit due for repairs to German ships taken by the Allies under the Armistice Agreement, it has not yet been possible to present a definite account to the German Government. The Committee, however, decided, subject to the approval of the Government of the United States of America, that the German Food Account should be terminated at the date of the coming into force of the Peace Treaty, and that all definite contracts made with the German Government prior to that date should be completed and carried to account, but that no fresh contracts should be included.

The transformation of the Finance Section of the Supreme Economic Council into an independent Finance Committee of the Allied and Associated Governments has proved very successful, in so far that it gives a rapid means of communication between the Treasuries of the principal Allied and Associated Governments, which would not have been possible under its former guise after the withdrawal of the American delegates of the Supreme Economic Council.

January 30, 1920.

Appendix 317

Board of Trade, Communications Section (British),
Supreme Economic Council,
23 Buckingham Gate, London, S. W. 1[, undated].

British Secretary, Supreme Economic Council,
Trafalgar House, Waterloo Place, S. W. 1.

I enclose herewith for your information copy of some clear and concise reports on the situation in Vienna which may be of interest to you.

G. Maxwell

, Colonel,
For Chairman, Communications Section.

[Enclosure 1]

To Secretary, Communications Section,
23 Buckingham Gate, London, S. W. 1.

The attached extract translation from yesterday’s local papers is sent you for information, following my reports of yesterday and to-day.

The Austrian crown has dropped 150 points since the 14th, and last night was standing at 850 to the Pound sterling a depreciation of just on 3400%.

The prospects are fearfully black.

M. W. Brown

, Lt. Col.,
British Railway Mission.

Vienna, January 16, 1920.

[Subenclosure]

Saving Measures To Take Effect To-morrow January 16th

The following is a sketch of saving measures for the city of Vienna now in course of elaboration.

1. Street railroad traffic will be stopped.

2. The consumption of gas and electric current for Industrial purposes will be forbidden. This measure does not apply to plants engaged in the preparing or making of victuals.

3. Shops will be closed at 3 o’clock. Only shops where food is sold retail are allowed to keep open until 7 o’clock.

4. Private, governmental and municipal offices will be closed at 3 o’clock.

5. Concerts, theatrical performances, conferences, moving pictures, cabarets etc. are forbidden.

6. Elevators for the conveyance of persons will be stopped.

7. This paragraph contains the fines to be applied in case of non-observance of the order.

8. The above measures to take immediate effect.

In an interview the Lord Mayor of the city of Vienna granted to Vienna newspapermen, he said:—

“Never was the situation in Vienna more desperate than it is now. All the promises made to us, absolutely positive though they sounded have not been fulfilled. There are practically no coal deliveries at all to this city. Coal stocks in the municipal electricity works are almost completely exhausted. Under these circumstances the State Office had to issue the economising measures. The orders which so far have not been officially notified to the City Hall affect not only the whole population of this place, but will also have a serious effect on the finances of the city of Vienna. Contrary to the orders issued in September last, the present order decrees the stopping of electric current and gas supply to trade and industry with the only exception of plants indispensable for the provision of the population with food.”

The coal receipts of to-day are eloquent of the desperate situation we are in. Only a few wagons loaded with mineral coal from Ostrau and Upper Silesia arrived here; hardly worth mentioning as these deliveries are, they will altogether cease from to-morrow onward, according to reliable information received from the State Office for Commerce and Industry. The number of cars reported en route to Vienna from Gmuend (Bohemian brown coal) is likewise very small. Deliveries from Poland amounted to 51 wagons which were distributed as follows:—32 gas and electricity works, 8 consumption in Vienna, 11 cars outside the metropolis.

Vienna , January 16, 1920.

[Enclosure 2]

To Secretary, Communications Section,
23 Buckingham Gate, London S. W. 1.

(1) On my return here the night before last, I find conditions to be worse than ever before.

(2) The whole trouble again is coal, three main sources of supply having all failed.

(3) There is a miners’ strike in the Ostrau region which could normally be depended on for some 1,100 tons per working day.

(4) There is a railway strike in Silesia with which country there was a contract for 7,000 tons daily and which actually furnished about 4250 tons per working day.

(5) Poland has now stated that it has now not enough coal to meet its own requirements, and the normal despatches of 15,000 tons monthly have therefore ceased.

(6) As from to-morrow the street tram services (there are no buses) close down completely, as also do all theatres and public halls.

(7) The Town Authorities hope to provide sufficient power to keep street lamps alight, and if they fail to do this there will be very serious trouble.

(8) The Chancellor, Dr. Renner, has just returned from an official visit to Prague, and, according to Mr. Lindley, the High Commissioner, whom I saw this morning, is not happy at the result of his conference with the Czechs.

(9) Another informant tells me that the Austrians were received in an amicable manner and the discussions on the coal supply provided the basis for a renewed contract of which I hope to write to you later.

(10) The strike at Ostrau is naturally going to interfere with this.

(11) With the assistance of Mr. Lindley, through diplomatic channels, I am going to try to divert to the Vienna-Silesia circuit some 400 Pool wagons which hitherto have been conveying coal to and from Poland.

(12) The trains will have to be escorted by British Military for the German Coal Controller in Berlin has advised that otherwise the railwaymen will not allow the wagons to move between the frontier and the pits and vice versa.

(13) These 400 wagons are, of course, an infinitesimal part of requirements, and won’t do much to help in the terrible existing situation.

(14) At the same time an effort is being made to release from the Czech-Vienna circuit a number of Pool cars for the Silesian coal which, as you are aware, is always conveyed in German wagons.

(15) I travelled up from Steinbruck with Mr. Marcovie, S. H. S.⁹ representative on the wagon distribution Commission.

(16) He told me that, in view of the Peace Conference ruling on certain points relating to booty wagons put forward by the Commission through the President, Sir Francis Dent, he had asked, when at Belgrade, to be relieved of his post.

(17) There are going to be fresh difficulties there.

(18) I left Marburg by the 2.42 a.m. (twice weekly) through train to Vienna.

(19) The train is timed to stop 2 hours at Spielfeld and 1½ hours at Leibnitz, respectively the S. H. S. and Austrian Control stations.

(20) For no earthly reason but mal-organisation, obvious to the veriest laymen, the train was held at Spielfeld five hours—with an engine in steam all the time of course.

(21) The railways were not to blame—it is all the Customs authorities, and my experience provides no exception to the rule.

(22) A communist dress rehearsal is announced for Sunday next.

M. Brown

, Lt. Col.

Vienna , January 16, 1920

[Enclosure 3]

To Secretary, Communications Section,
23 Buckingham Gate, London, S. W. 1.

Copy to Hon. F. A. Lindley, High Commissioner, Vienna.

In amplification of my report of yesterday’s date—

(1) I understand the following to be a general outline of the discussion which took place in Prague in regard to Czech fuel supplies for Austria.

(2) The original Czech contract (there is a dispute on the word “contract”) was for approximately 8600 tons of coal per working day; the actual despatches, while decreasing monthly, may be taken as round about 60% of contract.

(3) The present proposed contract is for 500 ten-ton car loads, or 5000 tons per working day, which is to be distributed in the following order.

(a) 1200 tons to the gasworks.

(b) Railways.

(c) Electricity plant, and

(d) City of Vienna, i. e. household, soup kitchens &c.

(4) The minimum railway requirements, based on the existing infinitesimal traffic, calls for 3600 tons per calendar day, so that (d) would get nothing at all.

(5) I am told that when it was pointed out by the Austrians that the 5000 tons represented a decrease of nearly 40% compared with the old contract, and when they pleaded for an extra provision for factories and industries, the Czechs replied that it was not for them to supply their competitors with coal, but offered to send some wood instead.

(6) It is calculated that it takes seven times as much rolling stock to transport a unit of timber calory as that of coal, so that the proposal, in these times, is not very promising.

(7) The Czechs urged strongly their own difficulties for want of coal and I don’t suppose that anyone will dispute that this to an extent, is justified, but—

(8) Throughout the autumn, and up to the end of last year, the whole difficulty turned on the supply of availability of wagons; particularly during the Beet season, now just closing, the cry was “send more wagons and you will have more coal”.

(9) Now suddenly the scene is changed, and we would be had [led?] to believe that there is not enough coal.

(10) In strict fairness it must be recorded that if the 5000 tons per day could be assured, it would represent a very slight improvement on the average receipt in Austria during the past six months (4600 tons per day average), but that 4600 tons is enough only to postpone the final collapse of life in this country.

(11) I have not got the official figures by me, but I believe that 5% of output represented Czech despatches to Austria.

(12) One could go on writing reams on the question of coal, but I am sure that you have most of the facts and figures by you, and all I can ask is that you will continue to take every possible opportunity of urging the importance of this country’s coal situation on those responsible.

(13) It all comes back to coal, and, practically speaking, coal only.

(14) A good proportion of Austrian Imports are paid for in manufactured articles; their stocks are now fearfully low and without coal they cannot possibly manufacture to pay for coal and food imports.

(15) I am, at the request of Mr. Lindley, making one more big effort to instal oil burning appliances in locomotives, for there is now a little stock of crude oil on hand, and I cannot believe that it would be more difficult to get oil out of Roumania or Poland than coal out of Czecho-Slovakia.

J. M. Brown

, Lt. Col.,
British Railway Mission.

Vienna , January 16, 1920.

Appendix 318

Note by the British Delegation [Regarding] Need of Relief for Christians in Turkey

The situation of Armenian refugees in the Caucasus was discussed at the 31st meeting of the Supreme Economic Council in Rome, and a resolution was passed expressing the concern of the Council at this situation.¹⁰ The United States representative on the Reparation Commission subsequently stated that it had been arranged for the Grain Corporation to send grain, and for the American Red Cross to send drugs for the relief of distress in Armenia. In addition, considerable sums have been raised in America for the relief of the Turkish provinces of Armenia and the Caucasus.

It should, however, in the opinion of the British Delegation, be pointed out that this assistance will not benefit the Christian population of Turkey, i. e. Greeks and Armenians, among whom very serious distress prevails.

Persecution by the Turks has caused many Christians to flee from the interior of Asia Minor to the coast. There are, however, no facilities in the coast districts for providing the necessary accommodation and relief for these refugees. Even in Constantinople, the refugee camps are so over-crowded and so insanitary that typhus is spreading. Conditions in the provinces are still worse.

The resources of voluntary relief are nearly exhausted and are quite insufficient to provide for the Christian refugees, who number several hundreds of thousands. The Turkish Government could give no help, even if it were willing. The only means of assisting these people, who rely entirely upon the Allies for help, is a scheme of relief undertaken by the Allied Governments.

28 January, 1920.

Appendix 319¹¹

Report by the Allied Maritime Transport Executive, January 17, 1920 [Regarding] Assignment and Employment of Enemy Tonnage

I. General

The decisions relating to the taking over by the Allied Powers of the vessels of the German and Austro-Hungarian merchant fleets during the period of the Armistice were briefly as follows:—

(a.) Austrian vessels.—At an Allied Conference held in Paris on the 21st December, 1918, it was agreed that the entire Austro-Hungarian merchant fleet should be requisitioned, on account of the Associated Governments, by the Power or Powers in the best position to put the vessels promptly into service, without prejudice to their ultimate disposition.

(b.) German vessels.—The terms of the Agreement of the 16th January, 1919, which extended the Armistice with Germany, provided that to ensure the revictualling of Germany and the rest of Europe the entire German merchant fleet should be placed at the disposal of the Allied and Associated Governments for the duration of the armistice, without prejudice to its final disposition.

Further conferences with the German Government took place at Spa on 6th, 7th and 8th February, 1919, and at Trèves on 16th and 17th January, 1919, but it was not until the Conference of the 13th and 14th March, 1919, at Brussels, that the terms of delivery of the steamers were finally settled in the document known as the Brussels Agreement. (For a detailed account of these negotiations and copies of the Agreements, see Allied Maritime Transport Council, Volume I, Part II, pages 53 to 108.)

delivery of vessels to allied management

The bulk of the Austro-Hungarian tonnage was secured in December 1918 and January and February, 1919.

The first German tonnage came over in March, and deliveries have continued up to date. At the present date 363 vessels, aggregating 1,830,000 gross tonnage, have been taken over.

assignment for management

The arrangements for the allocation for management of enemy tonnage have been made on the definite understanding that the ultimate disposition of the vessels under the Peace Treaty shall be in no way prejudiced, and each of the Allied and Associated Governments was called upon to make a definite declaration in this sense, including a statement that in discussing the question of the ultimate disposition of the vessels they would not found any argument on the allocation for management or service of the vessels in the meantime.

The principles on which assignments were made to the various Allies are dealt with under the separate headings of Austro-Hungarian and German tonnage (see below.)

The following table shows the exact results to date, but it should be stated that ten German vessels were allocated to America for the repatriation of their troops, and that on the completion of that work these vessels were reassigned among the Allies.

(A).—Assignment of German and Austro-Hungarian Tonnage to Allied Management, January 1920

Steamers of 500 Gross Tons and Over

	No.	Gross Tonnage	Dead Weight
Italy—
Long-distance passenger	15	96,606	95,321
Other passenger (or passenger and cargo)	50	130,748	130,575
Cargo	108	367,267	583,064
Cable	1	2,691	1,000
Total	174	597,312	809,960
France—
Long-distance passenger	15	121,849	123,816
Other passenger (or passenger and cargo)	20	23,085
Cargo	102	364,426	580,966
Total	a 137	509,360
Great Britain–
Long-distance passenger	53	532,444	450,762
Cargo	245	1,130,064	1,759,922
Cable	1	4,635	2,000
Total	b 299	1,699,143	2,212,684
Belgium—
Cargo	11	24,915	39,350
Total	c 11	24,915	39,350
Total assignments–
Long-distance passenger	83	750,899	669,899
Other passenger (or passenger and cargo)	70	153,833
Cargo	466	1,886,672	2,963,302
Cable	2	7,326	3,000
Grand total	621	2,798,730

a 3 vessels not yet delivered.

b 59 “ “ “

c 1 vessel “ “ “

employment of enemy tonnage

Under the Brussels Agreement it was definitely stated that the first charge on cargo tonnage should be the feeding of Germany up till the 1st September, 1919.

With regard to passenger tonnage it was definitely decided that the first charge on such tonnage should be the repatriation of troops, prisoners of war, etc.

Cargo tonnage which was unsuited for these services was allocated for special merchant or military service in relief of Allied tonnage, chiefly in the Mediterranean and Adriatic.

Outward cargoes and minor diversions were authorised in the interest of the fullest utilisation of tonnage, but subject always to the first charge upon the use of enemy cargo tonnage being, in the case of Austro-Hungarian tonnage, general European relief (excluding Germany) and in the case of German tonnage, German relief.

In August, 1919, the Supreme Economic Council at its meeting in London approved the proposal of the Allied Maritime Transport Executive that, until the decision in regard to final ownership could be made by the Reparation Commission, and subject to the satisfaction of approved relief requirements, if any, enemy tonnage should continue to be directed by the managing country.

In accordance with this decision steps were taken to agree with the Freight Committee of the Supreme Economic Council the exact quantities of relief cargoes which still remained to be carried on the 31st August.

The Allied Maritime Transport Executive accepted liability for the carriage of these cargoes, and allocated tonnage accordingly.

Subject to the satisfaction of these requirements the decision of the Supreme Economic Council has been carried out by the diversion to national requirements of the whole of the enemy cargo tonnage.

It has not, therefore, been necessary to keep detailed records of the employment of enemy ships for a later date than 1st October, 1919.

The following table shows, however, month by month, from May 1st to October 1st, the amount of enemy tonnage in employment:—

Employment of German and Austro-Hungarian Tonnage

	May 1			June 1			July 1
	No.	Gross Tonnage	Dead-weight	No.	Gross Tonnage	Dead-weight	No.	Gross Tonnage	Deadweight
German relief	42	219,000	348,000	86	449,613	715,311	117	577,532	919,911
Other European relief	144	173,000	269,000	74	293,644	446,428	82	332,962	510,498
Allied importing services, chiefly Italian coal	26	132,000	206,000	31	120,624	194,937	20	74,888	120,520
Mediterranean and Adriatic merchant services	39	68,000	79,000	45	81,675	95,953	44	85,670	94,437
Allied military and naval services	69	374,000	373,000	84	501,756	466,751	92	576,535	527,740
Total in active service	220	966,000	1,275,000	320	1,447,312	1,919,380	355	1,647,587	2,173,106
	August 1			September 1			October 1
German relief	67	286,934	457,808	44	174,927	277,696	25	95,289	151,168
Other European relief	98	399,166	608,397	28	119,144	190,579	15	63,292	102,248
Allied importing services, chiefly Italian coal	83	432,576	671,685	191	879,531	1,348,611	247	1,112,613	1,710,507
Mediterranean and Adriatic merchant services	47	91,515	100,017	50	100,039	113,411	49	96,983	108,811
Allied military and naval services	96	607,084		95	609,920	563,969	97	486,237
Total in active service	391	1,817,275		408	1,883,561	2,494,266	433	1,854,414

financial arrangements

The financial arrangements in regard to hire differ for German and Austrian vessels.

The German vessels were taken over under the Brussels Agreement at net time-charter rates, that is to say, the British Blue Book rate less running costs normally borne by the shipowners. This deduction has to be made as the vessels are run with Allied crews, no German crews being allowed to remain to work the vessels.

The Austro-Hungarian vessels were, however, generally worked by crews from the districts from which the boats came, in view of the fact that the residents in those areas were generally of Allied sympathies. The shipowners were, in such cases, paid gross charter rates based on the Italian Government requisitioned rates less certain deductions representing the interest on capital and the amortisation of the value of the ship.

No special arrangements were made in regard to any profits which might accrue in respect of the running of the passenger vessels, as these vessels were allotted to repatriation services.

The cargo vessels, however, were treated differently, and in their case it was decided that any profits should be placed in a central fund to be disposed of later.

At the meeting of the Supreme Economic Council held on the 30th July, 1919, it was decided that any profits on the work of ex-enemy cargo vessels should be disposed of as follows:—

1. For the period up to the coming into force of the Peace Treaty, the profits of the central fund to be handed over ship by ship to the country to which the vessels are allotted for final ownership.

2. After the coming into force of the Peace Treaty, the managing country to pay a net commercial rate of hire, to be fixed by the Allied Maritime Finance Committee, to the country to which the ship is ultimately allotted for final ownership.

The net rates of hire fixed under (2) were as follows:—

• Cargo vessels 18s. 9d. per dead weight ton per month.
• Oil tankers 20s. 6d. per dead weight ton per month.
• Sailing vessels 5s. per dead weight ton per month.

These rates also apply in certain circumstances for the period prior to the coming into force of the Treaty (see minute of Allied Maritime Finance Committee No. 128).

Similar arrangements were made for passenger vessels for the period subsequent to the coming into force of the Peace Treaty; the rate of hire fixed being 27s. 6d. per gross ton per month for vessels over ten years old on the date of the coming into force of the Treaty, and 32s. 6d. for vessels under ten years old on the date of the coming into force of the Treaty.

Under the Brussels Agreement the hire to be credited to the Germans has to be included in the Allied accounts for the supply of food to Germany. There are, however, a number of counter-charges against the German Hire Fund, and although progress has been made it will not be possible to submit a formal statement to the Germans for two or three months.

II. Austro-Hungarian Tonnage

As already stated it was agreed at the Allied Conference of the 21st December that the Austro-Hungarian Merchant Fleet should be requisitioned on behalf of the Associated Governments by the Power or Powers in the best position to put the vessels into service.

Before this decision had actually been taken a number of Austro-Hungarian vessels had already come under Italian control. The rest of those in the Adriatic and several from the Black Sea were secured very shortly afterwards, and by the end of 1919 all Austrian vessels which have been traced have been taken over, the great majority by Italy and almost the whole of the balance by France.

The Austro-Hungarian merchant fleet consists of more than 200 completed vessels of over 500 tons gross, aggregating nearly 700,000 gross tons, and certain smaller steamers and sailing tonnage amounting to about 25,000 tons.

This tonnage was found to be largely in the Adriatic, but there were about 80,000 tons in Spanish, ports, 56,000 tons in the Black Sea, and 30,000 tons in Holland, and a few vessels sheltered elsewhere. The great majority of these vessels have been traced and in regard to the few still untraced it is very probable that they have been lost during the war.

In addition to these completed vessels there were at the time of the Armistice over 100,000 gross tons of vessels under construction in Adriatic ports.

Even including the vessels launched but not completed, the post-war tonnage represents a decline from pre-war figures of more than 25 per cent., this decline being due chiefly to the insufficiency of wartime construction to offset the losses of Allied seizures and by sales to foreign flags.

assignment for management

In accordance with the arrangements made in the Paris Agreement, the bulk of the Austro-Hungarian tonnage was authorised to be requisitioned and managed by Italy. At present the Italians control over 90 per cent, of the Austro-Hungarian vessels, the balance being assigned to France.

In regard to the smaller vessels, it was agreed that the employment of these should be determined locally by the Italian Government. The amount of tonnage concerned is, however, small, probably not more than 25,000 tons of small steamers and a negligible amount of sailing tonnage; about 100 small steamers of 50 net tons and over, aggregating 18,650 gross tons, have been reported by the Italian Government mainly in Adriatic services.

The following table shows the assignment for management of the Austrian vessels over 500 gross tons:—

[B] Assignment of Austro-Hungarian Tonnage to Allied Management, January 1920

Steamers of 500 Gross Tonnage and Over

Assignment for Management to—	Total			Passenger or Passenger and Cargo			Cargo
	No.	Gross Tonnage	Dead-weight	No.	Gross Tonnage	Dead-weight	No.	Gross Tonnage	Deadweight
Italy	173	594,621	808,960	65	227,354	225,896	108	367,267	583,064
France	31	74,676	106,093	14	23,665	25,125	17	51,011	80,968
Total assigned*	204	669,297	915,053	79	251,019	251,021	125	418,278	664,032

*Including 2 vessels (Cracovia and Ombla) launched and completing assigned to Italy.

employment

The Allied Conference of the 21st December, 1918, directed that the utilisation of the Austro-Hungarian vessels should be regulated by the Allied Maritime Transport Council, or by any separate organisation which the Associated Governments might substitute for it; and on the 6th January, 1919, the following principles governing the employment were adopted by the Transport Executive in London, subsequently being confirmed by the Supreme Economic Council:—

1. That suitable passenger vessels should be allotted for the repatriation of troops and prisoners of war, the latter service having priority.

2. That cargo vessels should be put in the food programme, a small number of the largest vessels being sent to Australia, and the remainder of the larger vessels being sent to the North Atlantic, and those unsuitable for the North Atlantic being sent to South America.

3. Vessels too small to be sent on distant work should be left in the Adriatic or Mediterranean for trooping and supply work.

The vessels which were deemed suitable for long distance work were used for general European relief requirements (other than German relief), and loaded and discharged under the direction of the Freight Committee of the Supreme Economic Council.

As already stated, the Supreme Economic Council decided in August 1919 that, after the fulfilment of approved relief requirements, these vessels were to continue to be managed by the country to whom they had been assigned, until such time as the Reparation Commission may have decided as to their final ownership. They are now, therefore, being run as though they were in fact part of their national merchant fleets.

The following table shows the amount of Austrian tonnage employed month by month in relief and other services:—

Employment of “Austrian” Tonnage

	May 1			June 1			July 1
	No.	Gross Tonnage	Dead weight	No.	Gross Tonnage	Dead weight	No.	Gross Tonnage	Dead weight
German relief							3	7,367	11,275
Other European relief	42	168,000	260,000	70	283,216	428,878	75	309,707	472,849
Allied importing: services	8	29,000	47,000	9	36,059	56,979	10	35,523	58,284
Mediterranean and Adriatic merchant services	39	68,000	79,000	45	81,675	95,953	44	85,670	94,437
Allied military and naval services	49	170,000	195,000	49	154,255	177,433	45	131,750	154,753
Total in active service	138	435,000	581,000	173	555,205	759,243	177	570,022	791,598
	August 1			September 1			October 1
German relief	4	9,688	14,799	7	20,402	31,849	7	21,906	35,388
Other European relief	80	332,013	502,843	10	37,797	61,305	5	20,571	33,000
Allied importing services	10	39,232	62,689	77	328,908	490,275	82	341,695	511,521
Mediterranean and Adriatic merchant services	47	91,515	100,017	50	100,039	113,411	49	96,983	108,811
Allied military and naval services	44	125,945	145,892	39	101,667	115,382	42	121,509	143,467
Total in active service	185	598,393	826,240	183	588,813	812,222	185	602,664	832,187

III. German Tonnage

In round numbers, including damaged vessels in South America and elsewhere which are not yet available for use, and vessels under construction, the Fleet may be stated at 3,200,000 gross tons of steamers of 500 gross tons and upwards. There are, in addition, at least 150,000 gross tons of smaller steamers, and probably 200,000 gross tons of sailing vessels. Including vessels launched and completing, this tonnage represents a net decrease of about 30 per cent, on the pre-war figures, or about 1,500,000 tons on a pre-war total of about 5,000,000 gross tons. This decline was partly due to sinking by war or marine risks, but more largely to the fact that Allied captures and seizures, together with purchase and requisitioning by neutrals, materially exceeded the war-time construction of less than a million tons.

At the Conferences held in Brussels and Rotterdam it was agreed with the Germans that the following provisional exceptions should be made:—

(a) Sailing vessels.

(b) Tankers^*

(c) Certain vessels engaged in supporting German forces in Eastern Europe.^†

(d) 50 per cent, of the vessels between 1,600 and 2,500 gross tons.

(e) All vessels of less than 1,600 tons gross.^‡

assignment for management

France.—The Allied Maritime Transport Council decided that sufficient German cargo tonnage should be assigned to France to give her the management of a total of 600,000 tons dead-weight of enemy cargo tonnage, and, further, that France should receive 75,000 gross tons of the first 700,000 gross tons of German long distance passenger vessels.

America.—The United States undertook the management of 10 large passenger vessels for use in connection with the repatriation of the troops.^§

Italy.—The claims of Italy to enemy vessels being fully met by the Austro-Hungarian tonnage assigned to her management, no German vessels were assigned to her with the exception of one cable ship.

Belgium.—Eleven vessels, aggregating 25,000 tons were assigned to Belgium.

Great Britain undertook the management of the balance of the German vessels.

The following table gives full details of the tonnage of the German merchant marine, and shows how this has been divided between the Allies for management:—

(C).—Assignment of German Tonnage to Allied Management, January 1920

Steamers 500 gross tons and over

Assignment	No.	Gross Tonnage	Dead Weight
Long-distance passenger–
France	14	114,213	113,706
Great Britain	53	532,444	450,762
Total	67	646,657	564,468
Other passenger—
France	7a	7,056
Total	7	7,056
Cargo—
France	85	313,415	499,998
Great Britain	245b	1,130,064	1,759,922
Belgium	11c	24,915	39,350
Total	341	1,468,394	2,299,270
Cable ships–
Italy	1	2,691	1,000
Great Britain	1	4,635	2,000
Total	2	7,326	3,000
Total assignments–
Italy	1	2,691	1,000
France	106d	434,684
Great Britain	299e	1,667,143	2,212,684
Belgium	11f	24,915	39,350
Total assigned	417	2,129,433
Vessels under construction (approximate)	69	440,000
Unassigned and undelivered	437	597,556
Total (approximate)		3,200,000

a No information available as to dead weight.

b Including 2 vessels total loss since delivery.

c “ 1 vessel “ “ “ “

d 3 vessels not yet delivered.

e 50 “ “ “ “

f 1 vessel “ “ “

deliveries of german vessels

The delivery of the German vessels began in March, and by the end of April 156 vessels had been taken over. Vessels continued to be handed over by the Germans, 44 in May, 54 in June, 24 in July, 37 in August, and 19 in September.

The total number of vessels delivered to date is 363, aggregating 1,830,235 gross tons.

employment

The following table shows month by month, from May to October, 1919, the employment to which this tonnage was allocated:—

Employment of “German” Tonnage

	May 1			June 1			July 1
	No.	Gross tonnage	Dead-weight	No.	Gross-tonnage	Deadweight	No.	Gross tonnage	Dead-weight
German relief	42	219,000	348,000	86	449,613	715,311	114	570,165	908,636
Other European relief	2	5,000	9,000	4	10,428	17,550	7	23,255	37,649
Allied importing services, chiefly Italian coal	18	103,000	159,000	22	84,565	137,958	10	39,360	62,236
Mediterranean and Adriatic merchant services
Allied military and naval	20	204,000	178,000	35	347,501	289,318	47	444,785	372,987
Total in active service	82	531,000	694,000	147	892,107	1,160,137	178	1,077,565	1,381,508
	August 1			September 1			October 1
German relief	63	277,246	443,009	37	154,525	245,847	18	73,383	115,780
Other European relief	18	7,153	105,554	18	81,347	129,274	10	42,721	69,248
Allied military and naval services chiefly Italian coal	72	393,344	608,996	114	550,623	858,336	165	770,9181	1,198,986
Mediterranean and Adriatic merchant services
Allied military and naval services	52	481,139		56	508,253	448,587	55	364,728
Total in active service	205	1,218,882		225	1,294,748	1,682,044	248	1,251,750

Appendix 320

Note by the French Delegation on the Employment of Enemy Tonnage and the Reconstruction Requirements of the Regions Devastated by the War

The French Government sees, not without emotion, that the American Delegation on the Reparation Commission proposes to suspend the repartition of enemy tonnage pending the elaboration of a plan of relief for Central Europe and that the British Foreign Office is occupying itself actively with the question of food supplies for Turkey and Armenia, without any question at any time of the urgent needs of the regions devastated by the war.

However, a clear distinction should be made between relief and the reconstruction of devastated regions; relief is a charitable work, voluntarily undertaken under the influence of lofty ideas by certain States on behalf of certain other States. It is the work of the States who take part in this relief to furnish the necessary tonnage by a priority on their own national tonnage proportioned for their total resources.

The reconstruction of the devastated regions, on the contrary, is a sacred obligation, solemnly recognised by the Treaty of Peace.

Not only has this obligation been imposed upon the enemy, but all the signatories to the Treaty and members of the League of Nations have recognised it on many occasions, especially in Article 23 (e).

The French Government is raising the question before the Reparation Commission, but it also desires to ask the Supreme Economic Council that before proceeding with the repartition of enemy tonnage consideration will be taken of the needs of the devastated regions.

As a matter of fact the Supreme Economic Council has been charged since January 1919 with the study of all temporary measures which will eventually facilitate the reconstruction of these regions. Moreover, in so far as the enemy ships have not been definitively placed under the control of the Reparation Commission, they remain under the control of the Supreme Economic Council.

The French Government considers it right that before any repartition, and for the purpose of taking into account reasons of equity and right which exist for everyone, a contribution should be envisaged for the profit of all the devastated countries to ensure them a certain modicum of enemy tonnage. This contribution should be considered as follows:—

1. Execution of a joint programme according to the formula employed during the war. It might be asked whether this method is compatible with the tendencies of the moment.

2. Temporary or definitive attribution of supplementary tonnage to each of the States whose territories have suffered from the operations of the war, in due proportion to the loss caused.

3. Any other method by which the States which are members of the League of Nations may participate in supplementary transport assigned to devastated States, and that under conditions which take account of the difficulty which these States experience in obtaining foreign currency.

February 4, 1920.

Appendix 321¹³

Memorandum by the Allied Maritime Transport Executive [Regarding the] Dissolution of the Allied Maritime Transport Executive

The Allied Maritime Transport Executive was formerly the Executive of the Allied Maritime Transport Council, a body which was responsible for co-ordinating the policy of the Allied and Associated Governments in shipping matters during the war. It was situated in London. After the Armistice, however, the need for the Committee became less urgent, and in March 1919 the Allied Maritime Transport Executive was re-constituted as a section of the Supreme Economic Council, to sit in London and deal with the administration of enemy tonnage and the provision of tonnage for relief. These duties included the allocation for management of enemy vessels handed over under the Armistice Agreements and the supervision of their use.

In July 1919 it was decided that the Allied Maritime Transport Executive should, in future, refer for final decision to the Organising Committee of the Separation Commission all questions of enemy tonnage relating to Reparation. In the same month it was also decided by the Organising Committee to ask the Allied Maritime Transport Executive to prepare a plan for the division of the ships, and collect all statistical information which might facilitate the work of the Reparation Commission when constituted.

The Reparation Commission have also recently informed the Germans that, until further notice, all deliveries of vessels are to be made to the Executive.

It will thus be seen that the duties of the Allied Maritime Transport Executive were of two kinds:

(a) Relating to the supervision of enemy tonnage time-chartered from the Germans during the Armistice period; and

(b) Preparatory work performed on behalf of the Reparation Commission.

With the coming into force of the Peace Treaty, the Armistice arrangements ceased, and the vessels are deemed to have been automatically transferred to the Reparation Commission. The supervision, therefore, of the vessels similarly passes to the Reparation Commission. Correspondingly the preparatory duties of the Allied Maritime Transport Executive cease, and the shipping work of the Commission is handed over to the Shipping Section recently formed.

It was therefore decided, at a meeting of the Allied Maritime Transport Executive held on the 4th February, 1920, to propose to the Supreme Economic Council that the Executive should formally be disbanded and that all correspondence and records should be handed over to the Reparation Commission.

The Allied Maritime Finance Committee was instituted, by a decision of the Supreme Economic Council in March 1919, to deal with the question of the finance of enemy tonnage. Initially it consisted of representatives of the United States, Great Britain, France and Italy. To these subsequently a Belgian representative was added in July 1919.

The enemy vessels dealt with were, if German, taken over under the Brussels Agreement, which required that hire should be paid to the Germans for their use at net time-charter rates based on British Blue Book rates. The Austrian vessels were taken over by agreement between the Austrian owners and the Allied Governments.

The work dealt with by the Committee may be summarised as follows:—

(a) Fixing the net rates of hire to be paid to the Germans.

(b) Agreeing with the Germans the various charges for repairs, etc., and for the disposal of cargoes on the ships taken over.

(c) Fixing all freights for relief purposes.

(d) Disposal of the profits of running the vessels.

Strictly speaking the work, up to the date of the coming into force of the Peace Treaty, is a matter for the Supreme Economic Council alone, as the ships were hired by individual Allied Governments from the German Government or Austrian owners, and the arrangements had nothing to do with the Reparation Commission. Subsequent to the coming into force of the Treaty, the German ships are deemed to have become the property of the Reparation Commission, and therefore their financial arrangements are entirely a matter for that Committee.

It is, however, exceedingly difficult to separate the work into two water-tight compartments. For example, the Germans could not be asked to discuss perhaps part of a voyage with one Committee and the remainder of the voyage with another. Indeed, seeing that the vessels were handed over by the Germans to the Supreme Economic Council, and were taken from the Supreme Economic Council by the Reparation Commission without having in the meantime reverted to German control, it will be necessary, for the purpose of valuing the ships, to take into consideration the history of each boat from the time that it first came under Allied control. The future of the Allied Maritime Finance Committee was recently discussed by the Chairman of the Allied Maritime Transport Executive with representatives of the Reparation Commission, and at least one delegate took the view that it was essential that for the future the Committee should be responsible to the Reparation Commission. It was finally decided that, in view of the difficulties of the situation, a report should be prepared for submission to the Reparation Commission in regard to the future of the Allied Maritime Finance Committee. The Allied Maritime Transport Executive, at its Meeting of the 4th February, 1920, decided that this report should be forwarded simultaneously to the Supreme Economic Council and the Reparation Commission.

February 4, 1920.

Appendix 322¹⁴

Report of the Communications Section, January 1, 1920

Situation at the Commencement of 1919

1. The chief effect of the great war was to destroy communications in all their forms, material damage to waterways and Railways being very considerable. This damage had all to be repaired. In addition to this, the heavy use to which waterways and railways were put resulted in serious depreciation in the river craft and rolling stock, and very large numbers of craft, locomotives and wagons are out of use from this cause. The restoration of communications was vital for the resumption of normal conditions and the stabilisation of the internal situation in all countries, and was immediately necessary to assure the quick and safe transport of the food relief organized by the Supreme Economic Council.

Principle of Communications Section, Supreme Economic Council

2. The Communications Section is a consultative body and co-ordinates the voluntary efforts of the various Allied Powers who are assisting in the re-establishment of normal conditions in Europe. The Section has no executive powers and exercises its functions through the missions by personal influence and mutual arrangement with the Administration concerned. It has worked on the principle that, in view of the serious communications situation in Central Europe, assistance from any quarter was to be welcomed in the general interest, that it should support and not supplant the local administration, and that its functions would cease as soon as the new local administrations had made good, had adopted normal international relations, and had inspired sufficient confidence to enable them to meet their essential requirements through commercial channels.

General Résumé of Situation

3. In the first period the lack of suitable materials for repairs to rolling-stock and river craft was the limiting factor in the work of reconstructing this material, but as a result of relief credits (both for the direct purchase of materials and tools and for the transfer of surplus army railway plant and material) the situation in this respect is somewhat improving in Central Europe.

The disorganisation of administration, due to the splitting up of railway systems, and in some cases to wholesale change of personnel, is being slowly overcome, and the position of transportation now depends very largely on the improvement of political relations between adjacent countries and on the labour question. River craft and rolling-stock are not really very deficient in numbers for present requirements if only the ones out of service could be repaired and brought into service, and if better use were made of existing stock both within the States and by co-operation between States.

Another point in the actual working of rivers and railways is the coal situation. It is essential that sufficient coal of suitable quality should be allotted to this purpose.

Much has been done, but much remains to do, and to sum up, what is now required in the new States of Europe is:—

(1.) An early ratification of the Peace Treaties and good-will between countries.

(2.) A suitable coal allotment.

(3.) Workmen to work.

(4.) In some countries an improved administration.

(5.) Credits, firstly for raw material and tools to repair locomotives, craft and wagons, and secondly for new locomotives and wagons.

For some time to come efforts will have to be concentrated on meeting the immediate situation, but early arrangements for locomotives overhaul and construction on a large scale will be necessary in practically every country if the period of reconstruction is not to be delayed for several years.

4. The Communications Section was formed as a result of the report, of date the 22nd February, 1919,^14a of a special Sub-Committee appointed by the Supreme Economic Council, which met on the 20th and 22nd February.

In this report, which outlines the general transportation situation in Eastern Europe and the proposed functions of the Communications Section, an inter-allied credit of £20,000,000 was recommended to enable the minimum assistance necessary to be rendered until essential requirements could be met through the ordinary trade channels, which it would be the object of the Communications Section to encourage.

Although the functions of the Communications Section are economic rather than military, it was agreed that the existing military organisation alone possessed the facilities for prompt and effective action.

The Supreme Economic Council adopted the report of the special Sub-Committee of [on?] the 25th February, 1919, and authorised the Communications Section to proceed as far as possible prior to the allotment of funds.

5. The Communications Section has held forty-four meetings to date.

It consisted at first of representatives of America, Great Britain, France and Italy, with a representative of Marshal Foch attached. Since that date a Belgian representative has been nominated, and a representative of the British Naval Section, and a financial representative from the French Foreign Office have been attached.

Duties

6. The work of the Communications Section consists in:—

(a.) The organisation and co-ordination of the necessary urgent assistance for the maintenance and improvement of the existing port, railway, inland waterway and telegraphic facilities in Central and Eastern Europe, with a view to the earliest possible return to normal conditions.

(b.) The apportioning of the necessary action between Allies, with a view to the most effective solution of the above problem.

(c.) The organisation of the immediate despatch of the necessary Technical Missions.

(d.) The expediting of supply of essential materials, whether out of Government credits or by encouraging commercial supply from any source.

(e.) Taking action where necessary through the naval and military authorities for improvement of economic communications.

(f.) The arranging of safe transport for relief goods.^*

(g.) Reporting on any technical communication question referred to the Communications Section by the Supreme Economic Council.

(h.) Encouraging preparation of useful elementary statistics by all the States of Central Europe which are being assisted, and preparing comparative records of the same.

7. The principle followed has been for Allied Missions to be sent to every country assisted, but that in each case one Ally should be charged with the necessary local executive action.

8. The relations between any separate Mission sent out by the Supreme Economic Council and an existing Military Mission under the High Command have been defined as follows:—

“When the Military Mission exists under the High Command its relations with the Technical Mission of the Supreme Economic Council will be the same as its relations with the civil organisation concerned, to assist which is the duty of the proposed Mission.”

The Technical Missions report to and receive instructions from the Communications Section of the Supreme Economic Council through the channel laid down by the Power responsible for executive action.

9. The Inter-Allied Technical Communications Mission at present in existence and the general situation in each country assisted are as follows:—

Poland and Baltic Provinces

This mission is under the executive presidency of Lieut.-Colonel Graham of the British army.

(a) Poland.

The transportation situation in Poland continues to improve and is, generally speaking, better than in the other new States.

A credit allotment out of relief funds for £500,000 was made available for Poland. Full reports were prepared by the Mission with lists of material of primary urgency, consisting chiefly of material and tools for repairs to locomotives, of which about 50 per cent, were out of repair. Considerable quantities of this material have been delivered to Poland via Dantzig, and orders have been placed for the balance of the material, delivery of which should be effected shortly. The Poles have made determined efforts to re-organise their railways despite many difficulties, and the result of this and the arrival of this material has reduced the locomotives out of repair to about 30 per cent.—a very considerable improvement. It is hoped that this improvement will encourage overseas commercial enterprise to assist in financing further development, including the provision of locomotives and rolling-stock.

One hundred locomotives out of the Armistice Pool have been delivered to Poland, and about 1,900 wagons out of 2,000 promised. The other 100 are in course of delivery.

In addition to railway work, this Mission has the task of assisting in the re-organisation of the waterways of Poland, and a technical waterways expert is attached to the Mission to work in liaison with the Naval Mission.

The continuance of Military operations in Poland is unfortunately very detrimental to the quick improvement of the economic situation as regards transportation, and the amount of military traffic which is essential to these operations hampers the civil traffic considerably. This, however, is unavoidable.

Despite all these difficulties the transportation situation continues to improve.

The latest figures for rolling-stock in service are:—

Locomotives	70 per cent.
Wagons	90 per cent.

(b) Baltic Provinces.

The transportation situation in the Baltic Provinces is chaotic.

In the present political confusion ordered railway administration is an impossibility. No relief credits for transportation have been arranged, and with the exception of thirty Armistice locomotives supplied to Lithuania little help has been given to the railways of these provinces. Statistics are almost entirely lacking, but it is known that a great shortage of all kinds of rolling-stock exists, and that a great many materials of primary importance are entirely lacking. The countries are not without resources, but the political situation has hitherto precluded any commercial credits for the re-establishment of communications.

Spare parts and material to the value of about half a million would go a long way to starting repairs and getting all transportation on its legs again, as the necessary personnel is available locally.

Vienna Mission

10. This mission is a recent combination of the following Missions:—

• The Adriatic Mission, original American Presidency.
• Austria-Hungary, original Italian Presidency.
• Czecho-Slovakia, original American Presidency.
• Jugo-Slavia, original American Presidency.

The whole mission is under the presidency of Major Favrogossa, the Italian member.

Adriatic Mission

11. The first Inter-Allied Communications Section Mission to be authorised was the Mission to control the through railway service from the south for the relief of the States of the old Austro-Hungarian Empire. The responsibility for executive action of this work was allotted to the Americans, and the head of the Mission was Lieutenant Colonel Causey, United States army, with headquarters at Vienna, the instructions to whom were adopted on the 11th March. The powers of this Mission were defined by a special decision of the Supreme War Council.^14b Much useful work has been done and the “goods” have been delivered despite many difficulties in port and railway services. The initial programme of relief was completed some months ago, though consignments of cattle for Jugo-Slavia continue to arrive, for which careful organisation is required to enable the stocks to be sent to their destination alive and fit. There is still a good deal of advisory work to be done in connection with trains of all sorts from the ports to the interior, as well as the arranging with the various Governments for the passage of rolling-stock across the frontiers.

The attached charts (Annexes 1 and 2)^14c show the tonnage of relief despatched from Fiume and Trieste since the Mission started working on the 7th March up to the end of June. The decrease shown on the curve is due to the opening of the Elbe, which obviated the long railway haul from the south. The Adriatic Mission has now absorbed the old Austria-Hungary, Czecho-Slovakia and Jugo-Slavia missions, and has become the present Vienna Mission.

Austria

12. This country is in a bad way. The large workshops are still well equipped and can afford to repair locomotives and wagons for other countries as well as their own, but the whole crux of the situation here is coal. Attention has been called to this fact, and it is known that at any moment there may be a total collapse of transportation unless coal is provided for the railways. Express trains, and even main line trains have ceased to run regularly, and lately, for certain periods, all passenger traffic has been suspended. It is vital that a regular supply of coal for the working of the Austrian railways should be allocated separately from the country’s other needs from the output of Poland, Silesia or Czecho-Slovakia.

The activities of the local Mission are mainly confined to assisting in the movement of coal and foodstuffs to Austria. The assistance rendered generally takes the form of making the arrangements with the neighbouring States and engendering good will, and assisting in the arrangement of contracts and the execution of same. No material assistance in transportation has been given to Austria. A proposal by the Communications Section that France, Belgium and Great Britain should each contribute 1,500 wagons to Austria for her urgent requirements was not acceptable to the three Governments concerned, but the matter is still under consideration.

Locomotives are plentiful, but material for repair is not being replaced, and the country is very short of wagons. Latest figures fit for service:—

Locomotives	63 per cent.
Wagons	67 per cent.

Hungary

13. The position of this country under Bolshevik rule was not as bad as might have been expected, and there were indications that matters might have improved readily under a settled political régime.

The figures of rolling-stock have been carefully considered with a view to the actual requirements, and the same remarks as regards assistance, both moral and material, apply as in the case of Austria.

The quantity of locomotives and wagons is not now sufficient for the country’s necessities, owing to the sequestration by Roumania of large numbers of both.

Latest figures fit for service:—

Locomotives	27 per cent.
Wagons	76 per cent.

Cecho-Solovakia

14. This state is better off than many others, as it has its own coal supply, and has a fair supply of rolling-stock and workshops in more or less working order.

The representatives of the Communications Section are active in assisting in the transport of coal and arranging with the neighbouring Commissions for the running of trains under the existing contracts, the exchange of stock, &c. Ninety-two locomotives have been sent to Czecho-Slovakia from the Armistice Pool. Negotiations have been proceeding between the French Ministry of Finance and the Government of Czecho-Slovakia, with a view to the latter purchasing 1,500–2,000 Armistice wagons in good running order, to be used solely on coal traffic between that country and Austria, as well as the steel parts for 2,000 American wagons, the bodies of which would be built in Czecho-Slovakia.

An arrangement by which Czecho-Slovakia was to repair Armistice wagons for France and keep a proportion in payment has been found not to work well, as practically all the repairs needed to Armistice wagons are to running parts.

Arrangements have been concluded for Austria to supply locomotives and for Hungary to supply rolling-stock for the delivery of coal to Vienna and Budapest respectively.

The statistics available are very incomplete, but it would seem that Czecho-Slovakia is in a fair way to work out its own salvation, and it should only be a question of time for the transportation situation to be put on a sound basis, especially with an improvement in political relations with neighbouring States.

Latest figures fit for service:—

Locomotives	62 per cent.
Wagons	88 per cent.

Jugo-Slavia

15. In the beginning the executive action on transportation questions in Jugo-Slavia was undertaken by America, which was represented by Major McKennet, with headquarters at Belgrade. Detailed lists for immediate urgent requirements, as well as prospective total requirements, are available in the Secretariat for the railways of Jugo-Slavia. On the withdrawal of the Americans from the Communications Section Lieutenant-Colonel Jordan Bell of the British army took charge.

Owing to the almost complete destruction of practically the whole of the railway system in Serbia, including the telegraph and signalling installation, an enormous amount of reconstruction has been necessary in this country. Work was delayed through lack of survey instruments. Progress, however, has been marked, and with the completion of the Save Bridge on the 4th October all railway lines are now through, though several of the bridges are only temporary wooden structures.

The country should make every effort to develop its coal resources, as the coal supply is certain to be a great difficulty. Cross frontier interchange has not up till now been working well, owing to difficulties as to agreements with neighbouring States. There are reported to be ample wagons and sufficient locomotives in the country, but the outstanding needs are materials, tools and spare parts for their repairs.

Most of the 1,080 kilometres of standard-gauge track have up to the present been restored to operation, but the newly constructed tracks will only be suitable for slow traffic for some time to come.

Heavy repairs to locomotives and rolling-stock will be seriously impeded until the shops at Nish are reopened. The necessary plant for doing this is being dispatched from American Army stocks in France.

It was largely due to the timely aid of Colonel Jordan Bell that the railway bridge over the Save river at Belgrade was completed and opened to traffic on the 13th October, 1919, just two hours before the floods washed away the false work. This was the last remaining link to be repaired on the Paris-Constantinople line, and it is hoped that the lines will soon have settled sufficiently to allow the Simplon-Orient Express to run direct to Constantinople.

A credit of £40,000 for urgent telegraph, telephone and survey material was allotted out of relief funds for Serbia. All this has been placed on order, and a considerable quantity is in course of delivery.

There are, as yet, no reliable statistics for Old Serbia, but a large amount of information is available for the rest of the railways of Jugo-Slavia.

Roumania

16. In Roumania the position is not very satisfactory. Labour is disturbed and the trains do not run regularly. A relief credit of £500,000 was voted for Roumania, and about £300,000 has been spent. Up to the end of December 1919 all supplies to Roumania were stopped by decision of the Supreme Council. This embargo has now been removed. Further lists are available of material required. One hundred Armistice locomotives were destined for Roumania, and up to the time of the embargo sixty-three had been delivered. The number will not now be completed, as all undelivered Armistice locomotives have been called back into the pool for reparation. The principal needs would appear to be closer co-ordination of the railway administrations of Old and New Roumania, and a thorough reorganisation, with extensions and new construction, of the locomotive and wagon repair shops.

No Inter-allied Mission has been formed in Roumania. There is, however, a British Railway Mission, now under Lieutenant-Colonel G. Walton, and a Railway Section of the French Mission.

Such statistics as are available are not considered very reliable, but the figures for Old Roumania show bad conditions and a deplorable state of affairs.

Latest figures fit for service:—

Locomotives	29 per cent.
Wagons	57 percent.

17. French Missions have operated alone in:—

Bulgaria–
Locomotives	37 per cent.;
Wagons	56 per cent.; fit for service.
Greece–
Locomotives	76 per cent.;
Wagons	86 per cent.; fit for service.
Turkey in Europe;

and have furnished the statistics which are published for Bulgaria and Greece.

Trans-Caucasus

18. The Railways in the Trans-Caucasus were controlled by a British Military Technical Mission under General Brough. In September 1919 this Mission was withdrawn by the War Office and has not been replaced. The railways are in a lamentable condition, and there is no organization; there is no confidence between Georgia, Armenia and Azerbaijan. A working agreement between these three which was on the point of being established fell through on the departure of the British Mission. If the task were undertaken it would be essential to provide considerable credit for spare parts and material for repairs to locomotives and rolling-stock; without such a credit of at least £100,000 a Mission would be useless.

19. It must not be forgotten that Russia, sooner or later, under whatever form of Government may eventually be recognised, will require assistance in reorganisation, and in the provision of essential material necessary for the repairs to locomotives, rolling-stock and craft.

From the information it has been possible to collect the state of transportation in Russia, as a whole, is lamentable.

The length of line in operation at the beginning of 1917 was 64,000 versts. In October 1918 this had dropped to 22,000 versts. Out of an original 20,000 locomotives there were said to be only 4,500 in working condition at the end of 1918, and it was thought probable that a further 1,500 of these would have become unfit for use by the middle of 1919. The repair of locomotives was reported to have decreased from 559 in 1916 to 396 in 1917, and 80 in 1918. It was reported that the Soviet Government hoped to get the workmen to repair 700 or 800 during 1919, but under the existing conditions it was not probable that a greater quantity of locomotives than were repaired in 1918 could be dealt with.

The situation in wagons was very little better than that of the locomotives. No definite figures are available, but the Bolshevik Minister of Communications stated to a reliable Danish Red Cross official at the beginning of March 1919 that 80 per cent, of the rolling-stock in Russia was unusable. This situation led the Bolshevik Government to draw the conclusion that it would be necessary to resume the system of piece-work, and from their recent military movement it would appear that some such measure (or possibly reported system of forced labour) has prevented further deterioration.

20. In the Don and Caucasus a strong Railway Section under Colonel Hull was attached to the British Military Mission in March 1919 for the purpose of advising General Denikin on railway matters.

The Communications Section has never been represented in South Russia, and thanks are due to the British War Office for all the information available. This information is extensive, and is all contained in able reports by Colonel Hull. Briefly, the situation is as follows:—

(1) Shortage of locomotives.

(2) Shortage of wagons.

(3) Complete lack of material for repairs.

(4) Complete demoralisation of workmen.

(5) Inadequate workshops to cope with reconstruction.

(6) Lack of suitable machinery.

(7) Lack of fuel.

(8) Complete lack of organisation.

(9) Incapacity of officials.

(10) Bribery and corruption rampant.

With the advance of Denikin’s army more and more area came under the control of this Railway Mission, but with the recent developments all the reports will be out of date. Even should the country be retaken once more, conditions will have changed and no doubt further damage will have been done.

A credit of £1,000,000 was provided by the British Government: £500,000 for railway stores, £500,000 for equipment, clothing and medical stores for the railway staff. A great deal of these stores had been delivered.

River Navigation

21. Danube.—This river is treated as a separate subject owing to its vast importance and the number of States which it serves.

The question of facilitating the transportation of relief and commercial consignments on the Danube was raised on the 23rd April by Colonel Logan of the United States army, and as a result the Supreme Economic Council authorised the formation of a temporary Interallied Commission, working under the orders of the High Command. The Commission, consisting of representatives of Great Britain, France, United States of America and Italy, was duly formed under the presidency of Admiral Troubridge, R. N. Briefly its functions were:—

(a) To facilitate the circulation of relief and commercial barges.

(b) To collaborate with the Communications Missions established in the riparian States, in taking any necessary action to assure the upkeep of the boats and the supply of fuel and lubricants.

(c) To improve as quickly as possible the means of communication and liaison between the commandants of the three sections into which the river is at present split up for executive military purposes.

This provisional Danube Commission has done very good work in opening a limited traffic and in keeping it moving on the river, as well as in clearing channels through Hungarian waters of mines, &c., after the fall of the Bolshevik Government supervising the service at the Iron Gates Section, with the result that navigation can now take place along the whole navigable length of the river. The limiting factors are too little coal and too much politics.

Under the Peace Treaty an International Commission is to be formed to administer the whole of the Danube above the sphere of the existing European Commission.

Invitations were therefore recently sent, by order of the Supreme Council, to the non-enemy riparian States to attach members to this Allied Commission, with a view to creating an organisation which could gradually undertake the duties that would fall eventually to the International Commission and so save an interregnum. All the States availed themselves of this invitation, though unfortunately the Roumanian member was not present at the first meeeting of the enlarged Commission on the 30th November and the 1st December. On the ratification of the peace treaties the transformation of the Inter-Allied Commission to the International Commission will practically be one of name only, and any confusion due to a sudden change of control should be avoided.

The ownership of many of the river craft is in dispute or suspense as the result of circumstances of the war and of the Armistice and Peace stipulations. The complete reorganisation of the Danube traffic, which is an important factor in the restoration of normal conditions in Central Europe, cannot take place till the final ownership of the river craft has been determined by the Arbitrator to be nominated by the American Government under the conditions of the Peace Treaty. It is of the utmost importance that no steps should be left untaken to expedite the decisions of this Arbitrator. In the meantime the provisional use of the available craft by local administrations is being facilitated by the Commission, who have themselves organised certain temporary inter-state services where these are not otherwise provided for. Funds were urgently needed for temporary work and for current expenses of the pilotage organisation and the meteorological bureau, run by the Provisional Danube Commission. An advance of £15,000 was made by the British Government. Once the craft are definitely allotted and the traffic reorganised the need for financing the river will disappear, as the money spent can be recovered from dues, &c.

Elbe

22. In order to relieve the congestion on the railway caused by the relief traffic from Trieste to the states of the old Austro-Hungarian Empire, it was arranged at the beginning of April 1919 to open the Elbe for shipments of relief to Czecho-Slovakia. The attached chart (Annex 3)^14d shows the dispatches of relief from Hamburg destined for Czecho-Slovakia from the time of inception up to the end of June 1919. During May the Elbe was again opened for ordinary commercial traffic to Czecho-Slovakia, and relief traffic has ceased as a special item.

Facilities in Late Enemy Countries

23. The Communications Section arranged for the insertion in Railways and Waterways clauses of the Preliminary Peace terms of an article securing the powers requisite for the functions of the Supreme Economic Council after the signature of peace.

Article

“(The Enemy States) will carry out the instructions which may be given them as regards Transportation by an authority designated by the Allied and Associated Powers.

• “1. (Concerns military movements.)
• “2. As a temporary measure for the transport of relief traffic to various localities, and as regards the re-establishment as quickly as possible of the normal conditions of traffic and the organisation of postal and telegraphic services.”

Postal and Telegraph

24. In order to assist the relief administration the American member of the Communications Section arranged for the installation of new or connecting up of existing telephonic and telegraphic circuits between the principal towns of Europe, giving also direct communication with Paris.

Arrangements were made in the early days for the re-establishment of postal communications with Poland, Czecho-Slovakia, Austria, Jugo-Slavia and Roumania. It is hoped that an international conference of postal authorities will be held in Paris early in February with a view to expediting the resumption of normal conditions in Central Europe generally.

Trans-European Train Services

25. The Communications Section was represented at an international conference for the improvement of cross-European rail services. A résumé (altered to date) of the results is attached (Annex 4).^14e

26. The present general transportation situation has been complicated by the delay in the ratification of the Peace Treaties. It is this non-ratification which prevents free traffic between States, as until rolling-stock has been definitely allotted and re-marked States will not readily consent to its passage into another State. Under the Peace Treaties, committees of experts are to take in hand the redistribution of rolling-stock resulting from territorial changes and a definite and final allotment will be made to each State. This final distribution is of the utmost importance and is really urgent. Once free interchange of traffic takes place among States far better value will be obtained from the rolling-stock available, and though undoubtedly every State will not have all it requires, it will at least have plenty to start and keep going the vital part of its economic situation.

A Commission for the repartition of rolling-stock in the old Austro-Hungarian Empire has begun its work at Vienna under the presidency of Sir Francis Dent. The members of the various Communications Section Transportation Missions have been directed to furnish Sir Francis Dent, President of the above Commission, with any information and statistics that he may require.

General Census of Rolling-stock

27. It was decided that the Presidents of the various Transportation Missions in Europe should request the Governments concerned that a general census of all rolling-stock should be taken on a uniform basis throughout Central Europe every fourth Sunday, starting on the 4th January, 1920. It is understood that arrangements were complete in most countries for the first census, and it is hoped that the proposed measures will, in the next few months, afford information of the utmost importance for the re-establishment of normal railway conditions.

Wagons Exchange Committee

28. Interchange traffic across certain frontiers was originally organised and controlled by the Communications Section Missions with a fair degree of success by constant watching and bringing neighbouring States into touch with each other.

As a result of a careful study of the situation an international wagon exchange Committee has been set up at Vienna, at the invitation of the Supreme Council, by the countries formed out of or acquiring territory from the old Austro-Hungarian Empire, for the purpose of facilitating the interchange and checking of wagons at frontier stations. It is hoped that by this means a great deal of the mistrust of States will be overcome, and a freer interchange of commodities will take place. By general agreement an impartial Allied President (M. Leverve) was appointed to this Committee, which first met on the 14th January.

Statistics

29. In order to help the Communications Section to make a comprehensive up-to-date review of the transportation situation in Eastern Europe, all Missions in Europe have been requested to fill in the accompanying statistical form (Annex 5) every week or ten days and forward to the Section Headquarters. This has been done regularly, and the result of this work is shown in the diagrams attached (Annex 6, 4 charts, Poland, Roumania, Bulgaria, Transylvania). The fact that it has been found possible to prepare such curves at all is in some cases evidence of an improvement in the organisation compared with the situation early in the year 1919. While it cannot be claimed that the figures from which the graphs have been prepared are absolutely accurate, it is believed that they form a valuable indication of the developments or otherwise of transportation in each country. The four curves show—

(1) The percentage of wagons in working order.

(2) The percentage of locomotives in working order.

(3) The total train kilometrage.

(4) The average kilometrage, per engine in working order per day.

(1) and (2) show the physical situation, (3) shows the gross results and (4) is an indication of the efficiency of the operation. Where exceptional events interfered with the normal course of the curves a note has been made on the diagram.

Additional diagrams are attached, showing the locomotive and wagon situation in greater detail as regards Poland, Roumania, Hungary, Bulgaria and Transylvania (Annex 7, ten charts).

Bulgaria

30. Bad state of track, through lack of sleepers for replacements and bad ballast, has led to serious reductions in the safe speed of trains.

Shortage of materials and skilled workmen for repairs to locomotives and wagons and of coal.

In spite of this, a fair train service is maintained, though not sufficient for the needs of the public. It is feared that the situation will get worse when the locomotives and wagons taken from Serbia are returned under the Peace Treaty. Organisation better than might have been expected in the circumstances.

Yugo-Slavia

31. Twice a week a passenger coach connects Belgrade with the train from Constantinople to the Bulgarian frontier, and there is a daily mail van over this route, but these primitive services are at present subject to great delays.

Annex 4

Resume of the Negotiations for the Organisation of the Express Trains of the 45th Degree Parallel and 50th Degree Parallel, and for the Modifications to the Convention of Berne¹⁵

With a view to restarting at the earliest possible moment railway communications between France, England, Belgium and the old and new countries of Central and Eastern Europe, a meeting was convened at Paris during the beginning of the month of August. Representatives of all the countries interested, with powers both to discuss technical questions and to undertake engagements of a political nature, were represented at this conference.

Over and above the numerous conferences held by the different Commissions which shared the work arising out of these questions which had to be studied, three plenary meetings were held on the 6th

Annex 1

GRAPH SHOWING WEEKLY DESPATCHES OF RELIEF BY FIUME

Annex 2

GRAPH SHOWING WEEKLY DESPATCHES OF RELIEF BY FIUME

Annex 3

GRAPH SHOWING WEEKLY DESPATCHES OF RELIEF BY FIUME

and 22nd August and the 6th September at the Ministry of Public Works. The vast programme of our International Railway relations has actually been laid down and will be put into force as soon as possible.

This programme comprised:—

1. The definite organisation of the Simplon-Orient Express, called the 45th Parallel Express, with direct coaches from Paris to Belgrade and from Paris to Bucharest, with immediate future extension to Sofia and Constantinople, and ultimately to Salonica and Athens. This organisation will come into force on the 15th October. On the same date the Ostend–Brussels–Milan train will be started to connect at Milan with the Simplon–Orient Express. The line Belgrade–Sofia–Constantinople is not yet in sufficiently good order to allow of the through train running.

Convention between the interested countries on the working of the Simplon–Orient Express under the conditions stated above were signed by the qualified representatives on the 22nd August, 1919.

2. The organisation of the 50th Parallel Express between Paris, Prague and Warsaw via Strasbourg and Nuremberg, giving up the route of the Old Nord Express from Paris–Cologne–Berlin.

The train from Ostend to Strasbourg will be started to connect at Strasbourg with the Paris–Prague–Warsaw train.

This train will run, to commence with, three times per week and will have attached to it a coach to run direct from Paris to Vienna. It will start about the end of January. Delay in ratification of the Peace Treaty and consequent difficulties with Germany have given rise to this delay.

Convention between the interested Allied countries on the working of the Paris-Prague-Warsaw Express under the above conditions was signed by the interested representatives on the 6th September 1919.

A Conference was also held on the 15th September between the representatives of all Railway Administrations concerned, including representatives of the Bavarian and Baden Railways.

At this Conference the treaty regulating the definite number of trains was placed before the German Representatives, who discussed it and who decided to transmit it immediately to their respective Governments for approbation.

This conference has resulted in the settlement of the definite timetable of the train de luxe Paris-Prague-Warsaw, as well as the timetable for the through train composed of passenger vehicles of first, second and third class, which will also circulate between these three capitals.

3. The modifications made to the convention of Berne and the lettering of international coaches, the unification of tariffs and the arrangement of international transports were adopted at the meeting on the 6th September.

These arrangements, which regulate the transport of goods, are destined to modify the Convention of Berne, which is at present in abeyance, and which should be entirely revised.

4. It is understood that the Belgian, British and German railways are now in negotiation re the running of the Ostend-Vienna train.

Annex 5

General Weekly Statistics To Be Rendered by All Railway Missions

Total number of locomotives at end of week
Total number of locomotives under, or laid up waiting, repair—
(a) Heavy repairs
(b) Light repairs
Total number of locomotives repaired and put into traffic during past week—
(a) After heavy repairs
(b) After light repairs
Total number of passenger vehicles at end of week
Total number of passenger vehicles under, or laid up waiting, repair—
(a) Heavy repairs
(b) Light repairs
Total number of passenger vehicles repaired and put into traffic during past week—
(a) After heavy repairs
(b) After light repairs
Total number of wagons at end of week
Total number of wagons under, or laid up waiting, repair—
(a) Heavy repairs
(b) Light repairs
Total number of wagons repaired and put into traffic during past week—
(a) After heavy repairs
(b) After light repairs
Kilometres operated (excluding sidings)
Average number of trains per day—
(a) Passenger
(b) Freight
(c) Military
Total	_____
Number of wagon (or train) kilometres for the week—
(a) Passenger
(b) Freight
(c) Military
Total	_____

Notes on General Situation.—These should point out limiting factors in transportation, directions in which demands for transportation have not been complied with and steps being taken to remedy developments of relations with adjoining administrations, arrivals of rolling-stock, materials, tools, &c. and any other factors which are likely to assist the communications section in arriving at a proper estimate of the situation.

Annex 6 (I)

POLAND (Excluding Posen and Military Lines)

Annex 6 (2)

ROUMANIA (Old and Bukovina)

Annex 6 (3)

BULGARIA

Annex 6 (4)

TRANSYLVANIA

Annex 7 (I)

POLAND—LOCOMOTIVES (Excludes Posen and Military Lines).

Annex 7 (2)

POUND—WAGONS (Excludes Posen and Military Lines)

Annex 7 (3)

ROUMANIA—LOCOMOTIVES (Old Roumania and Bukovina)

Annex 7 (4)

ROUMANIA—WAGONS (Old Roumania and Bukovina)

Annex 7 (5)

HUNGARY—LOCOMOTIVES

Annex 7 (6)

HUNGARY—WAGONS

Annex 7 (7)

BULGARIA—LOCOMOTIVES

Annex 7 (8)

BULGARIA—WAGONS

Annex 7 (9)

TRANSYLVANIA—LOCOMOTIVES

Annex 7 (10)

TRANSYLVANIA—WAGONS

Appendix 323

[Memorandum by the] Consultative Food Committee [Regarding] Food Supplies & European Requirements

An attempt is made in the following pages to make a rough estimate of the food requirements of the countries of Europe and the supplies available.

Mr. Hoover has stated that Europe must work or starve but if she is to work efficiently ample supplies of food from overseas must, owing to her reduced productivity, be secured. The provision of bread, the main and cheapest source of energy of the greater part of the European population, and the one food on which the war has proved a certain elasticity of supply must exist to make good deficiencies of meat, fats and dairy produce and to prevent actual hunger in any class of the population, must continue to be the first charge of the European Governments.

As far as can be seen the supply of breadstuff cereals available during the cereal year 1919–20 is sufficient to meet the needs of Europe, but in the case of breadstuffs [and] of all other food commodities lack of credits has prevented the necessary food requirements from being filled. With increased credit facilities considerably greater monthly quantities should be imported into Europe in the last eight months of this cereal year, and it is in respect of this period that an estimate of the importation requirement of certain foodstuffs is forecasted in the following table. In some cases these estimates are considerably below

Approximate European Importation Requirements From Overseas, January to August 1920

	Breadstuffs	Frozen Meats	Pigmeat & Lard	Sugar	Cereal Fodders
	Tons.	Tons.	Tons.	Tons.	Tons.
United Kingdom	4,000,000	500,000	300,000	630,000	2,500,000
France	1,900,000	100,000	100,000	370,000t	590,000
Italy	1,800,000	70,000	35,000	35,000†	100,000
Belgium	800,000	16,500	60,000	14,000	560,000
Portugal	100,000			23,000
Greece	170,000			6,000
Czecho-Slovakia	235,000	5,000
Romania
Serbs,Croats and Slovenes
Poland	200,000
Finland	100,000
Lithuania
Latvia
Esthonia
Spain	170,000			3,000
Switzerland	250,000			60,000	70,000
Sweden	200,000			10,000	75,000
Denmark	235,000				300,000
Norway	200,000	4,000	2,000	50,000	80,000
Holland	400,000				600,000
Germany	800,000	160,000†	400,000†	100,000*	800,000
Austria	400,000	38,000	50,000	80,000*
Hungary	235,000*	25,000	5,000†	25,000*
Bulgaria
Turkey
Total	11,960,000	918,500	952,000	1,201,000	5,675,000

*To be imported from surrounding States. Not included in totals.

†To be imported in part from surrounding States.

the amounts stated by the various Governments as necessary, as some consideration has been given to the limitations of shipping, finance, inland transportation and port difficulties.

The system of partition of foodstuffs among the Allies carried out during the latter part of the war by the Allied Food Council, based on physiological requirements and made possible by a pooling of finance and tonnage is with the desire of freedom from State control no longer possible. Each country must therefore fend for itself, but in order that the beneficial effect of food control during the War, in reducing malnutrition to a minimum may not be destroyed and to prevent profiteering, encourage production consultation and co-operation in food matters, among the countries should be retained until at least the end of the cereal year when it is hoped conditions will be more stable.

A. Breadstuffs

i. changes since preliminary estimates made at the signature of the peace

The general balance of supply and demand of breadstuffs since the preliminary estimates were compiled in June last has not changed to any great extent, owing to counterbalancing factors:—

Diminished Supplies in Exporting Countries

The wheat harvests of the United States and Canada have resulted in a total out-turn of 24,997,000 tons and 5,344,000 tons respectively compared with the first estimates of 33,125,000 tons and 6,568,000 tons.

The Australian market, owing to bad harvest prospects has been eliminated except for contracts already effected and which are now being shipped. The Indian and Russian markets are still out of the reckoning.

Decreased Purchasing Power, Lack of Credit, increased prices and shortage of tonnage

Exchange.—The purchasing power of nearly every European State has been greatly reduced. The position of the Allies is shown in the increasing adverse exchanges set out below:—

Rates of Exchange (on London)

	Paris	Rome	Canada	United States	Argentine	India
	Francs per £	Lire per £	Dollars per £	Dollars per £	Pence per gold Peso	Shilling & pence to the silver Rupee
1st July 1919	29.51	36.25	4.74½	4.62	51 3/16	1s.8d.
1st Jan. 1920	42.42½	50.25	4.06	3.69½	62	2s. 41/4.d

Lack of external credits has prevented the “Relief” countries and Germany and Austria from making any large purchases in the earlier part of the cereal year.

Prices.—Operations have been restricted to the markets of North and South America, the former of which was completely controlled until 15th December 1919. In the Argentine the price of wheat, which was about $11.80 per 100 kilos, on the day of the Peace signature rose sharply by $2.50 and continued upwards in the hands of speculators to nearly $20 at the end of July. Since that date, apart from the slight fluctuations according to weather reports influencing the prospects of the 1920 crop, the price has tended steadily downwards to about $13.70 at Buenos Aires on the 1st January, 1920. In North America the basic price of $2.26 guaranteed at Chicago has been maintained.

Tonnage.—In spite of the fact that tonnage in existence now is between 2 and 3 million tons more than before the war, instead of becoming increasingly fluid, it is as scarce as at the date of the Peace Signature. This lessened transportation capacity is due almost entirely to port delays, and has resulted in tonnage being as expensive as in June last. The rates from countries for which it has been possible to charter steamers on the open market are as follows:—

	Canada & United States (per quarter)		Argentine (per ton)
	Western Europe	Mediterranean	United Kingdom ports	Western Europe	Mediterranean
1st July/1st Oct. 1919	15s.	17s.	200s.	*115s.	*117s. 6d.
1st December	12s.	15s.	142s. 6d.	190s.	190s.
1st January	14s.	17s.	160s.	180s.	200s.

*Ministry of Shipping rates for directed tonnage.

The retention of a system of semi-control whereby British steamers are directed to charter at fixed rates to carry the bread grains requirements of the United Kingdom, renders it impossible to judge the actual state of the freight market, as the free tonnage, being a proportionately small quantity, is enabled by this system to charge rates far above those which could be got if all tonnage were decontrolled. It must be assumed, however, that the increased cost of bunkers has greatly raised the cost of running ships and that delays at both loading and discharging ports which have been immeasurably more serious than could possibly have been predicted last summer, would have prevented any substantial decrease if tonnage had been entirely free.

ii.—position on 1st january, 1920

The above conditions are true of the current cereal year up to date.

Some considerable changes may at any time be expected:—

(1) If owing to the ratification of the Peace Treaty subsistence rations are available to ex-enemy countries provided securities are forthcoming for purchase and transport.

(2) If in the event of an international loan involving Allied and Neutral States, these countries should be given financial facilities for procuring full breadstuffs requirements.

(3) If an American loan of $150,000,000 with further contributions by the United Kingdom, France and Italy is granted for Relief areas.

It results, therefore, that the importation requirements of Europe in the eight months January-August should not be successfully calculated on the basis of the imports actually effected in the past four months, when many of the bankrupt States have been living nearly exclusively on home production, first because they had no other assets, and secondly, because they trusted to some arrangement being devised to secure for them foreign credits later in the cereal year. The requirements of Germany and Central and South-Eastern Europe will, if the above changes take place, add a further overseas demand of about 2,000,000 tons to those existing in the past months of the cereal year. The table appended^15a which takes account of these requirements shows that supplies available for export from all parts of the world are still estimated to be sufficient for importation needs but that no margin remains for the possible maladjustment of supply and demand in each separate exporting market. It may be assumed that the maximum quantity of cheaper cereals, such as rye (supplies of which have been increased by the cessation of distilling in the United States) will be used in the place of wheat, but it will not be possible to look for a relief to the breadstuffs position by the substitution of rice inasmuch as the normal European consumption requirements of rice in 1920 will exceed the estimated available supplies. Apart from this consideration a serious obstacle is placed in the way of importation by the present enhancement in the value of silver. In India the prohibition of export on rice has now been removed but the disposal of the crop is controlled and it has been announced officially that an export of about 550,000 tons of Burmah rice to Europe will be authorised in the year, whereas in prewar years this quantity was over 1,000,000 tons. The Siam crop was so nearly a failure that export has been prohibited until the end of March and it is improbable that more than 200,000 tons at the most can be shipped after that date. An export of 1,174,000 tons was reached in the last year before the war. The Saigon crop is satisfactory but in this market the increase in export duties has occasioned further advances in prices and the constant rise in silver for which there is a very large Eastern demand, renders it nearly impossible for trading transactions to be completed.

One of the salient features of the present situation is the absence of an economic level for imported wheat in Europe, especially shown in the difference between the prices of U. S. A. and Plate wheat c. i. f. European ports. Since the opening of the market in U. S. A. prices have soared to $0.50c. per bushel beyond that charged by the Grain Corporation and Canadian prices have followed the American curve of prices upward. The Argentine market, has, however, remained nearly steady during this time. This widening difference between the North and South American Continents together with increased European demands will concentrate competition in South America more than formerly, and the efforts of those countries engaged in consultative buying must, if the cost of feeding Europe and [by] America is not to be substantially increased, be directed towards the reduction of prices in the dearer markets.

During the war economies were effected and the bread supplies to the Allied countries secured by making large contracts for the purchase of grain. Whether such a policy can be advantageously resorted to again on behalf of the parties to the Consultative Food Committee when conditions are more stable, is a matter which might well be considered when the question of the allocation of Government credits is discussed.

To look further ahead than the end of the current cereal year may be too idle a speculation, but the study of the comparative breadstuff harvest yields of Europe (excluding Russia) before and after the war as portrayed in the following figures which show a deficiency of 17,000,000 tons is indicative of a real danger of demand outstripping supply:—

Thousands of Metric Tons

	Average 1909–1913	Estimated 1919–1920
United Kingdom	1,623	1,975
France	9,890	5,551
Italy	5,125	1,731
Belgium	985	616
Portugal	191	200
Greece	278	340
Spain	4,252	4,400
Switzerland	135	136
Sweden	809	753
Denmark	597	540
Norway	33	56
Holland	544	527
Finland	3	7
Germany	15,466	7,259
Poland	(included in Germany and Austria.)	3,400 (ex-Russian
Czecho-Slovakia,Austria Hungary,Yugo Slavia & Roumania	12,895	5,338
Bulgaria	1,369	1,000
	54,195	36,829
	}
	17,366

During the war the U. S. A. surplus more than made good the lack of Russian wheat, while owing to decreased acreage and yield France and Italy alone have required an increase in imports, which more than equalled the requirements of enemy countries before the War. Before the end of the year 1919–20, all the former European countries will have recommenced importation, but it is doubtful whether Russia and India, two most important sources of supply will have restarted exportation. There will probably be little surplus from the Australian crop just gathered. The U. S. A. farmers are officially recommended to reduce the wheat acreage this year by 15%, and the winter wheat acreage is actually 23% less than last year. In this connection Mr. Hoover has already stated that a decrease of 20% of Western Hemisphere wheat would not starve the West but that it would starve Europe.

With the danger of supply falling short of requirements, already reduced to a minimum in 1919–20, the Consultative Food Committee should take all possible steps to secure surplus stocks from Russia, stimulate production in Central and Western Europe, prevent profiteering and press the need for economy in consumption.

[B.] Grain for Feeding & Industrial Uses

The difficulty of fulfilling the European breadstuff requirement owing to lack of finance has been pointed out above and it may more certainly be assumed that for this reason the requirements of feeding stuffs which are of second priority, will be reduced to figures much below the needs of Europe, based on a desire to build up depleted herds.

Relaxed control of brewing and distilling will further increase the need of Barley and Maize, but here again finance will limit the quantities desired.

The figures in the appended table^15b are based on an average ration or on specific requests made by the Governments of liberated and enemy countries, but that the imports realised will fall short of these hypothetical quantities is beyond question. It will be seen therefore, that no real danger of unlimited competition or lack of supplies exists.

C. Meat

i.—beef and mutton

(a) Requirements, January to August 1920.

The effect of the war-time shortage of feeding stuffs in European countries is still reflected in the present importation requirements of frozen meat, but there has been a tendency in the direction of more normal conditions since the beginning of 1919, the continued

World’s Breadstuffs Position

In the average of the years 1909/10–1913/14, 1918–19 & estimated 1919–20

Wheat & Rye

Thousands of Metric Tones

	Estimated Requirements 1919–20	Imports		Average			Estimated Surplus 1919–20	Exports		Average
		1918/19		1909/10–1913/14				1918/19		1909/10–1913/14
	Wheat & Rye	Wheat	Rye	Wheat	Rye		Wheat & Rye	Wheat	Rye	Wheat	Rye
United Kingdom	5,700	4,968	52	5,880	41	Canada	3,200	2,983	23	2,581	3
France	2,800	2,330	14	1,189	81	U. S. A.	9,000	7,604	975	2,910	24
Italy	2,700	2,709	12	1,448	16	Plate	4,500	2,500		2,311	9
Belgium	1,250	670	67	1,344	124	Australia	2,700	1,800		1,456
Portugal	150	52		88	6	N. Africa	250	406		144
Greece	250	180		187		India				1,350
Czecho Slovakia	350	224	194			Russia	150			4,468	707
Roumania		204	17			Roumania	150			1,460	96
Serbs,Croats & Slovenes		80				Bulgaria				302	49
Poland	300	180	89			Hungary				1,112	348
Finland	150	61	130	97	244	Spain					1
Baltic States		42	7			Germany					672
Spain	250	250		169		Serbs,Croats,& Slovenes	400				4
Switzerland	400	295	19	461	18
Sweden	300	114	2	192	97
Denmark	350		10	171	208
Norway	300	184	77	104	262
Holland	600	352	30	598	293
Germany	1,200	427	135	1,860	316
Austria	600	342	13	1,397	316
Hungary	350
Bulgaria		23
Turkey		24
N. W. & S. Russia		19
Ex-European countries	2,000	2,100		2,500	100
Total	20,000	15,830	868	17,685	1,806	Total	20,200	15,293	998	18,094	1,913

Note:—During the cereal year 1918–19 certain quantities of Maize and barley were used in dilution of the loaf, which are excluded from above figures.

Fodder Cereals¹

Metric Tons (thousands omitted)

Country	Estimated Importation Requirement			Imports 1918–19			Average 1909/10–1913/14			Country	Estimated Exportable Surpluses 1919–20			Exports 1918–19			Average 1909/10–1913/14
	M.	B.	O.	M.	B.	O.	M.	B.	O.		M.	B.	O.	M.	B.	O.	M.	B.	O.
United Kingdom	1800	1000	1000	606	493	907	2047	1046	963	Canada		600	200		179	356		119	239
France	300	300	300	75	433	678	503	132	433	U. S. A.	300	1000	1000	366	446	1655	925	181	65
Italy	100		50	269	1	336	368	18	118	Plate	5000		500	1371	10	398	2940	38	652
Belgium	400	350	100	35	29	16	439	330	119	S. Africa	400			182		4	95
Portugal							43			N. Africa		300		1	430	143		174	100
Greece						9				Russia								3769	1005
Spain							248									B&G
Switzerland	100			56	1	16	101	25	181	India						200		230
Sweden	40		70	81			42		66	Roumania, Austria and Hungary	350						1351	644	302
Denmark	300	10	150	53	27	8	298	3	66
Norway	30	40	50	93	11		31	99	10
Holand	550	250	100	42	15	26	552	241	118	Bulgaria							235	41	1
Germany	400	850					812	3246	47
Poland						4	included in Germany and Austria
Czecho - Slovakia, Austria-Hungary, Yugo-Slavia & Roumania						7	595	92	191
Bulgaria
Canada							271
N. Africa							17	15
Egypt							11	2	9
Australia
Total	4020	2800	1820	1310	1010	2007	6389	5249	2321	Total	6050	1900	1700	1920	1065	2765	5546	5196	2364

shortage in livestock being still to a certain extent offset by reduced consumption engendered by high prices. The deficit of European production of beef and mutton is over 1,000,000 tons on the pre-war figure, whilst the United States, with its increasing population, cannot be regarded as a source of supply, but must be considered rather as an additional importing country. It is, therefore, to Australasia and South America that European countries must turn for the necessary imports. A table is attached giving an approximate estimate of European requirements in the first 8 months of 1920 together with possible sources of supply.

United Kingdom.—The annual imports which would be required to make good the deficit of present home production as compared with pre-war consumption would be 1,231,000 tons of frozen meat. It is estimated however, that consumption having not yet reached this level, an importation of 500,000 tons in the period January to August should in view of available supplies suffice. In addition to this, the British army in Europe should need 20,000 tons and the army in Egypt 12,000 tons.

France.—French livestock is still seriously depleted. Until May, when Government import of meat into France may cease, shipments are estimated at 61,000 tons. Imports during the first nine months of 1919 amounted to 240,000 tons but owing to the financial position and bearing in mind the desirability of getting back to normal trade conditions, purchases are being cut down severely although cold storage accommodation is being extended with a view to developing an entrepôt trade.

Italy.—Efforts are being made to restore the Italian livestock position by limiting slaughtering. The monthly needs of frozen meat are therefore placed at 9,000 tons, or 100,000 tons per annum which compares with the yearly average of 3,000 tons in 1909–13, and with 148,000 tons which owing to decreased home production would be required to provide supplies sufficient to maintain consumption at the pre-war level. As in the case of France, however, decreased purchasing power will limit importation.

Belgium.—Belgium will require an import of frozen meat. The estimate for the period April 1919 to April 1920 was 140,000 tons, but it is now stated that the Belgian army needs 1,500 tons per month during 1920 and the civilian population 1,500 tons over the period January to August.

The Liberated Territories.—Roumania, Serbia, Poland, Czechoslovakia, the Baltic States and Finland are unlikely to have either finance or refrigerated accommodation to enable them to import frozen meat, and will probably have to depend on pork-products to make good any deficiencies of home production of beef and mutton.

Scandinavia, Netherlands, Spain & Switzerland.—None of these countries should require imported frozen meat. Denmark has so far recovered as to be able to take the place of the United States in supplying Norway’s needs, which last year amounted to 10,000 tons from North America. Holland and Switzerland are both exporting meat to Germany.

Ex-Enemy Countries.—Should finance be available, Germany, German Austria and Hungary should be considerable importers of frozen meat.

It is estimated that to increase the present German ration to ½ lb per week would necessitate an annual import of 200,000 tons, whilst German Austria is in a worse condition as regards livestock and would require 4,700 tons per month to secure a ½ lb ration per week. Hungary needs 52,800 tons annually to provide a similar ration but finance and refrigerated accommodation will probably prove a limiting factor, as in the case of German-Austria.

The American meat companies have made, and are still making, attempts to sell meat to the ex-enemy countries, but after selling a few cargoes have had to discontinue their operations, owing to lack of finance.

(b) Supplies.

It may be assumed that the United States will not maintain the war time export effort, but that consumption will not yet be increased to a point which would warrant any appreciable import, although some estimates place this as high as 50,000 or even 100,000 tons.

The minimum European demand is likely to amount to nearly 900,000 tons in the period January to August 1920, but in spite of the limitations on shipment imposed by the shortage of refrigerated tonnage it seems probable that this amount will be available for import during the same period.

Considerable stocks of meat existed at the beginning of the year 1919–20 in Australasia. Australian shipments reached a low-water mark in 1917–18 but are now recovering from the effects of transport difficulties and the 1919 drought, and are estimated at the rate of 10,000 tons per month. As far as New Zealand is concerned, it may be expected that 160,000 tons will be exported in the first 6 months of 1920.

Stocks in South America are increasing, particularly in Brazil, which should in time become a large exporter of beef and mutton, if the developments of breeding and refrigerating, which have been carried out since the war, are continued.

South African exports have risen from a few hundred tons in 1914 to about 22,000 tons in 1917. The 1918 export dropped to only 8,000 tons but improvements are being made in cold storage accommodation. Increased supplies are however dependent upon the withdrawal of refrigerated steamers from other routes, and it should be noted that the rise in the price of livestock has caused a demand for legislation to limit export to “surplus produce” remaining after home requirements have been satisfied.

Refrigerated Meat (Beef & Mutton) Position; January to August 1920

estimated importation requirements—limited by finance etc.

	Tons
United Kingdom	500,000
France	100,000
Italy	70,000
Belgium	16,500
Germany	130,000
Austria	38,000
Hungary	25,000
Total	889,500

supplies as limited by available refrigerated tonnage

British steamers:	Tons
Australia	80,000
New Zealand	160,000
Canada	25,000
South America	440,000
South Africa	10,000
France & Italian steamers—South America	110,000
United States steamers—South America	100,000
Total	925,000*

*Say: beef, 600,000 tons; mutton, 325,000 tons.

Livestock

000’s Omitted

		Cattle			Sheep			Pigs
		Pre-war	1918	1919	Pre-war	1918	1919	Pre-war	1918	1919
(a)	European Countries–
	United Kingdom	12,145	12,315	12,491	27,887	26,850	25,119	3,940	2,820	2,926
	France	14,788	13,315		16,213	9,496		7,048	4,021
	Italy	6,646	6,155		13,824	11,753		2,722	2,378
	Belgium	1,877		898				1,494		319
	Romania	2,667			5,269			1,021
	Serbia	957			3,819			836
	Russia (European)	32,704			87,240			11,581
	Denmark	2,463	2,123	2,188	515	470	509	2,497	753	716
	Holland	2,097	1,956	1,964	842	748	437	1,350	340	449
	Norway	1,146	1,053		1,327	1,216		228	224
	Sweden	2,721	2,123		988	1,344		968	621
	Spain	2,879	3,712		16,441	18,602		2,710	4,997
	Switzerland	1,443	1,530	1,433	161	230		570	366
	Germany	21,829	17,227	16,799	5,471	5,229	423	17,287	10,080	888
(b)	Other Countries–
	Canada	6,037	10,050	10,084	2,058	3,037	3,421	3,434	4,290	4,040
	U. S. A.	56,592	66,830	67,866	49,719	48,800	49,863	68,933	71,374	75,587
	Argentine	25,867	30,000		43,225	50,000		2,901	3,200
	Brazil	30,705	28,960		10,653	7,205		18,399	17,329
	Australia	11,051	10,450		78,600	78,600		862	1,169(1917)
	New Zealand	2,020	2,869	3,021	24,799	26,538	25,528	349	258	235
	Asiatic Russia	17,334			34,468			2,962

The above conditions of supply and demand make it clear that economy will have to be exercised in the buying and distribution of meat supplies for European consumption in the next few months.

It should be noted, however, if the demand of ex-enemy countries is eliminated owing to absence of credits or shipping facilities, ample supplies exist to meet Allied requirements, and, in the absence of competition, on the part of the Allies inter se no further rise in price may be expected.

ii. pig meat

Two-thirds of the European home grown meat shortage is due to a diminution in the production of pig meat, and may therefore be expected to recover within a few years.

Denmark is expected to retrieve her former exporting position in two years, and has not only ceased to import bacon but has, in fact, begun to re-establish an export trade, 2,500 tons being exported in the period between July and the end of September 1919. The pre-war export from Denmark amounted to 128,000 tons, which fell to 80,000 tons in 1917, and to 25,000 tons in 1918 and ceased altogether in the first half of 1919.

Holland, although having imported largely during the war, has now commenced to export small quantities to Germany, where stocks have been reduced to such an extent as to render import necessary.

Sweden, also has ceased to import American bacon and has commenced to export a certain amount of local produce, but Norway continues to import American supplies.

France and Italy are importing quantities of pork products considerably in excess of their pre-war imports; whilst the United Kingdom doubled her imports from a normal 300,000 tons to over 600,000 tons in 1919 on account of reduced home production.

Other European countries are unlikely to require heavy imports of pork products. Surplus supplies in Yugo-Slavia will be sufficient to provide for the needs of Czecho-Slovakia and for Austria and Hungary, if exchanges can be arranged.

The improvement in the European stock position coupled with the increased numbers of pigs in Canada and the United States will, if maintained, tend to make for cheaper supplies to European consumers.

Canadian pigs increased in numbers from 3,000,000 before the war to 4,000,000 in 1919, which was, however, less than 1918 or 1917. There was a corresponding increase in exports of hog-products which rose from 18,000 tons in 1913 to 92,000 tons in 1918 and 108,000 in 1919.

The United States, developed the production of pork products to a very great extent during the war. The number of pigs in 1919 was increased to 75,500,000 i. e. 17,000,000 greater than before the war and in the period January to October 1919, 741,000 toils of bacon and hams were exported as compared with 762,000 tons in the whole of 1918 and 202,000 tons in 1913.

Lard.

The situation as regards lard is similar to that of bacon and hams. The United Kingdom may be regarded as the heaviest importer of lard, the annual consumption being about 100,000 tons, of which 80,000 has to be provided from abroad.

Germany normally imported 100,000 tons annually and in the first six months of 1919, imported 21,600 tons of lard under the Armistice Agreement.

Holland has recently recommenced the export of lard to Germany. In the first nine months of 1919 Holland imported 2,600 tons from U. S. A., but exports now exceed imports. The pre-war export from the United States amounted to 242,000 tons which dropped to 200,000 in 1916–17, but was increased (as a result of Mr. Hoover’s campaign) to 298,000 tons in the 10 months, January to October, 1919, of which 90,000 tons came to the United Kingdom. Canadian production has increased to the point of self sufficiency. Exports from countries other than the United States are negligible.

D. Dairy Produce

Condensed Milk.

The production of milk remains far below the pre-war level in most European countries. Before the war the United Kingdom was the chief European importer of condensed milk, taking about 70,000 tons a year. The present importation requirement has increased to 11,000 tons a month or 132,000 tons annually. France and Italy are no longer in a position to export dairy produce, but require to make good the deficiency in home production by a considerable import.

The demand for imported dairy produce in the disturbed areas of Europe has been concentrated mainly on condensed milk for children’s use, the shortage of finance limiting expenditure to cereals and pig meat, rather than to dairy produce. The American Children’s Relief Administration alone, supplied from March to August 1919 10,000 tons for children in Relief countries, of which more than half was sent to Austria, Czecho-Slovakia and Yugo-Slavia, and the remainder to Roumania and Northern Europe. These supplies were in addition to quantities which were provided for general consumption by other official and private organisations.

Exports of condensed and evaporated milk from the United States increased thirty-three times between 1914 and 1918, and during 1919 exports were at the rate of nearly 30,000 tons a month.

Increased cost of production in the United States has raised prices in this principal source of supply from 28/6 per case f. o. b. for full cream to sweetened condensed milk in June 1918 to 33/6 in January 1919, and for evaporated milk from 20/ to 25/6. Before the war, Holland and Switzerland together, exported 40,000 tons annually and Norway 14,000 tons. These exports have almost entirely ceased. Certain quantities are now obtained from the Argentine.

Butter.

Position before the war. The pre-war exportable surplus of butter was distributed between exporting countries in the following ratio:—

	Tons
Denmark	95,000
Siberia	77,000
Holland	39,000
Australia	32,000
Sweden	20,000
New Zealand	16,000
France	14,000
Argentina	7,000
Norway	1,000
Canada	1,000
Total	302,000

Of these quantities are [sic] the United Kingdom absorbed 210,000 tons and Germany 56,000 tons. The United Kingdom supply originated mainly from Denmark, Siberia, Australasia, New Zealand, Sweden and France.

Present position. The exportable surplus from both Australia and New Zealand up to the end of August 1920 has been purchased by the British Ministry of Food. The quantity available from New Zealand will be practically the same as the average in prewar years, but from Australia supplies will probably be only about one-third to one-half of the figure given above owing to severe drought during September to December, the first few months of the producing season. Production has increased considerably in the Argentine during the last few years, and the annual exportable surplus is now more than double the prewar figure. Only small quantities of butter can be expected from Canada in the coming season, which will not begin until the middle of May, but stocks at present held in the United States are about twice the size of those held at this time last year, and if the anticipated drop in prices occurs these stocks may be let loose for export to Europe. Adverse exchanges both in the case of the Argentine and the United States are hindrances in the way of liberal importation by Europe. In Siberia the chief obstacles are the dislocation of industry and transport difficulties. The only practicable route is by way of the mouth of the Rivers Oli, and Yenesi, and the quantity that can be lifted from these sources is not likely to be more than 10% of her prewar export.

As regards European countries, in Denmark production which decreased by 30% during the war is now rapidly expanding, and it is estimated that about 75% of the prewar exportable surplus will be available for export during the present year, provided the Danes can secure a remunerative price. France has been importing butter during the last few months, but will probably not require supplies from outside after May. It is probable that Sweden and Finland will have a surplus with the coming of spring and summer, and there is evidence to show that Holland is finding difficulty in disposing of her exportable stocks at present, the anticipated German demand having been curtailed owing to difficulties of exchange and lack of money and credit.

Cheese.

Before the war, the United Kingdom imported 120,000 tons of Cheese, which was more than half the exportable surplus of the world, the remainder going almost exclusively to Germany, France, U. S. A., Belgium and Austria-Hungary.

The prewar exportable surplus was as follows:—

	Tons
Canada	80,000
Holland	60,000
Switzerland	30,000
New Zealand	27,000
Italy	27,000
	224,000

Exports from Canada dropped to 10,000 tons in 1918–19, whilst New Zealand owing to the remunerative prices obtained for Cheese as compared with Butter, increased to 59,100 tons in the period January to September 1919, alone.

In May 1918 the entire exportable surplus of Canadian Cheese was bought by the British Ministry of Food at 23 cents per lb. subsequently raised in respect of 10,000 tons to 25 cents at the end of the season. In May 1919 it was decided to open the market to private trade the price then fluctuated between 29 to 32 cents, then fell to 25 cents. In July the Ministry of Food resumed control and bought 20,000 tons of Canadian cheese at 25 cents.

Exports from European countries have almost entirely stopped, except from Holland, whence an export from January to August of 10,000 tons is expected.

It may be assumed that there are ample supplies of Cheese to cover requirements.

[E.]—Margarine

The chief importance of oilseeds and the oil extracted from them, apart from technical uses, is in the manufacture of margarine and compound lard. The increase in the price of butter, which has been greater than in almost any other food, and the reduction in herds during the war with corresponding shortage in milk supplies and deficiency in refrigerated tonnage has led to the substitution of margarine for butter on a large scale. A table is attached showing the latest estimate prepared early in the cereal year 1918–19 of the constituents of margarine for European manufacture.

It is difficult to state what changes took and will take place in the constituents used firstly because oils and fats are interchangeable, secondly because interchangeability and consumption depend on price.

The normal import by Europe of oils, fats and oil producing seeds was two million tons, which chiefly came from the East Indies, China, North America and the Argentine. More will be needed now, and the prospects are encouraging in so far as the tropical islands—the Philippines, Dutch East Indies and Fiji Islands—with West Africa, are increasing their amount of export, chiefly of copra, palm kernels and ground nuts. There should therefore be no serious deficiency of fats in the European diet, assuming that finance can be found to enable supplies to come forward.

Estimated Total Requirement of Margarine Materials in Europe, 1918–19 (Prepared November 1918)

In this table the requirements for the U. K. are added. These requirements are calculated, not on a prewar basis, but on a scale allowing for the production of sufficient home produced margarine to make the U. K. self-supporting. It is presumed that Holland’s exportable surplus will be sent to Germany after the war at any rate at first.

	Germany	Holland	Denmark	Norway	Sweden		U. K.		Total
	Tons	Tons	Tons	Tons	Tons		Tons		Tons
Total Margarine required	250,000	130,000	50,000	30,000	20,000		470,000
Ingredients—Soft Fats.
Seams Oil	25,000		4,000		3,000	}	100,000*	{	32,000
Ground nut Oil	13,000	10,010	3,000	3,000	1,000				30,010
Cotton Seed Oil	12,000	24,900	5,000	5,010	2,000				48,970
Soya Bean Oil	3,000	1,950		990					5,940
Colza Oil	2,000	1,040							3,040
Total soft facts	55,000	37,900	12,000	9,000	6,000		100,000		219,960
Vegetable Hard Fats.
Cocoanut oil	70,000	30,030	22,000	3,990	8,000	}	240,000*	{	134,020
Palm Kernel Oil	25,000	4,940							29,940
Total vegetable hard fats.	95,000	34,970	22,000	3,990	8,000		240,000		403,960
Animal Fats.
Oleo Oil	25,000	10,010	2,000	4,500	1,000	}	60,000*	{	42,510
Oleo Stock	20,000	10,010	2,000	6,000	1,000				39,010
Natural lard	20,000	20,020	4,000	2,010	1,000				47,030
Total animal facts	65,000	40,040	8,000	12,510	3,000		60,000		128,550
Total Hard Facts	160,000	75,010	30,000	16,500	11,000		300,000		592,510
Total Soft Fats	55,000	37,960	12,000	9,000	6,000		100,000		219,960
Vegetable Fats	150,000	72,930	34,000	12,990	14,000		340,000		623,920
Animal Facts	65,000	40,040	8,000	12,510	3,000		60,000		188,550
Total all Facts	215,000	112,970	42,000	25,500	17,000		400,000		812,470

*These quantities represent totals of various oils, and are included in the general totals of each category only.

F. Sugar

The world’s sugar position, as in the case of wheat, centres round the European production. It is true that the cane sugar output of the world has increased by about 2¼ million tons since 1913–14 but in the same period the European beet sugar production has decreased by about 4½ million tons, and the estimated figures for 1919–20 show a decrease of 500,000 tons on the supplies available in 1918–19. High prices have not sufficed to reduce the consumption in either the United States or the United Kingdom and a condition of semi-control has been followed in the United Kingdom by a reversal to a state of complete control. The high prices ruling for sugar will doubtless stimulate production but for the present it will be necessary to secure a decrease in demand in order that supplies may be sufficient for distribution.

In May 1919 quotations for White Java, White Mauritius and American granulated sugar were at the equivalent of 71/ per cwt., duty paid, while at the end of October these sugars commanded 113/ to 118/. In June last the American Equalisation Board, which had arranged the purchase of the entire 1918–19 Cuba crop and controlled the import of all sugars into the United States announced that its existence would not continue after 31st December. As a result the purchase of the 1919 crop was thrown open to private trade. In May 1919 the price of old crop Cuba sugar was $5.50. In October 1919 the price for new crop had risen to $7.75 and in January 1919 to $12. With the recent decision to continue the existence of the Board it was hoped that the balance (over 80%) of the crop might be obtained at a satisfactory price but in fact the Equalisation Board is not proceeding to purchase the balance which is being left to private firms. The result is that prices show little sign of decrease, owing to the increased consumption of sugar in U. S. A., attributed largely to the prohibition of the use of beer and spirits. The reason for the U. S. A. Government’s not acting as a buyer and distributor of sugar is contained in the following statement given out by Secretary Tumulty in announcing the coming into law of the McNary Bill.

“The President has signed the Sugar Control Bill. This bill confers discretion on the President in the matter of purchasing sugar from Cuba. It is doubtful whether it will be practicable or wise for the President to exercise the powers conferred so far as the purchase and distribution of sugar are concerned. Some of the Cuban sugar has already been purchased, and there is no central control over sugar in Cuba as there was last year, and it might therefore be impossible for the Government now to step in and purchase the sugar without increasing the price to the consumer. The bill, however, continues the licensing power also, and this power may be used to assist in controlling profiteering among distributors. Much Cuban sugar is coming in now, and the indications are that prices have reached their peak, and that there will be a tendency for prices to fall in the next few weeks.”

The only country in Europe with an exportable surplus of sugar is Czecho-Slovakia. This surplus was estimated at about 300,000 tons but owing to poor crop outturn and bad weather the sales have been limited to 100,000 tons to France a certain quantity to Holland and a further 20,000 tons which the Czecho-Slovak Government desire to exchange for wheat flour. Czecho-Slovakia has agreed to supply Austria with 30,000 tons of sugar, to be paid for in Czecho-Slovak crowns.

The estimated world’s production of cane and beet sugar in all countries in 1919–20 compared with 1913–14 out-put is as follows:—

Cane Sugar Production

Tons

	1913–14	1919–20
Cuba	2,500,000	4,300,000
Porto Rico, Haiti, San Domingo, Guadaloupe, Martinique	516,000	640,000
Dutch East Indies	1,345,000	1,136,000
Mexico	130,000	85,000
Brazil, Argentine, Peru	570,000	675,000
Japan, Formosa	251,000	300,000
British India	2,263,000	2,800,000
Mauritius	250,000	242,000
British West Indies	191,000	218,000
Australia	225,000	275,000
Egypt	58,000	90,000
U. S. A.	268,000	118,000
Hawaiian Islands	577,000	560,000
Demarara	122,000	100,000
Philippine Islands	305,000	225,000
Réunion, Natal, Mozambique	178,000	250,000
Total	9,749,000	12,014,000

Beet Sugar Production

Tons

	1913–14	1919–20
Austria-Hungary	1,519,000	See Czecho-Slovakia
Belgium	204,000	125,000
France	703,000	150,000
Germany	2,382,000	770,000
Holland	224,000	200,000
Italy	322,000	150,000
Russia	1,526,000	350,000
Spain	165,000	120,000
Denmark	143,000	150,000
Sweden	134,000	130,000
Czecho-Slovakia	See Austria	520,000
U. S. A.	655,000	800,000
Canada		20,000
	7,977,000	3,485,000

Estimated Import Requirements 1920 Reduced by Statutory or Financial Limitation

	Tons
United Kingdom	1,100,000
France	550,000
Italy	50,000
Belgium	20,000
Norway	60,000
Austria	120,000	}	Will import from neighbouring States.
Hungary	40,000
U. S. A.	3,000,000		Import may be considerably higher owing to increased consumption.
Germany*	150,000		If finance available.

*German Government has fixed a price for roots which it is contemplated will afford encouragement for extension of beet planting.

Appendix 324

Note by the British Delegation on the Present Position of the Repatriation of Prisoners of War in Siberia

This question has been considered in the past repeatedly by the Supreme Economic Council and it was largely at its instance that the Supreme Council on September 27th, 1919 passed the following resolution:—^15c

“It is decided that a Commission composed of one Austrian [American], one British, one French and one Italian officer shall be set up to take in hand the repatriation of the German, Austrian and Hungarian prisoners in Siberia.

It is further decided that the repatriation of the Czecho-Slovak troops now in Siberia shall be carried out before that of the German, Austrian and Hungarian prisoners.”

On October 2nd, this resolution was modified¹⁶ by the addition of Polish, Yugo-Slovak and Rumanian prisoners to the prisoners to be repatriated before the Germans, Austrians and Hungarians.

A Japanese officer was also added to the Commission.

The Commissioner presented a report to the Supreme Council which was approved by that body on 29th October¹⁷ in which it stated that the provision for the initial repatriation of the friendly troops made it desirable that the scope of its functions should be extended to cover the repatriation of these bodies, and further that in view of the complexity of the problems involved in the question of repatriation, each of the principal Allied powers should have an additional representative for political purposes and an expert financier.

The attention of the Commission has in fact been devoted exclusively to the question of repatriation of the friendly troops. Of these, there are roughly the following numbers in Siberia:—

Czecho-Slovaks	54,000
Poles	12,000
Yugo-Slavs	4,000
Roumanians	2,000
Totalling about	72,000

A provisional agreement has been arrived at with regard to their repatriation. It has been agreed that half of the cost of repatriation of these 72,000 men shall be borne in the first instance by the United States and half in the first instance by the British Empire.

The question of the participation of the French Government in this expenditure is still under discussion. The French Government have borne hitherto the provisional cost of the maintenance, in accordance with the agreement of July 16th, of these troops in Siberia.

The American Government is arranging the shipping of the 36,000 prisoners for which it is responsible, and the British Ministry of Shipping is providing ships to repatriate the remaining 36,000.

The necessary organisation, however, for collecting and railing the men to Vladivostock does not yet appear to have been set up.

The British Treasury now states that the cost of repatriating 36,000 men will be £1,440,000. One British boat with 1,500 men on board has already left Vladivostock for Trieste and another is expected to arrive early in February also to go to Trieste.

It is clear that it will take several months before the Allied prisoners are repatriated and before the enemy prisoners can be repatriated by the same means, and even then it will be dependent upon finance being available.

In the meantime the position of these men who are estimated to number from 150,000 to 200,000 men is appalling and it is likely that only a small proportion of them will still be alive when their turn comes for repatriation, unless something is done in the meantime for their maintenance.

The majority of these men are at present in concentration camps in the Government of Omsk and it is conceivable that with the overrunning of this district by the Bolsheviks, the prisoners may ally themselves to the Bolshevik army as the only alternative to death.

The German Foreign Minister has stated recently that he hopes to come to an agreement with the Soviet Government for the exchange of German prisoners who would be repatriated by land through the Baltic Provinces where hostilities have now ceased.

January 5, 1920.

Appendix 325

Foreign Office, January 15, 1920.

[Letter from Mr. Gerald Spicer of the British Foreign Office to the British Council Officer, Supreme Economic Council]

Sir: With reference to your letter numbered Finance 68 of October 7th last, I am directed by Earl Curzon of Kedleston to transmit to you the accompanying copy of a telegram¹⁸ from His Majesty’s Acting High Commissioner at Irkutsk on the subject of the repatriation of German, Austrian and Hungarian prisoners of war in Siberia.

Mr. Lampson states that early in December a meeting of Allied representatives was held at Vladivostock to discuss this question, and it was decided that an appeal should be addressed to their respective Governments urging them to send relief to Siberia without delay, in order to prevent the prisoners dying of hunger and cold during the course of the winter. Mr. Lampson estimated that there were about fifty-five thousand Austrian and about ten thousand German prisoners of war in the part of Siberia still unoccupied by the Bolsheviks.

His Lordship is not aware what progress has been made with the formation and despatch of the interallied Commission referred to in Mr. Gorvin’s letter of the 7th October last, but unless this commission is already on the spot it would be too late to produce any useful results during the present winter. If money for the relief of ex-enemy prisoners of war in Siberia were forthcoming there would be no difficulty in forming an inter-allied administrative committee from the Allied Missions in Vladivostock.

The question of the repatriation of these prisoners must stand over till the Czecho-Slovak, Poles, Roumanians, Serbs and Letts (seventy-two thousand in all) have been repatriated. The transportation of these troops has been begun but can hardly be completed before the lapse of several months.

In the meantime it appears to His Lordship that the allied governments are obliged by motives of common humanity to furnish some immediate relief. He understands that the Supreme Economic Council have no funds available from which such a charge could be met, but he suggests that a simultaneous appeal should be made by them to all the Allied and Associated Governments for a special appropriation. Lord Curzon recognises that the burden of relief would fall mainly on this country and on the United States, and that the proposed expenditure would have to be considered as practically irrecoverable even if it took the form of advances to the German, Austrian and Hungarian Governments. He is alive to the objections on this head which would be raised by the financial authorities both here and in America but he is disposed nevertheless to think that if public opinion in this country were fully alive to the deplorable condition of ex-enemy prisoners of war, if, for instance, they happened to be interned in this country, instead of in Siberia, then that public opinion would refuse to acquiesce in those objections.

I am to request that you will bring this question to the attention of the Supreme Economic Council with the least possible delay.

Copies of this letter have been sent to the Treasury, War Office, Ministry of Food and His Majesty’s Embassy at Paris.

I am [etc.]

Gerald Spicer

Appendix 326

Note by the Permanent Committee [Regarding the] Re-Establishment of Trade Relations With Russia

On the 16th January the Supreme Council took a decision relative to commercial relations with Russia on the lines indicated in the following communiqué:

With a view to remedying the unhappy situation of the population of the interior of Russia which is now deprived of manufactured products from outside Russia, the Supreme Council, after having taken note of the report of a Committee appointed to consider the reopening of certain trade relations with the Russian people, has decided that it will permit the exchange of goods on the basis of reciprocity between the Russian people and Allied and Neutral countries.

For this purpose it decided to give facilities to the Russian Cooperative Societies which are in direct touch with the Peasantry throughout Russia, so that they may arrange for import into Russia of clothing, medicines, agricultural machinery and the other necessaries of which the Russian people are in sore need in exchange for grain, flax, etc., of which Russia has surplus supplies.

These arrangements imply no changes in the policy of the Allied Governments towards the Soviet Government.

At the same time the Supreme Council remitted to the Supreme Economic Council and to its Permanent Committee the settlement of any economic questions of an inter-allied nature which might develop as the result of its decision.^18a

The Permanent Committee submits to the Council the following report of the action taken to date in execution of the Supreme Council’s decision.

On January 21st a wireless message drafted by the representatives in Paris of the Russian Union of Co-Operative Societies was despatched to the President of the All-Russian Central Union of Cooperative Societies in Moscow (See Annex 1). This message communicated the gist of the report by the Sub-Committee established by the Supreme Council (Appendix 2) and asked for a definite reply to the questions whether the Co-Operative Societies in Russia could be authorised to enter into negotiations for the exchange of grain, flax and other raw materials against prime necessities for the Russian population; whether a guarantee could be given for the perfect safety of goods to be shipped into Russia; what kinds of raw materials were available for export and of what goods Russia stood in most urgent need.

It further proposed to despatch to Russia a delegation of Russian Co-Operative Societies outside Russia and asked whether safe conduct into and out of Russia would be granted to them.

On the 24th January a reply was received from the Central Union of Co-Operative Societies in Russia (Appendix 3). The message stated that the Soviet Government had given permission to the Central Union of Co-Operative Societies to enter into direct commercial relations with Co-Operative Societies and with private firms in Western Europe; gave guarantees concerning the protection of all goods exported and imported under the proposed arrangements and accepted the proposal of a delegation for Moscow.

This reply was discussed at the 9th meeting of the Permanent Committee on the 26th January, 1920, and the following decisions were taken.

It was agreed that the Union of Co-Operative Societies in their reply to the telegram from Moscow should be requested to ask for a definitive assurance that their colleagues in Moscow had received formal permission from the Soviet Government to export cereals and other raw materials from Russia.

It was agreed that the question of the actual methods of purchase and distribution should be referred to the Consultative Food Committee so far as contracts for grain were concerned.

It was agreed that the Neutral Governments should be immediately informed through their respective Foreign Offices of the Allied Powers of the action taken under the Supreme Council’s decision.

It was agreed that it would be desirable to discuss certain details of the scheme with M. Berkenheim and his colleagues of the Russian Co-Operative Societies at an early date.

The Russian Co-Operative Societies replied to the wireless message from Moscow on January 27th (Appendix 4).

On Wednesday, January 28th, the Permanent Committee held an interview with Messrs. Berkenheim, Morossoff and Polovzev. A note of the proceedings is attached (App. 5).

Appendix I

Copy of Cablegram Received From Sir William Goode, Paris, January 20th, 1920, 10 a.m.

Following for James from Wise.

Supreme Council approved today¹⁹ immediate despatch of following wireless telegram by Russian Cooperative Representatives to their headquarters in Moscow and remitted to Supreme Economic Council and its permanent Committee settlement of any economic questions of an inter-allied nature which may develop.—

“Moscow Demetrius Koroboff President of All Russian Central Union of Consumers Societies January 14th Berkenheim reported in Supreme Council²⁰ Clemenceau, Lloyd George, Nitti views of Russian Cooperation regarding trading relations with Russia. January 16 Supreme Council decided that whilst maintaining its general policy towards the Soviet Government.

1. The Allied Governments should inform the co-operative organisation[s] that they are prepared to permit the exchange of goods on the basis of reciprocity between the Russian people and allied and neutral countries and should invite these organisations to export surplus grain food and raw materials from Russia so as to provide exchange for clothing and other goods needed by Russia it being clearly understood that the value of goods allowed to be imported into Russia will be equivalent to the value of goods exported over a reasonable period from Russia.

2. Centrosoyus would then communicate by wireless with its headquarters in Moscow and enquire whether the co-operative movement was prepared to undertake the responsibility for handling the export and import of goods and whether such exchanges were practically possible. Representatives of Centrosoyus would at once proceed to Moscow to discuss details.

3. The co-operative headquarters in Moscow would ascertain, whether it would be permitted to export grain, flax etc. and whether transport and other necessary facilities would be afforded to it.

4. On receipt of a reply the co-operative headquarters would then communicate its decision to Berkenheim Paris.

5. If the co-operative headquarters are prepared to undertake this responsibility Centrosoyus and other co-operative organisations abroad would then be prepared to make definite contracts to supply grain, flax, etc., from Russia provided that they were financed at the beginning up to 25% of the full value of the contracts either direct or through British, French or Italian co-operative organisations or private traders.

6. The balance of the credits required they would themselves provide from their own resources in London Paris etc or by arrangement with the British French or Italian co-operative movement or private bankers or traders.

7. They would immediately proceed to start the shipment of goods purchased with these credits to the Black Sea or the Baltic Ports any loss falling on them if the goods were confiscated or destroyed.

8. With regard to transport the co-operative headquarters at Moscow would endeavor to secure at least four complete trains for use to and from the Black Sea ports. If this was impossible Centrosoyus and his associates would utilise some of their credits for purchasing trucks and locomotives in allied countries. They would in any case send out a number of lorries to assist the railways.

9. As soon as it became clear that grain, flax, and other raw materials started to be moved out of Eussia the contracts would of course be considerably extended so as to cover the full amount of at least for example one million tons of grain which it is estimated can be exported within reasonable time.

Firmly believe you entirely agree with us that for reopening of trading conditions with our suffering country all which is in human power must be done. We ask you to submit the invitation and conditions of Supreme Council to our headquarters who we hope will do their best to convince all authorities concerned to use this opportunity of reestablishing economic life of Russian people and country. Wire your definite reply, following questions.

1. Will Centrosoyus together with other co-operative organisations be duly authorised to export from Russia in exchange for prime necessities for civil population the surplus grain, flax and other raw materials?

2. Can we accept in the name of Centrosoyus full responsibility for perfect safety of all goods to be shipped into Russia?

3. What quantities and what kinds goods do you need most urgently and to where should they be shipped?

4. What quantities [and] what raw materials are or may be at your disposition in what time and in which ports can you deliver them. What obligations can we accept in our name.

5. What route should our delegate[s] take on their way to Moscow. What measures have been taken for their safe conduct and immediate return to Paris?

6. In case all proposed conditions are accepted you must immediately start export on the biggest scale at the same time we will organise here import for Russia.

Report by wireless about all important decisions and events. Our representatives leave immediately. Expect your prompt definite reply Centrosoyus, Paris. Members of Board Berkenheim, Vakhmistroff, Selheim, Lenskaya, Stenzel”.

Make arrangements for despatch today from London. Wire me immediately telegram despatch.

Appendix II

[Here is omitted a report, dated January 15, 1920, of the committee appointed to consider the reopening of certain trading relations with the Russian people. For text of the report, see appendix A to ICP–18, Volume IX, page 868. Its nine main points are also set forth in the telegram quoted in appendix I, supra.]

Appendix III

24 January, 1920.
Received via Marconi at 3.23 a.m.

Marconigram

Sub Rush 4/24 Ga. Towyn Rush 218.

Bradfield, Marconi House.

2.45 a.m. following received from Moscow.

“S.NR.1169.W186, 24/13.00—Carnarvon, Berkenheim, Vakhmistroff, Selheim, Lenskaia—January 23rd. In reply to your wireless dated Carnarvon January 20th we inform you Firstly the Central Union of Co-operative Societies has received from the Soviet Government permission to enter into direct commercial relations with Co-operative Societies as well as with private firms of Western Europe, America and other countries. Secondly the Central Union of Co-operative Societies has received from the Soviet Government all guarantee concerning the protection of all goods exported and imported by the Central Union Co-operative Societies. Thirdly the Central Union of Co-operative Societies is ready to immediately undertake exchange of goods. Fourthly as to your question with reference to the Delegation coming over to Moscow, the Central Union of Co-operative Societies has received from the Soviet Government permission for its unhindered passage into Russia, as well as for its unhindered return. Supply by wireless names of delegates and the Soviet Government will give them personal permits and will indicate route to be taken. President of Central Union of Co-operative Societies, A. Lezhava. Vice-President, D. Koroboff. Secretary, M. Paretchny.”

Appendix IV

Draft Telegram to the President of the All-Russian Central Union of Co-operative Societies, Moscow

In reply to your wireless S.NR.1160[1169].W.186, 24/15[13].00/, we assume from your answer that you have definite authority for export of grain, flax and other raw materials from Russia in exchange for commodities to be imported from Allied and Neutral countries for the Russian civil population. Please confirm that this is the case. Names of Delegates are Nicolas Makeev, Theodor Shmelev, Ivan Bubnov. They will leave immediately your reply indicates route to be taken by them. Paris Conference of Delegates of All Russian Co-operative Organisations abroad consider necessary that all Russian Co-operative Organisations should jointly take part in exchange of goods. Steps have already been taken to secure in connection with this scheme participation and assistance of British, French, Italian and other Central Co-operative Organisations in Allied and Neutral countries. On behalf of All-Russian Co-operative Organisations.

• Berkenheim
• Morossoff

Appendix V

Note of a Meeting Between the Permanent Committee of the Supreme Economic Council and Representatives of the Central Union of Russian Co-operative Societies, January 28, 1920

Present:—

Mr. Wise	Great Britain (in the Chair).	}	Permanent Committee.
M. Maskens	Belgium.
M. Cambon	France.
Dr. Giannini	Italy.

M. Berkenheim.	}	Representing the Central Union of Russian Co-Operative Societies.
M. Morossoff.
Dr. Polovzev (Chief Secretary)
Mr. James.	}	Secretariat, Permanent Committee.
Capt. Thompson.
M. Le Tellier.
M. Frederix.
M. De Boissiere.
M. Bertelli.

The Chairman explained that the meeting was called for the purpose of affording opportunity for a preliminary conversation as to the best method of solving outstanding difficulties in the practical work of resuming trade intercourse with the Russian people. He thought it would be best if the discussion were carried out by means of question and answer on specific points.

The Chairman first drew attention to the fact that in the reply received 24–1–20 from Moscow²¹ no mention was made of the availability for export of the commodities specifically required by Allied and neutral countries. A question on this point had been inserted into the telegram answering the message on 24 [27]–1–20²² and he would like to ask whether M. Berkenheim thought that the general guarantee given in that telegram could be held to cover the specific commodities in question.

M. Berkenheim gave it as his opinion that his colleagues in Moscow had received permission to export the required commodities, but he pointed out that the question of obtaining permission for export from Russia must be distinguished from the question of actually exporting. He was persuaded that imports into Russia would have to precede exports from Russia. In any case a definite answer would be given on these points after discussions in Moscow between the delegates of the Russian Co-Operative Societies outside Russia and their Russian colleagues.

Dr. Giannini enquired what would be the practical working of the clause which provided that the Co-Operative Societies should be financed at the beginning up to 25% of the full value of contracts made; what guarantees would be given by the Co-Operative Societies.

M. Berkenheim replied that the Co-Operative Societies would not take any advance until they had had a definite reply from their colleagues as to what would be in each instance guaranteed. He assumed that the beginning of the resumption of trade relations would be made on a small scale and expanded afterwards, but, after the early exchanges, the question of credits would arrange itself automatically.

M. Cambon asked whether any guarantees in the shape of securities, etc., were at the disposal of the Co-Operative Societies in countries outside Russia.

M. Berkenheim replied that the total value of securities of this nature amounted to about £3,000,000 sterling.

The Chairman referred again to the financial difficulty arising in the shipment of the first few cargoes to and from Russia and stated that in these cases it was considered fair that some part of the financial risk involved should be borne by the Co-Operative Societies. M. Berkenheim gave a general concurrence. He pointed out that the Co-Operative Societies now possessed merchandise in Constantinople, returned thither from Novorossisk. The Co-Operative Societies were prepared to take the risk of putting that merchandise into Odessa. The value was about £400,000 sterling in clothing, matches, paper and other manufactured goods.

In answer to M. Berkenheim, the Chairman stated that as regards finance he thought the opinion of the British Government would certainly be that the country which provided finance for a particular purchase of goods for Russia would expect that purchase to be made in its own country.

In reply to a question from M. Cambon, M. Berkenheim stated that the Delegation from the Co-Operative Societies outside Russia was ready to leave for Moscow at the end of the week and would reach its destination in about a week. One of its first duties would be to take up in detail questions of stocks available for export, ports, transport of commodities etc. His Committee had prepared a list of questions to be submitted by the Delegation to their Colleagues in Russia. It would be desirable that the members of the Permanent Committee should formulate questions which they wished asked for inclusion in this list.

It was agreed that the delegates should send immediately to M. Berkenheim through Mr. James any questions of this nature.

With regard to the question what kinds of goods were most required in Russia, it was pointed out to M. Berkenheim that there might be considerable difficulty in placing orders in the various Allied countries, and that it would be well if his Committee could furnish the Permanent Committee as soon as possible with a list of commodities urgently needed. M. Berkenheim agreed to do this.

Alluding to the question of railway material and especially locomotives and wagons, the Chairman pointed out to M. Berkenheim that a difficulty arose in the shipment of such goods to Soviet Russia, inasmuch as the railways were owned by the Soviet Government. Would it be possible in this case for the Co-Operative Societies to buy the material?

M. Berkenheim thought that it would be possible, and recalled the fact that the Co-Operative Societies had negotiated with the Government of the United States for railway material to be supplied in General Denikin’s area. In this case the Co-Operative Societies asked for and obtained authority to retain this railway material for their own purposes. He suggested that in the same way it would be possible for the Co-Operative Societies to retain railway material purchased by them and employ it for their own commercial purposes on the railways of Soviet Russia.

In reply to a question concerning lorries, M. Berkenheim stated that they would be very useful in certain districts, especially in South Russia where the ports were not very far from stocks of grain, e. g. in the districts of Berdyansk and Mariupol.

M. Maskens asked whether it would be possible to construct rolling stock, etc. in the South of Russia. M. Berkenheim replied that it might be possible; there were large factories of this sort in several centres, notably at Nikolaiev.

In reply to M. Berkenheim, the Chairman explained what, in his view, would be the method for the purchase of Eussian supplies. As regards grain, the Consultative Food Committee had arranged that it should be purchased on behalf of all the Allies through the Wheat Commission, which would make bulk contracts f. o. b. and from time to time give directions where ships should be sent, details as to quality, allowances, etc. being settled in advance.

As regards flax, purchases on behalf of Great Britain, at least, would probably be centralised through the Flax Control Board.

As regards shipping, it was agreed after discussion that M. Berkenheim should see representatives of the British Ministry of Shipping. Dr. Giannini pointed out that it would probably be advisable in this connection that charters should be made by the Allied Governments.

M. Berkenheim asked whether the Allied Governments had not at their disposal certain stocks which they might wish to sell to Russia.

The delegates agreed to consult their Governments on this point.

In answer to a question from the Chairman, M. Morossoff stated that the chances of supplies coming forward from Siberia were very remote owing to the difficulty of transport.

Finally M. Berkenheim stated the composition of the delegation about to proceed to Moscow.

M. Nicolas Makeev was President of the All-Russian Union of Zemstvos, under Kerensky, and was now Chief Secretary of Centrosoyus Direction in London.

M. Theodor Schmelev was President of the Flax Co-Operative Society in London.

M. Ivan Bubnov was Managing Director of the Narodny Bank in London.

Appendix 327

Following message received from Moscow 5.30 p.m. SS ur 1255.

“4/2 London W. 313 Berkenheim and Morossoff. February 2nd [4th?]. Re your wireless we report decision of Managing Board: First Central Council co-operative societies has received from Soviet Government full rights and powers to export raw materials in exchange for implements indispensable for Russians. Second Central Council Co-operative societies unites all Co-operative organisations of Russia and acts as their sole representative. Third in conformity with the message received by Central Council Co-operative Societies from the Soviet Government your Delegates have to obtain the necessary permits to enter Russia and receive instructions as to route to be followed by applying to Litvinoff at Copenhagen. Fourth the Managing Board of Central Council Co-Operative Societies is doubtful whether the arrival in Russia of the three insufficiently authoritative co-operators proposed by you will push forward the organisation of commercial relations. Central Council Co-operative Societies considers it therefore more practical to send immediately abroad independently of the arrival of your Delegation its own representatives supplying them with all the necessary information as well as wide discretionary powers. Central Council Co-operative Societies is of opinion that its delegation must obtain permission to come from Russia and the necessary guarantee of unhindered return to Russia. Besides sending your reply to this point by wireless communicate it to Litvinoff at Copenhagen whom Central Council Cooperative Societies appointed Chairman of above-mentioned Delegation. By appointing as its representative Litvinoff who is at present at Copenhagen and has every facility in daily obtaining necessary business data from managing board the latter aims at starting as soon as possible without waiting for the arrival of Delegation and avoiding delays connected with negotiations by wireless and sittings of Managing Board after each wireless. The exchange sovietal [sic] for both countries of Russian raw materials for foreign goods. Chairman Managing Board, A. Lezhava. Vice Chairman, D. Koroboff.”

Appendix 328

Reply to Moscow as Drafted by the Representatives of the Russian Co-operatives

Your telegram of February 4th received.²³ First we acknowledge that Central Council co-operative Society has received from Soviet Government full rights and powers to export raw materials in exchange for implements indispensable for Russia. Second we note the fact that the Central Council Co-operative Societies unites all Cooperative organisations. Third Representatives of Centrosoyus Nico-lai Makeev and of Flax Association Fedor Smelev are leaving to-day for Copenhagen with a view to proceeding immediately into Russia. Bubnoff held up by sickness will leave in a few days. We consider our first delegation as beginning of Permanent trading relations and would ourselves appreciate arrival and help of authoritative co-operators who could supply us with authentic information of all your views. Please send us names of proposed co-operative delegates so that we may submit permits from Allied Governments. We firmly believe that reopening of trading relations with Russia is at present possible only because of non-political character of Russian co-operation and of strictly economic and non-political course adopted by Russian cooperation. We consider therefore absolutely indispensable that our action should be absolutely separated from any other action not purely economic and that action of co-operative organisations should have no other aim than re-establishing trading relations in all classes of articles indispensable for Russia.

Appendix 329

[Telegram] to the President of the All Russian Central Union of Cooperative Societies, Moscow

No. 4. Your telegram of February 4th received. First we acknowledge that Central Council Cooperative Society has received from Soviet Government full rights and powers to export raw materials in exchange for implements indispensable for Russia. Second we note the fact that the Central Council Cooperative Societies unites all Cooperative organisations. Third Representatives of Centrosoyus Nicolai Makeev and of Flax Association Fedor Smelev have left for Copenhagen with a view to proceeding immediately into Russia. Bubnoff held up by sickness will leave in a few days. Please inform us of names of Cooperators whom you propose to send as delegates so that we may submit to the Supreme Council the question of your sending delegates. We would ourselves personally appreciate arrival and help of authoritative cooperators who could supply us with authentic information of your views. We consider our first delegation which has started for Russia as beginning of permanent trading relations. We firmly believe that reopening of trading relations with Russia is at present possible only because of non-political character of Russian cooperation and of strictly economic and non-political course adopted by Russian cooperation. We consider therefore absolutely indispensable that our action should be absolutely separated from any other action not purely economic and that action of cooperative organisations should have no other aim than re-establishing trading relations in all classes of articles indispensable for Russia. On behalf of All-Russian Cooperative Organisations. Berkenheim. Morossoff.

Appendix 330

Note by the Permanent Committee [Regarding] Relations Between the Supreme Economic Council and the League of Nations

The Permanent Committee in execution of the Council’s decision of November 22nd (minute 337) has not failed to keep in touch with the Secretariat of the League of Nations.

Considering that since that decision the League of Nations has formally come into existence, the Permanent Committee wishes to draw the attention of the S. E. C. to the desirability of officially notifying to the Council of the League:

1. The decision of the Council of Heads of States, 28th June.

2. The subsequent decision of the Committee on policy of the S. E. C. and of the S. E. C. itself,

and of ascertaining from them whether and when the League would be prepared to deal with economic matters.

In case the Council of the League should reply that nothing can be done before the assembly, the Permanent Committee should be instructed to co-operate with the Council of the League in preparing the Assembly, if so requested, by the Council of the League.

Feb. 4, 1920.

1. Omission indicated in the original.
2. See ICP–18, minute 2, and ICP–20, minute 1, vol. ix, pp. 863 and 885.
3. No mimeograph copy of appendix 313 accompanies the minutes; this text is reproduced from a printed copy filed with the minutes.
4. Reproduced from a printed text filed with the mimeograph text. The mimeograph text lacks the reservation of the French signatories and the complete list of signatories which the printed text contains.

5. Subject as regards the recommendations of paragraph 7 to the following reservation:—

   Having regard to the evidence given by the witnesses from Ireland, the prewar status should not be restored in Ireland until the Government consider the time opportune.

   Geo. F. Stewart

   [Footnote in the original.]

5. Omission indicated in the original.
6. No mimeograph copy of appendix 316 found in the flies; this text is reproduced from a printed copy filed with the minutes.
7. See appendix 250, p. 485.
8. See minute 305, p. 561.
9. Kraljevina Srba, Hrvata i Slovenaca (Kingdom of the Serbs, Croats and Slovenes).
10. See minute 336, p. 623.
11. No mimeograph copy of appendix 319 found in the files; this text is reproduced from printed copy filed with the minutes.
12. This exemption was revoked by the Supreme Economic Council at its meeting in Brussels, September 1919, and the vessels have since been delivered. [Footnote in the original.]
13. These vessels were delivered by the Germans on the completion of the service for which they were originally provisionally exempted. [Footnote in the original.]
14. Certain vessels of less than 1,600 gross tons which lay in neutral ports were taken over by the Allied Governments, and the Germans were allowed to retain an equal amount of tonnage of vessels between 1,600 and 2,500 tons, which would otherwise have fallen into the Allies’ 50 per cent, of this size. [Footnote in the original.]
15. This repatriation finished in August last, and the vessels have now been reallocated, nine to Great Britain, and one to France, and they will be available for use in the near future. [Footnote in the original.]
13. No mimeograph copy of appendix 321 found in the files; this text is reproduced from printed copy filed with the minutes.
14. No mimeograph copy of appendix 322 found in the files; this text is reproduced from printed copy filed with the minutes.
15. Appendix 11, p. 28.
16. Note.—The Communications Section is not responsible for the forwarding, custody or handling of any consignments. [Footnote in the original.]
17. See BC–46, minute 4 (b), vol. iv, p. 261.
18. Post, pp. 735 and 736.
19. Post, p. 737.
20. Post, p. 734.
15. For text of the Berne convention of October 14, 1890, see British and Foreign State Papers, vol. lxxxii, p. 771.
16. Post, p. 760.
17. Post, p. 761.
1. M. Maize. B. Barley. O. Oats.
2. See HD–62, minute 7, vol. viii, p. 411.
16. See HD–65, minute 4, ibid., p. 488.
17. See HD–78, minute 7, ibid., p. 808.
18. Not attached to file copy of this document.
19. See ICP–21, minute 1, vol. ix, p. 889.
19. Meeting of January 19, 1920; see ICP–21, minute 1, vol. ix, p. 889.
20. There is no record of this meeting in the files of the Department of State.
21. See appendix III, supra.
22. See appendix IV, supra.
23. See appendix 327, supra.