powers that unity of thought which either renders common action feasible or will be successful in finding an early solution. His Majesty's Government have during the past nine months made a series of proposals to their Allies for meeting these difficulties, none of which has been so fortunate as to meet with a measure of acceptance sufficient to bring about common action. And yet, without such action, not merely Germany, but Europe, appears to be drifting into economic disaster. In these circumstances His Majesty's Government have for long entertained the belief that the co-operation of the United States Government is an essential condition of any real advance toward settlement. America, by reason of her position and history, is more disinterested than any of the European powers. At the same time she is directly and vitally concerned with the solution of the European problem, if for no other reason, because in it is involved the question of the interAllied debt.

When Mr. Hughes made his declaration in December last, both Great Britain and Germany made it clear that they would warmly welcome the proffered assistance; and whenever the suggestion has been revived it has met with the hearty approval of His Majesty's Government; the French Government hitherto has taken a different view. This lack of unity is, so far as His Majesty's Government are aware, the sole reason why the proposal has not been proceeded with.

His Majesty's Government were already engaged in formulating an inquiry to the United States Government as to the manner in which, in the opinion of the latter, the united action, which is the common desideratum, could best be brought about, when they read in the press yesterday morning a declaration, reported to have been made by President Coolidge, that the American Government rest on their proposal of December last. His Majesty's Government warmly welcome this declaration, and hope that they are justified in deducing from it that, if the European powers will join in such an inquiry, America will render the promised co-operation.

If His Majesty's Government have rightly interpreted the statement of the President, and if they may count upon an encouraging reception being given to such a proceeding, they will not hesitate to invite the immediate cooperation of their Allies in Europe in an invitation to the United States Government to assist in the proposed inquiry, by deputing a delegate, whether official or unofficial, to take part in it. If, on the other hand, it were proposed to hold such an inquiry although complete unanimity had not been forthcoming at this end, might His Majesty's Government and the majority of the Allies still hope for American co-operation? Alternatively, if it were proposed that such an inquiry should be intrusted to the Reparation Commission or to a body appointed by it, would America still be willing to participate?

It is in the firm belief that the American Government have it in their power to render a great service to the security and peace of the world that His Majesty's Government, speaking in the name of the whole British Empire as represented in the Imperial Conference now assembled in London, desire to associate themselves with the renewed proposal of the President, and they will be glad to receive from the American Government any suggestion that the latter may be disposed to offer in reply to the questions which I have ventured to put.

(2) AIDE MÉMOIRE, DATED THE 15TH OCTOBER, 1923, FROM THE U.S. SECRETARY OF STATE TO THE BRITISH CHARGÉ D'AFFAIRES 1

In reply to the communication of His Majesty's Chargé d'Affaires of October 13, the Secretary of State desires again to express the deep interest of the United States in the economic situation in Europe and its readiness to aid in any practicable way to promote recuperation and a re-establishment of economic stability. The Government of the United States has viewed with Reprinted from loc. cit. Kk

1

deep concern the lack, as His Majesty's Government expresses it, of that unity of thought on the part of the European powers essential to common action. The views of the Government of the United States as to the importance of agreement among the Allies and the relations of the Government of the United States to the question involved were set forth in the statement of the Secretary of State to which His Majesty's Government refers, and these views are still held. It is observed that His Majesty's Government states that Great Britain and Germany made it clear that the proffered assistance would be warmly welcomed by them and that His Majesty's Government has always heartily approved the suggestion, then made by the Secretary of State, whenever it has been revived, and that, so far as His Majesty's Government is aware, the sole reason why the proposal has not been proceeded with has been lack of unanimity among the interested powers.

It is believed that present conditions make it imperative that a suitable financial plan should be evolved to prevent economic disaster in Europe, the consequence of which would be world wide. It is hoped that existing circumstances are propitious for the consideration of such a plan inasmuch as the abandonment of resistance on the part of the German Government will present a freer opportunity and an immediate necessity for establishing an economic program. The Government of the United States is, therefore, entirely willing to take part in an economic conference in which all the European Allies chiefly concerned in German Reparations participate, for the purpose of considering the questions of the capacity of Germany to make Reparation payments and an appropriate financial plan for securing such payments. It is deemed advisable, however, to emphasize the following points:

1. Confirming what was said by the Secretary of State in his statement of last December to which you refer, the Government of the United States has no desire to see Germany relieved of her responsibility for the war or of her just obligations. There should be no ground for the impression that a conference, if called, should have any such aim or that resistance to the fulfilment of Germany's obligations has any support. It should be evident that, in the effort to attain the ends in view, regard must be had to the capacity of Germany to pay and to the fundamental condition of Germany's recuperation, without which Reparation payments will be impossible.

2. Such a conference should be advisory; not for the purpose of binding Governments, who would naturally be unwilling to pledge their acceptance in advance, but to assure appropriate recommendations by a thoroughly informed and impartial body intent upon the solution of the difficult pending problems upon their merits.

3. The Secretary of State notes the observation in the communication of His Majesty's Government that the European problem is of direct and vital interest to the United States, if for no other reason, because the question of the inter-Allied debt is involved therein'. The Government of the United States has consistently maintained the essential difference between the questions of Germany's capacity to pay and of the practicable methods to secure Reparation payments from Germany, and the payment by the Allies of their debts to the United States, which constitute distinct obligations. In the statement of the Secretary of State, to which His Majesty's Government refers, it was said:

to us.

The matter is plain enough from our standpoint. The capacity of Germany to pay is not at all affected by any indebtedness of any of the Allies That indebtedness does not diminish Germany's capacity, and its removal would not increase her capacity. For example, if France had been able to finance her part in the war without borrowing at all from us, that is, by taxation and internal loans, the problem of what Germany could pay would be exactly the same. Moreover, so far as the debtors to the United States are concerned, they have unsettled credit balances, and their condition and capacity to pay can not be properly determined until the amount that can be realized on these credits for Reparations has been determined.

The Administration must also consider the difficulty arising from the fact that the question of these obligations which we would hold and what shall be done with them is not a question within the province of the Executive. Not only may Congress deal with public property of this sort, but it has dealt with it. It has created a commission and, instead of giving that commission broad powers such as the Administration proposed, which quite apart from cancellation might permit a sound discretion to be exercised in accordance with the facts elicited, Congress has placed definite restrictions upon the power of the commission in providing for the refunding of these debts.

It is hardly necessary to add, as it has frequently been stated by the Government of the United States, that while the American people do not favour cancellation of the debts of the Allies to the United States or of the transfer to the people of the United States of the burden of Germany's obligations, directly or indirectly, the Government of the United States has no desire to be oppressive or to refuse to make reasonable settlements as to time and terms of payment, in full consideration of the circumstances of the Allied debtors. It may be added that the establishment of sound economic conditions in Europe, the serious reduction of military outlays and the demonstration of a disposition of European peoples to work together to achieve the aims of peace and justice will not fail to have their proper influence upon American thought and purpose in connection with such adjustments.

In further reply to the communication of His Majesty's Government, it may be said that the Government of the United States is not in a position to appoint a member of the Reparation Commission inasmuch as such_an appointment can not be made without the consent of the Congress. The Secretary of State has no doubt, however, that competent American citizens would be willing to participate in an economic inquiry, for the purposes stated, through an advisory body appointed by the Reparation Commission to make recommendations in case that course after further consideration should be deemed preferable.

As to the further question, whether American co-operation in an inquiry for the purposes described in the communication of His Majesty's Government could be hoped for in case unanimity of the European powers could not be had, the Government of the United States must again express the view that the questions involved cannot be finally settled without the concurrence of the European Governments directly concerned. Other Governments cannot consent for them; and it would manifestly be extremely difficult to formulate financial plans of such importance and complexity without the participation of those whose assent is necessary to their fulfilment. In view of the existing exigencies it is hoped that the project of such an inquiry as is contemplated, of an advisory nature, might commend itself to all these powers and that the question suggested will not arise. But if it should arise, through lack of unanimity on the part of the European powers, the Government of the United States must reserve decision as to its course of action in order that the developments in such a contingency may be fully considered and that course taken which will give best promise of ultimate success in securing the desired end of re-establishing the essential conditions of European peace and economic restoration. To the attainment of that end, it may be repeated, the Government of the United States desires to lend its assistance in any manner that may be found feasible.

VIII. Exchange of Notes of the 16th August, 1924, regarding the Evacuation of the Ruhr.

(1) NOTE FROM MM. HERRIOT, THEUNIS, AND HYMANS
TO DR. MARX 1

We have the honour to inform you of the following statement which we make on behalf of our two Governments:

The French and Belgian Governments, confirming their previous declarations to the effect that the occupation of the Ruhr was carried out by them in virtue of the Treaty of Versailles, but being determined to respect the undertakings entered into at the time of the occupation, which had no object other than that of obtaining from Germany guarantees for the carrying out of her obligations, declare that if the London Agreements freely entered into for the putting into force of the Experts' Plan are carried out in the spirit of good faith and pacification which has inspired the deliberations of the Conference, they will proceed to the military evacuation of the Ruhr within the maximum period of one year from the present date. We shall be glad if your Excellency would acknowledge receipt of this communication.

(2) REPLY FROM DR. MARX TO MM. HERRIOT, THEUNIS,
2
AND HYMANS

I have the honour to acknowledge receipt of your letter of to-day's date in which you communicate to me the declaration of the French and Belgian Governments regarding the evacuation of the Ruhr territory.

In taking note of this declaration, I maintain the point of view upheld on different occasions by the German Government that the occupation of German territories beyond the German frontiers fixed by Article 428 of the Treaty of Versailles cannot be recognized as lawful. At the same time I would express my conviction that it would be desirable to hasten as much as possible military evacuation so as to terminate it before the date fixed by you. I trust that the French and Belgian Governments will consider this point of view.

(3) FURTHER NOTE FROM MM. HERRIOT, THEUNIS,

AND HYMANS TO DR. MARX 3

At the moment when the London Conference is about to close, a Conference which marks a serious effort to establish a régime of international concord, the French and Belgian Governments, desirous of giving immediate and spontaneous proof of their desire for peace and their confidence in undertakings freely entered into, have decided to order on the morrow of the final signatures the military evacuation of the zone between Dortmund and Hörde and of the territories outside the Ruhr occupied since January 11, 1923. This evacuation will be carried out simultaneously with the economic evacuation of the same zones.

(4) REPLY FROM DR. MARX TO MM. HERRIOT, THEUNIS,
AND HYMANS 4

I have the honour to acknowledge receipt of your letter of to-day's date in which you confirm that on the morrow of the final signature of the London Agreement the military evacuation of the Dortmund-Hörde zone as well as that of the parts of territories occupied after January 11, 1923, and

1 Reprinted from The Times, 18th August, 1924.

3

Reprinted from ibid., loc. cit.

2 Reprinted from ibid., loc. cit.

• Reprinted from ibid., loc. cit.

situated outside the Ruhr region, will be ordered. I rejoice at this decision which, in your confidence in the agreements which have been reached, you have taken to restore peace. The German Government is determined to be guided by the same spirit. It hopes that the carrying out of this decision will mark the beginning of a new era which will conduct us to a peaceful and fruitful development of the relations between our countries.

(5) Note from MR. MACDONALD TO MM. HERRIOT AND THEUNIS 1

In view of the new agreement which has been reached regarding the occupation of the Ruhr and of the exchange of Notes between the three Governments primarily concerned, it is necessary that I should reiterate in writing the position of the British Government as I have so frequently explained it during the last two or three days.

The British Government has never recognized the legality of the occupation of the Ruhr or the interpretation of the clauses in the Treaty of Versailles upon which their Allies acted. They hoped that, as that occupation was undertaken solely for economic purposes, it would be withdrawn so soon as the Dawes Report was put into operation. The Expert Committee, because their terms of reference were too limited, had to refrain from making recommendations regarding this military occupation, but they made it clear that the economic effect of the occupation could not be overlooked if and when their Report was acted upon.

The Occupying Powers and the German Government have agreed to accept an arrangement by which the occupation shall not extend beyond 12 months from this date, but may be terminated earlier. The British Government, without prejudice to the position which they and their predecessors have taken up as to the interpretation of the Treaty, but being anxious to see the Dawes Report in operation, simply note the agreement, and urge most strongly that the Governments concerned should take every possible step to hasten the evacuation, as, in the opinion of the British Government, the continued occupation may prejudice the working of the Dawes plan, and jeopardize the arrangements agreed to at the London Conference.

IX. Agreement between the Kingdom of Italy and the Kingdom of the Serbs, Croats, and Slovenes concerning Fiume, signed at Rome on the 27th January, 1924.2

His Majesty the King of Italy and His Majesty the King of the Serbs, Croats and Slovenes, being convinced of the absolute impossibility of organizing in any practical fashion the Free State of Fiume referred to in Article 4 of the Treaty signed at Rapallo on November 12, 1920, and in accordance with the general provisions laid down in the Agreement signed at Rome on October 23, 1922; with the object of establishing cordial relations between the two States for the common welfare of both Peoples; desirous of organizing in the most satisfactory manner the life of the City of Fiume and that form of economic development which is in the best interests of the City; have decided to conclude an Agreement with this object, and . . . [the signatories] have agreed as follows:

Article 1. The Italian Government recognizes the full and entire sovereignty of the Kingdom of the Serbs, Croats and Slovenes over Port Baross and over the Delta, both of which will be evacuated and handed over to the competent

2 Translation by the Secretariat of the League of Nations of the official French text registered with the League of Nations on the 7th April, 1924, reprinted from the League of Nations Treaty Series, vol. xxiv.