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between the President of the United States and the German Government. Subject to the qualifications which follow they declare their

willingness to make peace with the government of Germany,” etc., etc. The qualifications relate to a reservation which they made as to the interpretation to be put on the meaning of the phrase "the freedom of the seas" when that subject should be discussed in a peace conference; and on the meaning of the phrase "invaded territories must be restored as well as evacuated and freed." This was communicated to Germany on November 5th; the terms were accepted; the document was signed by both parties on November 11th; and the armistice became a closed incident save in so far as relates to its practical application.

The official records do not show that any one knew who was the author of any proposition, except the emendations or the non-military clauses that were introduced during the discussion of the Allied Council from October 31st to November 4th. Of course the Ministers knew, but they have left no records of their deliberations. With the exception of them, no one could say "This or that military or naval clause was introduced on the advice of this or that adviser.” When dissatisfaction began to be felt in any quarter with the terms of the armistice or with the fact that there was any armistice at all, various persons have attempted to fix the author. Just now we are not concerned in showing who made the armistice-the fact and the terms of the fact—but in showing who did not make it.

The origin of the armistice is thus perfectly plain. The first German note was received at the Legation of Switzerland in Washington "late this afternoon," as the Chargé d'Affaires of that legation says in his letter of transmittal dated October 6th. On the same day, in Paris, the Prime Ministers of Great Britain, France and Germany drew up their principles to form the basis of an armistice with Germany and Austria, -almost certainly before any member of the Government at Washington could have broken the seal of the Swiss Legation on the first German note. On the morning of October 8th, the military and naval representatives of the three European Allies formulated the details of armistice terms on the basis laid down by their Prime Ministers. On October 23rd the American Government informed those three European Governments that it felt that it could not decline to take up with the Governments with which the Government of the United States is associated the question of an armistice." The note added the "suggestion that, if those Governments are disposed to effect peace" then the proper advisers of all four governments prepare and submit the terms of an armistice for their consideration. If those governments were not disposed to effect peace, or to have an armistice as the first step thereto, it was in their power to say so. That they were so disposed, is evident from the immediate steps taken to formulate the armistice. Finally, in their official note of November 4th, the three Prime Ministers "declare their willingness to make peace.”

M. Mermeix declares positively (p. 280) that "Wilson had nothing to do with the determination of the terms of the armistice." He claims that the military terms were practically entirely French, and the comparison which he makes between the original French draft and the one finally accepted justifies his conclusion.

Now as to the operation of the armistice and its results. There are, apparently, a good many unthinking people abroad who are inclined to lay the blame for a large part of their troubles, during the last three years or more, upon the armistice. They seem to think that were it not for that and had the Allies marched to Berlin, the situation now would be better. It accounts for their perpetual hunting for a scape-goat upon which to throw the blame. They are right in blaming the armistice; but the trouble is not due to the fact that an armistice was made, but to the kind of armistice.

An armistice is, or should be, purely a military measure. It is a cessation of arms for the sole purpose of enabling warring nations to agree on terms of peace. Its sole conditions, therefore, should be such as will absolutely guarantee against the resumption of hostilities to interrupt the men who are determining the terms of peace. The military conditions imposed on either side are the more rigorous, to the possible limit of absolute surrender, according as the other side is the more powerful when the armistice is asked for by its enemy. The President of the United States clearly understood this when, in his note of October 14th, he informed the German Government that “it must be clearly understood that the process of evacuation and the conditions of an armistice are matters which must be left to the judgment and advice of the military advisers of the Government of the United States and the Allied Governments;" and when, in his note of October 23rd, he said that if the Allied Governments were willing to make peace, the military advisers should prepare the terms of an armistice for submission to those governments and that of the United States.

A military armistice contemplates that steps will very promptly follow for the establishment of peace. It is based on the assumption that peace is the only possible condition for prosperity and that delay in its resumption may be disastrous. But an armistice which is based upon the indefinite continuance of military control and which perhaps embodies terms of indefinite execution, only invites delay.

The one great error in the armistice, as now admitted by thinking men generally in Europe, was in the failure to demand complete surrender with resulting disarmament and demobilization. The situation would have compelled acceptance of this condition by the Germans. On the west they were confronted by a superior force of British, French and Americans, and on the south the map and the situation showed the impending attack from Italy and General Franchet d'Esperay's Army of the East.

Such an armistice could have been followed in a few days by the preliminary treaty of peace imposing the military, naval and air terms. Immediately the Allied commissions could have set to work dismantling fortifica

Wilson re fut pour rien dous la fixation des termes de l'Armistice.

tions, abolishing the military system, closing arms factories and, in fact, doing all the things that more than a year later they had to do under circumstances of far greater difficulty. And above all, the remaining peace terms, relating largely to world-conditions for generations to come, could have been more calmly discussed without the fear of a suddenly revived military Germany which haunted the daily proceedings of the actual Peace Conference.

This defective armistice was signed on November 11th. The nations seemed indifferent about making peace, trusting to the huge Allied armies then in France to control Germany. But the great expense of their maintenance and the absence of millions of men from their homes, cheerfully borne in war, became very irksome to the peoples in peace, and these armies began rapidly to diminish. The 11th of December came, with no Peace Conference in sight, and the armistice had to be renewed. Allied military men began to feel grave apprehension when they thought of the millions of trained soldiers in Germany whom they themselves had left with an unknown but large equipment of arms, politically demoralized, to be sure, and for the time sick of war; yet there was always the possibility that the right leader might yet arise with the right war-cry to bring them to their feet again. So, further security was attempted by additional terms to the renewed armistice. The 11th of January, 1919, came with the Peace Conference just getting to work, and the same course was followed in the second renewal of the armistice.

When the time for the third renewal of the armistice- February 11thapproached, the situation had grown more serious. The Allied armies were greatly reduced and the process of reduction was rapidly continuing. Notwithstanding the fact that the arms called for by the terms of the armistice had been surrendered and that the Germans had abandoned on the field still more of many important articles of equipment than they had surrendered under the armistice, there was a growing fear in certain quarters that there was still a great accumulation of arms in Germany and that their manufacturing plants were still producing them in quantities. When we consider the total demoralization of Germany at that time, it is difficult to believe that there was much ground for this apprehension. Nevertheless, the fear existed. It made itself evident in the still more drastic terms that were proposed to be imposed in this renewal of the armistice. As there was considerable difference of opinion as to the wisdom of this course, an Allied committee of civil and military representatives was appointed to prepare a memorandum and recommendation on this subject for consideration by the heads of the four governments.

When this committee met and the course which it was inclined to take became evident, the American representative expressed the following opinion: that the Allies had every reason for supporting the then existing government in Germany; that this government was as nearly a democratic one as could be expected at that time and under the circumstances; that the continual pin-thrusts being made by the Allies were playing into the hands of the opponents in Germany of this government; that, if another revolution came, this government would probably be succeeded either by an imperialistic military one, or by a bolshevist one; and that, finally, instead of these continual additions of new terms to the armistice, there should be drawn up at once the final military peace terms which, being imposed upon Germany without further delay, would relieve the Allies of all further apprehension. The committee, however, accepted the other proposed terms for the renewal of the armistice and made its report. The council of the heads of governments, however, decided upon the other course. It adopted a resolution to the effect that a renewal of the armistice would no longer be granted for a fixed time, but only for a short period during which the final military, naval and air terms of peace would be drafted and after approval would be at once submitted to the Germans for acceptance as a preliminary treaty,—and that the Germans should be at once so informed.

The Germans were at once so informed, and it is much to be regretted that the course that had been contemplated was not followed to a conclusion. A military and naval committee was at once appointed to prepare the draft of these final peace terms. In a few days it had completed its work and submitted its recommendations. In these recommendations there was only one point in regard to which there was any material difference of opinion among the heads of the governments. Had they desired, they could have settled this difference of opinion within twenty-four hours and these final military terms could have been, and undoubtedly would have been, immediately imposed upon Germany. Unfortunately, the President of the United States, who had supported this course, had been obliged to return to Washington. During his absence it was decided to revert to the former method of procedure and to combine all of the other terms of the treaty with the military terms. The result was that what would otherwise have been the real treaty of peace had to wait until the Powers had settled their differences of opinion about matters which were, largely, only incidental to a treaty of peace. And so, the preliminary treaty,—which involved the military, naval and air terms, and which was all that was necessary in order to bring a feeling of real security to Europe and to enormously reduce wasteful expenditures, had to wait until the general treaty was signed on June 28, 1919. This treaty did not go into effect until the specified number of Allied Powers had ratified it. The result was that measures which could have been and should have been begun the better part of a year before were not undertaken until the beginning of the year 1920.

All of this was due, not to the fact of the armistice but to the form of it.

The armistice was made because all the Allied world wanted it, and for no other reason. But its defective form, for which America was in no way whatever responsible, invited and permitted in a considerable degree the delays which proved the bane of the Peace Conference and which prevented the more prompt reestablishment of the peace of the world.

THE NEGOTIATION OF EXTERNAL LOANS WITH

FOREIGN GOVERNMENTS 1

BY CHARLES CHENEY HYDE

of the Board of Editors

PRELIMINARY

It is of advantage to every state in need of financial aid, as well as to the banks of every country having funds to invest abroad, that external governmental loans be generally regarded attractive. Attractiveness amounting to more than temporary and sentimental interest, depends upon the development of a conviction among the best buyers of every land that such loans constitute a safe investment in the face of every contingency reasonably to be anticipated, and that they are fairly immune from dangers which have heretofore proved to be inherent in or incidental to dealings with sovereign states of certain types—dangers of repudiation on colorable or solid grounds, dangers of invalidity, dangers arising from the operation of certain principles of international law concerning the effect of changes of sovereignty, dangers due to inadequate security or to pledges incapable of practical utilization for the benefit of the lender, dangers due to the freedom of the borrower to apply at will and without restraint the proceeds of a loan.

Experience has shown that the importance of any one of these dangers varies greatly according to the conditions of the particular case, and largely in proportion to the character and stability of the borrower. Thus in some instances the sole and reasonable concern of the lender pertains to the validity of the transaction; in others, the matter of validity affords but the first of a series of equally grave problems. The long record of losses sustained by holders of perfectly valid external bonds encourages belief that lenders have at times failed to appreciate the significance or reality of questions wholly unrelated to those of validity, and yet indissolubly connected with the matter of negotiation.

Despite the vast differences in the stability and character and credit and morale of the states comprising the international society, any one of them may seek and need foreign fiscal aid. When it does, its capacity to become a desirable borrower should be utilized. It is of highest importance that weak as well as strong states should be enabled to obtain funds for legitimate ends on just terms. If, therefore, by any process, an American bank may find itself in a position to lend with reasonable safety to a state of any

1 A slight enlargement of a paper presented to the Buenos Aires Conference of the International Law Association, August, 1922.

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