Paris Peace Conf. 180.03401/142
[IC–]180D
Notes of a Meeting Held at President Wilson’s House in the Place des Etats-Unis, Paris, on Saturday, May 3, 1919, at 12:30 p.m.
- Present
- The United States of America
- President Wilson.
- Mr. Norman Davis.
- Mr. T. W. Lamont.
- British Empire
- The Rt. Hon. D. Lloyd George, M. P. Prime Minister.
- The Rt. Hon. A. J. Balfour, M. P. Secretary of State for Foreign Affairs.
- The Rt. Hon. Lord Cunliffe.
- Mr. J. M. Keynes, C. B.
- Mr. H. A. Siepmann.
- France
- M. Loucheur.
- Sir Maurice Hankey (Secretary)
- The United States of America
The Council had before it the question of the Indemnity to be paid by Germany to Belgium.
(1) The First £100 millions Mr. Lamont said that since the Belgian question was last discussed at the Council various proposals had been made to the Representatives of the Belgian Government, but that negotiations could not now proceed further until the Allied Delegates had received instructions as to the precise limits within which they might make concessions. The first point was that of the priority of the Belgian claim to the first £100 millions to be received from Germany. This had been already agreed.
Mr. Davis said that the question might arise as to whether the Belgian priority applied only to the first cash receipts from Germany or whether it included, for example, any cessions which Germany might make in the way of ships etc.
It was agreed that the claim of Belgium to receive the first £100 millions is recognised, but applies only to the first cash receipts.
(2) Lien of the Allies Mr. Lamont said that the Belgian Government had raised the question whether they were released from the lien which the Allied Governments now have on the first payments to be received by Belgium from Germany in respect of Reparation.
[Page 446]It was agreed that no concession can be made to Belgium in this respect.
(3) Pre-Armistice Loans to Belgium Mr. Lamont said that the Belgian Representatives had attempted to maintain that if the proposal to substitute German for Belgian obligations in respect of loans made to Belgium by the Allies were accepted, it would be applicable to all loans made before the signature of the Peace Treaty and not merely to loans made before the Armistice.
It was agreed that the arrangement would in any event apply only to pre-armistice loans.
(4) Repayment of the Allies’ Loans to Belgium Mr. Lamont said that the Belgian Government did not press for the inclusion in the Treaty of a clause binding Germany to reimburse the Allies for loans made by them to Belgium, but that they were content to leave the question to a side agreement.
M. Loucheur said that what they really wanted was to be entirely relieved of all responsibility in regard to these loans.
Mr. Lamont said that the Belgian Delegates had apparently been under the impression that France and England, at any rate, were under an obligation not to look for the repayment of these loans at all.
Mr. Lloyd George protested that this had never been the understanding although we had in fact agreed not to demand interest on these advances until the date of the signature of the Armistice.
Mr. Balfour thought that the very fact that we had asked for obligations was a sufficient proof that the Belgian suggestion was quite unfounded.
M. Loucheur agreed that M. Hymans knew very well that Belgium was under an obligation to repay.
(5) President Wilson said that he understood the proposition to be that the Allied Governments should accept German for a Belgian obligation for all pre-armistice loans.
Reimbursement by Germany to the Allies of Loan Made by Them Belgium Mr. Keynes said that it would in practice be extremely difficult to fit in this proposal the remainder of the Treaty unless a priority were given to the Allied claim to reimbursement on behalf of Belgium. The next receipts after the first £100 millions should be specifically assigned to the repayment of the loans.
Mr. Davis objected that this would mean that Belgium would get nothing for some years except the first £100 millions.
The Question of Priority Mr. Keynes thought that it would not take years for Germany to pay £350 millions altogether.
Mr. David said that an alternative method was for the Allied Governments to include their claim for this amount among the categories of damage.
[Page 447]President Wilson said that he thought Congress would have no difficulty in accepting the principle. The loans made by the United States to Belgium before the Armistice were for Relief and therefore Congress would understand that they were not making any precedent for the remission of a debt, but were voting the money as part of the Relief to Belgium.
Mr. Lloyd George said that the major portion of the British loans to Belgium before the United States came into the war were also for Relief. He was prepared to accept the principle of German liability for these loans.
Mr. Balfour said that in his opinion Belgium was a rich country considering her population. He thought therefore that when the country was once more in working order she ought to be able to pay her debt. The trouble was that for the time being she could not get to work and therefore he thought it necessary that she should be given money wherewith to start.
Mr. Lloyd George said that he also thought that Belgium was in an extremely favourable position. She would be able to start without any war debt at all, with all her damage repaired, and with a prior claim to whatever might be received from Germany. In fact the whole priority of Belgium was absolutely indefensible. He thought it important to make sure that the claims of the Allies were not postponed until the last so that the £250 millions due to them might not be paid only at the very end.
Mr. Keynes said that that was one of the reasons why it was extremely desirable that a priority for the repayment of the Allied loans should be admitted, that is to say, that Belgium should receive the whole of the £350 millions paid by Germany, of which £100 millions would be for her own purposes and £250 millions would be used to meet her debts to the Allies.
President Wilson suggested that in negotiation it might be possible to induce the Belgians to accept this priority and that if they refuse to accept it the Allies should then fall back upon the alternative proposal to include the amount among the categories of Reparation.
(6) A Separate Bond Issue Mr. Lloyd George said that he would propose another possible solution, namely that for this £250 millions there should be an altogether separate bond issue.
Mr. Lamont said that this would fit in very well with Germany’s special undertakings as regards Belgium.
Mr. Keynes said that here again the important question would be bow this issue would rank in relation to the other issues.
President Wilson said that he could not actually bind the United States to accept the proposal, but that he was prepared to lay it before Congress on his own recommendation.
[Page 448]M. Loucheur said that if Great Britain were disposed to accept these bonds in payment of her debt, thus leaving Belgium wholly free, the French Government would also be prepared to fall in with the arrangement.
Mr. Lloyd George said that he thought this was a better suggestion than that the Allied loans should be repaid out of the Belgian percentage of the other issues. There would be three issues—the first of one the second of two, and the third a contingent issue of two thousand millions. Supposing that the Belgian percentage were ten per cent., this would mean that 300 millions out of the first 3000 millions would go to Belgium. It was difficult to suggest that out of this first 300 millions 250 millions should be taken for the repayment of Allied debt, leaving only 50 millions to Belgium herself for Reparation.
Lord Cunliffe agreed with the proposal of Mr. Lloyd George for a special issue of bonds.
Mr. Lloyd George said that after all this was an additional category of the Allied claims against Germany and that the fact might as well be recognized in this manner.
It was agreed that there should be a separate issue of bonds to the value of the advances made by the Allies to Belgium and that this special issue should be devoted to the repayment of these loans by Germany to the Allied and Associated Governments.
(7) Subsequent Reparation Payments Mr. Lamont said that a further point arose on account of the persistent claim of Belgium to receive a percentage of subsequent Reparation payments.
President Wilson said that he understood Belgium to claim a priority payment or 15 per cent.
Mr. Lloyd George said that in no circumstances could he agree to any such claim.
M. Loucheur said that he did not think that the Belgians would press the point in negotiation.
It was agreed that the Belgian claim to be allotted a percentage of subsequent Reparation payments should be given an unqualified refusal.
(8) Payment for Ceded Territory Mr. Keynes said that there was an inconsistency between the territorial and financial chapters of the Treaty in regard to the payments to be made to Germany for territory ceded under the Treaty. The only exception to the rule that ceded territory should be paid for was in the case of Alsace-Lorraine and for this specific exception a particular reason was given in the relative clause of the Treaty as drafted. No similar reason could be given in the case of Belgium, and he suggested that the territorial clauses should be brought into conformity with the financial clauses on this subject.
[Page 449]Sir Maurice Hankey said that it was agreed not to be desirable from the political point of view to require payment from Belgium.
Mr. Lloyd George said that he did not wish to quarrel on a point which appeared to be of no very great importance and that he was therefore in favour of allowing exceptional treatment to Belgium in this case.
It was agreed that Clause 9 of the Financial Chapter should be amended so as to make it consistent with the territorial provisions of the Treaty. A letter on this subject is attached to these Minutes.
(9) Polish Claim to Reparation Mr. Lamont said that Poland put in a claim for Reparation amounting to nine billion dollars.
Mr. Lloyd George said that this claim payment was quite inadmissible and that on the previous day a claim on the part of Alsace-Lorraine had been refused for the express reason that if it were granted there would be no logical reason for excluding Poland from making a similar claim.
Mr. Davis said that the difficulty was that Poland was an Allied and Associated Government and was therefore included under the Preamble of the Reparation Chapter.
It was agreed that the Reparation Clauses should be so amended as to include only such damage as had been done to any country while a belligerent Ally. A letter on this subject is attached to these Minutes.