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Crown Copyright Catalogue Reference (c) crown copyright Catalogue Reference:CAB/23/9 Image Reference:0021 uolonei Jones', [This Document is the Property of His Britannic Majesty's Government.] 72 Printed for the Wor Cabinet. March 15)19. SECRET. WA R CABINET, 534. Minutes of a Meeting of the War Cabinet held in the Leader of the Housed Room, House of Commons, on Wednesday, February 19, 1919, at 5 "30 P.M. Present : THE PRIME MINISTER (in the Chair). The Right Hon. A. CHAMBERLAIN, M.P. The Right Hon. SIR E. GEDOES, G.B.E., G.C.B., M.P. The following were also present : The Right Hon. W . LONG, M.P., First The Right Hon. W. S. CHURCHILL, M.P., Lord of the Admiralty. Secretary of State for War (for Minutes 2 and 3). The Right Hon. E. S. MONTAGU, M.P., Secretary of State for India. Major-General J. E. B. SEELY, C.B., C.M.G., The Right Hon. E. SHORTT, K.C.. M.P., j D.S.O., M.P., Under-Secretary of State Secretary of State for Home Affairs. for the Air Force (for Minutes 1 and 2). The Right Hon. C. ADDISON, M.D., M.P., The Right Hon. R. MUNRO, K.C., M.P., President of the Local Government j Secretary ei "Stale"for Scotland. Board. The Right Hon. J . I. MACPHERSON, M.P., The Right Hon. SIR A. C. GEDDES, K.C.B., i Chief Secretary for Ireland. M.P., Minister of Reconstruction and j National Service. The Right Hon. LORD ERNLE, M.V.O., The Right Hon. SIR A. MOND, Bart., M.P., President of the Board of Agriculture First Commissioner of Works. and Fisheries. SIR H. LLEWELLYN SMITH, K.C.B., Board Mr. JOHN ANDERSON, C.B., Secretary,, of Trade (for Minute 2). Ministry of Shipping (for Minute 2). Mr. THOMAS JONES, Acting Secretary. Lieutenant-Colonel L. STORK, C.B., Assistant Secretary. Mr. PEMBROKE WICKS, Assistant Secretary. Captain L. F. BURGIS, Assistant Secretary. [826]-193 B Payment for Goods 1. The War Cabinet had under consideration a memorandum supplied to f rom t he Chancellor of the Exchequer (Paper G.T.-6829), in which Germany. wag st a ted that a divergence of aims had appeared among the British delegates in Paris in regard to payment for food supplied to Germany. The approval of the War Cabinet was requested for a draft telegram to Mr. Balfour (Appendix), pointing out the divergence of views of Mr. Hughes, as expressed at the Inter-Allied Commission on Reparation and the views of Mr. Bonar Law, as expressed at the Supreme War Council (Paper I.C.-105, Minute 5), in regard to the relative priority of claims for reparation for acts of damage and claims for indemnity. The Prime Minister said that he was informed that the French Government were restricting their claims to claims for war damage, and would not press for indemnity, inasmuch as their bill for direct war damage could be made up to 4,000,000,000Z., or any figure they cared to name, and it would be very difficult to dispute the claim. The Belgians were taking the same line. The British claims for reparation, apart from indemnity, were exceedingly small. If the claims for reparation were given an absolute priority, they would probably absorb the whole of the amount it was possible to obtain from Germany. Mr. Hughes had unfortunately admitted in the Commission that claims for reparation would come first. The important thing was to secure payment before Germany again became powerful. It was the first payments which mattered. No one would go to war to recover an indemnity, and it was possible, and indeed likely, that if Germany became powerful again, the time would come when, in order to recover an indemnity, our only remedy would be to declare war or to go without. He had sent a note to Mr. Hughes, urging that reparation must include indemnity, and had added that, in his judgment, reparation should not come first ; if it did, Great Britain would recover nothing at all. Mr. Chamberlain said that he had heard that the Americans were sending surveyors into the damaged districts in France to appraise the damage for themselves. If the Government stood by Mr. Bonar Law's declaration, the British claims will be paid in full. Reparation might be 10s. or 20s. in the pound, according to the character of the claims, but in any case the British claims for repara­ tion for direct damage were very small. Lord Sumner bad written to him that the British claims had been made out on a theoretical basis of so much per ton for the hull, and so much per ton for the cargo. Lord Sumner thought that claims of that kind were untenable, and he wanted claims made out for each ship in each case. He had communicated with the Board of Trade, and they were preparing a statement in accordance with Lord Sumner's view. The Prime Minister pointed out that the British were standing alone in this matter; the Italians had no interest, as there was no Austria left and no chance of getting indemnity ; while the French had based their claims solely on reparation. Mr. Long agreed that, if the French were allowed to have priority for their claims in the way suggested, we should be left in the lurch. He thought that Mr. Hughes had only made the admission he had with a desire to moderate the case which he had put too strongly. Mr. Montagu suggested that it was necessary to provide a formula that would secure the division of the money equally, according to war effort. Mr. Churchill drew attention to the great importance of the British indebtedness to the United States, 8,000,000£. ; the sale of British securities in the United States, 1,200,000,0001. ; and export of bullion to the United States 400,0OO,00OL After the absolute destruction of property in France and Belgium he con­ sidered this claim should be the next, involving, as it did, a complete alteration of our financial position in relation to America. We had been harder hit than any other country, in that we had paid these enormous sums for other people. He desired to make the Germans responsible for the discharge of our overseas debt, and he had thought that the United States should be confronted with that point of view. The War Cabinet decided— To confirm the view stated by Mr. Bonar Law at the Supreme War Council (Paper I.C.-105), and requested — The Acting Secretary to invite Lord Sumner, Lord Cunliffe, and Mr. Hughes to return to London immediately to discuss the matter.* Ministry of Ways 2. The War Cabinet considered the draft Bill for the Ministry and Comniuni­ of Ways and Communications (Paper G.T.-6S12), together with cations. memoranda thereon by the President of the Board of Trade, the Merchant Shipping: Air Ministry, and the Chancellor of the Exchequer (Papers G.T.­ Clause 2 (1) (g). 6801, 6809, and 6832). Sir Hubert Llewellyn Smith stated that the Board of Trade took exception to clause 2 (l) (g), which provided for the transfer to the new Ministry of the powers and duties of the Board of Trade in relation to merchant shipping, including pilotage. Sir Eric Geddes said he assumed that the Minister of Ways and Communications should lie responsible for the conveyance of goods in the kingdom and into the kingdom. He stated that Sir Albert Stanley, on the other hand, considered it was wrong to put into one Department competing services of this description. Sir Albert Stanley agreed that, if there was to be a Ministry of Ways and Communications, the new Ministry should have control over merchant snipping, but was of opinion that the new Depart­ ment should be a Ministry of Kailwavs and not a Ministry of Wavs and Communications, in which case it would be logical to exclude shipping altogether. Sir Hubert Llewellyn Smith said that he thought Sir Albert Stanlev would suggest that the new Ministry should be responsible for all forms of transport over which the State for the time being assumed control. A Department which was administratively and financially responsible for one form of transport service would not be regarded as an impartial regulator of a competing private service. The inclusion of merchant shipping uuder clause 2 (1) (g) was an excrescence on the Bill : in all other respects the Bill dealt with inland transport. It might be necessary at some time or another to go to Parliament and seek-control over shipping. At present no real powers would be obtained under the Bill in respect of nationalisation of shipping, but suspicion would be aroused and the shipping interest would be alarmed. Tbe shipping interest was very powerful, and there was no doubt it would add greatly to the difficulties of getting the Bill through if this clause were retained. Sir Eric Geddes said there was no provision for taking over anything but the existing powers of the Board of Trade. The shipping interest had no reason for taking exception to that. He attached great importance to this clause. The First Lord of the Admiralty agreed that the chances of the Bill would be greatly imperilled by the inclusion of the clause. There was no vested interest in the House of Commons so powerful as the shipping interest. He was informed that the shipping industry had a stupendous task before them in restoring overseas trade, and were very suspicious of any Government action being proposed in Parliament.
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