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

Paris Peace Conf. 180.03401/36

CF–36

Notes of a Meeting Held at President Wilson’s House in the Place des Etats-Unis, Paris, on Tuesday, May 27, 1919, at 11:45 a.m.

Paris, May 27, 1919, 11:45 a.m.

• Present
  • United States of America
    • President Wilson.
    • Mr. Norman Davis.
    • Mr. T. W. Lamont.
    • Captain Smith.
  • British Empire
    • The Rt. Hon. D. Lloyd George, M. P.
    • Lord Sumner.
    • Lord Cunliffe.
    • Mr. J. M. Keynes.
    • Mr. O. T. Falk.
    • Colonel Peel.
    • Mr. H. A. Siepmann.
    • Mr. E. W. Sutton.
  • France
    • M. Clemenceau.
    • M. Loucheur.
    • M. Sergent.
    • M. Lyon.
    • M. Cheysson.
  • Italy
    • Signor Orlando.
    • Signor Crespi.
    • Captain Jung.

Sir Maurice Hankey, K. C. B.	}	Secretaries.
Count Aldrovandi.
M. P. J. Mantoux.—Interpreter.

The Council had before them the Financial Clauses for insertion in the Treaty with Austria.¹

1. Mr. Lamont said that in accordance with the instructions of the Supreme Council the Delegates of the States which had previously formed part of the Austrian Empire had been summoned on the previous day to discuss the question of Reparation. The attitude of all the Delegates had been that they could not bear to be considered as an enemy State or to be classed in the same category as Austria in regard to Reparation. Their declaration had been listened to but no definite answer had been made. After the meeting Dr. Benes had said in conversation that Czecho-Slovakia would be willing to consider favourably a proposal that she should share in the burden of the war provided that this proposal was not put forward in the form of a demand for Reparation. Dr. Benes had been asked to devise a formula which would be satisfactory to him and this formula would in all probability suit all the four new Nations. It would, however, necessitate the making of separate agreements with each of them. Payment of Reparation by the States Formed out of the Austrian Empire

Mr. Lloyd George said that he also had seen Dr. Benes and had gathered that there would be no objection on his part to a contribution towards the expenses of the war which was a war of liberation for Czecho-Slovakia. Indeed there could be no objection to such a proposal seeing that Bohemia is a very rich country and could well afford to make some sacrifice for the sake of its liberty. It was essential that in some form or another these countries should contribute seeing that in Allied countries the burden of the war would fall in many cases upon peasantry who were poorer than the inhabitants of liberated countries. But there were good reasons for meeting the wishes of the new States in regard to the precise purpose to be assigned to their contribution.

Signor Crespi said that he accepted the principle especially in view of the fact that Trent and Trieste are also to be treated not as enemy countries but as being in most respects analogous to Alsace and Lorraine.

Signor Orlando said he thought it was quite natural that these States should not wish to be regarded as responsible for the war of which they were the victims. It must be recognized that the Czechs had begun to take the part of the Allies even during the war and that they had made a useful contribution towards victory. He therefore had no objection to make to any proposal which was intended to recognize their special position.

Mr. Lloyd George suggested that as there appeared to be general agreement the Reparation Clauses for Austria should be drafted on this basis and that the experts in charge of them should have full power to negotiate with the component parts of the old Austrian Empire on this principle.

President Wilson suggested that the right phrase to use would be that the new States should be required to make a contribution towards the cost of their own liberation.

2. President Wilson said that he was advised that Article 1 had the effect of putting a permanent cloud on Austrian credit. He proposed that it should be modified by the insertion, at the beginning of the words “subject to such exceptions as the Reparation Commission may make”. Financial Clauses of the Treaty With Austria

M. Loucheur said that the only objection which he would have to this alteration would be that it might perhaps be inopportune to introduce such a modification, seeing that the clause as it stood was similar to the corresponding clause in the German Treaty, and that the text had been already presented to the Germans without any amendment.

President Wilson said that he saw no difficulty in making special arrangements with Austria, and that in fact it was the intention of the Allies to treat Austria differently from Germany.

Mr. Lloyd George said that as a matter of fact the difference amounted to very little because even in the case of Germany certain exceptions had been admitted.

It was agreed that the words “subject to such exceptions as the Reparation Commission may make” should be inserted at the beginning of Clause 1.

3. M. Loucheur said that he proposed that a special clause should be inserted to deal with the Compagnie des Chemins de Fer du Sud de l’Autriche. The obligations of this Company in France amounted to 1½ milliards and were in the possession of a vast number of people. The railway system belonging to the Company is to be split up into five separate parts which run through a number of the various new States. The regulation of the affairs of the Company was therefore a very complicated question which could not be settled by the Council, but the view of the French Government was that the Treaty must provide for the making of such a settlement. The South-Austrian Railway Company

President Wilson asked whether this was a Government railway.

M. Clemenceau explained that it was a private company.

President Wilson said that he saw great difficulty in accepting a clause which would make the Allied and Associated Governments a supervising authority in the case of one particular private company. He saw no reason for making special provisions in the case of South-Austrian railways, especially as he was informed that there were at least twenty Inter-national commissions already on which the United States had undertaken to be represented. A great number of similar questions were sure to arise under the Peace Treaties and it was impossible to make special provision for the settlement of each through international channels. It would be a very serious venture to enter into a control of a single corporation, and in fact the five different groups of the railway would know their interests and arrange their own difficulties a great deal better than any international commission would be likely to do.

Mr. Lloyd George said that he thought the Council should not be asked to interfere in order to safeguard the interests of these particular bond-holders. If private interests were to be safeguarded the principle ought to have been applied all round. In point of fact every legitimate interest is protected by Article 6 of the Financial Clauses which is so drafted as to include bond-holders. The Council could not judge of individual corporations and he would hesitate very much before giving special protection to bond-holders of whom nothing was known and who might very well be speculating.

M. Loucheur said that the French proposal was not intended to obtain special protection for the bond-holders. It was merely intended to provide a solution of a practical problem which was sure to arise. Here is a Company which is going to be split into five different pieces and it is necessary to say how this Company is to function and whether and in what manner it is to be allowed the right of exploiting the five separate parts. If the case is really covered by paragraph 6 of the Treaty the object of the French proposal is gained.

It was agreed that the Financial Clauses should be included in the Treaty with Austria as drafted, subject to the amendment of Clause 1 as proposed by President Wilson. (See paragraph 2 above.)

1. The text of these draft articles does not accompany the minutes.