[Distributed to the Official No. : 0 377 1930. I. Members of the Council.] , ,

Geneva, July 10th, 1930.

LEAGUE OF NATIONS

FREE CITY OF DANZIQ

GENERAL REPORT BY THE HIGH COMMISSIONER

Note by the Secretary-General.

The Secretary-General has the honour to circulate to the Council the annual general report by the High Commissioner of the at Danzig dated May 31st,. 1930. In his letter of June 20th, 1930, the High Commissioner asked the Secretary-General to note that, although the report contained nothing confidential, it was addressed to the Members of the Council and the Government of Danzig for their information and that no part of it was intended for publication. The appendices to the report are enumerated in the attached list of contents.

1 For the High Commissioner’s last general report, see document C.221.1929 -1- — 3 —

LIST OF CONTENTS.

Page 1. General Situation at D a n z ig ...... 4 2. Internal Political Crisis...... 5 3. Relations between Danzig and P o lan d ...... 5 4. The Harbour B o a r d ...... 6 5. Relations between the Free City and the Soviet U n io n ...... 7 6. Visits of Foreign to D a n z ig ...... 7 7. High Commissioner's Right of Veto on Treaties applying to the Free C ity...... 7 8. Participation in, and Accession to, Treaties and International Agreements by the Free City, and Agreements concluded between Danzig and Poland from May 1st, 1929, till May 31st, 1930 ...... 7 9. Railways of the Free C i t y ...... 7 10. Liquidation of an Estate belonging to a Danzig National, M. von Ruetzen Kositzkau 7 11. Recognition by the Danzig Authorities of Degrees and Educational Certificates obtained in Poland by Danzig Nationals belonging to the Polish Minority . . 8 12. Customs...... 8 13. Miscellaneous (Housing, Pensions, Industry, Wheat Agreement, Agriculture) . . . 8

L i s t o f A p p e n d i c e s .

I. Agreement signed at Berlin on February 24th, 1930, between the and the- Svenska Tândsticks Aktiebolaget, with a Supplement dated May 1st, 1 9 3 0 ...... 9 II. The Free City of Danzig 6 % Secured External Sinking Fund Gold Bonds, due February 1st, 1965 : Loan Agreement signed at Berlin on May 30th, 1930, between the Free City of Danzig and the Svenska Tândsticks Aktiebolaget and the N.V. Financieele Maatschappij Kreuger & T o ll...... 13 III. Report of the Senate of Danzig, dated , on the Economic and Financial Situation of Danzig, with Two Sub-Appendices : (а) Danziger Wirtschaftszeitung of January 25th, 1930, entitled “ Ten Years of the Economic Life of Danzig ” 1 ...... 24 (б) Table showing the Number of Registered Unemployed and the Number of Persons in Receipt of Unemployment Relief in the Territory of the Free City of Danzig, together with the Actual Expenditure of the State (exclusive of the Share of the Communes) in Unemployment Relief as from April 1st, 1 9 2 4 ...... 25 IV a and IVb. Two Memoranda from the Senate of Danzig concerning the Carrying-out of the Recommendations made by the Financial Committee of the League of Nations in 1 9 2 6 ...... 26 V. Opinion given by the Supreme Court of Danzig on April 12th, 1930, regarding the Composition of the Senate 2 ...... 3° I VI. Report dated April 7th, 1930, by the President of the Harbour Board on the Activity and the Development of the Port of Danzig ...... 30 VI a. Letter dated May 19th, 1930, from the President of the Harbour Board addressed to the High Commissioner, concerning the Ports of Danzig and Gdynia . . . 35 VII. Questions submitted to the High Commissioner for Decision under Article 39 of the Danzig-Polish Treaty of November 9th, 1 9 2 0 ...... - 37 VII a. Decision dated April 14th, 1930, of the Harbour Board, concerning the Reorgani­ sation of the Financial Department 3...... 39 VIII. Regulations regarding the Giving of Naval Honours by Foreign Warships visiting the Free City of Danzig, dated February 1st, 1930...... 39 IX. Participation of Danzig in International Treaties and Agreements concluded between May 1st, 1929, and May 31st, 1 9 3 0 ...... 39

1 This number of the Danziger Wirtschaftszeitung is kept at the Secretariat at the disposal of the Members of the Council. 2 This opinion has been communicated to the Council by document C.354.1930.I. 3 This document is kept at the Secretariat at the disposal of the Members of the Council.

S -

ANNUAL REPORT.

[!Translation.] Danzig, May 31st, 1930. To the Secretary-General. I have the honour to send you for the information of the Members of the Council the annual report on the general situation at Danzig and on questions arising out of the relations between Danzig and Poland.

1. G e n e r a l S it u a t io n a t D a n z ig .

My predecessors’ numerous reports must be my excuse for only touching briefly upon matters already dealt with by them. I shall merely consider here the salient features of the present position of the Free City. It is suffering from a constantly increasing economic depression that affects every class of the population and is, after all, only the natural consequence of the general economic crisis through which all European countries, including Poland, are now passing. In view of the inevitable demands made upon a great city, which possesses what may perhaps be regarded as disproportionately large administrative and bureaucratic machinery, the position of Danzig is rendered peculiarly difficult by the present economic depression. The most striking immediate result of this state of affairs is fresh tension in the relations between Danzig and Poland. There is indeed a tendency in Danzig to hold Poland primarily responsible for every misfortune from which the Free City is suffering. The present economic and financial situation is not unlike that during the summer of 1926, when, at the request of the Senate, the High Commissioner asked the League to hold an investigation. It should, however, be pointed out that the present position is considerably worse ; there has not only been a large increase in unemployment but, what is more serious, the remedies applied since 1926 have been exhausted without its having been possible even to stem the crisis. The situation has, however, once more been saved by the introduction of the matches monopoly at Danzig. Under the terms of the agreement signed on February 24th, 1930 (Appendix I), at Berlin by the representatives of the Free City and the Svenska Tândsticks Aktiebolaget, the latter has obtained a monopoly for thirty-five years for the exclusive manu­ facture and sale of matches in the territory of the Free City, in return for the immediate payment of one million gulden. Under another agreement, also concluded on May 30th, 1930, between the Free City and the Svenska Tândsticks Aktiebolaget and N.V. Financieele Maatschappij Kreuger & Toll, the Free City received a loan of one million dollars bearing interest at 6 per cent, redeemable in thirty-five years (see Appendix II). The agreements relating to the monopoly and the supplementary agreements were ratified by the Volkstag on April 15th, 1930. Nevertheless, everything points to the fact that the financial depression is likely to get worse in the near future, unless the Government adopts radical measures, which I am hardly qualified to discuss in detail here. Appendix III contains a report by the Senate of the Free City on the general economic and financial situation, with which might usefully be read the report submitted to the Council on July 29th, 1926, by the Financial Committee of the League of Nations on the financial and economic situation of Danzig at that time.1 In reply to enquiries as to what had been done to give practical effect to the suggestions and recommendations made by the Financial Committee on that occasion, Dr. Kamnitzer, the Senator responsible for the financial administration of the Free City, gave me the attached memorandum (Appendices IVa and b).IV I regard it as a matter for regret, as I have pointed out to the responsible authorities, that Danzig has continued to give important and correspondingly well-paid posts to persons who are not Danzig nationals. This happened again recently when a successor had to be found to Dr. Laue, the “ Oberbürgermeister ” of Zoppot, when he resigned. The draft amendment to the Constitution, which has passed its first reading in the Volkstag, provided that Senators relinquishing their duties shall be given an opportunity of serving the State in posts which they are particularly well qualified to fill There was a deficit in the budget of the Free City for 1929-30 of more than 3 million gulden, 2.4 millions of which were due to increased expenditure caused by the unemployment crisis, provision having been made for an expenditure of 7.1 millions. The Customs revenue falling to the Free City having been 20.6 millions for the financial year 1928-29, this item was estimated in the 1929-30 budget at 21 million gulden. The reduction in imports, which was partly due to the Customs policy which Poland was obliged to adopt for the purpose of defending her national economic interests, has brought Danzig’s Customs revenue down to 19.1 millions, which has had a considerable effect on a small budget like that of the Free City. The Senator responsible for the financial administration of the Free City told me that he was fully aware of the present serious financial position and the necessity of procuring for 1930-31 fresh revenue amounting to from 6 to 8 million gulden, and that he had prepared a number of bills designed to place the finances of the Free City on a sound basis. The unfortunate intrusion of politics even into financial questions makes it impossible, however, to count on the majority

1 Note by the Secretary-General. — See Official Journal, , pages 1442 to 1467. — 5 — in the Volkstag necessary for the adoption of these fiscal measures, which were drafted after most careful study of the local, economic and social possibilities. Thanks to the ability of Senator Kamnitzer, who secured the friendly support of Poland and sympathetic consideration from the creditor Powers, the whole of the Free City’s debt to the Allied Powers, amounting to 160 million Reichsmarks, was cancelled at the recent Hague Conference. Before concluding this chapter on finances, I would like to draw attention to certain considerations set out by the former Senator Professor L. Noé, the able General Manager of the International Shipbuilding and Engineering Company (Danziger Werft) in a speech delivered in . In this speech, Professor Noé says that Danzig’s present difficulties might have been avoided had due regard been paid to the advice of experienced men, who had already asserted, three years before, that, if Danzig was to escape economic disaster, she must do what Austria had had to do at the demand of the foreign commissioners—keep a tight hand on public expenditure. Economic questions hold first place, and political questions are only secondary.

2. I n t e r n a l P o l it ic a l Cr i s i s .

The administration of the Free City has suffered most from the political crisis. This crisis, which had been latent for some considerable time, suddenly became acute on the break-up of the Government coalition occasioned by the withdrawal of the Liberals on March 29th on the question of the Lohnsummensteuer, followed on April 1st by that of the Social Democrats on the question of the Arbeitskartengesetz, and finally by the Centre (Catholic) senators who resigned, after the defection of some of their supporters had prevented the formation of a new Government leaning to the Right, which seemed, on the morning of May 19th, 1930, to be a foregone conclusion. The fourteen parliamentary Senators having all resigned, the Government of the Free City is now being carried on by the eight principal Senators (including the President, who does not belong to any party, three Social Democrats, two Liberals and two members of the Catholic Centre) who are elected for four years. The Supreme Court answered in the affirmative (see Appendix V) the question submitted to it by the Senate for an advisory opinion : namely, whether the Senate, as at present constituted, is competent to take decisions.1 Although it is impossible at present to say with any certainty how the present crisis will be settled, the fourteen parliamentary Senators will very probably be appointed without further delay and the Government thus constituted will remain in power until the summoning of the next Volkstag, which must be elected on the basis of the constitutional reforms (72 deputies instead of 120, who will elect twelve Senators instead of twenty-two), provided that the proposed modification of the Constitution, which was adopted on first reading in the Volkstag on May 26th, passes the second reading and is finally approved by the League of Nations. Article 49, paragraph 3, of the Constitution provides that amendments to the Constitution can only come into force after they have been communicated to the League of Nations and after the League has stated that it has no objection to these amendments.

3 . R e l a t io n s b e t w e e n D a n z ig a n d P o l a n d .

In all circumstances, I have been repeatedly assured by the responsible authorities of the Free City that it is their intention to maintain a policy of goodunderstandmg(V er standi gun gsftolitik) in their relations with Poland, in accordance with the statements made by the Senate at the time of its election in . I have constantly received similar assurances from the responsible Polish authorities as regards their attitude to the Free City, in particular from M. Zaleski, the Polish Minister for Foreign Affairs, whose repeated public statements in this sense, since January 1928, are well known. As the sincerity of these statements is beyond question, there was reason to hope that, at least in the economic field, it would have been possible to secure a greater measure of co-operation between Danzig and Poland—so much to be desired from every point of view and from which both parties would have derived great benefit. Unfortunately, however, politics have intruded even into the economic field, with the result that several conferences held on the initiative of the High Commissioner have been unsuccessful, owing to the unfavourable atmosphere created by the absence of mutual confidence. I will merely mention the meetings held at Warsaw under my chairmanship during February, with a view to concluding an agreement between the Free City and Poland to relieve the Danzig labour market.

1 Note by the Secretary-General. — For the opinion of the Supreme Court of Danzig see document C.354.1930.1. — 6 —

These meetings opened in a conciliatory spirit, the responsible authorities on both sides making eminently satisfactory statements, and an agreement of principle was concluded. But the fear that there were political motives in the background made the Danzig representatives decline the Polish proposal to introduce a system of compulsory unemployment insurance at Danzig, in which Poland would have borne a large financial share. Similar fears on the part of the Poles led to the rejection of the Danzig proposal to confine to foreigners the issue of labour cards [Arbeitskarten), which were to be introduced to regulate the influx of labour to Danzig and to adapt it to the amount of work available. Although these meetings have only been suspended owing to the internal crisis in Danzig, and although it is to be hoped that a final agreement will be reached, so that what was gained at Warsaw may not be finally lost, they cannot be said to have yielded any practical result up to the present.

I have already referred to the nationalist influence which constitutes a serious obstacle in the way of economic co-operation between Danzig and Poland, so desirable and necessary for both parties. I may mention here certain demonstrations (not confined to the territory of the Free City) which are also due to the nationalist sentiments of both parties. Such demonstra­ tions, of which it is not always easy to say whether they are cause or effect, must be regarded as undesirable and at variance with the spirit of the treaties in force, and sometimes as frankly intolerable, owing to the violent language used. I have again drawn the attention of the authorities of the Free City to the undesirability of these demonstrations being held on Danzig territory, and I am happy to be able to say that although such demonstrations were particularly violent during the first six months of my term of office, on the occasion of the tenth anniversary of the , for some time past the promoters of the demonstrations—which are now less frequent and certainly less violent—seem to have shown a better sense of their responsibilities and duties.

4 . T h e H a r b o u r B o a r d .

I have asked the Chairman of the Harbour Board, who is particularly well qualified in this respect, to let me have a report on the activities and development of the port of Danzig (see Appendices VI and VIa). Appendix VI {contains important statistics and personal observations, while Appendix VIa contains considerations which would deserve special attention here, if the whole question of the alleged competition between Gdingen (Gdynia) and Danzig were not the subject of a request submitted to the High Commissioner by the Danzig Senate on May 20th, 1930. I cannot therefore discuss this point until the present proceedings are concluded. Three requests, all connected with the Harbour Board, have been submitted to me for a decision under the terms of Article 39 of the Paris Treaty concerning the financial organisation of the Harbour Board, ice-breaking on the Vistula and the purchase of land needed for extending the railway system belonging to the Harbour Board (see Appendix VII). Whilst the last two requests are still being dealt with, I have been able to induce the Harbour Board to reconsider its decision of February 14th, 1929, on the first question which had given rise to the dispute, and thus to arrive at an agreement satisfactory to both parties, on which I congratulated the Chairman of the Harbour Board, M. de Loës. It is sincerely to be hoped that the parties will also succeed in coming to an agreement on the procedure to be followed in execution of their declaration of September 1st, 1923 otherwise we can only repeat what my predecessor, Mr. MacDonnell, said about the situation of the Harbour Board in his report to the Council of February 22nd, 1924: 2

" I have to note that the normal activities of the Harbour Board run a risk of being obstructed by a practice which appears to be becoming more common, of both Governments appealing to me to annul decisions given by the casting vote of the President. The cases are usually connected with purely technical matters of the administration of the port, such as the purchase of a new ferry, the building or leasing of warehouses by or to the railways, on which the Harbour Board is a competent authority and for which it should be considered by both parties to be a competent judge, of the interests of the port and of the two Governments. The general status of the Harbour Board has been settled by the agreement of September 1923, and it is in my opinion in the interests of all concerned that the Board should enjoy in its administrative and executive functions the greatest freedom compatible with the provisions of the treaties in force, a view shared by both Governments more in theory than in practice.”

1 Note by the Secretary-General. — See Official Journal, November 1923, page 1417. 9 Note by the Secretary-General. — See Official Journal, May 1924, page 816. — 7 ~

5- Relations between the Free Cit y and the .

During the first few days of , a trade delegation from Danzig led by the President of the Senate, Dr. Sahm, went to Moscow, where it was received with marks of particular attention. One happy result of this visit was no doubt the order placed by the Soviet Government with the Danzig shipyards for some steam trawlers and steamers for the coasting trade, and also a number of tugs. The suggestion has been made that the expulsion of three Russian ex-Generals, residing at Danzig, who were to have left the territory of the Free City on December 26th, 1929, under a police order, was not unconnected with pressure from Moscow. However, through the intervention of the delegate of the High Commissioner of the League of Nations for Refugees, who drew the sympathetic attention of the authorities of the Free City to the precarious position of the three ex-Generals and the great difficulty—not to say impossibility—of them and their families finding a refuge elsewhere, they were allowed to remain in Danzig territory, although the expulsion order has not been cancelled.

6. V is it s o f F o r e ig n W a r s h ip s to D a n z ig .

Two Italian cruisers, thePisa and theFerruccio, visited Danzig from August 5th to August n th . This visit passed off normally, though it gave rise to a dispute between Poland and the Senate of the Free City on a point which had not so far been settled. This dispute related to artillery salutes in Danzig waters. After long negotiations, entailing careful study of the provisions in force in the principal countries, both parties agreed to refer to me the final regulation of the question (see Appendix VIII). This was submitted to the two Governments for their approval on February xst, 1930, and communicated by the Polish Government to the other Governments as a regulation supplementary to the Agreement concluded between Poland and Danzig on June 29th, 1925, relating to visits of foreign warships.1 I have been informed of the visits in the near future of a German cruiser, a British naval division and two American guard-ships.

7 . H ig h C ommissioner ’s R ig h t o f V e t o o n T r e a t ie s a p p l y in g to t h e F r e e Cit y .

As the need was felt for laying down clearer rules governing the procedure adopted hitherto in connection with the High Commissioner’s right of veto on the treaties or international agreements as provided for in Article 6, paragraph 2, of the Danzig-Polish Treaty of November 9th, 1920, the High Commissioner, with the consent of the parties, submitted to the Council for its examination during its session in September last, a memorandum containing certain proposals for establishing the procedure to be followed in future. The draft resolution containing the proposals in question was submitted to the Council by the Rapporteur, M. Villegas, and adopted at the meeting on September 6th, 1929.2

8. P articipation i n , a n d A c c e s s io n t o , T r e a t ie s a n d I nternational A g r e e m e n t s b y t h e F r e e Ci t y , a n d A g r e e m e n t s c o n c l u d e d b e t w e e n D a n z ig a n d P o l a n d fr o m Ma y i s t , 1929, t il l M a y 31ST, 1930.

A list of these agreements is to be found in Appendix IX.

9. R a il w a y s o f t h e F r e e Ci t y .

I have received several requests for a decision with regard to railways under Article 39 of the Paris Treaty. I would only point out that most of these cases are disputesarising out of the interpretation of General Haking’s decisions in 1921-22. As the proceedings in regard to these appeals are not yet concluded, I cannot now give a definite opinion on the various questions, but would refer to Appendix VII.

10. L iq u id a t io n o f a n E s t a t e b e l o n g in g to a D a n z ig N a t io n a l , M. v o n R u e t z e n -K o s it z k a u .

This dispute arose out of varying interpretations of Mr. MacDonnell’s decision on June 21st, 1923,3 relating to the liquidation by the Polish authorities of an estate situated in Poland belonging to a Danzig national—M. von Ruetzen-Kositzkau. The question has been going on since 1923, and at the request of the party concerned, I have managed to bring the

1 Note by the Secretary-General.— See Official Journal, , page 1197. 2 Note by the Secretary-General.— See Official Journal, , page 1461. 3 Note by the Secretary-General.— See document C.88.1924.I, and Official Journal, , pige 1:094. — 8 —

solution somewhat nearer. The report of the Committee of Experts, which has met on several occasions under the chairmanship of M. Lachenal, will be ready shortly, and it cannot be much longer before the question is finally decided.

n . R e c o g n it io n b y t h e D a n z ig A u t h o r it ie s o f D e g r e e s a n d E d u c a t io n a l Certificates OBTAINED IN POLAND BY DANZIG NATIONALS BELONGING TO THE POLISH MINORITY.

I have been requested by the Polish Government to approach the authorities of the Free City with the request that they shall recognise certain degrees and educational certificates (required for the exercise of professions in Danzig), obtained in Poland by Danzig nationals belonging to the Polish minority. I have taken steps to do so, in the conviction that it would be only fair to settle this question according to the wishes of the Polish minority, while at the same time safeguarding the admitted rights and interests of the Free City. The Government crisis at Danzig has, however, for the time being delayed the negotiations.

1 2. Cu s t o m s .

The Danzig-Polish Customs Agreement concluded at Geneva on September 20th, 1926,1 which guaranteed to the Free City a minimum amount of the total yield of the Polish Customs revenue, had not been renewed or replaced by a new agreement when it expired on September 20th,1928, and a return was made to the system of allocating receipts provided for in Article 206 of the Agreement concluded at Warsaw on October 24th, 1921. Danzig’s share for the financial year 1929-30 was 19.1 million gulden (or about 7 per cent of the revenue collected by Poland) as against 21 millions indicated in the budget estimates.

13. M iscellaneous .

Housing. — The Housing Bill was for long the subject of keen debate between the political parties, and it was not until last February that an agreement was concluded on this question between the parties forming the Coalition Government in power at that time. This Bill provides for a 105 per cent increase in the rentsOf houses, as compared with the pre-war average. Rents for shops are to be increased by 10 per cent. Of the sum representing the rents, 30 per cent is collected by the State, which devotes it to municipal building work. The voting on this Bill has been delayed by the Government crisis. Pensions. — The sums paid by the State to employees and officials are very considerably in excess of those paid in previous years, owing mainly to the heavy charge for pensions, which now cost the Free City about 5 million gulden as against 667,000 gulden in 1924. Industry. — The sugar refinery of West Prussia (Westpreussiche Zucker-Raffinerie) has suffered much the same fate as the Baltische Zucker-Raffinerie, which was liquidated last August. These sugar refineries, which before the war were regarded as two of the most important factories in the north-east, and gave employment to several hundred employees and workmen, were no longer able to compete with Polish sugar. The International Shipbuilding and Engineering Co. (Danziger Werft) founded a branch at Gdingen (Gdynia) on October 1st, 1924, under the name of “ Stocznia Gdynska ”, with the co-operation of certain Polish industrial groups. Wheat Agreement. — About the end of 1929, negotiations were set on foot beetwen the representatives of the Danzig and Polish exporters with a view to arriving at an agreement on the question of export premiums on wheat. A limited agreement was reached whereby the Danzig wheat exporters joined the Polish syndicate, and Danzig merchants sent representatives to the Board of Management of the Polish Export Syndicate. The Free City has also secured 15 per cent of the amount of wheat of last year’s harvest allowed to be exported. It is to be expected that fresh conversations will shortly be begun to settle the question of the export quota for future harvests. The two Governments have taken cognisance of the agreement by means of an exchange of notes. Agriculture. — Agriculture has not escaped the consequence of the general economic crisis. The prices of certain agricultural products are lower now than they were before the war, while agricultural implements have gone up greatly in price, credit is dearer and taxation is heavier.

(Signed) M. G r a v in a , High Commissioner.

1 Note by the Secretary-General. — See document C.173.1928, page 59. Appendix I.

AGREEMENT BETWEEN THE FREE CITY OF DANZIG AND THE SVENSKA TÀNDSTICKS AKTIEBOLAGET, STOCKHOLM.

[Translation from the German.]

The F r e e Cit y of D a n z ig , represented by its Senate in the persons of the President of the Senate, Dr. Sahm, and the Senator responsible for the financial administration, Dr. Kamnitzer, of the one part and

The SVENSKA T â n d st ic k s A ktienbolaget , at Stockholm, hereinafter called the “ Stab ”, represented by its General Manager, M. Ivar Kreuger, of the other part :

§ I. The Free City of Danzig shall introduce a matches monopoly in its territory, comprising import, manufacture, the right to sell direct from the factory, and export. Provided that this monopoly acquires force of law, the Free City of Danzig shall make over to the “ Stab ” the exercise and exploitation of the exclusive rights arising out of this monopoly and any other commercial rights and powers attaching thereto. The making-over of these rights shall be published in the Legal Gazette of the Free City of Danzig as soon as the monopoly has acquired force of law, and shall hold good until December 31st, 1964. The “ Stab ” is empowered to delegate the rights conferred on it to persons of Danzig nationality or to Danzig firms. In this case also, it will, however, remain responsible to the Free City of Danzig for the fulfilment of the obligations arising out of the present Agreement. It is bound to make the person to whom, or the firm to which, it delegates the rights in respect of the monopoly jointly responsible with it for the fulfilment of the contractual obligations to the Free City of Danzig.

§ 2. Claims for Compensation. The " Stab ” undertakes in respect of the Free City of Danzig to be responsible for all claims for compensation which may be made by third parties against the Free City of Danzig in connection with the execution of the present Agreement, under the terms of the laws existing at the time of the signing of the Agreement.

§ 3-

Manufacture and Sale of Matches (Article of Consumption). The “ Stab ” undertakes to manufacture in Danzig ordinary matches to satisfy the total requirements of the territory of the Free City of Danzig, to supply good impregnated matches such as are customary in the trade, and always to keep a three months’ reserve to meet these requirements (article of consumption, see § 4). Only persons of Danzig nationality may be engaged as workmen or employees in the factories and in the sales organisation connected therewith. This undertaking shall not, however, apply to persons in leading positions or to specialised workers. The “ Stab ” must supply every buyer in the Free State with matches, if he is prepared to take at least 5,000 (five thousand) boxes. This undertaking shall not, however, apply to persons who, in spite of warning, fail to fulfil the conditions of sale or otherwise engage in unfair competition. The “ Stab ” is entitled to demand payment as and when the goods are delivered. They shall be delivered within the Danzig municipal area free of charge at the purchasing premises and, in the other parts of the territory, at the nearest railway station or landing-stage. The matches must be delivered by the " Stab ” to purchasers at a price not exceeding 30 P. (thirty guldenpfennig) for 10 (ten) boxes, excluding the monopoly tax (basic price). The Free City of Danzig undertakes to fix the retail price at at least 35 P. (thirty-five guldenpfennig). Four years after the conclusion of the present Agreement and at intervals of two years thereafter, an application may be made for an alteration in the basic price of the matches, at the request of either contracting party if the average basic prices in those European countries possessing a similar system with regard to matches have increased or decreased by 10 (ten) per cent, as compared with the date on which the present Agreement is concluded. It this is found to be the case, the basic price shall then be altered accordingly. The Free City of Danzig is bound, whenever the price is altered, so to fix the retail price that it is at least 5 P. (five guldenpfennig) more than the basic price. Should the Free City of Danzig introduce a monopoly tax on matches, the basic price and retail price shall be correspondingly increased. All this also applies to ordinary imported matches. — 10 —

§ 4. Ordinary and Fancy Matches. Each box of matches manufactured by the “ Stab ”, or imported by it to meet home requirements, must contain at least 50 (fifty) and at the most 60 (sixty) matches (ordinary matches), and must bear an inscription in German. The “ Stab " is entitled, provided that the requirements in ordinary matches are satisfied, to manufacture matches from other raw materials (and in particular from aspen wood), to make them up and pack them differently and in other quantities, and to sell them at a price to be fixed by it (fancy matches).

§ 5- Export and Import. The “ Stab ” is entitled to export both ordinary and fancy matches manufactured in Danzig to other countries and without prejudice to the stipulations in § 3, to import an equal quantity of foreign matches correspondirig in quality to the monopoly article. The Free City is bound to make arrangements for the importation duty-free of sufficient foreign matches to meet the requirements of Danzig. This also applies to the importation of the raw materials needed for the manufacture of the matches to be sold in Danzig. ,

U j ' s I

§ 6. Financial Obligations. The " Stab " assumes the following financial obligations to the Free City: (1) It shall, within two weeks after the coming into force of the Agreement, pay to the Free City the sum of 1,000,000 (one million) Danzig gulden; (2) The " Stab ” shall pay a tax to the Free City of Danzig for the matches sold by it in the territory of the Free City, viz:

On the first ten million boxes a year, % P. (one-eighth of a guldenpfennig) per box; On a further quantity of ten million boxes a year,1/i P. (one-quarter of a guldenpfennig) per box ; On any quantity of boxes over and above twenty millions a year,1j 2 P. (half a guldenpfennig) per box.

Payment shall be made within a month after the end of the calendar year and shall be accompanied by a statement. For the first year, the tax shall be calculated proportionately from the date of the coming-into-force of the present Agreement until the end of the year. Receptacles other than standard boxes, and other matches, shall, for the purpose of calculating the tax, be converted into boxes containing 55 (fifty-five) matches each. (3) The " Stab ” shall not have to pay a tax on matches exported by it to foreign countries, unless they are exported to Poland, when it shall be required to pay1ji P. (one-quarter of a guldenpfennig) for each box of matches.

§7- Collection of the Monopoly Tax. If the Free City of Danzig imposes a monopoly tax on matches, the " Stab " shall be bound to collect it free of cost as a supplement to the price and transmit it every quarter to the Free City accompanied by a statement. The system of conversion into boxes containing 55 (fifty-five) matches laid down in § 6 shall also apply to the tax on fancy matches.

§ 8. Price Compensation on the Introduction of a Tax. If the Free City of Danzig introduces a monopoly tax which exceeds 1 P. (one (guldenpfennig) a box, it shall accord the “ Stab " compensation, if it is found during the first six months after the introduction of such higher monopoly tax that, as a result of the tax, thé consumption of matches has fallen, as compared with the previous six months. If the Senate reduces the tax to 1 P. (one guldenpfennig) no further compensation shall be made.

19- Lighters, etc. Should, as a result of the introduction of a monopoly tax, the consumption of lighters which can be used in place of matches increase, the Senate of the Free City shall be bound to make arrangements so to limit the consumption of such lighters that the consumption of matches does not suffer. — II —

§ 10. Discontinuance of Manufacture. Should the “ Stab ” found and exploit in the territory of the Free City of Danzig a new concern which is at least as commercially important as the match factory set up, and should the " Stab ” give an undertaking to the Free City of Danzig to continue to exploit this new concern, at least to the extent specified, until the termination of the present Agreement, it shall be entitled to discontinue the manufacture of matches in Danzig and to import into the Free City of Danzig sufficient matches to meet the requirements.

§ II. Loan. The " Stab ” assumes, in regard to the Free City of Danzig, the obligation to purchase, either itself or through the N.V. Financieele Maatschappij Kreuger & Toll, bonds to be issued and guaranteed by the Free City to a nominal amount of U.S.A. $1,000,000 (one million dollars) on the following conditions: The bonds shall bear interest at 6 (six) per cent and shall be taken over at 93 (ninety-three) per cent of the nominal amount. Purchase and payment shall be subject to the following conditions : (a) Payments shall in principle be effected three months after the present Agreement has acquired force of law. Nevertheless, they shall in no case be effected until the decrees and laws specified in § 1 have been issued by the Free City and put into force. (b) The bonds to be sold to the “ Stab ”, or to the N.V. Financieele Maatschappij Kreuger & Toll, as the case may be, shall be issued in a special series and in accordance with American Bank and Stock Exchange usage. The bonds, which must be made out in denominations of $50,000 (fifty-thousand dollars) shall, two days before the date of payment, at latest, be deposited by the Free City with the Skandinaviska Kredit Aktiebolaget in Stockholm and they shall be handed over to the " Stab " or the N.V. Financieele Maatschappij Kreuger & Toll on payment of the purchase price (with accrued interest) to the account of the Free City with the bank of Lee, Higginson & Co., of New York. (c) The redemption of the loan accorded shall begin on February 1st, 1935 (one thousand nine hundred and thirty-five), and shall be so effected through a cumulative sinking fund twice yearly—on February 1st and August 1st—during the following thirty years, that the loan is redeemed in full by February 1st, 1965 (one thousand nine hundred and sixty-five). The interest shall be paid in half-yearly instalments at 3 (three) per cent on February 1st and August 1st. Interest and sinking fund shall be paid to the bank of Lee, Higginson & Co., of New York, not later than 10 (ten) days before the due date. The " Stab ” or the N.V. Financieele Maatschappij Kreuger & Toll shall have the right to exchange the bonds for bonds of smaller denominations at any time on giving three months’ notice, in order to be able to negotiate them on the market. If this is done, the redemption and the service of interest shall be effected in accordance with American Bank and Stock Exchange usage. (d) The interest and sinking fund instalments shall be paid by the Free City to the Fiscal Agent, free of all charges and costs. {e) Should the Free City be in default with the payment of interest or sinking fund instalments, the “ Stab ” shall, without prejudice to its other rights, be entitled to retain the amounts of the match taxes and, as regards the amount still uncovered, correspondingly to increase the prices and to debit the balance of the instalment in arrears and the instalment falling due by means of a notification to the Fiscal Agent.

§ 12. Vis major. If the manufacture of ordinary matches is rendered impossible by circumstances outside human control through no fault of the “ Stab ", the “ Stab ” shall, during such time, be exempt from its obligation to manufacture matches and shall then be authorised and bound to import the necessary quantities of ordinary matches. The Senate shall be bound to arrange for these quantities to be imported free of duty, in so far as they are needed to satisfy the requirements of Danzig.

Arbitral Tribunal. Any disputes which may arise between the parties in connection with the present Agreement shall be decided by an arbitral tribunal and not by the ordinary courts. This applies in particular to disputes relating to the interpretation, fulfilment or non-fulfilment of the present Agreement, and in connection with which claims are put forward for the fulfilment of the Agreement, the payment of damages, or the termination of the Agreement. The parties shall each nominate one member for this arbitral tribunal. The first two members nominated shall appoint the umpire. If they are unable to reach an agreement with regard to the choice of an umpire, he shall be appointed, on the request of one of the parties, by the President of the Berlin Chamber of Commerce and Industry. Should one of the parties have demanded arbitral proceedings and at the same time have communicated the name of the arbitrator chosen by it, and should the other — 12 —

party not have appointed its member, the former shall ask for the second arbitrator to be appointed through the President of the Berlin Chamber of Commerce and Industry. In all such disputes arising out of the present Agreement, the German text is alone decisive.

§ 14- Coming into force of the Agreement. The present Agreement shall come into force after it has been signed by the Senate of the Free City of Danzig and by the " Stab ", and after the proposed Monopoly Law and the notification mentioned in § i have been published. If the attached Monopoly Bill is not voted by the legislative bodies within two months of the signing of the present Agreement, both parties shall be freed from their obligations under the Agreement.

§ 15- Extension of the Agreement. This Agreement shall always be extended for a period of five years if notice to terminate it has not been given by either of the parties one year before the date of its expiration. After the expiration of the period specified in § 1 and any extensions thereof, the “ Stab ” shall be entitled, in the event of the Senate desiring to give the rights accorded to the “ Stab " under the present Agreement to another concern, to participate in any other binding offer by a third private party. It shall state within four weeks after the offer has been notified whether it will participate or not. This right accorded to the “ Stab ” can only be exercised in direct connection with the present Agreement. § 16. Stam p Tax. The stamp tax due in respect of the present Agreement and any other documents needed for the execution of the Agreement shall be deemed to be discharged by the payment of 1,000,000 (one million) gulden (§ 6, No. 1).

Control Regulations. The “ Stab ” is bound to keep books from which the sales of the various kinds of matches may be ascertained at any time. It is also bound to allow an official, to be appointed by the Senate, to inspect these books at any time during business hours. Finally, it is also bound, at the end of every quarter, to send the Senate a statement of the sales.

§ 18. Transitional Regulations. The Senate is bound to take steps to prohibit any matches other than those manufactured or imported by the Monopoly to be sold three months after the coming into force of the present Agreement. § 19- Appointment of a Legal Representative. The “ Stab " undertakes, within two weeks after the coming into force of the present Agreement and on request being made, to appoint a legal representative resident in Danzig. The Senate shall be informed by registered letter of the name of the accredited representative for the time being. Berlin, February 24th, 1930. For the Senate of the Free City of Danzig : For the Svenska Tândsticks Aktiebolaget :

[Signed) Dr. Heinrich S a h m , [Signed) Ivar K r e u g e r . Dr. K a m n it z e r .

S u p p l e m e n t t o t h e A g r e e m e n t o f F e b r u a r y 24TH, 1930, b e t w e e n t h e S e n a t e o f t h e F r e e Ci t y o f D a n z ig a n d t h e S v e n s k a T â n d s t ic k s A ktiebolaget o f S to ck h olm .

1. In view of the fact that the Republic of Poland has at present objected to the duty-free importation of the raw material needed for the manufacture of the matches required by Danzig, the “ Stab ” hereby declares that it agrees to the sentence : “ This also applies to the importation of raw materials needed for the manufacture of the matches to be sold in Danzig ” in § 5, paragraph 2, being dropped until the Free City of Danzig is able to arrange for the raw materials in question to be imported free of duty. On the other hand, the Senate shall see to it that the application from the Danzig matches industry for permission to benefit by free transit for the finishing trade in accordance with § 13, paragraph 4, of Annex II (Customs) to the Warsaw Convention of October 24th, 1921, is immediately granted. — 13 —

2. In amplification of § 4, it is provided that every match-box intended for sale within the Danzig monopoly area shall be labelled “ Danziger Zündwaren-Monopol ” (Danzig Matches Monopoly), whether it has been manufactured in a Danzig factory or has been import^ and that every match-box intended for export to a foreign country shall bear an inscription to the effect that it comes from Danzig. 3. § 1 (3) No. 3 of the Bill attached to the Agreement provides that matchwood of the kind used for the manufacture of matches shall also be regarded as matches within the meaning of the Monopoly Law. As this provision is stated by the Senate to be impossible of application at the present time owing to the opposition of the Republic of Poland, the “ Stab " hereby declares that it agrees to the omission of this provision from the Monopoly Law, on the understanding, however, that it is reintroduced as soon as the Free City of Danzig can arrange for the monopoly to be extended to matchwood; that is to say, that the Senate of the Free City of Danzig is bound thereupon to extend to matchwood the monopoly accorded to the “ Stab The Senateshall take steps to prevent matchwood factories being erected in the territory of the Free City of Danzig before such date. Danzig, May ist, 1930. For the Senate of the Free City of Danzig: For the Svenska Tândsticks Aktiebolaget : (Signed) S ah m . (Signed) Stellen Ca r lber g . Dr. K a m n itz e r .

Appendix II.

The F r e e Cit y o f D anzig 6% S e c u r e d E x t e r n a l S in k in g F u n d G old B o n d s

d u e F e b r u a r y i s t , 1965.

LOAN AGREEMENT BETWEEN THE FREE CITY OF DANZIG AND THE SVENSKA TÂNDSTICKS AKTIEBOLAGET AND THE N.V. FINANCIEELE MAATSCHAPPIJ KREUGER & TOLL, DATED MAY 30TH, 1930.

Loan A g r e em e n t (hereinafter called the Agreement) dated May 30th, 1930, made in the Free City of Danzig, by and between :

T he F r e e Cit y o f D anzig (hereinafter called the City), acting through its duly authorised representatives, President Sahm and SenatorDr. Kamnitzer.

T he S v e n s k a T â n d st ic k s A ktiebolaget , Stockholm, Sweden (hereinafter called the Matchco), acting through its duly authorised representative, M. Stellan Carlberg, and

T he N.V. F in a n c ie e l e Maatschappij K r e u g e r & T oll, of Amsterdam, Holland (hereinafter called the Maatschappij), acting through its duly authorised representative, M. Viktor Holm.

Article First. — Description of Bonds.

Section 1. — The City will create an issue of its bonds, to be known as “ The Free City of Danzig 6% S ecured External Sinking Fund Gold Bonds, due February ist, 1965 ” (hereinafter called the Bonds), in the principal amount O ofn e Mil lio n gold dollars of the United States of America of the standard of weight and fineness existing on February ist, 1930. The Bonds shall be in bearer form, shall be dated February ist, 1930, shall mature February ist, 1965, and shall bear interest from the date thereof at the rate of six per cent (6%) per annum, payable semi-annually on February ist and August ist in each year. The text of said Bonds and of the interest coupons to be attached thereto shall be in the English language, substantially in the respective forms set forth in Schedules A and B, hereto annexed. Section 2. — The Bonds shall be in denominations of $50,000 each, exchangeable, as a whole, at the option of the Maatschappij and free of any charge, at the office of a bank in the City of Stockholm, Sweden, after three months’ prior notice delivered in writing to the Senate of the City, for Bonds of an equal aggregate principal amount in the denominations of $1,000, $500 and $100 each, according to the choice of the Maatschappij. Bonds of any of the denominations of §1,000, $500 and $100 shall conform to the requirements of the New York Stock Exchange. In case Bonds of the denominations of $50,000 shall be exchanged for smaller denominations as provided in this Section 2, the parties to this Agreement may in agreement with the Fiscal Agents and the holders of the Bonds enter into a new agreement or agreements, or into an agreement or agreements supplemental hereto, each of which shall thereafter form a part hereof. Section 3. — The principal of, and interest on, the Bonds shall be payable at the offices of the Fiscal Agents in the Borough of Manhattan, City and State of New York, Boston, Massachusetts or Chicago, Illinois, United States of America, in gold coin of the United States of America of, or equal to, the standard of weight and fineness existing on February ist, 1930. Section 4. — For the amortisation of the Bonds, the City will provide a Sinking Fund as stated in Article Third hereof. Section 5. — The City will pay the principal of, and interest on, and the respective instalments of the Sinking Fund for, the Bonds in time of war as well as in time of peace, irrespective of the nationality or residence of any holder of such Bonds or the appurtenant coupons, whether or not such holder is a citizen or resident of a State friendly, neutral or hostile to the City, and irrespective of any Regulation, Treaty or Convention of the City or of any subdivision thereof or of any other authorities, and without requiring any declaration as to the citizenship or residence of such holder or as to the length of time such holder has been in possession of any such Bond or coupon. The principal of, and interest on, the Bonds shall bs free from, and payment thereof shall be made without deduction or diminution for, any taxes, assessments, charges, duties, levies or imposts of any nature, now or at any time hereafter imposed, levied, or assessed by the City, or by any municipality, commune or other taxing authority thereof or therein. Section 6. — The Bonds shall bear the handwritten signatures of the duly authorised representatives of the City and the interest coupons attached thereto shall bear the facsimile signatures of the said representatives.

Article Second. — Security.

Section 1. — The Bonds shall constitute a direct obligation of the City which pledges its full faith and credit for the due and punctual payment of the principal of, and interest on, and the respective instalments to the Sinking Fund for, such Bonds and all other amounts required for the service thereof, and for the due and punctual performance of all covenants of the City contained in this Agreement or in the Bonds and the appurtenant coupons. Section 2. — The City covenants to enter in its yearly budget sufficient provisions for the payment in full of all instalments of interest and Sinking Fund under this Agreement. Section 3. — As security for the paym ent of any and all sums which may become payable on account of the principal, interest, or Sinking Fund of or for the Bonds as well as all other amounts payable for the service thereof, the City hereby creates a specific lien or charge in favour of the Bonds, ratably, upon all amounts at any time payable as excise, taxes or otherwise tc or for the account of the City under the contract (hereinafter called the Match Contract) dated February 24th, 1930, between the City and the Matchco regarding the right to sell and manufacture matches in the City (such amounts being hereinafter called the Assigned Revenues) which lien or charge shall be superior to any and every other lien or charge now existing or which may be hereafter created on such Assigned Revenues or any part thereof, until the repayment and discharge, in full, of the Bonds and of the obligations of the City under this Agreement. Section 4. — In case the City shall fail to pay the principal of, or any instalment of interest on, or Sinking Fund for, the Bonds, as well as all other amounts payable for the service of the Bonds, as and when the same shall become due and payable, and such default continues for a period of five (5) days, the Fiscal Agents shall notify the Matchco of the default on the part of the City, and upon receipt of such notice, the Matchco is hereby authorised and requested to pay to the Fiscal Agents such parts of the Assigned Revenues which are due under the Match Contract at any such time and at any time thereafter until the Matchco has received notice from the Fiscal Agents that the default on the part of the City has been made good. After receipt of notice that the default has been made good, the Matchco shall again pay the Assigned Revenues to the City according to the stipulations of the Match Contract. In case the Assigned Revenues, paid by the Matchco to the Fiscal Agents as above stated, shall prove not to be sufficient for the satisfaction in full of the amounts in default, then the Matchco is entitled under the Match Contract to raise the amount of taxes levied to an extent which will allow such satisfaction in full. The amounts received by the Fiscal Agents under this Section 4 shall be credited by the Fiscal Agents to a Special Account in their books, to the debit of which account the Fiscal Agentsshall apply the amounts so received for the partial or full execution, as the case may be, of thepaym ents to be effected by the City under this Agreement, as and when such amounts shall become dueand payable. In case the City shall meet the amounts thereafter payable for the service of the Bonds out of its general resources (any balance standing to the credit of the Special Account included) and — 15 — shall make good any default previously incurred and any arrears of interest thereon, then the Fiscal Agents shall forthwith notify the Matchco of such action on the part of the City. Section 5. — In case: (а) The City shall fail to pay the principal of, or any instalment of interest on, or Sinking Fund for, the Bonds, as well as all other amounts payable for the service of the Bonds, as and when the same shall become due and payable, or (б) The City shall fail to observe or perform any |of the covenants, conditions and agreements on its part contained in this Agreement or in the Bonds or coupons appurtenant thereto, and such default shall continue for a period of fifteen (15) days, the Fiscal Agents, notwithstanding the measures provided for in Section 4 of this Article Second, may, and upon receipt of written request so to do signed by the holders of at least twenty-five per cent (25 %) in principal amount of the Bonds then outstanding shall, deliver to the Senate of the City written notice declaring the entire principal amount of Bonds then outstanding due and payable by reason of such default or failure, and upon delivery of such notice the entire principal amount of Bonds then outstanding shall become immediately due and payable.

Article Third. — Service and Redemption of the Bonds.

Section 1. — Until all of the Bonds shall have been paid or redeemed, the City will pay to the Fiscal Agents at their office in the Borough of Manhattan, City and State of New York, at least ten (10) days before the first day of February and the first day of August in each year, commencing with the first day of , up to and including the first day of February 1965, a sum sufficient to pay the semi-annual interest, falling due on each such first day of February and first day of August on the principal amount of Bonds then outstanding. The City will further pay to the Fiscal Agents at their office in the Borough of Manhattan, City and State of New York, at least ten (10) days before the first day of February and the first day of August in each year, commencing with the first day of , up to and including the first day of February 1965, as and for a Sinking Fund for the Bonds, the sum of $36,132.96, less the amount required to pay the semi-annual interest, falling due on the next succeeding interest payment date, which amount will be paid as provided in the preceding paragraph of this Section 1. Section 2. — In case the Bonds of $50,000 each should be exchanged for bonds of $1,000, $500 and $100 each according to Article First, Section 2, then the interest and Sinking Fund service shall be effected according to bank and Stock Exchange practice of the United States of America. Section 3. — In addition to redemption through the Sinking Fund, the City, at its option and after at least six (6) months’ prior notice in writing to the Fiscal Agents, may redeem, on any semi-annual interest payment date on or after February ist, 1940, all Bonds then outstanding at One Hundred Per Cent (100%) of their principal amount plus accrued interest. Funds for the payment of Bonds to be redeemed pursuant to the provisions of this Section 3 shall be paid by the City to the Fiscal Agents not less than two days prior to the redemption date. Section 4. — If the Bonds shall have been duly called for redemption, either in respect of the payments into the Sinking Fund or otherwise as stated in this Agreement, all interest thereon shall cease from and after the date of redemption, unless the City shall default in the payment in full of the redemption price of the Bonds. If any Bond called for redemption shall be presented with any unmatured coupons missing therefrom, the Fiscal Agents shall have the right to pay the redemption price thereof less the face amount of such missing, unmatured coupons. Section 5. — All Bonds redeemed as provided in this Agreement together with all coupons attached thereto and unmatured shall be cancelled by the Fiscal Agents and delivered to the City, or shall be otherwise disposed of as the City shall direct, and no Bonds or coupons shall be issued in lieu thereof. Section 6. — The Sinking Fund payments made as provided in Section 1 of this Article Third shall be applied by the Fiscal Agents to drawings by lot (in any manner deemed by them to be fair) of Bonds for redemption on the next succeeding interest payment date at One Hundred Per Cent (100%) of their principal amount and accrued interest. The principal amount so to be redeemed shall correspond to the amount of such Sinking Fund payment and shall be endorsed on the Bond selected by the Fiscal Agents as above provided, and the face value of such Bond shall thereupon be deemed to be reduced by the amount so endorsed and the coupons appurtenant thereto shall be valid only for a proportionally less face value. The next succeeding Sinking Fund payment shall be applied by the Fiscal Agents toward the full redemption of any Bond of which part of the principal amount may have been redeemed by any preceding Sinking Fund payment. In the event that, upon application of any Sinking Fund payment, the entire principal amount of such Bond shall be redeemed and there shall remain unexpended part of the Sinking Fund payment, the Fiscal Agents shall draw by lot (in any manner deemed by them to be fair) an additional Bond, the principal amount of which — i 6 —

shall be redeemed, by endorsement in the manner above provided, by the amount of the unexpended part of such payment. Section 7. — Notice that Bonds have been called for redemption, either in respect of the Sinking Fund or otherwise as herein stated, shall be published once a week for two successive weeks in a daily newspaper, printed in the English language and published and of general circulation in the Borough of Manhattan, City and State of New York, the first publication to be not less than thirty (30) days prior to the redemption date.

Article Fourth. — Concerning the Fiscal Agents.

Section 1. — The City hereby irrevocably appoints Lee, Higginson & Co., or their successors, Fiscal Agents for all purposes relating to the Bonds and the service thereof, the duties of the Fiscal Agents to comprise their acting as agent of the City for the payment of principal and interest on the Bonds (at their offices in the Borough of M anhattan, City and State of New York, Boston, Massachusetts and Chicago, Illinois, United States of America) out of funds provided them for this purpose by the City, and the application of payments made as and for the Sinking Fund for the Bonds in accordance with the stipulations of this Agreement. Section 2. — The Fiscal Agents may execute any of the powers or duties herein expressed by or through its agents and the Fiscal Agents shall not be accountable for any default or misconduct of any such agents if reasonable care shall have been exercised in the appointment and retention thereof. The Fiscal Agents shall not be liable for any action taken or suffered by them or for any act of commission or omission done or omitted by them, except for their own misconduct or negligence. The City agrees to indemnify them for losses and expenses incurred by them as Fiscal Agents, except those arising from their own misconduct or negligence. Section 3. — The Fiscal Agents shall have the right to advise with legal counsel in such matters as they may deem necessary and shall be fully protected for any action taken in good faith in accordance with the opinion of counsel. Section 4. — All moneys paid to or deposited with or to the credit of the Fiscal Agents, pursuant to any of the provisions of this Agreement, until required or permitted to be disbursed as provided in this Agreement, may be held by the Fiscal Agents as a general deposit without liability for interest, and the Fiscal Agents shall be under no duty to invest any funds held by them or subject to their control. Section 5. — The Fiscal Agents, appointed in Section 1 of this Article Fourth, or their successors, respectively, shall have the" right to resign by mailing or delivering to the Senate of the City a written notice to the effect that they or their successors elect to resign. Said notice shall take effect six months from the date of its mailing or delivery, as aforesaid, and shall be published in the manner provided for notices of redemption under Section 7 of Article Third. In the event of such resignation or in the event that the Fiscal Agents shall become bankrupt or insolvent or be liquidated or dissolved, the City shall appoint a successor. The City shall forthwith cause notice of any such appointment to be published in the manner provided for notices of redemption under Section 7 of Article Third, the first publication to be not less than thirty (30) days before the date on which any such appointment shall take effect. The Fiscal Agents retiring shall deliver all moneys or securities on deposit with them to the Successor Fiscal Agents and make all dispositions as will permit the service of the Bonds to proceed without interruption. Section 6. — The compensation of the Fiscal Agents shall be fixed by an agreement between them and the City and such compensation, as well as all reasonable expenses, charges, counsel fees and other disbursements shall be paid with one-half each by the City and the Maatschappij to the Fiscal Agents, upon receipt by the City and the Maatschappij, respectively, of statements setting forth the amount of such compensation, expenses, charges, fees or other disbursements.

Article Fifth. — Miscellaneous Provisions.

Section 1. — The City certifies and declares that all acts, conditions and things required to be done and performed and to have happened precedent to and in the execution of this Agreement and in the creation and issue of the Bonds, have been done and performed and have happened in due and strict compliance with the Constitution and Laws of the City and its governing international treaties. Section 2. — This Agreement and the Bonds issued hereunder, wherever executed, shall for all purposes be deemed a New York contract and shall at all times and all occasions be performed, governed and interpreted in accordance with the laws of the State of New York, United States of America. — b i ­

section 3. — The parties to this Agreement may, in agreement with the Fiscal Agents and the holders of the Bonds, enter into an agreement providing for the suspension, during any time, of publications of notices under this Loan Agreement.

I n consideration of the sum of one dollar, lawful money of the United States of America, duly paid to the City by each of the other parties hereto, at or before the execution and delivery of this Agreement, and of other good and valuable considerations, the receipt whereof is hereby acknowledged, the City has covenanted and agreed and by this Agreement does covenant and agree with the Matchco and the Maatschappij as contained herein for the equal and proportionate benefit of the present and future holders of the Bonds and appurtenant coupons. I n w it n e ss w h e r eo f the City, the Matchco and the Maatschappij have caused this Agreement to be executed in their names by their duly authorised representatives, in four counterparts, one of which shall be retained by each of the parties hereto and the remaining delivered to the Fiscal Agents, all as of the day and year above written.

Free City of Danzig:

(Signed) Sa h m , (Signed) Dr. K am nitzer . [Die] Svenska Tândsticks Aktiebolaget:

(Signed) Stellan Car l b e r g .

N. V. Financieele Maatschappij Kreuger & Toll:

(Signed) V. H olm.

Schedule A.

(o n th e fa c e)

$50,000. No......

Free Cit y o f D anzig S ix P e r Ce n t Se c u r e d E x t e r n a l S in k in g F u n d Gold B o n d .

Due February ist, 1965.

The F r e e Cit y of D anzig (hereinafter called the City), for value received, promises to pay to bearer on surrender of this Bond on the first day of February 1965, unless before said date this Bond shall have been duly called for redemption and payment thereof made or duly provided for, the principal amount of F if t y T h o u sa n d D ollars and to pay interest on such principal amount, from February st, 1930, until such principal amount shall have been fully paid, at the rate of Six Per Cent per annum semi-annually on the first day of February and the first day of August in each year, upon presentation and surrender of the interest coupons hereto attached as they severally mature. Such principal amount and interest shall be paid at the offices of Lee, Higginson & Company, or their successors, as Fiscal Agents of the City, in the Borough of Manhattan, City and State of New York, Boston, Massachusetts, or Chicago, Illinois, United States of America, in gold coin of the United States of America of or equal to the standard of weight and fineness existing on February ist, 1930. Principal of, and interest on, this Bond shall be paid by the City in time of war as well as in time of peace, irrespective of the nationality or residence of the holder of this Bond or of the coupons appurtenant hereto, whether or not such holder is a citizen or resident of a State friendly, neutral or hostile to the City, and irrespective of any Regulation, Treaty or Convention of the City or of any subdivision thereof, or of any other authorities, and without requiring any declaration as to the citizenship or residence of such holder or as to the length of time such holder has been in possession of this Bond or the coupons appurtenant hereto. The principal of, and interest on, this Bond shall be free from, and payment thereof shall be made without deduction or diminution for, any taxes, assessments, charges, duties, levies or imposts of any nature, now or at any time hereafter imposed, levied, or assessed by the City or by any municipality, commune or other authority thereof or therein. This Bond is one of a duly authorised issue of Bonds of the City known as the “ Free City of Danzig 6 % Secured External Sinking Fund Gold Bonds due February ist, 1965 ” (herein called the Bonds), limited to the aggregate principal amount of $1,000,000 at any one time outstanding and consisting of similar Bonds of like date and maturity and of like tenor, all of which are issued under, and equally secured by, the terms and provisions of a Loan Agreement dated May 30th, 1930, between the City, the Svenska Tândsticks Aktiebolaget, and the N. V. Financieele Maatschappij Kreuger & Toll (herein called the Loan Agreement). For a description of the nature and extent of the security and of the rights of the holders of the Bonds, and the terms and conditions upon which the Bonds are issued and secured, to all of which the holder hereof assents by acceptance of this Bond, reference is made to said Loan Agreement. This Bond is entitled to the benefits of the Sinking Fund provided in said Loan Agreement. In addition to redemptions for the Sinking Fund, this Bond is subject to redemption at the option of the City on any semi-annual interest payment date on or after February ist, 1940, at One Hundred Per Cent of the principal amount plus interest accrued to the date of such redemption, upon six months’ prior notice to the Fiscal Agents, as provided in said Loan Agreement, such notice to be published once a week for two successive weeks in a daily newspaper printed in the English language and published and of general circulation in the Borough of Manhattan, City and State of New York, the first publication to be not less than 30 days prior to the redemption date. If this Bond shall have been duly called for redemption, either in respect of the payments into the Sinking Fund or otherwise as herein stated, all interest hereon shall cease from and after the date of redemption, unless the City shall default in the payment in full of the redemption price hereof. If this Bond, called for redemption, shall be presented with any unmatured coupons missing therefrom, the Fiscal Agents shall have the right to pay the redemption price hereof less the face amount of such missing, unmatured coupons. In case the City shall default in the payment of any amounts due in respect of these Bonds or the coupons appurtenant thereto or in the observance or performance of any of the covenants of the City under the Loan Agreement, the principal of all Bonds issued thereunder may be declared or may become due and payable prior to maturity thereof in the manner and with the effect provided in said Loan Agreement. As provided in the Loan Agreement this Bond shall be exchangeable, free of any charge, for Bonds to bearer in the denominations of $1,000, $500 and $100 each of an equal aggregate principal amount. This Bond is and is intended by the parties hereto to be a New York contract, and shall be performed, governed and construed in accordance with the laws of the State of New York, United States of America. The City certifies and declares that all acts, conditions and things required to be done and performed and to have happened precedent to and in the creation and issue of the Bonds, have been done and performed and have happened in due and strict compliance with the Constitution and Laws of the City. I n w it n e ss w h e r e o f the City has caused this Bond, with interest coupons bearing the facsimile signatures of its duly authorised representatives to be attached hereto, to be signed on its behalf by its duly authorised representatives, all as of the first day of February, 1930. Free City of Danzig:

Schedule A .

(o n t h e r e v e r se ) $50,000. No...... No

F r e e Cit y o f D a n zig S ix P e r Ce n t S e c u r e d E x t e r n a l S in k in g F u n d Gold B o n d .

Due February ist, 1965. Interest payable February ist, and August ist. Principal and interest payable in the Borough of Manhattan, City and State of New York, Boston, Massachusetts, or Chicago, Illinois, United States of America.

Schedule B.

(form o f in t e r e s t c o u po n ) No. 1. $1,500.

On the first day of August 1930, unless the Bond hereinafter mentioned shall have been called for previous redemption and payment duly provided therefor, the Free City of Danzig — 19 —

wall pay to bearer at any of the offices of Lee, Higginson & Co., or their successors, as Fiscal Agents, in the Cities of New York, Boston and Chicago, One Thousand Five Hundred Dollars ($1,500) in gold coin of United States of America of or equal to the standard of weight and fineness existing on February ist, 1930, without deduction or diminution for any taxes, assessments, charges, duties, levies or imposts of any nature now or at any time hereafter imposed by the City or by any taxing authority thereof or therein, being six (6) months’ interest then due on its 6% Secured External Sinking Fund Gold Bond due February ist, 1965, ...... No Free City of Danzig :

Appendix III.

REPORT ON THE ECONOMIC AND FINANCIAL SITUATION OF THE FREE CITY OF DANZIG.

(With two Sub-Appendices.) [Translation from the German.] April 1930.

Danzig’s economic position is dependent, not only on world economic conditions, but also— and more particularly—on the conditions in Polandi.e., ; the general state of trade there and, secondly, the administrative and legal measures taken by the Polish Government. In 1929, and particularly in the second half of the year, the Polish economic situation greatly deteriorated and Danzig’s position was affected in consequence. Poland’s demand for credits has increased, losses have been incurred on those already granted and the volume of trade has greatly fallen off ; all these circumstances have had a direct effect upon Danzig. As an indication of the situation, it may be mentioned that bankruptcy petitions—including applications for composition—at Danzig rose from 43 in 1927 to 66 in 1928 and 106 in 1929. The number of actions in respect of bills of exchange rose from 1,779, involving a total sum of 951,000 gulden in 1928, to 2,863, involving a total sum of 1,341 million gulden in 1929, the year covered by the present report. To this must be added a large number of administrative and legal measures taken in Poland as a result of an ambitious new mercantile policy, which have directly injured Danzig. The chief of these is the further extension of the port of Gdynia. The foreign trade of the Danzig-Polish Customs territory through Danzig and Gdynia showed the following figures:

I m po rts.

January to January to December 1929

Danzig Gdynia Danzig Gdynia

Value Value Value Value Tons (in thousands Tons (in thousands Tons (in thousands Tons (in thousands of zloty) of zloty) of zloty) of zloty)

1,610,401 887,980 114,726 34-353 1,561,874 793,408 218,037 63,678

E x p o r t s.

6,748,102 588,384 1,593,022 44,778 6,865,419 669,118 2,402,051 70,620

The rapid rise of Gdynia is clearly shown by these figures. Exports of Polish Upper Silesian coal alone, via Danzig, fell off in 1929 by 180,000 tons, as compared with the previous year,1 while the coal traffic via Gdynia increased by about 700,000 tons compared with the previous year. Shipments of scrap iron, which have brought in several hundred thousand gulden monthly to Danzig, and especially to the port of Danzig, in the form of wages and dues, have, to a large extent, been diverted to Gdynia,2 owing to the fact that, not only are the harbour dues kept

1 According to the figures supplied by the Provincial Customs Office, the coal exports by sea via Danzig only fell off by approximately 40,000 tons as compared with the previous year. 2 Imports of scrap iron via Gdynia in 1929 amounted to approximately 39,000 tons and those via Danzig to approximately 406,000 tons (according to Polish foreign trade statistics). The ratio of scrap-iron imports was therefore still as 1 to 10 in 1929. — 20 —

at a lower level there by the Polish Government than is possible at Danzig, but the wages of the Polish workers at Gdynia are much lower than at Danzig, although at the same time the efficiency of the workers is also less.

Compared with the pre-war figures, the transhipment figures for the port of Danzig in 1929 are also very high. It has often been demonstrated, however, that this traffic figure is mainly an indication of the volume of consignments, but is unfortunately no criterion of the development of Danzig trade.

In the year under consideration, bulk-goods (Massengiiter) again predominated, and these bring little profit to the port administration and to the shipping agents, since the interest of Danzig trade in such consignments is small. A mere reference to the statistics of the value of the goods handled confirms this view. The average value of the Danzig transhipment traffic, calculated per ton, has continually fallen, the figures being as follows:

Imports Exports (in Danzig gulden) (in Danzig gulden) 1926 628 85 1927 387 74 1928 355 61 1929 293 (?) 59

The present downward economic tendency in Poland, which, here as elsewhere, is leading to a gradual increase in the number of unemployed, combined with the low wage-level in Poland, encourages on the one hand an influx of Polish workers with a lower standard of living into Danzig, where they tend to depress wages and to displace Danzig workers, while, on the other hand, this difference in economic structure between Danzig and Poland has had the result that numerous orders which could previously be executed profitably in Danzig must either be given direct to Poland owing to the cheaper prices offered by Polish competitors, or are secured by Polish contractors appearing on the Danzig market. Thus, the furniture industry and orders for furniture have almost all been diverted to Poland. The same is the case with boots and shoes, printing, the manufacture of packing material, etc. For these reasons, unemployment in 1929 reached unexpectedly large proportions. The amount of work available is restricted in two directions,i.e., on the one hand, by the replacement of Danzig workers by Poles, and, on the other, by the placing of orders in Poland, which many Danzig enterprises are obliged to do if they are to carry on business at all. Varied as Danzig industry is to-day, its development has not been able to keep pace even approximately with industrial development in Poland.

In addition to this, Danzig is, to a growing extent, losing her wholesale trade both in exports and imports, and this tendency made further progress in 1929. In the coal trade for example, Danzig hardly retains any share (only about 3 to 4 per cent) and the same applies to imports of fertilisers. In the sugar trade, the participation of Danzig firms in the Polish exports is less than 1 per cent. The Danzig sugar industry, which previously gave employment to hundreds of workers, suffered severe losses in 1929. The “ West Prussian Sugar Refinery ”, which was already in a difficult position, had to go into compulsory liquidation. One of the largest refineries of the eastern area, the “ Baltic Sugar Refinery ", had to be broken up as old iron. Their continued existence had become impossible, as the Polish raw sugar was no longer treated at Danzig, nor could the two undertakings earn sufficient profits in the sugar trade. The coal trade is almost entirely in the hands of Polish agents. As regards fertilisers, Danzig firms were ousted from the import trade in 1929, owing to the Polish Finance Ministry’s action in granting Customs-free quotas to Polish import agencies (e.g., to the Rolny Bank). Under the new regulations, applications from Danzig firms for the Customs-free import of potash salts and Chile saltpetre have been refused without exception, whereas the Polish firms and associations have received import permits on a large scale. Danzig has been given absolutely no say or share in any of these measures.

Danzig’s share in the grain trade, which for centuries past has been in her hands, became very small in 1929, owing to the introduction of the system of export bounties and the formation of export syndicates, in which Danzig firms were only able to obtain a small participation. All these circumstances are not only leading to a reduction in employment for workers and contractors, but are gradually weakening the taxable capacity of Danzig trade and industry.

The crisis in the timber trade grew more acute in 1929, and there was a series of failures in which the Danzig banks suffered losses. The export of Polish timber via Danzig in the year under consideration was hardly more than one-third of the 1927 exports.

Reference has already been made to the Polish system of export bounties and to the formation of export syndicates. This question is also touched upon in the financial report. As Danzig has — 2 1 — not the same opportunity as Poland for paying export bounties out of the common Customs fund, the export trade in important articles is more and more falling into Polish hands.

Up to the beginning of 1930; we calculate that our share in the Customs receipts fell off by about 3 y 2 million gulden, on account of the export bounties granted by the Polish Government alone, without Danzig trade having profited in any way. New syndicates are constantly being formed. As a consequence, the native Danzig wholesale trader, who is highly skilled in his business and therefore well qualified to act as an intermediary, is being more and more deprived of his leading position in the world market.

A similar effect has been produced by the export duties imposed on various occasions by Poland, which have confined the Danzig export trade in the branches affected to Danzig products, and Danzig, being a commercial city, is unable to live on these alone.

Following upon the Polish system of encouraging exports, the year 1929 saw a further development of the system of import prohibitions or prohibitive Customs increases, the result of which has beeen to make numerous branches of Danzig trade and industry unprofitable or to rain them altogether. As a consequence, the turnover in goods in 1929 was considerably reduced. The rice trade, for example, has come to a complete standstill, and the demand is met by the syndicated Polish rice mills.

In this way, Danzig trade has been gradually falling away and has repeatedly been deprived of its field of activity, and this loss has not been made good by new branches of industry. Danzig’s efforts to attract new industries and thus to find employment for her population have met with no success, for it was impossible to compete either with Polish wages or with the administrative advantages which are offered to new industries in Poland, and particularly at Gdynia. We have seen reports of the negotiations with industrial firms in connection with the creation of establishments in the port of Gdynia, in which advantages as regards taxation and exemption from harbour dues were offered for a long series of years. Industries have also been deterred from establishing themselves at Danzig by the propaganda which has been carried on by Polish newspapers against Danzig products, this propaganda being supported by numerous official declarations to the effect that all purchases of goods must be confined to goods produced in Poland. Another deterrent has been the Polish Government’s repeatedly expressed intention of imposing an increased turnover tax on goods imported from abroad, including Danzig goods. The guarantees which individual undertakings have asked the Senate to give that Danzig products would not be treated more unfavourably in Poland than Polish goods could naturally not be granted, particularly as such unfavourable treatment had already been applied to Danzig goods in many cases—for example, in th at of the turnover tax and in other directions.

During 1929, the population of Danzig was more and more obliged to give up consuming foreign goods and to replace them by Polish products. Hence, in many cases, the import quotas granted to the Free City of Danzig in consequence of the Polish import prohibitions were not fully employed, and, even apart from this, the purchase of goods in Poland has greatly increased —a tendency which, in view of our economic ties with Poland, we cannot but welcome ; we should like to be in a position to be one of Poland’s best customers. Textiles and footwear, earthenware, furniture and many other articles are extensively purchased in Poland—the first-named articles almost exclusively—so that, in 1929, the Free City of Danzig undoubtedly became a buyer of great importance to Poland. In consequence of this development, Danzig’s share in the purchase of dutiable goods, in so far as these goods are actually obtained from outside the Polish Customs frontier, has fallen off; though goods have been largely purchased abroad, these purchases have nevertheless been made within the common Customs area. This is a fact of great importance from the point of view of the distribution of Customs revenue.

Another matter that engaged our particular attention during the year was the negotiations for a commercial treaty between Poland and Germany, which at the beginning of the year seemed certain of success, but in the last few weeks again appeared doubtful. We are apprehensive that it will result in a further hindrance of our industry. How far Danzig will profit as an intermediary from the development of German-Polish trade which is anticipated from the conclusion of the commercial treaty is also uncertain, as, in her weakened economic position, she will hardly be able to place large credits at the disposal of German-Polish trade and thus attract it into her hands.

The severe depression suffered by Danzig agriculture in 1929, and particularly the depression in the labour market, led us to assist the Danzig shipbuilding industry to accept large Russian orders by guaranteeing the bills of exchange given in payment by the Russian Government up to a sum of roughly 7 million gulden. Consideration of the absolute necessity of stimulating Danzig industry, on the one hand, and of the manifold dangers presented by an excessive increase — 2 2 —

in the number of unemployed, on the other, led us to take this step. Without our help, unemployment would have assumed proportions which would have threatened the very existence of the State. Lastly, we attach (Sub-Appendix Ilia) a copy of the Danziger Wirtschaftszeitung of January 25th, 1930,1 which contains a survey of Danzig’s economic situation in the last few years and ample statistical material regarding the development of the individual branches of industry in 1929. To sum up, we are obliged to conclude that, in the past year, Danzig was farther away than ever from the prediction contained in the Note of the Allied and Associated Powers of June 16th, 1919, to the effect that Danzig was destined once more to enjoy great commercial prosperity, such as had fallen to her lot in the Middle Ages, owing to the political circumstances of the time.

The finances of the Free City took an unfavourable course in the budgetary year 1929. In the estimates for 1929, revenue and expenditure were balanced without a deficit. On the actual results of the year, however, it is to be feared that there will be a large deficit. The following are the chief items which are expected to show an unfavourable balance :

Gulden 1. Customs revenue, which the budget of the Finance Administration estimated to yield 21 million gulden, will show a deficiency of approximately . . 1,500,000 2. The surplus of the Postal and Telegraph Administration will be smaller by about ...... 800,000 3. The Social Budget will show an additional deficiency of about.... 2,000,000

These deficiencies, to tallin g...... 4,300,000

are partly set off by more favourable balances in other departments, but the total deficiency for the accounting year 1929 must be estimated at 3 to 4 million gulden. The causes of the unfavourable results of Items 1 to 3 are as follows :

Ad 1. — The general economic depression of the past year has been particularly marked in Poland. This has inevitably led to a falling-off in imports and hence in Customs receipts in the common Customs area, and therefore to a falling-off in Danzig’s share of Customs revenue. Danzig’s share was still further reduced by the fact that Poland has adopted a system of export bounties to encourage her exports, and these bounties are paid out of the common Customs receipts. The Free City of Danzig takes the view th at this is contrary to existing agreements, and has issued a note demanding that the export bounties should be charged to some other account. It seems probable that this question can only be settled by an appeal to the authorities of the League of Nations. Ad 2. — The smaller surplus of the Postal and Telegraph Administration is due to the fact that, on the one hand, the Free City incurred additional expense in connection with the improvement of the telephone connection with the harbour and particularly with the newly- opened basin, and that, on the other hand, the Polish postal service established at Danzig has come into increasing competition with the Danzig Post Office and has thus reduced receipts. Ad 3. — Information with regard to the exceptional unemployment in the Free City of Danzig in the past year and the financial burdens thereby imposed on the Free City is given in the attached Sub-Appendix111 (6). In addition, considerable burdens have been placed by this unemployment on the communes, as the latter have to pay one-sixth of the unemployment relief and also incur considerable expenses in respect of social welfare. The causes of this heavy unemployment in Danzig can only to a small extent be attributed to the world economic depression, and is due in the first place to the fact that, owing to the extension of the port of Gdynia, more and more work is being taken from Danzig, while, at the same time, the Polish workmen, in view of the growing unemployment which also exists in Poland, are being more and more attracted to the territory of the Free City of Danzig, where there are higher wages and better social benefits, and where they often tend to depress the level of wages while still earning more than in Poland. Danzig has not been able, like other States, to remedy this position by taking legislative measures to reserve situations vacant in Danzig in the first instance for her own nationals, as Poland has taken up the standpoint that, on the basis of the existing treaties, Polish nationals are entitled to obtain employment in Danzig without restriction, and has threatened to retaliate

1 Note by the Secretary-General. — This issue of the Danziger Wirtschaftszeitung is kept at the Secretariat at the disposal of the Members of the Council. — 23 —

against any restrictive legal measures taken by Danzig with an economic boycott. The nego­ tiations with regard to this question held at Geneva and Warsaw under the chairmanship of the High Commissioner of the League of Nations, which are not yet quite at an end, are only aimed at stopping any further influx during the current year, but Poland desires to reserve the right to revise any such agreement after six months. Even if such an agreement is concluded, il will bring little relief in view of the large amount of unemployment in the Free City of Danzig and the burden imposed on its finances. The reasons which have caused this unfavourable result for 1929 will also exercise a harmful effect on the 1930 budget. Danzig will be obliged to make a lower estimate for Customs receipts in 1930. She will have to reckon on a further falling-off in postal revenue and on higher expenditure in respect of unemployment. It will further be necessary to provide additional resources to assist the distressed communes, since the latter are unable to bear the increased burdens resulting from unemployment without State assistance. Furthermore, in the interests of sound finance, the new budget must provide for part of the deficit of 1929, which must be covered as soon as possible. Reserves from previous periods, which could still be drawn from anequalisation fund in the case of the 1929 budget, will no longer be available for the new budget, and, in 1930, the sums obtained from these sources in the previous year will have to be replaced by other receipts. In addition, it will for the first time be necessary this year to provide in the budget for the whole interest service on the tobacco monopoly loan contracted on the recommendation of the Financial Committee of the League, the service of the loan having previously been met partly out of the proceeds of the loan itself. Apart from this, the new budget only contains the normal additions to expenditure entailed by the increase in expenditure on personnel approved by law. Further, it has to bear the increases in material costs, which are often so difficult to avoid in a large administration, but all expenses which are not absolutely necessary have been ruthlessly cut out. In order to balance the 1930 budget, the only possible course is unfortunately to increase existing taxes and introduce new ones. Taxation is already severe, but there is no other alternative. The proposed law on the spirit tax provides for an increase of 100 per cent (tax on one litre of alcohol, previously 4 gulden, to be increased to 8 gulden). The additional revenue, after allowing for a certain falling-off in consumption, is estimated at 4,500,000 gulden. A tax on the total amount paid in wages (1 per cent of the wages, estimated to yield 2,000,000 gulden) is to be regarded as a special contribution by employers to the high costs of unemployment relief, since the State cannot continue to bear these burdens alone out of the revenue hitherto available. The increase in the supplement on the income and corporation tax (from 3 to 10 per cent) falls on all taxpayers alike; the extra revenue is estimated at 1,500,000 gulden. Reference should also be made to the introduction of the match monopoly, from which the budget receives small current revenues. The loan agreed upon in connection with this monopoly will somewhat relieve the situation by providing ready money. In addition to the loan, the State is to receive a sum of 1,000,000 gulden, which is not subject to interest or repayment. Unfortunately the financial position does not permit of this sum being invested in a productive manner, and it will have to be employed to meet part of the deficit for 1929. The proposed measures of taxation have created great agitation among the population. The difficult financial situation lies at the root of the present political crisis and enhances the difficulties of its solution. It remains to be seen whether a new coalition will be able to reach an agreement on the proposals put forward by the Senate. The legitimate anxiety felt as to the Free City’s financial future makes it very difficult for any party to assume responsibility for the conduct of the State’s affairs. It is generally recognised that the taxes now proposed exhaust the last possibilities of revenue, and that if the port loses any further trade to Gdynia, or if Poland continues an economic and financial policy hostile to Danzig, or, at least one taking insufficient account of Danzig’s interests, a financial situation will arise for which no solution seems possible.

Year by year the position of agriculture at Danzig has grown worse. The causes are largely the consequence of the world war. The non-European agricultural countries pushed forward their production during the war, and since then have been in strong competition with European agricultural countries and have depressed world prices. The situation is made still more difficult for Danzig by strong Polish competition, since Poland works with lower wages and smaller social charges. The appreciably higher standard of Danzig agriculture also necessitates, in comparison with Polish agriculture, greater expenditure on machinery and other necessaries, which are made considerably dearer by the Polish Customs duties. The following figures show the pre-war and present prices for agricultural products and articles used by agriculture. 24 —

T a b l e I.

February 1913 February 1930 (In gulden per zentner) R y e ...... 7.4 0 6.00 W h e a t...... 10.85 10.65 B a rle y ...... 7-95 6.15 O a ts...... 7-32 5.15 Potatoes ...... 3-20 2.20 Prices for cereals, with the exception of wheat, stand considerably under those for 1913. Since October 1929, a further fall has occurred.

T able II.

F ebruary 1913 October 1929 February 1930 (In gulden per zentner) B u llo ck s...... 5 4 .2 0 34-25 36.40 C alves...... 68.30 64.00 64.00 Sheep ...... 44-30 33-10 32.50 Pigs ...... 73.00 76.10 72.50 Butter (best q u a lity ) ...... 162.00 217.90 169.00 Butter (second quality...... 158.00 195.90 151.00 Eggs (each)...... 0.13 0.1 5 .7 0.12. Prices for animals for slaughter are considerably below those ruling before the war. From October 1929 to February 1930, there was also a small fall, except in the case of bullocks. Butter prices in the autumn of last year were gratifyingly higher than in 1913, but there has since been a considerable fall, and the price of second-quality butter is now below the pre-war figure.

T able III.

February 1913 October 1929 February 1930 (In gulden per zentner) Chilian s a ltp e tr e ...... 15.00 13-25 13.60 Ammonia...... — 12.25 11.60 Calcium cyanamide...... 14.50 10.00 10.60 Thomas m e al...... 3.0 0 3-65 3-65 Superphosphates ...... 3.8 0 5.05 5.10 40% p o t a s h ...... 3.80 5.80 5.80 K ainite ...... 0 .8 0 1 4 5 1.40 Wheat bran ...... 6.90 6.90 565 Palm kernel c a k e ...... 10.70 13-50 11.50 Coconut cak e...... 9.90 15-50 10.30 Sunflower cake ...... 9.0 0 13.00 14.00 Groundnut cake...... 9.90 14-50 11.40 Soya husks ...... 10.20 13-75 10.30 As regards fertilisers, prices of nitrogen fertilisers have fallen off, as compared with 1913. Phosphorus and potash fertilisers, on the other hand, have become considerably dearer. Fodder was dearer in October 1929 than in 1913. Prices have now fallen and, with the exception of that of sunflower cake (which has become dearer), they have returned nearer to pre-war levels. From these statistics, it will be seen that the disastrous price-margin between receipts for agricultural products and expenditure on articles required for agriculture has increased to a dangerous extent. The Danzig Hôhenkreis is particularly hard hit, as it is mainly dependent on the cultivation of rye and oats, and the prices for these products have fallen to unprecedentedly low levels; at the present time these products are not purchased by the trade, even at the lowest prices. The indebtedness of Danzig agriculture is at least as great as, if not greater than, Germany’s. According to the latest debt census of January ist, 1930, the total land credits amounted to 29,738,730 gulden. This represents a debt of 211.60 gulden per hectare of cultivated land. The corresponding figures for land credit debts in the Prussian Provinces, as calculated by the Institut für Konjunkturforschung (22), are as follows, converted into gulden: Gulden Brandenburg . . . , ; ...... IOO.5 i P o m eran ia...... I 34-I East Prussia and “ Greuzmark ” ...... 117.2 S ile sia...... 123.7 Saxony. . 122.6 Schleswig-Holstein...... 142.8 — 25 —

The Provinces west of the Elbe all stand under 100 gulden. The average for the whole of Germany is 90.4 gulden. The total indebtedness (land and commercial credits) of Danzig agriculture, exclusive of valorisation mortgages, amounts to 47,177,060 gulden, corresponding to 321 gulden per hectare.

Sub-Appendix III a.

“ D a n z ig e r W irtschaftszeitung ” o f J a n u a r y 25TH, 1930, e n t it l e d “ T e n Y ea r s o f t h e E conom ic L if e o f D a n z ig ”, [This issue of the Danziger Wirtschaftszeitung is kept at the Secretariat at the disposal of the Members of the Council.]

Sub-Appendix III b. [Translation from the German.]

Table s h o w in g t h e N u m b e r o f R e g is t e r e d U n e m p l o y e d a n d t h e N u m b e r o f P e r so n s i n R e c e ip t o f U nemployment R e l ie f in t h e T e r r it o r y o f t h e F r e e Cit y o f D a n z ig , TOGETHER WITH THE ACTUAL EXPENDITURE OF THE STATE (EXCLUSIVE OF THE SHARE o f t h e Co m m u n e s) o n U nemployment R e l ie f a s f r o m A p r il i s t , 1924.

The unemployment figures represent the position in themiddle of each month.

Number of Registered Unemployed and the Number of Persons in Receipt of Unemployment Relief.

Number Actual N um ber of persons expenditure Budget in receipt on current Year Month Financial of provision of unemployment year registered (in gulden) unemployed unemployment relief relief (in gulden)

1924 April . 1924 3,550 2,173 May . . 2,222 738 June . 2,369 728 J u ly . . 3,57I 1,265 August 3 ,8 4 2 1,583 September 1,284 3,384 1,714,187.59 936,000 October . 3,097 1,013 November 3,332 1,224 December 5,400 2 ,626 1925 January 8 ,4 9 0 4,774 ,2 2 6 6,372 March . 9 ,6 1 6 7,078

1925 April . 1925 8 ,8 5 4 6,618 May 7 ,2 1 6 5,439 June . 7 ,2 6 7 5,039 July • - 6,456 4,873 August 6,695 4,4i 9 September 6 ,8 7 4 4,613 7,i56,055-i4 1,248,000 October . 8,559 5,236 November 11,467 7 ,0 8 0 December 1 6,670 11,996 1926 January 2 0,797 1 5,814 1 ,3 9 0 17,010 March . i 8,553 15,254

1926 April . 1926 1 5,674 1 2,004 May 16,135 12,491 June . 14,885 11,469 July . . i 3,5i o 10,293 August 12,407 9,735 September 12,006 9,676 9 4 8 3 3 7 4 -3 4 9,180,000 October . 12,898 9,298 , , November 13,606 9,994 December 16,225 12,280 1927 January . 17,638 13,597 February . 18,365 14,258 March . . 17,573 I 4,:r59 — 26 —

Number Actual Number of persons expenditure Year Month Financial of in receipt on current Budget year registered of unemployment provision (in gulden) unemployed unemployment relief relief (in gulden) I9 2 7 A p r i l ...... 1927 13,425 11,235 May ...... 1 2 ,3 7 3 9,573 J u n e ...... 10,611 7,820 J u l y ...... 8,819 6,982 August .... 7,976 5,629 September . . . 7,930 5,548 8,359,008.40 8,580,000 October .... 9 ,1 2 2 6,132 November . . . 10,101 6,897 December . . . 12,280 9,067 1928 January .... 15,780 i i ,755 February .... 1 6,564 13,398 M a rc h ...... 15,358 12,736

1928 A p r i l ...... 1928 12,767 10,038 May ...... 9,861 7,282 J u n e ...... 8 ,0 8 6 6,385 J u l y ...... 8,375 6,012 August .... 7,5o 8 5 ,6 7 6 September . . . 7,769 5,52i 8,I 55,855-04 7,425,600 October .... 7,901 5,542 November . . . 8 ,4 9 6 6,283 December . . . 11,247 8,005 I9 2 9 January .... 15,572 12,079 February .... 1 7,200 14,435 M a rc h ...... 1 8,014 15,486

I9 2 9 A p r i l ...... 1929 1 5 ,7 2 1 13,617 May ...... 11,812 10,065 June ...... 1 0,068 7,639 J u l y ...... 9,544 6,771 9,200,000.00 7,175,000 August .... 8,514 6,452 (including September . . . 9 ,2 0 6 6,445 estimate of October .... 9 ,8 4 0 7,021 1.3 million November . . . 11,052 8,095 gulden December . . . 1 4,202 10,249 for March) I93O January .... 17,916 1 3,814 February .... 2 0,472 16,065 March ..... 2 1,185 17,035 Expenditure of the State (excluding Share of the Communes) on Productive Unemployment Relief.

Financial Budget A ctual year provision expenditure Remarks (gulden) (gulden)

1924 — 155,264.00 Included in the fund for unemploy­ ment relief

1925 — 375,254-12 As in 1924

1926 750,000 1-233,355.29 — 1927 750,000 712,142.51 —

1928 720,000 339,999.60 —

1929 500,000 362,256.69 About 50,000 gulden still outstanding

Appendix IV a. MEMORANDUM REGARDING THE CARRYING OUT OF THE RECOMMENDATIONS MADE BY THE FINANCIAL COMMITTEE OF THE LEAGUE OF NATIONS IN 1926.

[Translation from the German.] The Senate having come to the conclusion, in , that the existing financial difficulties could only be completely remedied with the help of the League, and having accordingly got into touch with the High Commissioner with a view to the despatch of experts of the League to Danzig, — 27 —

the results of the enquiries made by these experts were submitted to the Financial Committee of the League. At its session held in London in the middle of July,1 the latter, with a view to restoring the equilibrium of the budget, recommended a reduction in expenditure by simplifying the administration and diminishing the number of officials, and also by reducing salaries and increasing revenue (creation of the tobacco monopoly). Danzig’s efforts to secure a change in the basis of distribution of the Customs receipts were approved in principle, and a proposal was made for the provisional settlement of the allocation of the Customs revenues for a period of two years by coming to an agreement with Poland with regard to a fixed share for Danzig. The minimum sum to be received by Danzig was to be 14,000,000 gulden, and the maximum 20,000,000 gulden. After the application of these measures and agreements, the question was considered of recommending a loan to cover the anticipated deficit for 1926, to repay current indebtedness, and to be employed for productive purposes. At its September session at Geneva, the Financial Committee decided that the measures taken and contemplated by the Free City of Danzig did not correspond fully with what the Committee had suggested in July, and were not such as to afford an entirely sufficient substitute for them. The Committee was therefore unable to make a definite recommendation for the issue of a loan. The Free City of Danzig was asked to settle the following points by December: (а) The position of Danzig regarding its liabilities under the Peace Treaty—i.e., in respect of the cost of the armies of occupation, the share of the pre-war debt of the German Empire and ceded property—to be made clear by means of discussions with the competent authorities; (б) Conclusion of the negotiations with Poland regarding the distribution of Customs duties ; (c) Conclusion of the arrangements for the introduction of the tobacco monopoly. If these points were settled, and the Free City then submitted a definite and satisfactory plan of further economies containing proposals concerning the following points : (a) A detailed scheme for securing budget equilibrium, fixing a maximum figure for budgetary expenditure in 1927 and 1928; (b) A reduction of the number of officials amounting, together with any reduction found possible in the number of members of legislative bodies, to a total of not less than 400 in each of the next two financial years; (c) The reduction in salaries which had been adopted for a period of four years only should be made without a time-limit; (d) A simplification of the budget and accounting system, and periodical publication of returns of cash revenue and expenditure and liabilities by the Free City and the Municipality of Danzig; The Financial Committee declared its willingness to recommend a loan of 30,000,000 gulden at its next session in December. In a memorandum on financial reform dated November 26th, 1926, the Senate declared: That it was prepared, in principle, to conclude an agreement regarding Danzig’s obligations under the Peace Treaty, i.e., regarding the troops of occupation, its share in the pre-war debts of the German Empire and ceded property; but that, in the event of payments having to be made to the Conference of Ambassadors and to the Reparation Commission, the amount of the loan should be increased by the amount of these sums ; That the negotiations with Poland regarding the distribution of Customs duties had led to a provisional agreement in accordance with the suggestion made by the Financial Committee, this agreement having already come into force on September ist, 1926, but not yet having been ratified ; That the agreement regarding the introduction of a tobacco monopoly had not yet been finally concluded, as Poland had raised objections to the bill proposed in this connection. In addition, the Senate had taken the following steps to prepare a definite and satisfactory plan of budget economies in order to create a permanent basis for budget equilibrium : (a) A supplementary budget had been established for the financial year 1926 and put into force. (b) The reduction in the number of Government officials was being actively pursued, and a saving of 400 would be effected for the budgetary year 1927 as compared with 1926. For 1928, a further reduction of 200 Government officials would certainly be effected. Any further reduction of personnel would require far-reaching legislative measures and, in the case of the reform of the Senate and Volkstag, amendments to the Constitution would be required. In so far as such measures could be passed, a further reduction of 200 would be effected in 1928. (c) As a reduction in the salaries of officials was not possible by a simple law, and there was no prospect of a law for the reduction of these salaries being passed by the

1 Note by the Secretary-General. — See Official Journal for October 1926, pages 1409 and 1444. — 28 —

majority required for a change in the Constitution, the Senate had decided to accept the voluntary sacrifice offered by the officials themselves without time-limit. (d) The budget and accounting system was being simplified, and returns of cash revenue and expenditure and of the liabilities of the Free City and the Municipality would henceforward be regularly published.

In ,1 the Financial Committee declared its willingness to agree to an increase in the total amount of the loan in the event of payments having to be made by Danzig to the Conference of Ambassadors and the Reparation Commission as a result of the settlement of the Peace Treaty liabilities. The final recommendation of the loan was, however, made conditional upon: (a) The final approval of the Customs Agreement of September 20th, 1926, by Poland and Danzig; (b) The definite conclusion between Poland and Danzig of a satisfactory agreement for the introduction of a tobacco monopoly; (c) The receipt of an undertaking by the Senate that the number of officials would be reduced by 400, instead of 200, in each of the financial years 1927 and 1928; (d) The receipt of a notification of an agreement between Danzig and the competent authorities as to the settlement of the obligations under the Peace Treaty; (e) The receipt of a notification of the agreement of the Harbour Board with regard to the proposed modification of their existing loan from the Municipality; (D Fulfilment of all formalities required by Article 7 of the Treaty of Paris. In a mémorandum dated February igth, 1927, on the state of the negotiations regarding the carrying out of the recommendation for a League of Nations loan for Danzig, the Senate stated, in regard to points(a) and (6), that the Customs Agreement of September 20th, had not yet been finally approved, nor had it yet been possible to conclude an agreement between Danzig and Poland for the introduction of a tobacco monopoly. The undertaking by the Senate regarding the reduction in the number of officials referred to in point (r) was given. The question referred to in.(d), regarding the obligations under the Peace Treaty, could only be settled when the Senate was convinced that the other conditions of the Financial Committee for the issue of a loan would be fulfilled. It was therefore undesirable to make any offer to the competent authorities until then. The notification referred to in(e), of the agreement of the Harbour Board to the proposed modification of their existing loan from the Municipality, could not be obtained, as the Polish delegation on the Harbour Board had opposed the modification. The President of the Harbour Board had, therefore, been obliged to decide not to accept the Senate’s offer. As regards (/), the Polish Government had been consulted in accordance with Article 7 of the Treaty of Paris, but had so far only given a provisional reply. Negotiations which took place between Poland and DanzigMarch in 1927 before the Financial Committee resulted in both Governments signifying their willingness to sign both the Customs agreement of September 20th and an agreement regarding the introduction of a tobacco monopoly at Danzig at an early date. Meanwhile, offers were made by the Free City of Danzig to the Reparation Commission and the Conference of Ambassadors, which were notified to the Financial Committee. In view of Article 7 of the Treaty of Paris, the Polish Government declared that, in principle, it had no objections to the issue of the loan, and that it would give favourable consideration to the conditions of the loan itself. The Financial Committee of the League of Nations thereupon expressed the hope that the arrangements still necessary would be made as soon as possible and, on March 9th, 1927,2 authorised its Chairman, Dr. Pospisil, to ascertain the fulfilment, of the conditions and to approve the loan contract on behalf of the Financial Committee. The instruments of ratification with regard to the Customs Convention concluded between Poland and Danzig on September 20th, 1926, were exchanged on April 29th 1927. On May 31st, the loan contract was approved by the Chairman of the Financial Committee. Poland's consent to the agreement regarding the introduction of a tobacco monopoly was given on June 17th. On June 18th, the Polish Government’s reply regarding the conditions of the loan was received. The certification of the Chairman of the Financial Committee, Dr. Pospisil, that all the conditions of the Financial Committee had now been fulfilled, was sent to London direct, so that, on June 22nd, a contract was concluded with the English banks for the raising of the 6 % % Government (Tobacco Monopoly) Loan of 1927, and the loan was issued on June 28th. As regards the question of the reduction in the salaries of officials and that of the cutting down of the number of Government employees by a total of 800, reference should be made to the attached memorandum from the Personnel Department of the Senate.

Danzig, May 26th, 1930.

1 Note by the Secretary-General. — See Official Journal for F ebniary 1927, pages 142 and 175. 2 Note by the Secretary-General. — See Official Journal for , pages 386 and 511. Appendix IV b.

[Translation from the German.] Danzig, May 26th, 1930.

Senate of t h e F r e e Cit y of D a n z ig . To the F in a n c e D e p a r t m e n t , Danzig.

Reference : your oral request of May 23rd, 1930, regarding the fulfilment of the conditions laid down by the Financial Committee of the League in 1926.

The following stipulations were made by the Financial Committee of the League of Nations:

1. Reduction of 800 in the number of Government officials ; 2. Reduction in salaries of officials.

Ad 1. — On the basis of the Financial Committee’s demands, the Senate ascertained in that the number of Government employees could be reduced in the 1927 financial year by 400, and in the 1928 financial year by 200. At the same time, the Senate declared that further reductions could only be attained by means of special legislative measures, some of them involving changes in the Constitution. The Financial Committee of the League of Nations was notified of this declaration of the Senate; it nevertheless demanded a reduction of 800 officials, but agreed that in this figure might be included the reduction in the number of Senators and Deputies as a result of the proposed cutting down of the size of the Senate and of the Volkstag. The following number of Government employees are provided for :

In the 1926 b u d g et...... 8,128 In the 1929 b u d g et...... 7,392

The reduction therefore amounts t o ...... 736

So that, on the figure of 800 demanded by the Financial Committee of the League, there is still a deficiency of 64. The bill at present before the Volkstag, and already adopted at the second reading, regarding the amendment of the Constitution, provides for a reduction in the number of Volkstag Deputies from 120 to 72, and in the number of Senators from 22 to 12; so that, after the adoption of the law, a further 48 plus 10 = 58 persons will be dispensed with, thus leaving a balance of 6. This discrepancy is due to the fact that it was previously proposed to reduce the number of Volkstag Deputies to 61, whereas the new bill provides for 72. The budget for 1930, which has not yet been finally passed, will probably contain various differences as compared with the budgets of the previous years. In a number of departments various indispensable new duties have arisen which make a certain increase in the number of employees essential. Among them are the enlargement or extension of social and health institutions, the engagement of new teachers in view of the large increase in the number of school-children, the taking over of private schools by the State, etc. On the other hand, the Senate is making every effort to reduce the number of Government employees still further, and to continue to apply the principles of stringent economy which have been observed during the last few years. Ad 2. — As the reduction in the number of Government employees by 800 demanded by the League could not be carried out immediately, but as it was essential to bring some relief to the budget, an immediate reduction in salaries was also stipulated. After protracted negotiations, the officials declared their readiness to make a voluntary sacrifice to the State, graded according to the rate of salary and family circumstances. The sacrifice amounted to from 1 to 13 per cent of the salary, and brought to the State budget a saving of 2,860,000 gulden annually. This reduction took effect as from January ist, 1927. When on October ist, 1927, the salaries of the German and Prussian officials were materially raised, and in consequence rose above the Danzig salaries in some cases—particularly in the lower grades—the officials decided that they could no longer bear the sacrifice they were making, especially as the German-Danzig Officials Agreement obliges Danzig not to treat the officials taken over by her more unfavourably than they would be treated in Prussia and the rest of Germany. They thus withdrew their consent to the reduction, but only with effect as from April ist, 1928. As the Senate felt unable to renounce these savings, it laid a bill before the Volkstag providing for a reduction in salaries to the same extent as the voluntary contribution. The Volkstag adopted this law by a simple majority. Thereupon, an official took legal proceedings and gained a judgment in his favour from the Supreme Court. The Supreme Court decided that the law reducing salaries was unconstitutional and that the reduction in the salaries of officials could only be effected by a law amending the Constitution. No such law was passed, whereupon the Senate was obliged to pay the salaries as from April ist, 1928, at the full rate. Simultaneously, however, the Senate began to prepare a new salaries law closely modelled on the new Prussian-German laws and doing away with all the privileges enjoyed by Danzig officials as compared with Prussian and German Officials. The law came into force on — 30 —

November ist, 1928, and, as compared with the Prussian and German rates, simply introduced a compensation supplement of 6 per cent over the basic salary and supplements (in Germany, a supplement of from 3 to 8 per cent is also granted in particular localities). As this new salaries law was also only adopted by a simple majority in the Volkstag, the officials, etc., had to be paid at least the sum due to them on October 31st, 1928, under the old law. The wife allowance of 15 gulden monthly was, however, cancelled with immediate effect, which led to an immediate saving of some 700,000 gulden annually. As the new salaries are only higher than the old in some cases in the lower and middle grades (at present only about one-quarter of the staff receives higher salaries under the new law), and as the other officials, etc., belonging to the seniority grades established by the old law which has been repealed cannot obtain any increase of salary after October 31st, 1928, a saving in salaries is being effected, and this saving will grow larger from year to year. If we add together the economies in salaries and in wife allowances, and also those resulting from the reduction in children allowances, and if we deduct the extra amount spent on the officials who obtain higher salaries under the new law, we still get a saving of about 1,050,000 gulden for the 1930 financial year as compared with the old law. This saving may be expected to grow by about 300,000 gulden in each subsequent year. Ad 1 and 2. — To sum up, the reduction in staff demanded has been carried through with the exception of the reduction in the size of the Volkstag and Senate, which is now in progress, and this will result in a yearly saving of approximately 2,100,000 gulden. The reduction in the size of the Volkstag and Senate will bring a further economy of about 180,000 gulden annually. If we add these sums to those saved by the new salary regulations, we find that an annual saving has been achieved of 1,050,000 plus 2,100,000 plus 180,000 = 3,330,000 gulden. This economy will be somewhat increased each year as a result of the new salary regulations.

(Signed) S c h e u n e m a n n .

Appendix V.

OPINION GIVEN BY THE SUPREME COURT OF DANZIG ON APRIL 12TH, 1930, REGARDING THE COMPOSITION OF THE SENATE.

[This document has been communicated to the Council in document O.354.1930.I.]

Appendix VI.

REPORT BY THE PRESIDENT OF THE HARBOUR BOARD TO THE HIGH COMMISSIONER OF THE LEAGUE OF NATIONS, DANZIG.

[Translation.] Danzig, April 7th, 1930.

In reply to your esteemed letter of March 29th last I have the honour to forward to you the following information and particulars:

A. T r a ffic in t h e P o r t .

I. Vessels.

Y ear Number of vessels Net tonnage 1927 12,986 7,752,969 1928 12,381 8,071,836 1929 10,828 7,810,252

The average individual tonnage of vessels was greater in 1929 than in the previous years. In 1929, vessels of twenty-eight different nationalities came to Danzig. Of these vessels, 26 per cent were of German nationality, 18 per cent Danish, 16 per cent Swedish, 10 per cent British, etc. — 31 —

II. Goods.

Year Im ports Exports Total Tons Tons Tons 1927 ...... 1,517,194 6,380,420 7,897,614 1928 ...... 1,832,409 6,783,273 8,615,682 1929 ...... 1,792,951 6,766,700 8,559,651 For details regarding the movement of goods, we venture to refer you to our publication of February 1930. It will be observed that the total movement of goods, which in 1927 fell short of 8 million tons, amounted in 1928 and 1929 to some 8% million tons. If imports and exports are compared, it will be found that, in 1927, imports were 4.2 times lower than exports, but have since grown to the extent of only being 3.8 times lower in 1928 and 1929. Progress has thus been made as regards imports. With reference to these imports, artificial fertilisers have shown hardly any variation, and the same applies to herrings. Mineral ores have doubled since 1927. Other products call for no special observations. As regards exports, coal is the most important, the total being approximately 450,000 tons a month; it accounts for more than half the general movement of goods. Timber, on the other hand, shows a sharp decline. In 1927, timber exports were about one-quarter of the total exports ; but in 1928 they were only one-seventh, and in 1929 only one-tenth. Cereals, on the other hand, are showing an increase, and in 1929 were five times the 1927 figure. The number of passengers has not shown any great fluctuations. Nevertheless, in 1929 it was 10,000 lower than in 1928. Emigration and immigration are included in the figures quoted for the passenger traffic.

B . H a r b o u r I nstallations .

The length of wharves available is about 18,000 linear metres, to which should be added 2,000 linear metres of wharves for temporary mooring. Of these 18,000 metres, half consists of masonry wharves and the other half of wharves made of pile-planks or wooden structures. Work can be carried out, i.e., goods can be transhipped, along their entire length. Our publication of February 1930 gives details of the masonry wharves, the use to which they are put and their equipment. Dredging is being carried on regularly so as to ensure a depth of 9 to 10 metres throughout the harbour. Storage space in the open air covers an area of approximately 2 million square metres. The warehouses and sheds at the Harbour Board’s disposal cover a surface of 210,000 square metres, 57,000 of which represent public warehouses; 10,000 square metres are supplied with cranes and electric trucks. In addition to the storehouses mentioned above, the harbour possesses granaries with a capacity of 160,000 tons, and oil and molasses reservoirs for 100,000 tons. These granaries and reservoirs do not belong to the Harbour Board.

C. F i n a n c e .

Table of Actual Receipts and Expenditure of the Harbour Board during 192 j, 1928 and 1929. 1927.

Balance Government Receipts Expenditure available contributions

Harbour proper .... 9,207,000 7,807,000 1,400,000 River waterways .... 1,461,000 2,861,000 1,400,000 Government contributions

Total . . . 10,668,000 10,668,000 1,400,000 1,400,000

Note. — The available surplus of the harbour proper having been 1,400,000 gulden in 1927, the Governments were not called upon in that year to contribute to the maintenance of the river — 32 —

waterways. These 1,400,000 gulden, added to the 1,461,000 gulden of receipts on these waterways, represent the 2,861,000 gulden expenditure indicated above.

1928.

Balance Receipts Expenditure Government available contributions

Harbour proper .... 9,947,000 9,726,700 220,300 River waterways .... 2,554.°°° 4,674,100 2,120,100 Government contributions 1,899,800 1,899,800

Total . . . 14,400,800 14,400,800 2,120,100 2,120,100

Note. — The upkeep of river waterways cost 4,674,100 gulden in 1928. The harbour proper having had an available balance at the end of the year of 220,300 gulden, and the receipts of the waterways being 2,554,000 gulden, the Governments had to be asked for a contribution of 1,899,800 gulden.

1929.

Balance Government Receipts Expenditure available contributions

Harbour proper .... 1 0 ,4 1 3 ,0 0 0 1 0 ,2 9 3 ,0 0 0 120,000 River waterways .... 2 ,0 3 1 ,6 0 0 4 ,3 8 6 ,0 0 0 2,354,400 Government contributions 2,234,400 2,234,400

Total . . . 14,679,000 14 ,6 7 9 ,0 0 0 2,354.4° ° 2,354,400

Note. — As in 1928, the Governments had to be asked for a contribution for the upkeep of the river waterways. As the balance available for the harbour proper was 120,000 gulden and the receipts of the waterways 2,031,600 gulden, this contribution amounted to 2,234,400 gulden. In the course of these three years, the net receipts of the harbour exceeded the budget estimates :

Gulden In 1927 b y ...... 1,700,000 In 1928 b y ...... 1,800,000 In 1929 b y ...... 2,300,000

With the payments which the Governments still have to make to the Harbour Board, it is estimated that its reserve fund will stand at 1,350,000 gulden at the beginning of the present financial period.

Loans.

1925 Loan (from the Commune of Danzig). — This loan was repaid out of the proceeds of the 1927 loan. The balance outstanding was 6,700,000 gulden, which the harbour has thus paid off to the Commune of Danzig. J927 Loan (from the Blair and Chase Group). — This loan amounted to 20,000,000 gulden, out of which the 6,700,000 gulden due to the Commune of Danzig were first paid off. The balance was mainly devoted to the construction of a basin for heavy goods near Weichselmiinde. 1929 Loan (from Local Banks). — A large loan not having been possible in 1929 owing to the bad general situation, the Harbour Board had to be content with issuing a small loan of 3,000,000 gulden locally. Blair and Chase having a preferential right under the contract of 1927 in respect of any new loan the Harbour Board might issue, their authorisation had to be obtained. These 3,000,000 gulden are required for the following installations :

Wharf along the Broschkischer Weg and waiting-room for passengers ; Electrification of the Holm; Storehouse for retail goods in the free district. Four cranes for the said storehouse. — 33 —

D. G e n e r a l C onsiderations .

The situation of the Port of Danzig is at the present moment very satisfactory and even flourishing. If its traffic has remained more or less stationary in 1929, this is chiefly due to the general situation and to the fact th at the railways are unable to bring a greater volume of goods. It tranships all that is brought to it, but, in the case of many goods, would be capable of handling 10 to 20 per cent more. It should further be noted that the port is not yet sufficiently well organised for handling retail goods. For this purpose, it would need a new basin and new sheds. The sheds constructed during the last two financial periods have, however, contributed largely to the development of the transit trade in these retail goods. Nevertheless, this branch of the port’s activity could be developed still further. The railways would benefit, as they would be able to utilise for the import of these retail goods a large proportion of the wagons which bring heavy goods and return empty. The Polish Government has been good enough to authorise us, subject to certain conditions, to employ the 620 metres of wharves of the Westerplatte Basin for the transhipment of so-called intermediate goods (cement, sugar, scrap-iron, etc.), which has had a favourable effect on the traffic in these goods. It is to be hoped that an improvement in the general situation will permit of the construction of the desired basin and sheds. As regards railways, the harbour at present has 330 kilometres of railway line on its territory. Numerous improvements of detail are still necessary, which the railways are carrying out willingly but slowly. As we have seen above, the general transport capacity of the railways converging on Danzig requires to be rapidly increased. It is chiefly on this factor that the development and extension of the Harbour of Danzig depends. The railways promise us for this year the construction of a line going direct from Praust to the new basin we have constructed on the right bank of the Vistula (Weichselmünde). This line will enable the congestion of Danzig station to be avoided. Apart from this small line, the railways still have many lines to construct and stations to improve in Poland before they can bring a sufficient tonnage to Danzig. For the moment, they can only carry from 900,000 to 1,000,000 tons of goods monthly to Gdynia and Danzig together. They had promised almost to double this figure by the end of 1930 by constructing a special line for coal. Unfortunately, part of the credits assigned to them for this purpose were withdrawn. Apart from the railways, the Polish Government ought at length to decide seriously on regulating the Vistula. Successive plans have already been approved by the Ministries which have succeeded one another during the last few years, but they have not yet been voted by the Sejm. Once the Vistula was regulated, about 250,000 more tons of goods could be brought to Danzig monthly than by the railways alone. During the summer months, this figure would be higher, but in winter it might at times be reduced to nil. To sum up, the Harbour Board is continually studying new extensions, but for these to be effective they must run parallel with the development of the railways. Otherwise, it would be no use locking up capital and contracting loans which would be unproductive owing to the fact that the new installations would not be sufficiently employed. The port maintains commercial relations with all the Baltic ports, those on the North Sea coast, the French ports and a few Italian and Greek ports. Vessels carrying mineral ores come from North Africa and Morocco. Quite a good volume of traffic is being established with the United States and South America. As regards passengers, especially emigration, Poland avails herself of the French shipping companies touching at Gdynia and, until recently, has left Danzig a good share in the emigration to North America. From the point of view of tariffs, Danzig has often been reproached with being an expensive port, although endeavours are constantly being made to reduce charges. This reproach may sometimes be justified in the case of vessels having to employ tugs for distances in the port which may often be 8 to 10 kilometres. These tugs belong to private enterprises, and the Harbour Board finds it difficult to exert an effective influence on their charges. Labour is also dearer at Danzig than in other competing ports. Transhipment will, however, become cheaper as and when we are able to improve our mechanical equipment. It is difficult to predict thefuture of the port of Danzig and to say what its destiny will be. Undoubtedly, its traffic has shown an upward trend in the last few years. If it was not very marked in 1928, this was due, as we have already said, to the general situation, and in 1929 to the fact that for two months the port was ice-bound. What will be the effect on Danzig of thenew Polish-German Commercial Treaty ? This treaty will certainly bring traffic to our coasts and will encourage commercial transactions. Is it to be feared that many goods going from Poland to Germany, viceor versa, will make greater use of the land route and of the railways ? This is hardly probable. In any case, there is ground for the hope that goods bound for, or sailing from, the Baltic or North Sea coasts will pass through Danzig. — 34 —

According to this treaty, the Silesian mines may export 320,000 tons of coal to Germany monthly; but these 320,000 tons will certainly not come out of the quantities which have so far gone to Sweden and Denmark, for there is no doubt that Silesia can extract much more coal than she has hitherto done. There seems to be no reason for apprehension; and we need not be too much impressed by the fact that coal exports were rather small during the first months of 1930. This is generally the case at the beginning of the year. The winter having been very mild, it is not surprising that this rule should be confirmed more than ever this year. The general industrial depression is also a contributory factor. Furthermore, the English mines have lowered their prices in the endeavour to recover the Swedish and Danish markets, which have been captured by Poland. It is not yet possible to predict the outcome, nor whether the Silesian mines will respond by a similar reduction in their selling prices. As regards timber, as we have seen above, there has been a considerable decrease. This is largely due to the fact that Russia, thanks to absurdly low prices, has captured a large part of the English m arket and shows an increasing tendency to send her products through Kônigsberg, Reval, Riga, etc. As regards theHarbour Board, the relations between its delegations are continually improving. It is true that slight friction sometimes occurs, leading to delays which hamper the progress of business. The fault does not always lie with the delegations themselves, but with the Special ideas of their Governments. The staff of the Harbour Board at present consists of 72 per cent of permanent employees and workmen of Danzig nationality and 28 per cent of permanent employees and workmen of Polish nationality. The proportion fixed in the Agreement of September 1st, 1923,1 has therefore notbeen reached. This Agreement terminates on September 1st, 1930. The reason for this disproportion is that Danzig employees or workmen cannot be dismissed to make way for Polish nationals, and also to a lesser degree that the Polish delegation is not always able to propose persons fulfilling the conditions of service (especially as regards the pilotage). As the competition between the port of Gdynia and Danzig has been much discussed, we should perhaps say a few words on this subject. Undoubtedly, many goods pass through Gdynia which Danzig could also tranship in addition to what she already handles. Without large extensions, however, the port of Danzig would be unable to deal with the whole of the Polish traffic, part of which goes through Gdynia. Hence it can hardly be said at the present time that Gdynia causes any real prejudice to Danzig. If we compare the present length of wharves of the two ports (beginning of 1930), we find the following figures : Danzig Gdynia Length in metres Coal wharves ...... 2,000 2,000 Wharves for miscellaneous goods...... 16,000 3,000

Of these 16,000 metres of wharves at Danzig for miscellaneous goods, however, a good half is not in masonry but consists of wood and pile-plank structures. Part of these wharves are employed for the handling of timber and the remainder is utilisable for all kinds of other goods. This figure includes all the wharves proper as far as the railway bridge over the “ Dead Vistula ”. All the 3,000 metres of wharves for miscellaneous goods at Gdynia are of masonry, and at present Gdynia has no others which are of any practical utility. As regards the theoretical capacity of these wharves, the figures are as follows:

Danzig Gdynia Tons Tons Coal Wharves, at the rate of 3,000 tons per linear metre per annum...... 6,000,000 6,000,000 Wharves for miscellaneous goods, at the rate of 500 tons per linear metre per annum. . 8,000,000 1,500,000

The coal capacity of 6 million tons for the two ports is, however, never attained at Gdynia. The reason is that its transhipment installations are much inferior to those which at present exist at Danzig. Whereas 450,000 tons of coal are actually transhipped at Danzig per month, hardly more than 200,000 tons are handled at Gdynia. The 8 million tons of miscellaneous goods thus include timber, which takes a great deal of space ; but there can be no doubt that Danzig could handle a traffic in retail goods two or three times greater than Gdynia’s maximum. Such are the respective positions of the two ports to-day. According to our information, it is proposed to construct or complete in the near future at Gdynia a new basin with wharves having a length of 6,000 linear metres. If this is done, Gdynia will have almost the same length of wharves

1 Note by the Secretary-General. — See Official Journal for November 1923, page 1418. 35 — as Danzig (within about 2,000 metres). The port of Gdynia is no doubt capable of being still further enlarged, but only within certain limits. New basins are planned on the north side and have already been partly dredged. But when will they be actually constructed ? This is a question of money, and it is probable that several years will elapse before the work can be undertaken. Furthermore, while Danzig’s possibilities of enlargement are unlimited, and some ten more basins could easily be constructed there, those at Gdynia are rather restricted. The harbour has only one frontage,i.e., a roadstead 2.5 kilometres wide. Being shut in between two hills, it cannot be extended laterally. The proposed north basin could no doubt be extended in depth, but at what price ? If it is desired to make it longer, it will have to be wide in proportion, which will involve great expense. There also seems no doubt that all wharf construction is infinitely more expensive at Gdynia than at Danzig (about 5,000 gold francs per linear metre at Gdynia against 3,200 gold francs at Danzig). This is not surprising, as the subsoil of Gdynia mainly consists of peat and of somewhat unfavourable soil necessitating a special mode of construction. Dredging, too, would be difficult and would probably have to be repeated frequently. With only a fraction of the large sums spent on the port of Gdynia, large extensions could have been carried out much more economically at Danzig, and the spirit of the treaties and conventions would have been much better observed. Poland can hardly be content with only two ports. In view of her continual development, these two ports will soon be insufficient for her. She could supply them up to capacity already if the railway traffic could be intensified. If, thanks to the railways, as many goods can be brought to Danzig and Gdynia as they can handle, there will no longer be any question of competition. Hoping that these particulars will prove adequate, I have the honour to be, etc.

(Signed) de LoËs. President of the Harbour Board.

Appendix VI a.

LETTER FROM THE PRESIDENT OF THE HARBOUR BOARD TO THE HIGH COMMISSIONER. [Translation.] Danzig, May 19th, 1930.

At your request, I had the honour to send you, in my letter of April 7th last, various technical and economic particulars on the Port of Danzig. At the end of that letter, I also spoke of the Port of Gdynia, and at that time held the opinion that the latter could hardly be regarded as doing any real injury to the Port of Danzig. Since then, however, certain facts have occurred which, while perhaps not of the very first importance, nevertheless tend to modify the opinion which I expressed in April as to the competition winch the Port of Gdynia seems to be preparing against the Port of Danzig. The decision pronounced by the High Commissioner of the League on August 15th, 1921,1 says, in Chapter VII, that “ the Polish Government will engage to make full use of the Port of Danzig whatever other ports may open in future on the Baltic Coast ’’. As the Polish Government has never appealed against this decision of August 15th, 1921, it may legitimately be considered as bound by it. The Polish Government, however, has latterly acted contrary to this decision, as the two following examples show. I. During the autumn of 1929, the Harbour Board undertook to construct a new wharf 200 metres long for the United Baltic Corporation, and to equip this wharf with two cranes. Under the contract, the corporation undertook to hand over the ground and sheds which it owns along this wharf to the Harbour Board, in the event of its no longer utilising these installations. The United Baltic Corporation represented two steamship lines carrying both goods and passengers, viz.: 1. The Baltic-America Line of the East Association Company of Copenhagen. This company maintained a Danzig-Libau-New York service and possessed three vessels, the Estonia, the Polonia and theLituania. 2. The London-Baltic Line, of London, plying between Danzig and London. The above arrangements had already been concluded with the United Baltic Corporation when it was learned that the Polish Government had bought from the Baltic-America Line its three ships and all the supplementary material, in order to create a Polish shipping company, the Polish-America Line, in which it took a large interest, and the headquarters and principal port of which was to be Gdynia, to the exclusion of Danzig.

1 Note by the Secretary-General. — See Official Journal for November 1921, page 971. — 36 —

Attempts are now being made to find out whether these three vessels will continue to touch at Danzig, but no information has been obtained on this point. It is possible that they may be obliged to continue to do so for cargo, but this is not at all certain. As regards the passenger traffic, it is more than probable that Danzig will lose it, at all events as far as emigrants are concerned. Article 24 of the Treaty of Paris lays down that the Harbour Board must take all necessary measures to ensure that emigration and immigration to and from Poland should be able to take place through Danzig. On the basis of Article VII of the decision of August 15th, 1921, mentioned above, this emigration and immigration should pass through Danzig. The harbour installations are quite adequate for the purpose, and, indeed, it is only right and proper that the port should be so used, since the Allocation Commission, instituted by the Conference of Ambassadors, assigned the Neufahr- wasser Barracks to Poland on May 3rd, 1923, in order that she should have premises in which emigrants could be temporarily billeted. Despite this, Poland has already sent 15,000 emigrants via Gdynia in 1929, and only 25,000 have passed through Danzig on the way to North America. The result of this purchase of the three vessels of the Baltic-America Line and of the creation of this Polish-America Line, with headquarters and chief port of departure at Gdynia, will be that, when there is no longer any direct connection between Danzig and North America, all emigration to New York and Canada will pass through Gdynia and will be taken from Danzig, and hence, broadly speaking, there will no longer be any emigration through Danzig. This certainly seems to be contrary to the conventions and decisions relating to the Port of Danzig. It is also rather singular that Poland should have chosen just the moment when the Harbour Board was making arrangements with a shipping company with a view to the development of its traffic, to purchase the vessels on which it was relying for this purpose, and thus to set up competition against it at Gdynia.

II.

In the last few years, the Harbour Board has made great efforts to attract to Danzig the trade in scrap-iron passing to Silesia and Czechoslovakia. It had succeeded in achieving its object. Vessels arriving from North America, England, Sweden, Norway, etc., which previously unloaded their cargoes mainly at Stettin, now come to Danzig, where they had also been attracted by a reduction in railway rates for the transport of scrap-iron. Thanks to the various installations and improvements introduced by the Harbour Board to develop it, this traffic had become of considerable dimensions and had attained some 15,000 tons a month. At the end of last year, however, it fell off progressively, to the advantage of Gdynia. Whereas this traffic during thelast four months of 1929 was approximately :

3,600 car-loads for Danzig, and 1,500 car-loads for Gdynia,

these figures were modified as follows during thefirst four months of 1930 :

840 car-loads for Danzig and 3,000 car-loads for Gdynia.

These imports of scrap-iron are in the hands of a central agency at Warsaw. Despite our protests, this central agency is making an increasing use of Gdynia. Its official excuse and defence is that the costs of transhipment, which it is true are of considerable importance for this type of goods, are higher at Danzig than at Gdynia. There is perhaps some truth in this, although it seems to us that the principal cause of this abandonment of the Port of Danzig is not precisely positive orders from the Polish Government, but very serious pressure said to have been exercised by the latter on this agency. Without daring to confess it, the agency lets it be understood that this is the case. This course of action is somewhat singular, particularly as, apart from any other consideration, it is hardly admissible that the Harbour Board should act as a catspaw for the Port of Gdynia, and that the latter should take advantage of it in this way and deprive the Port of Danzig of the good results it has achieved by its own efforts. Since I had the honour to write to you on April 7th last, these two facts have become clear and have assumed an importance which they did not appear to possess at the outset.I venture to bring them to your notice and thus to supplement my letter in order that the information which I gave you therein should furnish an exact picture of the present situation.

(Signed) de LoËS. Appendix VII. [Translation.]

QUESTIONS SUBMITTED TO THE HIGH COMMISSIONER FOR DECISION UNDER ARTICLE 39 OF THE DANZIG-POLISH TREATY OF NOVEMBER q t h , 1920.

A. H a r b o u r B o a r d .

1. Financial Organisation of the Harbour Board. The Senate of the Free City appealed to the High Commissioner against the decision pronounced on February 16th, 1929, by the Harbour Board with regard to the latter’s financial reorganisation. Under this decision, the financial service of the Harbour Board was attached to the Commercial Department (Appendix V ila 1).

2. Ice-breaking on the Vistula. • On January 21st, 1930, I received an appeal from the Danzig Senate asking me to cancel the Harbour Board’s decision of July 18th, 1929, making the Harbour Board responsible for ice- breaking on the Vistula for ten years, as from April 1st, 1929; and to lay down that the Harbour Board should maintain its fleet of ice-breakers at a sufficient strength to perform the work of ice-breaking without the help of the Polish ice-breakers.

3. Acquisition of the Land necessary for the Extension of the Railway System belonging to the Harbour Board. On February 4th, 1930, the Polish Government appealed to the High Commissioner against the decision pronounced by the Harbour Board on January 28th, 1930, to the effect that the cost of purchasing the land necessary for the extension of the railway system belonging to the Harbour Board should be borne by the Polish Railway Administration and not by the Harbour Board.

B. R a il w a y s .

Request of the Free City, dated November 18th, 1929. 1 have been asked to decide that the Polish Railway Administration be required: (a) To effect a separation, both as regards the matters dealt with(sachlich) and the personnel(Personal), between the Administrations of the railway lines of the Danzig and Polish territories, the said Administrations having been amalgamated in the Danzig Directorate of Railways and in the Danzig Railway Offices; (b) To organise the Administration of the Danzig Railways, which has to be constituted in the territory of Danzig; in such a way that its competence shall be restricted, both territorially (ôrtlich) and as regards the matters dealt with(sachlich), to the railways of Danzig; (c) To fill the posts in the Administration, which has to be constituted for the Danzig Railways (as in paragraph (6)), with due regard to Article 22 of the Paris Treaty of November 9th, 1920, the Decision of September 5th, 1921,2 the Agreement regardingofficials(Beamtenab- kommen) of October 22nd, 1921,3 and the Executive Regulations of November 24th, 1921.

Request of the Free City, dated November 21st, 192g. I have been asked to decide that : I. (1). Danzig citizens who are employed on the working staff of the Danzig railways may not be removed from their posts by dismissal, notice of discharge or transfer to other posts unless the exigencies of the railway service so require, on grounds to be recognised as justifiable. I. (2). The question whether the exigencies of the railway service can be recognised as justifying the removal of a Danzig citizen from a post on the working staff of the Danzig railways is to be determined by the official of the Danzig Government appointed under paragraph 9 (VI) of the Decision of August 15th, 1921,4 and may form the subject of a difference between the Free City and Poland within the meaning of Article 39 of the Paris Treaty of November 9th, 1920.

1 Note by the Secretary-General. — This document is kept in the Archives of the Secretariat and is at the disposal of the Members of the Council. 2 Note by the Secretary-General. — See Official Journal, No. g, 1921, page 974. 3 Note by the Secretary-General. — See document C.375.1927. 4 Note by the Secretary-General. — See Official Journal for November 1921, page 971. I. (3). Danzig citizens employed on the working staff of the Danzig railways may not be transferred to a place outside Danzig territory. II. The Polish Railway Administration is required to revoke the following measures, which are inconsistent with the foregoing decisions:

(а) The notice of discharge of the Danzig citizen Arnheim; (б) The removal of the Danzig citizens Sandkamp, Wurm, Mehl,Damitz, Conrad and Steppuhn from their posts; (c) The transfer of the Danzig citizen Heinz to a place outside the territory of the Free City of Danzig.

Request of the Free City, dated December 2nd, 1929.

The Senate has requested that it may be decided, in accordance with Article 39 of the Paris Treaty of November 9th, 1920, that:

The Polish Railway Administration must, in all cases where the approval of the supervising authority (Aufsichtsbehôrde) is required under the Danzig Traffic Regulations of October 25th, 1928 ( Verkehrsordnungen), obtain the approval of the . Senate of Danzig, as being the supervising authority.

Request by the Polish Government, dated December 16th, 1929. (a) The Senate of the Free City, or the authorities appointed by it to deal with housing questions, shall be obliged to assign to the employees of the Polish Railway Administration at Danzig permanently employed in the territory of the Free City, whatever their nationality, lodgings, subject under Danzig law to the regime of compulsory administration, under the same conditions and on the same scale as such lodgings are assigned to Danzig nationals. (b) The Senate of the Free City of Danzig, or the authorities appointed by it to deal with housing questions, shall be obliged to treat the employees of the Polish Railway Administration permanently employed in the territory of the Free City, whatever their nationality, as persons entitled to a lodging(Wohnungsberechtigte ) within the meaning of clause III of the Decree of the Senate of the Free City, dated January 28th, 1927, and to issue to them lodging certificates (Wohnimgsberechtigungsschein) on the same conditions and to the same extent as certificates are issued to nationals of the Free City. (c) The buildings and dwellings which are situated on land purchased by the Polish State (Polish revenue authorities) in the territory of the Free City, and which are intended to house the officials of the Polish Railway Administration permanently employed in this territory, shall not be subject to the legal provisions of the Free City of Danzig at present in force or to be promulgated hereafter, regulating the assignment of lodgings by the Danzig authorities in whatever form, whether direct or indirect, and shall thus remain at the free disposal of the said Polish Railway Administration both as regards the buildings themselves and the lodgings contained therein. (d) The present decision shall be without prejudice to the questions referred to in Article 104, paragraph 5, of the Treaty of Versailles and in Article 33 of the Treaty of Paris concerning the legal situation of Polish nationals in the territory of the Free City of Danzig.

C. T h e P o l is h P o r t o f G d y n i a .

Request by the Free City, dated May 9th, 1930.

I have been asked by the Senate of the Free City to decide that the Polish Government be required: (1) To take all necessary measures, more particularly in respect of railway tariffs, to ensure that the portion of the goods and passenger traffic to and from Poland which does not pass the land frontier and of the transit traffic through Poland is transhipped in the harbour of Danzig, (2) To make every effort to develop and improve the harbour of Danzig and the railway and inland waterway routes of access thereto, so that they can meet all the requirements of the traffic referred to in (1). (3) To refrain from all measures in respect of other harbours whereby goods and passenger traffic would be diverted from Danzig, more particularly rebates of public taxes and other; the conclusion of agreements embodying an undertaking to make capital investments and to effect a certain minimum transhipment ; Customs measures by which rebates of duty, exemptions or other privileges are promised in the case of consignments sent via Gdynia, or measures in respect of the granting of quotas ; or, finally, measures of an economic or other nature. Appendix VII a.

DECISION, DATED APRIL 1 4 T H , 1930, OF THE HARBOUR BOARD, CONCERNING THE REORGANISATION OF THE FINANCIAL DEPARTMENT.

[This document is kept in the Secretariat.]

Appendix VIII. [Translation.] *

REGULATIONS, DATED FEBRUARY i s t , 1930, REGARDING THE GIVING OF NAVAL HONOURS BY FOREIGN WARSHIPS VISITING THE FREE CITY OF DANZIG.

As there were differences of opinion on this question, both parties agreed to request the High Commissioner of the League of Nations to draw up final Rules concerning naval honours to be accorded to the various authorities on the occasion of visits of warships to the Free City of Danzig. The High Commissioner, in agreeing to draw up these rules, desires to point out that they merely refer to a question of etiquette, and shall in no way prejudice the question of the International Statute of Danzig.

R u l e s .

1. The Senate of the Free City is entitled to a salvo of twenty-one guns. 2. The diplomatic representative of the Polish Government is entitled to a salvo of seventeen guns. 3. The High Commissioner of the League of Nations is entitled to a salvo of nineteen guns It is understood that, during the visit to Danzig of vessels flying the same flag, naval honours, shall be rendered once only and by one unit. The diplomatic representative of the Polish Government at Danzig is asked to transmit these rules to his Government for communication to the Governments concerned, in addition to the other agreements concluded on the question of visits of warships to Danzig, viz. : The Agreement of June 29th, 1925 ; The letter of August 7th, 1925 ,x from the High Commissioner of the League of Nations at Danzig to the Secretary-General.

Appendix IX. [Translation.]

PARTICIPATION OF DANZIG IN INTERNATIONAL TREATIES AND AGREEMENTS CONCLUDED BETWEEN MAY i s t , 1929, AND MAY 31ST, 1930.

A. C o n v e n t io n s a n d T r e a t i e s t o w h ic h t h e F r e e C i t y h a s a c c e d e d o r e x p r e s s e d it s I n t e n t io n o f a c c e d in g .

1. Treaty of Paris of August 27th, 1928 (Kellogg Pact); Protocol of Moscow of February 9th, 1929 (Litvinoff Pact) (see Official Journal, , pages 1274 and 1275). 2. International Radiotelegraph Convention signed at Washington on November 25th, 1927 (document C.327.1930.I). 3. In its note of May nth, 1929, the Free City requested the Polish Government to take steps with a view to the accession of Danzig to the International Labour Organisation. On the request of the Governing Body of the International Labour Office, the Council theof League of Nations decided, in its resolution of May 15th, 1930, to request the Permanent Court of International Justice to give an advisory opinion on the question : “ Is the special legal status of the Free City of Danzig such as to enable the Free City to become a Member of the International Labour Organisation ? "

1 Note by the Secretary-General. — See Official Journal, August 1925, page 1197. 4o —

B. C o n v e n t io n s a n d T r e a t i e s w h ic h t h e F r e e C i t y h a s r a t i f i e d o r e x p r e s s e d i t s I n t e n t io n o f r a t i f y i n g .

1. Convention establishing an International Relief Union, signed at Geneva on1 2July th , 1927 (document C.175.1930.I). 2. Agreement concluded at Berlin on December 17th, 1929, regarding the regulationof plaice and flounder fishing in the Baltic (document €.342.1930.1).

C. Agreements concluded between the Free Cit y and Poland.

1. Agreement of May 29th, 1929, concerning double taxation in the matter of direct taxes, stamp duties on bills of exchange, and succession duties. 2. Arrangement of November 23rd, 1929, on certain questions relating to Articles 207 and 208 and Annex I (Customs) of the Danzig-Polish Convention of October 24th,1 9 2 1 . 3. Agreement of March 4th, 1930, on regulations for the supervision of foodstuffs and articles of prime necessity.