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THURSDAY, JULY 31, 1919.


Washington, D. C. The committee met at 10.30 o'clock a. m., pursuant to the call of the chairman, in room 426, Senate Office Building, Senator Henry Cabot Lodge presiding.

Present, Senators Lodge (chairman), McCumber, Fall, Knox, Harding, Johnson, Moses, Hitchcock, Williams, Swanson, Pomerene, Smith, and Pittman.


The CHAIRMAN. Mr. Baruch, what is your title--one of the advisers of the American mission at the peace conference ?

Mr. BARUCH. Economic adviser.

The CHAIRMAN. I want to ask you a question first that does not come directly under your economic clauses, but one about which I thought possibly you might know. Article 237 on page 253, says:

The successive installments, including the above sum, paid over by Germany in satisfaction of the above claims will be divided by the Allied and Associated Governments in proportions which have been determined upon by them in advance on a basis of general equity and the rights of each.

Do you know if that determination has been reached, and if it has been omitted in the document?

Mr. BARUCH. I understood it had not been reached.

Senator McCUMBER. Then, it should read, “which shall have been determined,” rather than "which have been determined,” should it not?

The CHAIRMAN. The statement in article 237 is incorrect, of course ?

Mr. BARUCH. Let me see how it reads in the French. The French would mean "following the proportions determined by them in advance."

The CHAIRMAN. I did not compare it.

Mr. BARUCH. It gives an incorrect translation. You see, it says “déterminées par eux à l'avance." The translation is not exactly correct.

The CHAIRMAN. It says "seronts répartis par les Gouvernments alliés et associés, suivant les proportions déterminées par eux à l'avance et fondées sur l'équité et les droits de chacun.” Apparently the French is correct and ours is incorrect.

Senator MOSES. What is your point with reference to that translation?

The CHAIRMAN. The French says "shall be" and ours is "have been.”

Senator Moses. The French says "seront répartis”—will be divided.

Mr. BARUCH. I think you are referring to the one a little further down.

Senator Moses. There is only one place. I do not get your point. Mr. BARUCH. The point is "which have been determined.” The French means “determined by them in advance."

The CHAIRMAN. This says "which have been determined.” That does not give the sense of the French clause, certainly.

Senator HITCHCOCK. The English text should leave out the words "which have been ?"

Mr. BARUCH. In proportions determined upon by them in advance. Senator Moses. "Which have been” should be omitted, then ? The CHAIRMAN. I do not think it is clear in either language. Mr. BARUCH. It does not seem to me that is a correct translation of the French. I am not a French scholar, but that is the way it seems to me.

The CHAIRMAN. On second thought, I think it is pretty nearly correct.

Senator Moses. It is the past participle.

Senator SWANSON. It simply means that whatever distribution is made, the Allies shall agree.

The CHAIRMAN. This speaks of it as having been determined. It says “which shall have been determined." I think the French is pretty nearly the same, on second thought.

Senator Knox. Mr. Baruch, you say that this distribution has not been determined upon, so far as you know. Is that correct?

Mr. BARUCH. Up to the time that I left it had not been, so far as I know.

Senator Knox. Had there been any conversations on the subjectany effort to arrive at a basis?

Mr. BARUCH. There had been some discussion.
Senator Knox. Was there any tentative plan drawn up?
Mr. BARUCH. Not that I was aware of.

Senator Knox. Do you recall what proportion the United States
had in this distribution ?
Mr. BARUCH. No, sir.
Senator Knox. Can you suggest approximately what proportion?

The question of the United States getting an interest in the reparation has not been decided. I believe it is a matter that is under discussion.

Senator Knox. Between whom were these discussions held, especially with reference to whether the United States should or should not have any proportion of the indemnity ?

Mr. BARUCH. I think those matters would be a question for determination by the President, rather than anybody else—or for this body.

Senator Knox. The President alone, or the President in conjunction with the Congress ?

Mr. BARUCH. You would be a better judge of that than I, as to what the procedure would be.

Senator Knox. You said a moment ago, as I understood you, that the question as to whether the United States should participate in this reparation had not been determined ? Mr. BARUCH. So far as I understand.

Senator Knox. Was there any suggestion that the United States should not participate?

Mr. BARUCH. That was a part of it—that we should not be paid any reparation.

Senator Knox. I understood the President to say in his address to the Senate on July 10 that we were not to have any share in the reparation, and I wondered whether that fact had been determined, or whether he was foreshadowing his own purposes with respect to that?

Mr. BARUCH. I understand that that has been the President's view.

Mr. Knox. That is all, as far as I am concerned.

Senator MOSES. Have the members of the Reparation Committee been tentatively determined upon by the other powers so far as you know?

Mr. BARUCH. The membership?
Senator Moses. Yes.

Senator MOSES. Who were the members of this group who held the conversations with reference to reparation ?

Mr. BARUCH. Did your question refer to the permanent Reparation Commission?

Senator Moses. Yes. Mr. BARUCH. I understand it has not been appointed for the permanent Reparation committee, but they desired to have an ad interim or provisional commission.

Senator MOSES. The President's letter would indicate that provisional selections had been made by all the powers.

Mr. BARUCH. That I am not aware of; I do not know whether they have been selected, or who they were. In the newspaper reports there were names mentioned, but I do not know how correct they were.

Senator McCUMBER. Was it your understanding of the President's view that we should not have any reparation for the sinking of ships before the war?

Mr. BARUCH. That matter would not be covered by reparation. That comes under the head of prewer claims and is not a war claim. That is not a matter of reparation.

Senator Knox. Pardon just one other question in connection with the suggestion of our nonparticipation in the indemnity. I understood you to say that you thought that was a question for the President's determination.

Mr. BARUCH. I would rather put it, “for determination." I do not know exactly who would determine it.

Senator Knox. On the question of our renouncement of our share of the indemnity in the Boxer affair, at the time of the Boxer outbreak, do you recall how that was determined, whether by the President or by Congress? Mr. BARUCH. No; I do not know.

The CHAIRMAN. The committee desire to have some explanation of two paragraphs appearing on page 371 (reading]:

(1) As regards Powers adopting Section III and the Annex thereto, the said proceede and cash assets shall be credited to the Power of which the owner is a national, through the Clearing Office established thereunder; any credit balance in favour of Germany resulting therefrom shall be dealt with as provided in Article 243.

(2) As regards Powers not adopting Section Ill and the Annex thereto, the proceeds of the property, rights and interests, and the cash assets, of the nationals of Allied or Associated Powers held by Germany shall be paid immediately to the person entitled thereto or to his Government; the proceeds of the property, rights and interests, and the cash assets, of German nationals received by an Allied or Associated Power shall be subject to disposal by such Power in accordance with its laws and regulations and may be applied in payment of the claims and debts defined by this Article or paragraph 4 of the Annex hereto. Any property, rights and interests or proceeds thereof or cash assets not used as above provided may be retained by the said Allied or Associated Power and if retained the cash value thereof shall be dealt with as provided in Article 243.

It makes a different disposition. We should like to know about that choice that was there given as to adopting section 3.

Senator SWANSON. Suppose you put in article 243.
Mr. BARUCH. That should be the distribution.

The CHAIRMAN. That simply arranges as to the distribution, but what the Senator wanted to find out about, and what the committee desired to find out about, was about this choice that was here given.

Mr. BARUCH. I will be glad to answer that question, but perhaps the rest of the committee would like to know exactly how the economic commission functioned. If you would, I would like to read a little statement here. I think it might interest the committee to learn somewhat how our committee functioned mechanically and how we arrived at our decisions. It will only take two or three minutes to read it, and then I will answer the question which was asked. I think you can understand my answer better if I read this first.

The CHAIRMAN. Certainly, read it. Mr. BARUCH. The clauses of the peace treaty dealing with economics, customs, enemy property and industrial property, were drawn up by the economic commission, which was made up of representatives of all of the larger powers, representatives of certain of the smaller powers being associated with them from time to time.

The work was divided among subcommissions, to consider the various phases of the subject. These subcommissions considered, for example, such matters as customs tariffs and navigation, commercial treaties, prewar debts, prewar contracts, the disposal of enemy property, industrial property (patents, copyrights, etc.).

In order to cover the field, we invited to Paris the following gentlemen:

Dr. Frank Taussig, chairman of the United States Tariff Commission, to deal with the subjects of customs duties and the like subjects. These he handled, together with Prof. A. A. Young, who was already attached to the peace commission, and who had been making a special study of these subjects before Dr. Taussig's arrival.

There was also associated with the advisory staff Mr. F. K. Nielsen, who was formerly one of the solicitors of the State Department.

Mr. J. E. Brown, who had made a study of patents, and who, together with Mr. Pennie, one of the leading patent lawyers in America, looked after industrial property and patents.

We also had associated with us Mr. Alex. Legge, formerly vice chairman of the War Industries Board; Mr. L. L. Summers, who had

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