1. See my article, "Italy's Financial Stake in Albania," Foreign Policy Association, Foreign Policy Reports, VIII, No. 7 (June 8, 1932), 80-86, portions of which are used here with permission.
2. Between 1921 and 1925 there were international flurries occasioned by the rivalry of a number of companies over Albanian oil, but the results of prospecting for this or for other mineral resources have been disappointing.
3. British and Foreign State Papers, 112 (1919), 975.
4. Joseph Swire, Albania; the Rise of a Kingdom (London, 1929), pp. 317-323.
5. League of Nations Treaty Series, XII, 381 ff.
7. League of Nations, Official journal, June, 1922, pp. 572-82.
9. Albert Calmès, "The Economic and Financial Situation of Albania," Annex to the Report presented to the Council by the Financial Committee of the Provisional Economic and Financial Committee on its Eighth Session (Geneva, September, 1922). Cf. also League of Nations, Official Journal, January, 1923, pp. 113-17
11. "Had that organization (the League) acted with less trepidation and caution, and with more practical activity, Albania would have been not a danger point, but a pillar of security and stability in the Balkan peninsula." (Swire, op. cit., p. 43 8.)
12. Ibid., pp. 411-12, 424; League of Nations, Official Journal, June, 1922, pp. 523, 535; November, 1922, p. 1209; March, 1923, pp. 397-9; June, 1923, pp. 560, 638; Records of the Fourth Assembly, 1923, plenary sessions, pp. 245, 337.
13. League of Nations, Official Journal, Report of Mr. Hunger to the League Council, January, 1924, pp. 162-68.
14. Ibid., and Official Journal, May, 1924, pp. 762-63.
15. Avv. Adolfo Gulinelli, "L'Azione italiana in Albania," Revista di Politica Economica, 1927, Nos. 8-9. Cf. also speech of Signor Mario Alberti on March 25, 1928. (Annual Report of the Banca Nazionale d'Albania for 1927, p. 18.)
16. For the protest of the Netherlands government against Mr. Hunger's dismissal, cf. League of Nations, Official Journal, July, 1924, p. 1018. (Letter from the Netherlands Minister at Berne to the Secretary-General of the League.)
17. Ibid., October, 1924, p. 1928; Swire, op. cit., p. 444.
18. League of Nations, Records of the Fifth Assembly, 1924, plenary sessions, p. 101.
19. League of Nations, Official Journal, May, 1923, pp. 504-10.
20. Albanian and Italian texts in the Albanian Official Gazette (Republika Shquiptare, Fletorja Zyrtare), Vol. IV, No- 40, 1925, pp. 3-8.
21. Signor Alberti of the Credito Italiano is a leading Italian banker, has represented his country in numerous international financial negotiations, and was president of the Commission of Control set up by the League of Nations in Austria. He holds the honorary rank of Minister Plenipotentiary.
22. This section is based largely on the annual reports of the Bank. The reports used include those for 1926 (in Italian), 1927 (in English), 1928 (in English), and 1929 (in Italian).
24. Vossische Zeitung, July 5, 1925.
25. Frankfurter Zeitung, May 5, 192.6.
26. A total of 595,000 ordinary and founders' shares were outstanding, but some of them were not represented at the meeting. The Credito Italiano holds the 100,000 founders' shares. (Annual Report of the Banca Nazionale d'Albania for 1929, pp. 8-10)
27. These shares were mostly from the original Albanian allotments. Owing to the failure of Albanians to take up their quota, these shares are largely in Italian hands. (Near East Yearbook and Who's Who, 1931-1932, p. 39.)
28. Cf. Report Presented to the International Chamber of Commerce, Economic Group for Albania, at the Fourth Congress, Stockholm (1927), pp. 2-3; also Economic Situation of Albania, at the Fifth Congress, Amsterdam (1929).
29. This section is based largely on the following annual reports and other documents published by the S.V.E.A.: S.V.E.A., Relazione sul Bilancio al 31 Dicembre 1926, presented at the meeting of the shareholders held on April 27, 1927; Relazione sul Bilancio al 31 Dicembre 1927, presented at the Meeting of shareholders held on September 18, 1928; Relazione sulle Opere Eseguite al 31 Dicembre 1929, presented at the meeting of shareholders held on March 21, 1930; Verbale della Assemblea Generale degli Azionisti, March 21, 1930.
The text of the convention of May 29, 1925, may be found in the July 31, 1925, issue of the Albanian Official Gazette, Vol. IV, No. 40, cited, and in the appendix to the 1926 report of the S.V.E.A., which also contains the executive accord of July 26, 1925.
30. Interview in the Ministry of Finance of the Albanian government, Tirana; Swire, op. cit., p. 462.
31. Cf. S.V.E.A. Report for 1926, pp. 44-45.
32. S.V.E.A., Relazione sulle Opere Eseguite al 31 Dicembre 1929, presented to the assembly of stockholders on March 21, 1930, p. 5.
33. Decree No. 631, dated April 3, 1926, published in the Gazzetta Ufficiale of Italy, No. 93, April 22, 1926, and quoted in the S.V.E.A. Report for 1926, p. 7.
34. Decree No. 249, dated March 3, 1927, published in the Gazzetta Ufficiale, No. 55, March 8, 1927, and quoted in the S.V.E.A. Report for 1926, pp. 7-8.
35. See Decree No. 1068, dated July 29, 1931.
36. Dr. Gerhard Schacher, Der Balkan und Seine Wirtschaftlichen Kräfte (Stuttgart, 1930), p. 131
37. Italian spokesmen often draw an analogy between Italy's policy in Albania and the policy of the United States in certain Caribbean countries. Comparisons have also been made with the British policy in Portugal.
38. Condensed, with permission of the editors, from my article, "Private Investments and International Politics in the Saar, 1919-20: A Study of Politico-Economic 'Penetration' in a Post-War Plebiscite Area," Journal of Political Economy, 41 (October, 1933), 577-601.
39. Sarah Wambaugh, Plebiscites Since the World War (Washington, Carnegie Endowment for International Peace, 1933), Ch. X.
40. This statement needs some qualification. The Homburg Iron Works owned by the firm of Stumm Brothers took in French capital only to the extent of 40 per cent. The Burbach Foundry, property of the Arbed concern, occupied a special position due to its Belgian and Luxemburg ownership. Many manufacturing establishments and machine shops (German, "weiterverarbeitende Industrie") remained entirely German.
41. Unless otherwise indicated, information regarding the Stumm firm which follows is based upon an interview with the general manager for the Stumm family's interests at Neunkirchen, Dr. Deubert, who himself participated actively in the negotiations and transactions here described. The events related in the text were told to the writer not merely from memory, but with the aid of documents in the firm's files---letters, telegrams, memoranda of conferences dictated at the time, and minutes of meetings. As a check on accuracy of reporting, the account which appears in the text was later submitted to the general manager in writing and certain corrections made.
42. Dr. Fritz Schleifenbaum, Die wirtschaftliche Ueberfremdung der eisenschaffenden Industrie des Saargebietes (Berlin, 1928), p. 41, says that all four of the German metallurgical firms---Dillingen, Röchling, Rudolph Böcking, and Stumm---agreed under no circumstances to make concessions regarding the acceptance of French capital without previous consultation among themselves.
43. Schleifenbaum, op. cit., p. 46, asserts that an offer made to the Stumm works in June, 1919, by a group headed by the Aciéries de Pompey proposed a 60 per cent French participation with an option to the German owners to repurchase 20 per cent after ratification of the Peace Treaty. There were long negotiations on this basis, but they were finally abandoned. "This attempt to circumvent the governmental demands shows, at any rate, that some of the French capitalists took no interest in the economic-imperialistic plans of their Government which aimed at the Acquisition of active control over Saar industry. They did not wish to invest great sums of capital in the Saar, on account of the difficulty in financing such investments, if for no other reason. Their capital investments in Saar works were made primarily in order to obtain the award of properties being liquidated in Lorraine."
44. The report to his Board on this interview was dictated by the Stumm general manager on November 8.
45. The Stumm interests were allowed to insert certain safeguards in the sale contract which assured them a voice in the administration of the business. The French group was to select one managing director, the German group, one, and a third was to be chosen by a three-fourths majority.
46. The Stumm managers felt that those who applied the pressure on the firm intentionally did so in ways which would not leave written proof, especially proof that the French government was involved.
47. Kölnische Zeitung, February 18, 1929.
48. He was sentenced in contumaciam.
49. Schleifenbaum, op. cit., pp. 59-64.
51. Schleifenbaum, op. cit., pp. 59-64, writes that the economic pressure on Röchling could not be made so severe as on the Stumm firm for the reason that the Röchling works supplied gas to Saarbrücken, which necessitated coal deliveries, and that Röchling had personal relations which helped his firm to get ore. These statements are described as inaccurate by the firm itself, which informs the writer that the French were under no necessity to treat it with consideration. Nevertheless, the firm says that it made known to the French as emphatically as it could at the time that "Röchling would never consider accepting the participation in question were it not for the fact that Mr. Robert Röchling (at the instigation of the then minister, Loucheur) was under French arrest." (Statement from the Röchling firm committed to the writer through Dr. W. Cartellieri, director of the Saar Economic Archives, Chamber of Commerce [Handelskammer] of Saarbrücken.)
52. My translation of the German text supplied by the Röchling firm through the channel mentioned in the preceding note. This was Article 7 of the option.
53. Schleifenbaum, op. cit., p. 61.
54. In preparation for carrying out its portion of the agreement, the Röchling firm transformed itself into a holding company and divided the Saar works between two newly-formed subsidiaries. (Ibid.)
55. The limit mentioned in the article of the agreement quoted above seems to have been extended somewhat. (Cf. ibid., p. 61.)
56. Special circumstances made the crisis particularly severe for Saar industries. The Röchling firm is reported to have lost 58,300,000 marks from January to May, 1921. (Ibid., p. 62, footnote.)
57. The Röchling firm claims that from 1919 to 924 a secret rebate of 3 to 5 per cent was accorded by the French coal mines to its competitors. (Interview with Dr. Rupp, secretary to Kommerzienrat Hermann Röchling. Also H. S. Weber, Der Kampf um die Saar [Berlin, 1928] , p. 89.)
58. Schleifenbaum, op. cit., pp. 43-49, 56-59. The account given by Schleifenbaum, who as son of a former general director may be presumed to have had access to reliable information regarding the Dillingen firm, is followed in the text.
60. Kölnische Zeitung, March 31, 1929. See also an article by Dr. Fritz Schmidt, "Frankreichs Kapitalanteil an der Saarwirtschaft," in the Rheinischer Beobachter, VIII (June, 1929), pp. 174-79.
61. R. Martin, "Die zollpolitische Lage des Saargebietes," in Lebensfragen der Saarwirtschaft, published by the Handelskarnmer of Saarbrücken, August, 1929.
The German Saar industrialists went to Berlin and said, "We are Germans, after all. Let us export into Germany, even though it does cause competition." The French Saar interests said in Paris, "We know we are asking for an alteration in the Treaty of Versailles, but we need the German market in order to live and in order not to compete disastrously with French industry at home." (Interview with M. Drouard, secretary-general of the Chambre de Commerce Franco-Sarroise, Saarbrücken.)
62. "All in all," concludes an article in the Kölnische Zeitung (March 31, 1929), "the situation still remains such today that French capital, even after the receding movement, has a downright determining influence in the Saar District, which is made still stronger by the currency and customs tie with France.... Now, in truth, it is the characteristic fate of the whole German economy that everywhere foreign capital has large interests, and no political objections can be raised on that score. In a boundary territory, however, this question takes on quite another meaning, especially when foreign capital interests have reached such an extent as they have in the Saar. That an attempt will be made at the time of the plebiscite to take full advantage of the artificially created economic dependence of the Saar District on France, especially the dependence of large groups of employees, is beyond question. One may say that these efforts will not be successful. Nevertheless, it seems desirable to us that the reverse movement of French capital proceed still further, even before the reincorporation of the District by Germany."
In a similar sense, an article in Wirtschaftsdienst (Hamburg, October 9, 1923): "The French intentions regarding the Saar District were mainly of a political character. The attempted economic separation from Germany was to be followed by a political separation. The incorporation of the Saar District in the French economic sphere was designed to bring that Territory, connected by economic interests with France, to attach itself politically to France also."
One more quotation, out of hundreds that might be added, is from the Deutsche Bergwerks-Zeitung (Düsseldorf, November 3, 1929): The French metallurgical investments at the end of the war in the Saar were made "at the instigation of the government, with the intention of industrial penetration for the purpose of exerting pressure in connection with the future plebiscite."
63. It should also be said that copies of this article in manuscript form were addressed to M. Louis Loucheur, former Minister of Industrial Reconstruction in the Liberated Regions, and to the secretary-general of the Chambre de Commerce Franco-Sarroise with a request for corrections of fact or comment on the interpretation of the facts. Shortly after the copies were dispatched the death of M. Loucheur occurred. No answer was received from the Chambre de Commerce Franco-Sarroise.
64. The fact that Röchling and other German firms never did admit French capital and nevertheless kept on working was cited as proof that the French did not use their control of coal to apply pressure. It was also remarked to the writer, "If the French had wanted to put pressure on German industries what necessity was there for doing it through coal? All that was needed at any time was a prohibition on ore export from Lorraine." The German allegations in general were branded as the stories of ardent propagandists.
65. It was remarked to the writer in different interviews in almost the same words, "The Germans imagine all these things, because it is exactly what they would have done."
66. When the Germans bought back French interests in many of the Saar firms after about 1925, the French protected themselves against the danger which had originally induced them to buy. International steel agreements were signed which embodied certain clauses limiting the amount of steel which Saar firms were to sell in France. (M. Drouard, interview, and his article, "l'Union Douanière Franco-Sarroise," in the series "Union Douanière Européenne, Études Documentaires," No. 12, December, 1930.
67. One finds, indeed, in some portions of the French press the definite affirmation that French capital was invested in the Saar at the instance of the government. The industrial organ, La Journée Industrielle, for example, has put the matter as follows:
"After the armistice numerous groups of French financiers and industrialists, often at the request of public authorities [souvent à la demande des pouvoirs publics], acquired important interests in various Saar enterprises." (January, 10, 1928.)
And again: "When the Treaty of Versailles . . . set up the Saar Territory and accorded to France the ownership of the mines, the French government, with the understandable object of consolidating its position in a provisional territory where it had such great interests, asked French industrialists to go into the Saar and invest considerable sums of capital there [demanda aux industriels français d'aller dans la Sarre et d'y investir d'importants capitaux]." October 14, 1927.)
Likewise, a member of the French Senate, writing in the Revue Politique et Parlementaire, expresses himself thus:
"Following the Treaty of Peace the mines and steel plants of Lorraine were liquidated to the profit of French companies, and a considerable amount of French capital was engaged at the instigation of the French government [à l'instigation du gouvernement français], in the principal steel companies of the Saar, with the exception of that of Röchling." (Frédéric Eccard, Sénateur du Bas-Rhin, "L'aspect économique du problème sarrois," Rev. Pol. et Parl., November, 1930, pp. 169-84.)
In evaluating statements such as these, however, one must remember that there has been talk in recent years of returning the Saar to Germany by special agreement without waiting for the plebiscite of 1935. There was a natural tendency, therefore, on the part of those French circles with interests in the Saar which might be injured by the sudden reëstablishment of a customs boundary between the Saar and France, to emphasize the government's rôle in their original entry. Perhaps still more important is the desire of French industries in the Saar to obtain favorable railway rates on their shipments in France. "We came in as a favor to the government; we must be fairly treated now," runs the argument. An instance of this sort is accorded by one of the articles quoted above from La Journée Industrielle (October 14, 1927, reporting the speech of M. Puech, president of an economic congress held at Saarbrücken). It complains of the political uncertainty in the Saar and continues: "Les industriels et les commerçants français de la Sarre expriment avec discrétion leur malaise, mais trop de signes peuvent leur faire craindre qu'on cesse de les soutenir dans leur rôle d'ambassadeurs bénévoles."
Extreme nationalists who oppose on principle any concession whatever by their country and stand for an aggressive policy in the Saar made use of similar arguments.
68. The question of what influence lay behind the French demand for the Saar at the Peace Conference is not being discussed here. Some think that French industrialists pressed for the taking over of the Saar in order to be able to buy the German industries cheaply and that M. André Tardieu was the mouthpiece of this group. Aside from the fact that it is hardly reasonable to suppose that the French steel industry was anxious to bring still more competing plants into its internal market, one hardly need to seek farther than ordinary patriotic expansionism and the attraction which Saar coal would have for nationalistic economists, industrialists, and statesmen, to explain the French ambitions.
69. Schleifenbaum, op. cit., pp. 32-36, interprets the French actions in the Saar almost wholly in terms of an "economic imperialism" seeking to gain monopolistic control of the metallurgical industry on the continent of Europe.
.
1. Interview with a retired French diplomat, M. Guiot, 1930. He negotiated the 1909 accord with Germany over Morocco, held the rank of "ministre plénipotentiaire de première classe" at the foreign office, was a representative of the holders of Moroccan bonds, member of the board of the State Bank of Morocco, and chief of the Moroccan customs control service.
2. Die Grosse Politik No. 6524 (July 27, 1904), No. 6525 (July 29, 1904).
3. Interview with Mr. F. M. Huntington Wilson, 1931. See Chapter 4, first paragraph.
4. The discussion which follows applies, of course, only to countries where private enterprise operates in international trade and finance, not to regimes in which the State rules international economic transactions directly.
5. Charles W. Hallberg, The Suez Canal; Its History and Diplomatic Importance (New York, 193 1), Ch. XV; Sir Arnold T. Wilson, The Suez Canal, Its Past, Present, and Future (Oxford, 1933), Ch. IV.
6. North Manchuria and the Chinese Eastern Railway, published by the Chinese Eastern Railway Company (Harbin, 1924), p. 39. Further showing the actual control of the Russian government is the fact that a secret decree gave the Company and its employees the benefit of special court procedure provided for government institutions and government employees. (W. W. Willoughby, Foreign Rights and Interests in China (Baltimore, 1927), p. 425; J. MacMurray [ed.], Treaties and Agreements with and Concerning China, 1894-1919 [New York, 1921], pp. 89-90).
7. Willoughby, op. cit., p. 222; M. J. Bau, The Foreign Relations of China (New York, 1921), p. 195 ff,; Japan Year Book, 1920-21, pp. 740-42; Lancelot Lawton, Empires of the Far East (Boston, 1912), p. 1165.
8. C. F. Remer, Foreign Investments in China (New York, 1933), p. 90.
9. Herbert M. Bratter, Finance and Investment Division of the U. S. Department of Commerce, in Commerce Reports, March 24, 1930; "The Oriental Development Company, Ltd.---A General Survey," published by the Company, Tokyo, August, 1930.
10. Commerce Reports, March 24, 1930.
11. Commerce Reports, March 24, 1930; circular issued by the National City Bank of New York at the time of flotation of the 1928 loan.
12. Commerce Reports, March 24, 1930. It was said at the time of the negotiations for the first of the $20,000,000 loans from the National City Bank (1923) that the American government had raised objections against the use of these funds for the peaceful penetration of the Japanese government in Manchuria and Mongolia. American objections were said to have been allayed by representations from the Oriental Development Company that it had large outlays to make elsewhere than in Manchuria. (Japan Chronicle, Kobe, March 21, 1923, and April 20, 1923).
13. "The Russian Bank at Teheran has the full support of the Russian Exchequer, its Manager takes his orders from the Minister of Finance at St. Petersburgh, and the nature of its business is dictated by political rather than financial considerations." (British Documents, IV, 367.)
14. Ibid., IV, 371-2, for a loan to Persia through the Imperial Bank, the risk borne by the government of India and by the British government proper.
15. Dr. Mahmoud Afschar, La Politique Européenne en Perse (Thesis at University of Lausanne, published in Berlin, 1921), pp. 69-71. See also Sykes, op. cit., pp. 480 ff.
16. Bulletin du Comité de l'Afrique Française, 1907, p. 90; Leonard Woolf, Empire and Commerce in Africa (London, 1919 [?]), pp. 205-11. Woolf bases his account largely on T. L. Gilmour, Abyssinia: The Ethiopian Railway and the Powers (London, 1905).
17. Gilmour, op. cit., p. 35, quoted by Woolf.
18. See the discussions in the French parliament quoted extensively in the 1909 and 1910 volumes of the Bulletin du Comité de l'Afrique Française, especially the statements of Finance Minister Caillaux, M. Jaurès, and the reporter of the Budget Committee, printed in the 1909 Supplément, pp. 72 ff., and in the 1910 Supplément, p. 26.
19. British and Foreign State Papers, 99 (1905-6), 486-9.
20. Reports of M. Messimy on behalf of the Budget Committee and of M. Le Hérissé on behalf of the Committee on Foreign and Colonial Affairs of the Chamber of Deputies, quoted in the Bulletin du Comité de l'Afrique Française, Supplément, 1909, pp. 94 ff.
21. Bulletin du Comité de l'Afrique Française, April, 1909, pp. 126-7, and Supplément, pp. 77 ff., where the text of the agreement between the Government and the new Compagnie du Chemin de Fer Franco-Ethiopien de Djibouti à Addis-Ababa and the law of April 3, 1909, approving this agreement are given. The settlement with the old company granted it an annuity of 610,000 francs for ninety-nine years, corresponding to a capital sum of 18 million francs, in exchange for its assets. The railway from Jibuti to Addis-Ababa, 495 miles in length, "was completed in 1917 and is under French management, receiving a subsidy from the French government. Trains run twice a week!" (Moon, op. cit., p. 157, footnote.)
22. Overlach, op. cit-, pp. 121-132.
23. M. C. Hsu, Railway Problems in China (New York, 1915), pp. 58-61. The construction company formed to build the line was a consolidation of the Régie Générale des Chemins de Fer and the Société des Batignolles, which had built subsidized railways for the French government in Tunis before Tunis became a French protectorate.
24. Chapter 4. See S. Gargas, "Politique pétrolière dans les Pays-Bas," Revue Économique Internationale, 1927, I, pp. 79-81. It was officially stated in 1929 that the holding consisted of 7,500,000 ordinary shares, 1000 preferred shares, and £199,000 of 5% debenture stock. The market value of the ordinary shares approximated £32,773,500. (London Times, March 21, 1929.)
25. Dr. Wilhelm Mautner, "Erdölkonflikte Heute und Morgen," Europäische Gespräche, VII (1929), 200-201.
26. "Policy and Finance in China," Far Eastern Review, March, 1920, pp. 162 ff. The article appeared originally in The International Review.
27. M. von Brandt, "Tagesfragen," Deutsche Revue, August, 1898, Vol. 23, Part 3, p. 237.
28. "As a direct result of the situation arising from the keen struggle for railway concessions in 1898 to strengthen the political hold of the European powers on China, the organization of a purely British Company became essential to act as the official instrument for the execution of the concessions extracted from the Chinese Government." The Hongkong and Shanghai Banking Corporation, having on its board of directors representatives of great German trading firms, had up to this time been operating under an agreement with the official German banking syndicate for mutual participation in administrative and railway loans to China. Now it terminated that agreement and with the British firm of Jardine, Matheson and Company organized the British and Chinese Corporation, Ltd. This strong, representative and influential syndicate contracted henceforth with the Chinese government for the construction of all the great British-built railways in China and, with the exception of the Peking Syndicate, whose activities lay in another direction, was able to command a monopoly of the British government's support. "From time to time other British railway constructors endeavored to secure a footling in China but were compelled to retire after severe financial losses and leave the field to the undisputed control of the official commercial organization." The monopoly exercised by the syndicate within the British sphere was thus a monopoly of railway construction to the exclusion of both British and non-British interests, and on its side the syndicate fitted its economic program into the political aims of Great Britain. (Overlach, Foreign Financial Control in China, pp. 46-49, quoting the Far Eastern Review, Vol. 10, p. 297.)
29. Karl Helfferich, Georg von Siemens (Berlin, 2d. edn. 1923), 11, 168; Die Disconto-Gesellschaft, 1851 bis 1901 (a semi-centennial publication by the Bank, Berlin, 1901), pp. 212-14
30. Jacob Viner, "Political Aspects of International Finance," Journal of Business, I (July, 1928), p. 332; Helfferich, op. cit., III, 118; Die Grosse Politik, XIV, Part II, 470.
31. MacMurray, op. cit., pp. 240, 242.
32. Willoughby, op. cit., pp. 980 ff. on the financial agencies of the various powers in China.
33. M. Huntington Wilson, in the Annals article cited in Chapter 4.
34. He also pointed out the danger in Russian projects, to which Salisbury replied: "I understand you to propose that we should resist and prevent the construction of any Chinese railway to whose expenses any Russian bank has subscribed. Is this practical? ... I do not see my way, if Russian Capitalists will throw their money about, to preventing the Chinese from picking it up. We must find some equally patriotic Capitalists on our side; otherwise we must say sorrowfully of the Russian coin---'Roublet.'" (Earl of Ronaldshay, Life of Lord Curzon [New York, 1928], I, 286-7.)
35. British Documents, 11, 175-6.
36. Paul H. von Schwabach, Aus meinen Akten (printed and privately circulated, but not published, Berlin, 1927), p. 335.
37. Die Disconto-Gesellschaft 1851 bis 1901, cited above, pp. 69, 216.
38. Reported at the session of the Deutsches Auslandsinstitut in Stuttgart, 1930.
39. December 1, 1883; Helfferich, op. cit., II, 164.
40. Richard Lewinsohn, Das Geld in der Politik (Berlin, 1930), pp. 19-20.
41. Confidential interview with a well-informed man in Hamburg.
42. "By urging on the investors to lend themselves as instrumentalities of foreign policy the government clothed those investors with rights to protection of especial dignity," is the way that Mr. Huntington Wilson puts it in his Annals article, cited in Chapter 4.
43. Some of those who early saw which way the wind was blowing and were among the first to follow the wishes of the government by putting money into Morocco reaped rewards by getting the best opportunities later. (Interview, M. Guiot, cited above.)
44. Raymond Bouissi, Étude sur la colonisation capitaliste au Maroc (Thesis, University of Paris, 1921), p. 35.
45. Helfferich, op. cit., 111, 31.
46. Ibid., III, 60-62, 86-7, 88-9, 118-19; Die Grosse Politik, XIV, Part II, 468 ff.
47. Minute by Lansdowne on a dispatch from Constantinople received April 21, 1902, British Documents, II, 179.
48. Interview with M. Caillaux, 1930.
49. Interview with an American banker who says that this is the chief importance of State Department goodwill to his bank.
50. But see the Cowdray and Tana Lake incidents described in Chapter 13.
51. Loath to build up the political or economic power of an enemy nation, France enforced a tacit but none the less official and effective ban on German securities after 1870. No German issues, public or industrial, were admitted to trading on the Paris stock exchange, with the exception of a few industrial securities admitted during the brief period when the Fashoda incident, by threatening war with England, brought France closer to Germany. Even the direct investments of French companies in Germany and German companies in France---coal properties, branch offices, shares in steel plants, mines, etc.---were subject to excited attack in the French jingo press at every crisis in Franco-German relations. The private cooperation of French and German banks in joint undertakings abroad provided a target for vigorous patriotic denunciation by many authors. A similar but less drastic rule of financial non-intercourse was applied by France against Austria-Hungary, as the system of European alliances tightened and it became evident that to strengthen this ally of Germany was to strengthen the enemy. Austrian securities, both industrial and governmental, with few exceptions, were tacitly refused admission to the Paris stock exchange, despite the pressure of interested banks. The Paris market was held open to Hungarian issues after it had been closed to Austrian, apparently with some thought that Magyar aims might be supported toward a dissolution of the Dual Monarchy. But after the Bosnian crisis of 1908-9 even Hungarian governmental securities came under the ban, which tended to apply also to industrial and public utility issues. Russian opposition to their admission became firm and permanent. (Herbert Feis, Europe the World's Banker: 1870-1914 [New Haven, 1930], Ch. VIII, "Nonintercourse between France and the Central Powers.")
52. The official reason given was the weak condition of the German capital market and the need for conservation of its funds in the national interest, though other explanations have also been offered, including the suggestion that this was a gesture of political protest to the United States arising out of diplomatic altercations over the German potash law of 1910 and out of resentment against the high American tariff.
53. The Johnson Act, passed in 1934, prohibits the flotation of securities in the United States on behalf of foreign governments in default on their obligations to the United States government. It applies only to government loans.
Under the Securities Act of 1933 foreign securities must be registered in the same way as domestic securities before they can be publicly issued; there appears to be no discretionary authority under which particular issues could be excluded from the market for, let us say, political bargaining purposes.
54. For citations and additional details on the topics of this and the succeeding paragraphs see Jacob Viner, "Political Aspects of International Finance," Journal of Business I (April, July, 1928), 153-173, 349-363; Feis, op. cit., Chs. IV, V, VI.
55. The widespread and persistent attacks in France on Italy's financial reputation after Italy had renewed the Triple Alliance with Germany promoted large withdrawals of French capital. These certainly had the tacit approval of the government, if not its active encouragement. The German government, too, resorted to press campaigns. In 1913-14 it conveyed through the semi-official press the opinion that foreign loans which were not especially advantageous for economic and political reasons should be restricted to the utmost. (Feis, op. cit., pp. 137-170.)
57. M. von Brandt and Karl Helfferich in the Bank-Archiv, April 15, 1911, pp. 215, 221. Helfferich argued that any extension of the government's formal supervision over foreign loans, such as was then being proposed, would force it to take an open stand for or against each transaction, which would be politically more embarrassing and less useful to the government than the existing quiet control.
58. Feis, op. cit., p. 85. Sir Edward Grey, Secretary of State for Foreign Affairs, described this policy and the chief reason for it as follows: "British financiers run their business quite independent of politics, and, if we attempt to interfere, they naturally consider that we come under some obligation. If they do some particular thing, either in granting or withholding a loan, to oblige the Foreign Office, then, of course, we come under some obligation, and I do not think that is a desirable system. It is much better we should leave them to deal with these matters of loans. I do not say there are no cases in which loans have a political character and in which financiers come to the Foreign Office and ask if there is any objection to them. But generally speaking, and especially in South America, these are things in which the Foreign Office do not interfere." Parliamentary Debates, House Of Commons, 5th ser. LXIV, 1448-1449.
59. "In the small circles of power, financial power was united with political power, and held mainly the same ideas. Partners of the important issue houses sat in the House of Commons or among the Lords, where they were in easy touch with the Ministry. In Clubs, country week-ends, shooting parties, Sir Ernest Cassel, Lord Rothschild or Lord Revelstoke could learn the official mind and reveal their own; there was ample opportunity to discuss the wisdom or needs of the moment. The smallness of England, the concentration in the same circle of those possessing influence or prestige, the responsiveness to group opinion which ruled, the personal honesty and discretion of English officialdom, the acceptance by the financial world of a high standard of honor---all these combined to make it easier to understand the freedom left to private judgment." (Feis, op. cit., p. 87.)
60. Viner, op. cit., p. 170; see also George W. Edwards, "Government Control of Foreign Investments," American Economic Review, 18 (December, 1928), pp. 691 ff.
61. U. S. Department of State, Press Releases, Weekly Issue No. 119, release of January 7, 1932, which quotes the 1922 announcement.
62. This was further supplemented: "You of course appreciate that, as pointed out in the Department's announcement of March 3, 1922, the Department of State does not pass upon the merits of foreign loans as business propositions nor assume any responsibility in connection with such transactions, also that no reference to the attitude of this Government should be made in any prospectus or otherwise."
63. Sale of Foreign Bonds or Securities in the United States, Hearings, Committee on Finance, U. S. Senate (Washington, 1932), correspondence on pp. 959, 963-4.
64. Even so, there was considerable lack of consistency between successive pronouncements on the subject and between statements issued at various times by the President, the Cabinet as a whole, the Secretary of State, and the Secretary of Commerce, leaving the bankers in some doubt as to just what was the policy to which they were desired to conform. See Viner, op. cit., pp. 359 ff
65. See testimony in Sale of Foreign Bonds . . . hearings cited above, pp. 359, 1652, 1852, 1891-3, 1907-12, and the State Department press release of January 7, 1932, cited above.
68. Ibid., citing Livre Noir, II, 127-8.
69. Ibid., citing Memoirs of Count Witte (Garden City, 1921), p. 306.
.
1. British and Foreign State Papers 73 (1881-2), 359 ff.
2. Hansard's Parliamentary Debates, 3rd series, Vol. 267, p. 713 (March 13, 1882).
3. Carton de Wiart, Les grandes compagnies coloniales anglaises au 19e siècle (Paris, 1899), p. 47.
5. Encyclopædia Britannica (14th edition, 1929), III, 915; Statesman's Yearbook, 1934.
6. Parker T. Moon, Imperialism and World Politics (New York, 1927), pp. 98 ff.; Charles Henry Robinson, Nigeria, Our Latest Protectorate (London, 1900); Emile Baillaud, "La Compagnie Royale du Niger," Annales des Sciences Politiques, XII (July, 1898), 494; Carton de Wiart, op. cit., pp. 49 ff.; J. Darcy, Cent années de rivalité coloniale (Paris, 1904), pp. 235-40.
7. The charter itself did not differ in essentials from that of the North Borneo Company. The company was authorized to conduct both commercial and governmental activities; commercial monopoly was prohibited; control was to remain British; the government might intervene on matters of policy, especially where foreign nations or rights of natives were concerned, and might revoke the charter. The territorial sphere of the company was purposely vague and flexible. British and Foreign State Papers 72 (1885-6), 1022 ff.
8. Encyclopædia Britannica (14th edition, 1929), XVI, 442.
9. British and Foreign State Papers 79 (1887-8), 641 ff.
10. Cf. Leonard Woolf, Empire and Commerce in Africa (London, undated [1919?]), Ch. VI.
11. P. L. McDermott, British East Africa ... ; A History of the Formation and Work of the Imperial British East Africa Company, Compiled with the Authority of the Directors from Official Documents and the Records of the Company (London, 1893), p. 114.
12. There was "a considerable infusion of philanthropic and patriotic feeling" in the undertaking, says its historian, and "conceptions and obligations of a higher character" than business considerations frequently influenced the Court of Directors. Lord Salisbury said of the company that "It would hardly be just to describe it as a purely commercial body, for it is notorious that the majority of, if not all, the subscribers, are actuated rather by philanthropic motives than by the expectation of receiving any adequate returns for their outlay." (Ibid., pp. 106-9, 179.)
15. Leading article, September 28, 1891, quoted in ibid., p. 200.
18. J. G. McDonald, Rhodes (New York, 1928), p. 112; Sir Lewis Michell, Life of the Rt. Hon. Cecil John Rhodes (London, 1910), p. 266.
19. Basil Williams, Cecil Rhodes (London, 1921), p. 135.
20. Williams, op. cit., pp. 135-6; McDonald, op. cit., p. 112.
21. Text in John H. Harris, The Chartered Millions (London, undated [1920]), Appendix; or British and Foreign State Papers, 81 (1888-9), 617 ff.
22. For details, see Harris, op. cit.
23. Bertha M. Rightmire, "The British South Africa Company and Its Administration of Southern Rhodesia" (M. A. Thesis, University of Chicago, 1921, in Mss.), pp. 84 ff.
24. Encyclopædia Britannica (14th edition, 1929), IV, 203.
25. Mary E. Townsend, The Rise and Fall of Germany's Colonial Empire, 1884-1918 (New York, 1930), Chs. IV, V.
26. This account is based mainly on Miss Townsend's excellent work, cited above, Ch. V.
27. Ibid., p. 134; text translated in British and Foreign State Papers 77 (1885-6), 10-11.
28. Pierre Decharme, Compagnies et sociétés coloniales allemandes (Paris, 1903), p. 131.
29. Ibid., p. 135; Townsend, op. cit., p. 141.
31. Townsend, op. cit., pp. 145 ff.
32. Op. cit., pp. 149-50. See also, Alfred Zimmermann, Geschichte der Deutschen Kolonial-politik (Berlin, 1914), PP. 94 ff., 221 ff.
33. Townsend, op. cit., p. 151. The text of the contract with the German government is found in Decharme, op. cit., Appendix X.
34. Townsend, op. cit., pp. 129-30, citing L. Sander, Geschichte der deutschen Süd-West Afrika Kolonialgesellschaft (Berlin, 1912).
35. Consult S. H. Roberts, History of French Colonial Policy (London, 1929).
.
1. Livre Jaune, Affaires de Tunisie, 1870-.1881 (Paris: Imprimerie Nationale, 1881).
2. Day-by-day reports of the trial in L'Intransigeant and in Le Temps, December, 1881.
3. Leonard Woolf, Empire and Commerce in Africa (London, undated [1919?]), p. 114.
4. France, Ministère des Affaires Etrangères, Commission de Publication des Documents Relatifs aux Origines de la Guerre de 1914, Documents Diplomatiques Français, 1871-1914. (Paris: Imprimerie Nationale, 1929 ff.) Ire Série, I, II and III, especially the last two. These will be cited henceforth as Doc. Dip. Fr. I, II, and III.
5. Jean Darcy, France et Angleterre---Cent années de rivalité coloniale (Paris, 1904), pp. 191-3; Narcisse Faucon, La Tunisie avant et depuis l'occupation française (Paris, 1893), I, 189, 192, 207, 223, 228, 245.
6. Except just after 1870, when the threat to the status quo in Tunis came from Italy rather than France. In that situation Sir Richard and his government joined with France against Italy.
7. P. H. X. (Paul Henri Benjamin d'Estournelles de Constant) La politique française en Tunisie (Paris, 1891), Ch. 1; also on economic concessions, Victor Piquet, La colonisation française dans l'Afrique du nord (2nd edn., Paris, 1914).
8. A. M. Broadley, The Last Punic War. Tunis Past and Present with a Narrative of the French Conquest of the Regency (London, 1882), I, 149-50; Estournelles de Constant, op. cit., pp. 64-5. Consul-General Sir Richard Wood wrote in an official report: "The treatment to which the Tunisian Government has been subjected by Europeans, who have solicited and obtained concessions and grants, but who, unable to carry out their engagements, have set up claims against it, supported by their national authorities, has discouraged it from granting concessions, which only entail upon it trouble and expense." (Reports of H. M.'s Consuls, 1879, Part I, p. 271, in Accounts and Papers, LXX.)
9. Estournelles de Constant, op. cit., pp. 36 ff.; Faucon, op. cit., pp. 214-15.
10. Estournelles de Constant, op. cit., pp. 53-5.
11. Broadley, op. cit., 1, 149-50; Estournelles de Constant, op. cit., pp. 61-2; Doc. Dip. Fr. I, No. 65.
12. Pierre Giffard, Les Français à Tunis (Paris, 1881).
13. Ibid.; Estournelles de Constant, op. cit., p. 74.
14. Fernand Vatin, Les chemins defer en Tunisie (Paris, 1902), pp. 27 ff.
15. Paul Leroy-Beaulieu, l'Algérie et la Tunisie (2d edn., Paris, 1897), p. 334.
16. The guarantee was first given in an agreement between the governor of Algeria and the company dated March 8, 1877, and was subsequently approved by the French parliament. (Compagnie des chemins de fer de Bône-Guelma et prolongements, Actes Organiques, undated, published by the company.)
Certain additional lines in Tunis were later conceded to the same company and guaranteed by the French government. This brought the total length to 220 kilometers. (Vatin, op. cit., pp. 36-9.)
For text of law and agreement see Annales du Sinai et de la Chambre des Députés, 1877, II, 484 (March 19, 1877, annex no. 78). For discussion in Senate see Journal Officiel, CCXVII, 2356 (March 25, 1877). Adopted without discussion in Chamber March 19, 1877, ibid., p. 2174 (March 20, 1877)
17. For example, Journal Officiel, Débats Parlementaires, Chambre, November 9, 1881, p. 1969.
18. Quoted by Vatin, op. cit., p. 40, citing Doc. Parl. 1899, No. 603, p. 31. "Never, perhaps, have agreements between a State and a railway concessionaire company provoked discussions more stormy, criticisms more violent."
19. The political import of this strategic concession was not hidden from the prime minister of the Bey. " I am putting into your hands the whole future of this country, industrial, commercial, and even political," he told the French consul as the final agreements were made, and Roustan wrote exultingly to the Quai d'Orsay that many clauses of great political importance which Sir Richard Wood had skillfully incorporated into the original railway grant had now been turned to the advantage of France. Wood himself brought into the open the violently hostile attitude which he had nursed from the start as soon as he learned of the financial guarantee by the French government. At least, so Roustan reported to Paris, adding that it would have been the crowning achievement of the veteran diplomatist's career had he succeeded in planting the English flag along the Medjerdah so as to block the approach from French Algeria to Tunis. Sir Richard Wood was a diplomat of the Palmerston school who already counted fifty-three years of service, most of them spent, as he liked to say, combatting the influence of France in oriental countries. All this from Roustan throws light on the personal rivalries of the consuls in Tunis, which added not a little to the political conflict there. (Doc. Dip. Fr., II, Nos. 49, 193.)
21. The secret treaty by which England obtained Cyprus from Turkey and thus disturbed the status quo in the Mediterranean was communicated to Waddington on July 6, 1878. He sought out Lord Salisbury, the English foreign minister, the very next day, and "did not hide from him that ... we were very much concerned (très ému) over his communication." Lord Salisbury was conciliatory and expressed his willingness to do something to counteract the unfavorable reaction on public opinion in France which Waddington assured him would result from the publication of the Cyprus treaty. The conversation veered to Tunis. "Do what you like there," said Salisbury. "You will be obliged to take it, you cannot leave Carthage in the hands of the Barbarians." Salisbury's attitude was confirmed by Lord Beaconsfield and the Prince of Wales. (Ibid., Nos. 325, 330.)
22. Ibid., No. 330. The dispatches of the French ambassador at Berlin from 1878 until the actual occupation of Tunis in 1881 are full of repeated assurances, urgings, even taunts, emanating from Bismarck and designed to foster a bold French policy in Tunis.
23. "I am of the opinion that we must profit by the occasion which offers itself to obtain from the English their formal consent to all that we may wish to do in Tunis, including annexation," (italics are Waddington's) Waddington wrote to the French ambassador in London on July 21, 1878, and the President of the Republic, MacMahon, agreed with him that "we must not let this opportunity slip to attain a result which the French government has never ceased to pursue during many years and which the English government has always opposed." On July 19th Waddington telegraphed Roustan that "France may be led shortly to affirm her protectorate over the Regency of Tunis," and Roustan was asked on what terms a treaty might be concluded, as well as what military force would be necessary to vanquish the Bey in case he should resist French wishes. Roustan replied that it would be difficult to get the Bey to consent voluntarily, though "monetary considerations and the desire to disembarrass himself of the financial commission" might offer convenient means of pressure. On July 21st Waddington noted that the Tunisian question was being studied, but was not yet decided. "My present idea would be, first of all, to obtain the recognition of our protectorate from the Bey ... with the right for us to occupy certain strategic points. that done, we should ask that other powers in their turn recognize the French protectorate; for the rest, time and the natural development of our actions and of our interests would do their work." (Ibid., Nos. 330, 328, 329.)
24. M. Desprez, Director of political Affairs at the Quai d'Orsay, telegraphed Waddington on July 18th that he still considered the Tunis question a "very grave one for our relations with our neighbors on the south," and in his opinion it was essential that the matter of compensation be gone into carefully. Waddington inquired of Roustan whether he saw any dangers in letting Italy establish itself at Tripoli, and Roustan saw none, on condition that Tunis be occupied by France. (Ibid., No. 328 and note to No. 329.)
25. Estournelles de Constant, op. cit., p. 81.
26. Doc. Dip. Fr., II, Nos. 339, 340, 342.
28. Ibid., No. 347 (October 4, 1878); No. 369 (January 5, 1879); No. 373 (January 9, 1879); No. 375 (January 14, 1879); No. 376 (January 21, 1879).
29. Jules Ferry in preface to Narcisse Faucon, La Tunisie avant et depuis l'Occupation Française. (Paris, 1893), Vol. I, p. "j."
30. Estournelles de Constant, op. cit., pp. 84-5. It is not clear just what control the French government had over the inspectors of finance sent to Tunis to represent French interests on the International Financial Commission. Though nominally agents of the bondholders, they were apparently government officials selected from the Ministry of Finance.
31. Doc. Dip. Fr., II, Nos- 366-369, 372, 374.
32. Ibid., Nos. 375, 381, 449.
33. Ibid., No. 366 (December 29, 1878).
34. Op. cit., III, Nos. 49, 51, 72, 80.
35. Italian officials made no effort to conceal the fact that Commander Rubattino had been acting at the wish of the government. Broadley says that as the English agent was leaving Rome he learned that the telegraph office there had been authorized by the Ministry of the Interior to deliver to Rubattino copies of all telegrams which he, the English negotiator, might send or receive. (Op. cit.,I, 187.)
36. Ibid., III, No. 89 (April 15, 1880).
37. Ibid., III, Nos. 193, 196; Broadley, op. cit., I, 188; Vatin, op. cit., pp. 65-68.
38. This agreement was signed on July 12, 1880, ratified by the Chamber of Deputies on the 15th, and by the Senate on the 17th. (Vatin, op. cit., pp. 65-68.) The company agreed not to sell without the consent of the Italian government, and various phases bases of the railway's management were to be subject to governmental approval, including personnel. (Doc. Dip. Fr., III, No. 213.) After the French occupation in 1881 the political value of the railway decreased. It remained the property of the Società Generale di Navigazione until 1898, when the company ceded all its property in Tunis, including railways, equipment, boats, land, supplies, etc., to the Tunisian government for 7,500,000 francs. It was charged in the Italian parliament that while certain persons who had risked nothing made some 2,500,000 lire on the transaction, the road had lost money for the public treasury. Government officials replied that the profits realized by the company had been much exaggerated. (Vatin, op. cit., pp. 70-71, and La Dépêche Coloniale, March 27, 1901.)
39. Ubaldino Peruzzi, "Tunis et l'Italie," Revue Politique et Littéraire,, July 23, 1881, p. 104.
40. Doc. Dip. Fr., III, No. 100.
41. Estournelles de Constant, op. cit., p. 105.
43. Doc. Dip. Fr., III, Nos. 351, 361, 364, 370, 375, 377; British and Foreign State Papers, 72 (1880-81), 1329-55.
44. Not only had Kheredine rejected offers from a group of Tunisian capitalists after he had promised the estate to the Société Marseillaise, said Ferry, but the French company had itself had an offer. From whom? From the Ottoman government.
"Reflect on the gravity of the incident . . . a profit of five hundred thousand francs was offered to it (the Société Marseillaise) if it would sell to the Ottoman government, represented by Said-Pasha. Well, gentlemen, it refused, in the midst of the worst difficulties created against it. Perhaps there is in this refusal proof of a patriotic sentiment to which I am glad to render homage here." Journal Officiel, Débats Parlementaires, Chambre, November 10, 1881, p. 1980.
Ferry's statement might be read in connection with the following passage from the Livre Jaune ("Affaires de Tunisie, 1870-1881") reproducing a dispatch from M. Roustan to the minister of foreign affairs, December 7, 1880. ". . . M. Ruffigny [agent of Société Marseillaise in charge of the Enfida] leaves today for Marseilles; I should like him to go to Paris to give an account of the situation to your Excellency and to receive encouragement (et recevoir ses encouragements)."
These bits of evidence make it apparent that the French government was at least as much interested in acquiring political advantage through the Enfida purchase as was the Société Marseillaise in winning profits.
45. Broadley, op. cit., I, 191-3; II, 361-3 (Appendix "M"). Broadley claimed to write with the draft of the proposed concession in extenso before him and quoted it in full. The alleged text was also published in La Justice, a Paris journal, and figured in the Rochefort trial. Renault and Roustan denied the accuracy of this text, but they did not back their denials by revealing the actual proposals made to the Tunisian government. See L'Intransigeant, October 3, 1881, and December 16, 1881.
46. M. Roustan to M. Barthélemy Saint-Hilaire, December 21, 1880, Livre jaune, "Affaires de Tunisie, 1870-1881," criticized in L'Intransigeant, October 3, 1881.
47. Doc. Dip. Fr., III, Nos- 337, 449
48. Broadley, op. cit., pp. 204-13.
49. "Your Excellency has long understood that the question at stake is something quite other than that of the La Goletta railways and a few kilometers of telegraph wire on the Regency's territory," the French ambassador at Rome wrote to Barthélemy Saint-Hilaire on March 19, 1881. "Those are merely the pretexts being used. It is not only a question of commercial and political influence in Tunis; the aims of our adversaries go beyond that: what they really want is to supplant France in the Mediterranean and to assume there, after England, the second place that we occupy by reason of the importance of our commerce and to substitute themselves for us wherever they can. Italy can hope to attain this end only if we fall victim to some grave European complication. Thus, the conflict may very well, one day or another, cease to be partial and local and have the most dangerous repercussions at London, Vienna, or Berlin." (Doc. Dip. Fr., III, NO. 405.)
50. Ibid., No. 214 (July 16, 1880). Cf. also Nos. 193 (July 6, 1880) and 211 (July 14, 1880).
