[Sailor Steve]

Monday, June 23, 1919

PARIS PEACE CONFERENCE

President Wilson’s House, Place des Etats-Unis, Paris, 16:30

Meeting of the Council of Five with a Council of Experts on Belgian Affairs


1. The Council has before them proposals for meeting the Belgian claims for priority in reparation payments.

Mr Lloyd George says that he has had no time to consider those proposals; so far as he can make out those that had been submitted to him were the result of agreement between two Delegations only. He asks that the question might be referred again to the financial experts of all the Delegations who are dealing with the matter, and that their report should be referred to the Supreme Council.

(This is agreed.)


2. M Loucheur proceeds to describe his negotiations with the representatives of Czechoslovakia, Poland, Serbia and Romania, in regard to their claims for reparation and the proposed payment by them of contributions towards the cost of the war of liberation. As regards claims for reparation, he instances the settlement suggested by him and his colleagues to Serbia. They had made an offer of Fr 500,000,000 as reparation, half of this sum to be paid in priority: Serbia to assume a part of the pre-war Austrian debt on account of the newly acquired territories but not to be liable for payment for the public property taken over in those territories. The Serbian representatives are not disposed to accept this offer and prefers to have their claims dealt with under the general provisions of the Treaty; and this is generally the view of the Delegations of the other states in question.

As regards the payment of contributions towards the cost of the war, all the states in question appear to be ready to agree to pay a sum equal to 20 per cent of the Austrian war debt held in the newly acquired territories; this sum in the case of Serbia and Romania to be set off against their claims for reparation. He desires, however, the further instructions of the Council in regard to dealing with claims for reparation: The Serbians, e. g. had suggested an extravagant sum - 5 milliards of francs - and he is disposed to suggest that these states should be dealt with under the general provisions for reparation.

Mr Lloyd George asks whether he is to understand that if, for instance, 20 per cent of the Austrian war debt in Yugoslavia amounts to 100 millions and the Serbian claim for reparation amounted to 150 millions, the Yugoslav state would receive 50 millions.

M Loucheur says that he assumes that the contributions would be payable in local currency, while reparation received would be in gold. He adds that he cannot recommend demanding a higher payment from Serbia and Romania, having regard to the fact that they have already borne the expenses of a war. He thinks, however, that Poland and Czechoslovakia should be treated on different lines and that from those two latter states payment might be demanded in external debt. He is disposed personally to suggest that no contribution should be asked from Serbia and Romania.

Mr Lloyd George points out that this latter proposal would appear to ignore the large increase of wealth accruing to these states as a result of their acquisition of territory.

Mr Lamont then recalls to the minds of the Council the history of the negotiations with those new states on the question of the payment of contributions, which he, and subsequently, M Loucheur, had conducted.

In the first instance he had been instructed by the Council to negotiate as follows:

In the case of Serbia and Romania the agreed payments contributory to the cost of the war are to be set off against their claims to reparation. Poland and Czechoslovakia, which are not entitled to claim reparation, were to be called upon to make a contributory payment. Subsequently M Loucheur had proposed to relieve the new states of any responsibility for Austrian war debt. But this suggestion, which is inconsistent with the proposed financial clauses, had been abandoned. The difficulty is, however, that Serbia and Romania are not disposed to agree, at the present juncture, to an assessment of the amount of their reparation claims.

Mr Lloyd George points out that this does not appear to be material: if they accept the principle, the Reparation Commission can fix the sum, and the amount of their proposed contribution can then be deducted.

(It is agreed that a settlement with Serbia, Romania, Poland and Czechoslovakia in regard to their proposed contribution to the cost of the war should be communicated on the following lines:

The existing financial and reparation clauses to remain.

Each of the countries to which Austro-Hungarian territory passes shall pay as a contribution to the expenses of their liberation a sum equal to 20 per cent of that portion of the bonded war debt of Austria-Hungary as legally constituted on October 27, 1918, apportioned to such territory on the same principle as the pre-war debt.

Those countries to which reparation is due shall set off the amount of the contribution referred to above and the value of the public property taken over by them in the newly acquired territory against their claim to reparation.)