NOTES ON INTERNATIONAL AFFAIRS FROM APRIL 10 TO MAY 10
Prepared by Professor Allan Westcott, U. S. Naval Academy
GERMAN REPARATIONS SETTLEMENT
United States Mediation.—According to the Treaty of Versailles, May 1, 1921, was the date fixed for final settlement of the amount of German reparations. On April 20 Germany sent an appeal to the United States Government, requesting the President to mediate the reparations question, and pledging itself to fulfill "all the provisions of any award that may be made."
This request Secretary Hughes declined in a brief note as follows:
Washington, April 21, 1921. This government could not agree to mediate the question of reparation with a view to acting as umpire in its settlement.
Impressed, however, with the seriousness of the issues involved, as they affect the whole world, the government of the United States feels itself to be deeply concerned with the question of obtaining an early and just solution. This government strongly desires that there should be an immediate resumption of negotiations and reiterates its earnest hope that the German Government will promptly formulate such proposals as would present a proper basis of discussion.
Should the German Government take this course, this government will consider bringing the matter to the attention of the allied governments in a manner acceptable to them in order that negotiations may speedily be resumed.
Germany Holds Gold Reserve.—On April 18 the Reparations Commission demanded that, as security for payments to the Allies, the entire gold reserve of the German Reichsbank, amounting to 1,100,000,000 gold marks, should be transferred to the branch banks at Cologne or Coblenz in territory under Allied control. This Germany refused, and the refusal was regarded as a further violation of the treaty requirements.
German Reparations Proposal.—Following the refusal of the United States to act as mediator, the German Government submitted through the agency of the United States a final proposal, which was declared to be "the maximum of what can be offered." The proposal was to pay reparations to the amount of 50 billion gold marks (present value) in the form of annuities which would bring the ultimate total of money paid to about 200 billion gold marks. Various details and somewhat vague conditions were attached, including 1 billion marks as initial payment, 4 per cent interest, and an offer to take over the Allied debts to the United States.
Allies Reject German Offer.—The French Government at once signified to the American Government its rejection of the German proposal, stating that the German offer was hut 50 per cent of the total agreed upon by the Allies at Paris (226 billion gold marks plus 12 per cent of the value of exports) and but 35 per cent of the Reparations Commission's more recent estimate of about 140 billion marks (present value). Premier Lloyd George in Parliament on April 28 declared the offer "thoroughly unsatisfactory." Secretary Hughes on May 2 transmitted the Allied views to Germany in a brief note which advised Germany to make at once "clear, definite, and adequate proposals, which would in all respects meet its just obligations."
Ultimatum to Germany.—The Supreme Council, in session in London, on May 5 presented to Germany an ultimatum requiring that Germany admit liability for the full 132 billion marks (present value) fixed by the Reparations Commission, and that this admission be made before May 13, on penalty of Allied occupation of the Ruhr Valley. France called the class of 1919 to the colors and mobilized war forces in readiness to enforce the penalty.
Detail of Allied Demands.—Paris, May 6.—The Reparations Commission made public to-day the Allied plan for payment by Germany of the reparation account. A study of this plan shows that the basis of it is a system of bonds of the face value of 132,000,000,000 gold marks, the total of the indemnity fixed by the Reparations Commission. Germany would pledge herself to pay a sum which would provide for the payment of 5 per cent interest on these bonds and a sinking fund.
This is the plan Germany must accept by noon on May 12 to avoid occupation of the Ruhr. The system is of direct interest to America, for it is an essential part of the plan that the Allies realize in the near future a certain amount of cash, of which America has a great deal and other nations very little.
The system does not call for direct payments by Germany to the Allies. Germany gives bonds to the Reparations Commission, the Reparations Commission hands over the bonds to the different Allied nations and pays to the holder of the bonds interest from a fund Germany supplies.
Therefore France will not receive 68,500,000,000 marks, 52 per cent of the total, in cash, but will receive 68,500,000,000 marks in German bonds. She would not receive these all at once. Twelve billion marks worth of bonds are to be issued at once and 38,000,000,000 more in the future, therefore a year from now France will be the holder of something less than 30,000,000,000 marks, face value, of the bonds.
France Must Market Bonds.—Now if France put these bonds in her vaults and held them she would receive interest at the rate of 1,500,000,000 gold marks annually. But that would by no means solve the bad financial situation of the French Government. That would mean an annual reparation income of some 5,000,000,000 paper francs, present value, whereas France has already paid out 55,000,000,000 paper francs for reparation and needs 16,000,000,000 more for this year. Therefore it is obvious France must sell the bonds she would receive.
This raises a question very serious for France of the market value of a German bond paying 5 per cent. It would not sell at par. If all doubt of its value were removed, a study of the market indicates a value something like 75 per cent of par and, due to the uncertainty of Germany s making good its value would probably be less. Therefore it seems, a sate assumption that France's share of the reparation payments is going to be much less than the face value, 68,500,000,000 marks. To estimate the effect this fact will have on French opinion one should bear in mind that the French public started by expecting 200,000,000,000 gold marks.—N. Y. Times, 7/5.
German Acceptance.—In the face of the reparations crisis the Fehrenbach cabinet resigned on May 4, but pending the formation of a new cabinet was requested by President Ebert to continue to deal with current affairs. In view of the apparent eagerness of France to enter the Ruhr region, and on the other hand with the prospect of securing the major part of Upper Silesia and creating a favorable impression in England and May 5 swung towards acceptance of the Allied terms. On May 11 the new Wirth Cabinet accepted the terms unconditionally.
UNITED STATES RE-ENTERS ALLIED COUNCILS
Text of Invitation and Reply.—At a meeting of the Supreme Council in London it was decided on May 4 that the United States be invited to send representatives again to the Supreme Council, the Council of Ambassadors, and the Reparations Commission. To this the American Government replied favorably. Ambassador Wallace resumed his seat in the Council of Ambassadors on May 9.
Allied Invitation.—As President of the Allied Conference, which is just completing its sittings in London, I am authorized with the unanimous concurrence of all the powers here represented to express to the United States Government our feeling that the settlement of the international difficulties in which the world is still involved would be materially assisted by the co-operation of the United States; and I am, therefore, to inquire whether that government is disposed to be represented in the future, as it was at an earlier date, at Allied conferences, wherever they may meet, at the Ambassadors' Conference, which sits at Paris, and on the Reparations Commission.
We are united in feeling that American cognizance of our proceedings and, where possible, American participation in them, will be best facilitated by this.
American Reply (May 6).—The government of the United States, while maintaining the traditional policy of abstention from participation in matters of distinctly European concern, is deeply interested in the proper encouragement and in the just settlement of matters of worldwide importance which are under discussion in these conferences, and desires helpfully to co-operate in the deliberations upon these questions.
Mr. George Harvey, appointed Ambassador to Great Britain, will be instructed on his arrival in England to take part as the representative of the President of the United States in the deliberations of the Supreme Council. The American Ambassador to France will be instructed to resume his place as unofficial observer on the Conference of Ambassadors, and Mr. Roland W. Boyden will be instructed to sit again in an unofficial capacity on the Reparations Commission.
The Government of the United States notes with pleasure your expression of the belief of the representatives of the Allied governments assembled in London that American co-operation in the settlement of the great international questions growing out of the World War will be of material assistance.
Knox Peace Resolution Passed.—On April 30 the Senate by a vote of 49 to 23 adopted the Knox Resolution declaring war with Germany at an end. The resolution as finally revised provided: (1) That the Joint Resolution of Congress passed April 6, 1917, declaring a state of war with Germany be repealed and said state of war is hereby declared at an end; (2) That all property of the German Government or of German nationals in the possession of the United States be retained until ratification of a treaty with Germany; (3) that the United States reserve all rights, reparations, etc., under the armistice and the Treaty of Versailles.
President Harding on Foreign Policy.—The passage of the Knox Resolution was in accord with the President's foreign policy as stated in his message to Congress on April 12. In this message he favored a peace resolution "with essential qualifications." As regarded further measures, he said:
"It would be idle to declare for separate treaties of peace with the Central Powers on the assumption that these alone would be adequate, because the situation is so involved that our peace engagements cannot ignore the Old World relationship and the settlements already effected, nor is it desirable to do so in preserving our own rights and contracting our future relationships.
"The wiser course would seem to be the acceptance of the confirmation of our rights and interests as already provided and to engage under the existing treaty, assuming, of course, that this can be satisfactorily accomplished by such explicit reservations and modifications as will secure our absolute freedom from inadvisable commitments and safeguard all our essential interests."
CONTROL OF OIL RIGHTS
British Would Confer on Oil Control.—Washington. April 11. Adjustment of the dispute between the United States and Great Britain growing out of the San Remo oil agreement concerning Mesopotamia has been suggested informally to the United States, it was learned officially to-day.
The plan proposed was in a memorandum reaching the State Department, but not made in such a manner as to place the necessity for decision upon this government until more definite representations are received.
It is proposed that the United States appoint a commissioner to confer with the British Petroleum Commission, in the belief that such direct negotiations would lead to a more speedy adjustment than might be expected through the usual diplomatic exchanges.
Reports from Constantinople crediting Turkish officials with having declared that British nationals never succeeded in obtaining actual concessions from the Turkish Government for the exploitation of the oil resources of Mesopotamia confirm information that has been in the possession of officials of the State Department for some months.—N.Y. Times, 12/4.
Protest to Dutch on Oil Concessions.—Washington, April 9.—Under instruction from Secretary Hughes a vigorous note has been delivered to the Dutch Government by William Phillips, American Minister at the Hague, insisting that American oil corporations must have equal opportunities with the Royal Dutch Company, or any other company, in the development of the celebrated Djambi oil fields in Sumatra and other oil deposits in the Dutch East Indies.
Mr. Hughes takes the ground that the United States has a real interest in the development of the future oil supplies of the world and has informed the Dutch Government through Minister Phillips that the real interest of he United States Government in these matters lies in the recognition of the principle of "mutual or reciprocal accessibility to vital and natural resources by the nationals of the United States and by those of foreign countries."
In his note to the Dutch Government, Minister Phillips stated that he was not acting on behalf of any particular American company, but pointed out that certain definite propositions, made in the last year, "furnish sufficient evidence that responsible and experienced American interests are ready and desirous to co-operate with the Netherlands Government in oil developments in the Netherlands Indies."
These interests are the Standard Oil Company of New Jersey, whose officials in New York on Wednesday confirmed recent cable dispatches to The New York Times from The Hague to the effect that representatives of American oil interests had submitted to the Dutch Government a bid for half of the oil concessions in the Djambi fields in Sumatra.—N. Y. Times, 30/4.
ALLIED REPLIES IN YAP DISPUTE
French Reply Favorable.—To Secretary Hughes' note of April 4 to the four Allied Powers protesting against Japanese control of the island of Yap and insisting on the right of the United States to share in all decisions regarding mandates, the French Government made a preliminary reply on April 7 stating that a final answer could be made only upon agreement of the four powers concerned. The note pointed out, however, that, while the award to Japan on May 7, 1919, was not restricted, nevertheless the Japanese representatives had official knowledge of the reservations previously made by the representatives of the United States.
Japan Unyielding.—Correspondence between Japan and the United States in the Yap controversy was made public on April 18. The fact was revealed that the Japanese note of Feb. 26, 192 1, insisted that the decision of May 7, 1919, awarding to Japan all former German islands in the Pacific north of the equator was "final," "with no reservations whatever," and that the Japanese Government "would be unable to consent to any proposition, which, reversing the decision of the Supreme Council, should exclude Yap from the territory committed to their charge."
Secretary Hughes in his note of April 4 produced definite evidence of President Wilson's reservations, but insisted further that no mandate decision of the Supreme Council could be final without the approval of the United States as a participant in the war.
Italy Supports American View.—In a note on April 29 Italy expressed its belief that the United States in regard to Yap was asking merely for equal privileges with other nations, signified complete agreement with the views expressed in the American note of April 4, and noted that the matter had been referred to the Juridical Commission of the Council of Ambassadors.
League Assembly Meets in September.—Notices were sent in May to members of the League of Nations that the second session of the League Assembly would be held as scheduled at Geneva on September 5. The notices included a tentative schedule of business to come before the session.
CIVIL WAR IN SILESIA
Polish, Uprising.—Early in May reports were circulated that the Allied Commission on Upper Silesia had decided that, aside from the mining districts of Pless and Rybnik and another narrow strip, the territory should be awarded to Germany. Upon this report, Polish insurgents to the estimated number of 20,000 attempted to secure control of the disputed area. The Allied authorities declared martial law and at various points engaged in armed conflict with Polish hands, but their forces were inadequate to maintain order. France on May 4 requested the Polish Government to take all possible measures to prevent disturbances, and at the same time warned Germany against any invasion of the district by German forces. Poland signified to the Allies its disapproval of the action of the insurgents, and urged that announcement of the settlement be made as soon as possible.
UNITED STATES AND LATIN AMERICA
Harding on Monroe Doctrine.—At the unveiling of Venezuela's gift of a statue of Simon Bolivar, South America's liberator, in New York City, on April 19, President Harding spoke significantly of the meaning of the Monroe Doctrine, and also suggested his purpose of discussing disarmament with other powers. The following passages may be quoted:
The Monroe Doctrine.—"There have been times when the meaning of Monroeism was misunderstood by some, preverted by others, and made the subject of distorting propaganda by those who saw in it an obstacle to the realization of their own ambitions The history of the generations since that doctrine was proclaimed has proved that we never intended it selfishly; that we had no dream of exploitation. On the other side, the history of the last decade certainly must have convinced all the world that we stand willing to fight, if necessary, to protect this continent and these sturdy young democracies from oppression and tyranny."
A Predicted Call to Disarm.—"In the last half century our American commonwealths have not only been able to hold themselves aloof from competitions in armament, but they have built up a system of international arbitration and adjudication which has constantly lessened the danger of armed conflict. There is too little realization, my fellow-citizens of the Americas, of the progress that had been made toward judicial and arbitral settlement of international differences by the American nations. It presents an example well worthy earnest consideration, and affords us an assurance which will justify our purpose to invite the present-day civilization to cast aside the staggering burden of armament."
Colombian Treaty Ratified.—The treaty between the United States and Colombia was ratified by the U. S. Senate on April 20 by a vote of 69 to 19. The treaty provides for the payment of twenty-five million dollars to Colombia in five annual installments. The Senate rejected the Borah amendment explicitly denying any complicity of the United States in the secession of Panama. According to the terms of the treaty, Colombia has the right in peace and war to use the Panama canal and railroad for purposes of transporting oil, coal, munitions, and troops from her Atlantic to her Pacific coast.
Panama Must Accept Award.—On April 21 the Republic of Panama sent a lengthy note to the American Government, in effect refusing the demand of Secretary Hughes that the Loubet and White decisions regarding the Panama-Costa Rica boundary be at once accepted and put into effect. On May 2 Secretary Hughes sent a more forcible note insisting on the just and binding character of the awards and closing as follows:
"It is precisely because of its friendship for the Republic of Panama, as well as because of its desire to assure itself that the peace of Central America is maintained on a stable basis guaranteed by the scrupulous observance of international obligations, that the Government of the United States feels compelled to state that it expects the Government of Panama to take steps promptly to transfer the exercise of jurisdiction from the territory awarded to Costa Rica by the Loubet award, at present occupied by the civil authorities of the Government of Panama, in an orderly manner, to the Government of Costa Rica.
"Unless such steps are taken within a reasonable time the Government of the United States will find itself compelled to proceed in the manner which may be requisite in order that it may assure itself that the exercise of jurisdiction is appropriately transferred and that the boundary line on the Pacific side, as defined in the Loubet award, and on the Atlantic side, as determined by the award of the Chief Justice of the United States, is physically laid down in the manner provided in Articles II and VII of the Porras-Anderson treaty.
SOUTH EASTERN EUROPE
Relief for Austria.—On May 8 the plan of the League of Nations Financial Commission for the economic rehabilitation of Austria was made public. The first part of the general scheme provides for the suspension of Allied liens on Austrian Government resources, in order that these may be used as security for an international loan to Austria. The Finance Commission of the League assumes virtually the functions of a receiver or trustee, taking control of these sources of revenue and supervising the purposes for which loans are to be used.
A second part of the plan is the breaking down of the economic barrier between Austria and former parts of the Austro-Hungarian Empire. For this purpose delegates from these states assembled at Porto Rosa near Trieste in early May. The Bank of Austria-Hungary was to be reorganized as a bank of issue for the new Austrian Republic.
Among other proposals of the commission may be noted: an internal loan; stopping of further issues of paper currency; reduction of expenditures; issue of new metallic currency;
Hungary Declares Charles Legal Sovereign.—In reply to an inquiry from the Swiss Government, the Hungarian Government in April declared that the former Emperor Charles was Hungary's "lawful sovereign" and that "foreign circumstances" alone prevented him from exercising his rightful powers. Switzerland reserved decision regarding the request that Charles be allowed to take up residence in that country.
Czecho-French Entente.—Washington, April 24.—France, in continuation of her policy of creating a Slav barrier about Germany and Russia from among the smaller nations of Europe, has concluded a secret offensive and defensive alliance with Czechslovakia, according to advices received here to-day.
The alliance follows closely upon that concluded by France with Poland. It is reported to be similar also to agreements which France is understood to have attempted recently to negotiate with Jugoslavia, Rumania and Hungary.
By the terms of the alliance concluded by France with Czechslovakia, the two nations are reported to have given pledges to assist each other offensively or defensively in the event of any of the following eventualities:
"Attempted restoration of the monarchical form of government in Germany, Austria or Hungary; appearance of a Bolshevist coup d’état in either Germany or Austria, or any ambitious effort put forward by Austria or Germany in the direction of union of the two countries."
Greek Difficulties in Asia Minor. It became known in April that after the March Conference in London Italy, as well as France, negotiated a secret agreement with the Turkish Nationalists. By the terms of the Italian agreement, Italy in return for economic concessions consented to withdraw Italian troops in Asia Minor and support Turkish demands for restitution of territory in both Smyrna and Thrace. The withdrawal of Italian opposition, and of French troops from Cilicia, increased the difficulties of the Greek campaign in Asia Minor; and it was reported that Greece was seeking peace with the Turks on the basis of giving up Greek claims in the Smyrna region while retaining Greek acquisitions in Thrace.