[Sailor Steve]

Monday, June 9, 1919

PARIS PEACE CONFERENCE

President Wilson’s House, Place des Etats-Unis, Paris 11:45

Meeting of the Council of Four


1. Mr Lloyd George says that he has received a report from Mr. Headlam-Morley to the effect that the Committee which was working out the details of the plebiscite for Upper Silesia has arrived at an impasse on the question of the time within which the plebiscite should be taken after the signature of peace. Consequently, he had asked that this Committee might attend to receive further instructions. Since then, however, he had seen Mr. Headlam-Morley and had suggested to him that the Committee should work out the conditions of the plebiscite, leaving the period within which it should be held blank to be filled in by the Council. Eastern Frontier of Germany.

President Wilson says that the conditions of the plebiscite will, to some extent, depend upon the time.

Mr Lloyd George says that he had suggested that the Committee should work it out on alternative hypotheses. He had told Mr Headlam-Morley that it was not the business of the Committee to discuss policy but merely to work out the details, leaving the policy to the Council. In reply to President Wilson, he says that there are certain other difficulties, for example, some members of the Committee wish the clergy to be removed from the area during the time preceding the plebiscite, which is obviously impossible. He is inclined to leave all these details to the Commission to be set up by the League of Nations for the purpose of conducting the plebiscite.

(The above views are accepted, and, at the request of the Council, President Wilson retires to the next room to meet the Committee and give them verbally the Council’s instructions.)


2. S Orlando says he has information that Klagenfurt has now been occupied by the Yugoslavs.


3. Sir Maurice Hankey reports that M Clemenceau had that morning handed him a fresh proposal on the part of the Delegation of the Serbs, Croats and Slovenes, in regard to the Klagenfurt question. He had at once sent it to be translated.


4. Mr Lloyd George reports that he has received a letter from the Estonian Delegation, asking that action might be taken to bring to an end the German activities which were affecting their operations against Petrograd.

(It is agreed that the letter should be communicated to the Military Representatives at Versailles, for their consideration. Sir Maurice Hankey undertakes to hand it to Major Caccia, the British Secretary.)


5. M Clemenceau says that it is a good thing that the telegram had been sent to the Hungarian Government insisting on their desisting from attacks on the Czechoslovaks. He now has information that the invitation to the Hungarian Government to send delegates to Paris to make peace has at last been received and he expects to have a definite reply on the following day.

President Wilson suggests that the representatives of the Czechoslovak and Romanian Governments in Paris should be sent for by the Council, who, without asking their advice, should say: “If you do not observe the conditions on which a final settlement is alone possible and which we have communicated to you” - which, in the case of the Romanians would be the armistice line - ”we will withdraw every sort of support.”

Mr Lloyd George suggests that there ought to be someone on the spot. It might be General Franchet d’Esperey, or possibly some other person might be found to summon all parties and make them agree on the lines on which fighting should cease. He has very little doubt that the Hungarians will withdraw from Czechoslovakia if the Romanians could be made to withdraw from Hungary.

President Wilson asks if a position has not been reached where the Romanians ought to be allowed to take no further part in the settlement. If they are allowed to advance, they will never evacuate the territory they have occupied.

Mr Lloyd George hopes that this is no reflection on the Military Representatives. They had only been asked to report on the situation from a military point of view, and General Sackville-West had told him he had not felt at liberty to discuss the political consequences of their advice.

President Wilson says that no such reflections were intended. General Bliss says the military advice was good, but draws attention to the political risks.

M Clemenceau says the political risks have already been taken when the telegram was sent to the Hungarian Government.

Mr Lloyd George says that, by the following day, M Clemenceau and he himself could ascertain how much war material was being sent to Romania. General Sir Henry Wilson had informed him that a good deal of material was on its way and he had asked him to stop its delivery. He suggested that a report should also be obtained from the Supreme Economic Council.

(It is agreed:

1) That Mr Lloyd George should ascertain the amount of British war material on its way to Romania which could be stopped.

2) That M Clemenceau should obtain the same information as regards French war material. (He instructs M Mantoux to initiate the necessary inquiries.)

3) That Sir Maurice Hankey should obtain the same information from the Supreme Economic Council.)


6. President Wilson reads a letter he has received from the Commission on Reparation, explaining the differences of opinion that had arisen.

(Sir Maurice Hankey is instructed to circulate this document immediately.)

Mr Lloyd George says that there is a good deal to be said, in his opinion, for putting Germany in a position to restart her industries again. Unless she is given raw material and the necessary credits, it would be impossible for her to pay reparation. But, on the question of fixing the amount, he is not in agreement with the United States experts. He has turned the matter over in his mind again and again, in order to try and meet their views. The conclusion he has come to is that if figures are given now they will frighten rather than re-assure the Germans. Any figure that would not frighten them would be below the figure with which he and M Clemenceau could face their peoples in the present state of public opinion. He does not know how Italy feels toward it but he has no doubt about Great Britain. Mr Bonar Law had been in Paris during the last day or two and was better in touch with British public opinion than he was himself. Mr Bonar Law was also inclined to take the same view as the United States delegates, but the moment any possible figure was mentioned he began to shrink from it. The statement of a figure at the present time would also raise inconvenient questions between the Allies. France could not accept any figure at the present time which did not provide a very large sum for restoration. His own opinion is that the present French estimate is a good deal higher than the actual cost would be. He thinks that France could take the risk of a lower figure, but of course they had not yet been able to make any detailed survey. In three or four months a preliminary survey would have been made, and it would be easier for France to state a figure. Another point is that he does not see how any member of the Council could apply his mind to the considerations involved in fixing a figure. They are faced with an infinity of subjects; for example, within the last day or two they had been considering the making of an armistice between the Hungarians and Czechs and between the Yugoslavs and Austrians in the Klagenfurt region and Polish questions. The topics are innumerable. To ask them now to fix a figure is like asking a man in the maelstrom of Niagara to fix the price of a horse. It is impossible, in these circumstances, for him to work out a figure which was fair to the British, French and Germans. He cannot honestly say that it is possible for him to give his mind properly to this at the present moment and he requires more time. Only this morning he had received information to the effect that the Germans are saying just the same thing. They really do not know what they can pay and would prefer to have more time to consider it. He would have thought that the proposal to allow three or, as Mr Loucheur urged, four months for the Germans to make an offer of a figure would be preferable. This would enable an examination to be made of the conditions and a survey to be carried out and for the estimates and methods to be worked out in detail. He hoped, therefore, that four months would be allowed in which the experts of all the Governments concerned, including the Germans, would be able to meet. The matter cannot be settled in an hour or two’s talk with German experts at Versailles, but if time were allowed it should be possible. M Loucheur, who is a particularly able business man, said frankly that he did not know what would be a fair sum. He was, however, with the United States experts in their desire to give a guarantee to Germany that she should get raw materials.

President Wilson says his position is that he is perfectly willing to stand by the Treaty provided that it were explained to the Germans, but he had understood that the British and French Governments were desirous of making some concessions as a possible inducement to the Germans to sign. If we must make concessions then he is in favour of perfectly definite concessions. He is not very interested in the details because personally he is prepared to sign the Treaty provided it is understood by the Germans. If, however, concessions are to be made the difficulties must not be allowed to stand in the way. He admits the full force of what Mr Lloyd George had said, namely that no-one knew enough to enable the bill to be drawn up, or the capacity of Germany to pay, to be estimated. Consequently, he is prepared to admit that any sum fixed now would be quite arbitrary and we should not know whether it covers the claims or whether it is within Germany’s capacity to pay. He understands, however, that Germany is supposed to want a fixed sum. From his point of view the sole consideration is as to whether it would provide a serviceable concession or not. He was warned, however, by his Economic experts that if Peace is not signed very soon most serious results would follow throughout the world, involving not only the enemy but all States. Commerce cannot resume until the present Treaty is signed and settled. After that it is necessary to steady finance and the only way to do this is by establishing some scheme of credit. He wishes to say most solemnly that if enough liquid assets ire not left to Germany together with a gold basis, Germany will not be able to start her trade again, or to make reparations. His own country is ready to provide large sums for the purpose of reestablishing credit but Congress will not vote a dollar under existing circumstances and he cannot ask the United States bankers to give credit if Germany has no assets. Bankers have not got the taxpayers behind them as Congress has and consequently they must know what Germany’s assets were. The United States War Finance Corporation is prohibited by law from granting credit unless it is covered by assets. Hence, if commerce is to begin again, steps must be taken to reestablish credit and unless some credit can be supplied for Germany’s use, the Allies will have to do without reparation.

Mr Lloyd George suggests that the question between establishing an immediate fixed sum for Germany to pay, and allowing four months within which the sum was to be fixed, could be discussed between experts on both sides. For example, before long Germany will want raw cotton, but until the Treaty is signed it is impossible to discuss the conditions with her.

President Wilson says that he has not the material wherewith to justify any particular sum.

Mr Lloyd George says that neither has he.

President Wilson says that the only argument in favour of fixing a sum is to provide a basis for credit. Supposing, for example, the sum is fixed at twenty-five billion dollars, the financial world could then form a judgment. If it is thought that Germany could pay this sum, many would be willing to lend to her on the strength of the bonds to be issued under the reparation scheme in the Treaty. Otherwise, money would not be lent. To find some way of making the bond issue the basis for credit is the whole question.

M Clemenceau says he agrees in this last statement.

Mr Lloyd George thinks it is impossible to fix a sum before Peace is signed.

President Wilson then reads a suggested reply on the subject of reparation which had been prepared by the United States Delegation. He undertakes to have it reproduced at once and to circulate it to the Council.

Mr Lloyd George says he likes “the crust and the seasoning but not the meat”. He does not think it is necessary to go as far as is proposed. According to his information this is not necessary. He would like President Wilson to see the man who had given him this information.

President Wilson says that the difficulty is that the information is so conflicting.

Mr Lloyd George says it is necessary to act on some information.

President Wilson says he does not agree in this. At the meeting of the United States Delegation it had been proposed that all the Commissions should be instructed to consider the concessions that could be made to Germany. He had replied that our objects should be to show the reasonableness of the Treaty and to make it workable. That is what he has in view in the present discussion.

Mr Lloyd George says that, as a former lawyer, before a litigation he would always try and find out what concession it was necessary to make in order to secure an agreement. This is his present attitude, and according to his information it is not necessary to make so large a concession as is proposed in the letter of the United States Delegation.

President Wilson agrees that for the moment it would be desirable to leave out fixing the sum to be paid.

Mr Lloyd George agrees that this is important. But he thinks it was unnecessary to make the concessions in regard to shipping. He is prepared to meet the Germans in regard to the gold assets.

(The question is adjourned until the following day.)


7. S Orlando says that his reply is ready and he can discuss the matter at once.

President Wilson suggests that S Orlando should forward his reply in writing in order that the Council might consider it.

S Orlando agrees to do this.


8. M Clemenceau said that a repetition of the telegram containing Admiral Kolchak’s reply haw been asked for.

(It is agreed that nothing should be published until the repetition had been received, as there are various important points still obscure, particularly the passage in which reference was made to the regime in force in Russia in February 1917. It is not clear as to whether the possibility of a return to this regime is or is not contemplated.)