HL Deb 25 July 1923 vol 54 cc1346-68

My Lords, I beg to ask if any further progress has been made with reference to the settlement of Hungarian Reparations. This Question, which appears in my name upon the Paper, is really of more importance than it seems to be, because it concerns the peace and prosperity of the whole of Central Europe. I confess I am rather surprised that this Question has not been brought forward by some more responsible person than myself, more especially by the noble Viscount the Leader of the Opposition, who for so long occupied the position of Foreign Secretary. The statesmen who negotiated the various Treaties at Paris are always somewhat impatient of any criticism upon their performances, but I do not think that my noble friend Lord Curzon need feel any sensitiveness upon this point because, if report is to be believed, he was not consulted as much as he ought to have been, and I will pay him the compliment of saying that if he had been consulted to a greater extent the condition of Europe would in all probability be much more satisfactory than it is at the present moment.

Whatever people may feel upon this particular point, I think it will be generally admitted that the question of the treatment of Reparations was the least successful amongst the performances of the statesmen to whom I have alluded. In the case of Germany, the total was fixed, if I am not mistaken, by certain members of this House—not, I hasten to say, by my noble friend Lord Curzon—at the figure of £20,000,000,000; I am not sure that it was not originally fixed at £40,000,000,000. That was reduced, as we all know, to £11,000,000,000, and in 1921 it was again reduced to the figure of £6,600,000,000, at which it stands at the present moment. Speaking for myself, I cannot help feeling that we shall be somewhat; fortunate if we obtain one-third of that amount eventually.

In the case of Austria, a Commission (an enormous army, so to speak, both male and female), proceeded to Vienna and remained there for a year, consuming all the available resources of the place. They finally reported that there was nothing to be got out of Austria and, as everybody knows, Austria has been extricated from her difficulty by means of a loan which has been obtained through the intermediary of the League of Nations and is administered under the League of Nations. In the case of Turkey—Turkey, by the way, being, possibly, the greatest criminal of all our opponents—no Reparations, so far as I know, have been asked for at all. The only case which has been satisfactorily dealt with is that of Bulgaria. In Bulgaria Reparations were originally fixed at the fantastic sum of £90,000,000 sterling and, if I have not been mistaken, that sum has been reduced to I something like £24,000,000. But I would like especially to draw attention to this fact that although the question of Bulgarian Reparations has been settled, the Commission is still established there practically in full force, and the head of the English section of the Reparations Commission at Sofia is actually drawing a larger salary than the British Minister in that place. I am curious to see how much longer he will continue to do so. If I were in his position, I should feel some scruple about drawing a disproportionate salary from a broken and bankrupt country.

Now I come to Hungary. In the case of Hungary, of course, a Reparations Commission proceeded in full force to Budapest in the usual way, and for about two years or more they have been studying what Hungary ought to pay without being able, to arrive at any conclusion. I would like to remark, incidentally, that when the Reparations Commission arrived at Budapest the Hungarian crown stood at 700 to the £; to-day, if I am not mistaken, it stands at anything between 40,000 and 50,000 to the £ sterling. It is not surprising, therefore, that this Commission has been unable to fix upon any definite figure. Everybody admits that there is no money to be got out of Hungary at the present time. The financial position of Hungary is about as hopeless as anything can well be. I do not know what their National Debt amounts to, but the deficit on their present Budget is something like forty milliards of kronen, and everybody admits that if payment is insisted upon at the present moment, not only will the Hungarian crown collapse, but the whole of the Hungarian State will collapse, too. The only chance for that country is to obtain a loan by means of the League of Nations, and the only possibility of effecting this object is the release of certain assets which are claimed by the Reparations Commission as a first charge. To put it quite shortly, the only chance for Hungary is for her to be put in the same position as Austria and to obtain a loan on the same terms.

The position was very clearly explained by Count Bethlen in an interview which he accorded, I think, to The Times correspondent on July 7. Count Bethlen's words, I think, exactly expressed the situation. He said:— What is the issue? It is nothing less than the existence of Hungary. We are striving to-day solely for an economic chance to live, and compared with that all other questions are insignificant…Without the League, so far as I can see, it will be quite impossible for Hungary to obtain a loan, and without a loan, despite all the sacrifices and all the economies which Hungary can and must make, it will be impossible for us to exist. In pursuance of this policy of trying to obtain a loan through the League of Nations, Count Bethlen, recently Prime Minister of Hungary, made lately a tour which included this country, France and Italy—a melancholy pilgrimage which must have recalled to some people the equally melancholy pilgrimage of M. Thiers when the fortunes of France were at their lowest ebb.

When Count Bethlen came to this country he was received, as might well have been expected, in a sympathetic manner, and I believe that his proposals were approved by His Majesty's Government. In the same way, when he went to Rome, Italy being a country which is greatly interested in the question—because, unlike ourselves, she is entitled to claim twenty-five per cent. of Hungarian Reparations—he met with an equally favourable reception. But when he went to Paris he met with a rebuff. When the question was brought before the Reparations Commission, which, in this instance, consisted of a representative of this country, a representative of France, a representative of Italy, and a representative of the Little Entente, owing to the casting vote of the Chairman who was the French representative—why he should have a casting vote I do not know—this proposal was rejected. At the present moment, therefore, it looks as though Hungary was doomed to economic ruin, if not to something worse.

In case anyone should feel surprised that a great nation like France, which has always prided itself upon its generous policy, should have decided that this unfortunate country was not to be relieved, the explanation is a fairly simple one. It has been the policy of France ever since the war to build up a series of satellite States who will be of military assistance, if necessary, in the event of another war, and in return for this hypothetical military assistance the policy of the French Government has naturally always accommodated itself to the policy of the Little Entente. It is a somewhat strange fact that, although the French Government does not show any inclination to pay its Debts elsewhere, yet these satellite States are always able to obtain either loans or credits for the purposes of munitions of war. Unfortunately, the views taken upon Reparation questions by this country and by other countries are diametrically opposite. We look upon Reparations from the economic point of view. Other nations, unfortunately, look upon them from the political point of view. In other words, we look upon Reparations as a method of obtaining some return for the gigantic expense to which we were put during the war, while other nations look upon them from the political side as a means of paying off old scores and of gratifying political hatreds.

It is a melancholy fact—I dare say my noble friend will reprove me for saying so—that the Little Entente countries have no particular desire to see a re-established Hungary. With great ingenuity they have persuaded a number of simple people, here and elsewhere, that Hungary is a dangerous, aggressive and pugnacious State of whom they stand in fear. As a matter of fact, these Hungarians at this moment possess a so-called Army of 30,000 men, who actually cost less than the Austrian Army, which is administered by the League of Nations. Each of the Little Entente countries can put in the field a force of well over a million men, and, in order to foster this idea that Hungary is a truculent State with which nothing can be done, every kind of trumpery incident is magnified into an event of vast importance. I learn, for instance, that the other day the Control Commission—that is to say, the Commission which is supposed to superintend the disarmament of Hungary—on arriving at a certain town called Keskemet were stoned by the populace.

It is no doubt a very discreditable thing that such an incident should happen at all, but what, to my mind, is infinitely more discreditable is that a Commission of this kind should be in existence at all. There never was anything in the nature of disarmament to do in Hungary. Hungary was disarmed. Everything was taken away from it by the Rumanians long ago, and nothing remains. The Allied Missions which still infest, if I may use the term, ex-enemy countries are little short of a curse. Two years ago, when I was in Berlin, it was submitted to me by a very important official of the Control Commission there that the work was completed, and he was corroborated by no less a person than the French General at the head of the Mission. Yet the Missions go on, and there does not appear the smallest chance of any of them coming to an end.

I would like noble Lords to put themselves, if they can, in the position of these ex-enemy countries. Supposing that five years after the war we had here a Control Commission, consisting of Turks, Austrians, Bulgars and Germans, living here at colossal expense, drawing, the humblest of them, twelve times as much as Mr. Baldwin, our present Prime Minister, and that these people were going about the country searching for arms, looking for old rifles or some trumpery matter of that kind, is it supposed that they would meet with a friendly reception? My impression is that if this sort of Commission existed in this country it would have a very much worse time of it than these Missions have experienced in any country on the Continent. The fact is that so far from Hungary being a danger to other countries, and being a well-armed and truculent State, it stands in the greatest danger of being partitioned by its neighbours. I am not sure whether the Hungarians realise it themselves, but I am inclined to think that Hungary at the present moment is in very much the same position as Poland was in the eighteenth century, and that it would take very little in order to bring about a partition of that country.

It will, perhaps, have been gathered from what I have said that I do not see why Hungary should pay any Reparations at all. Hungary was more hardly treated than any State at Paris. I remember the late M. Stambulisky saying to me last autumn, "Bulgaria has been treated hardly enough, but our treatment has been mild compared to that of Hungary." I think he was speaking only the truth. Sixty-five per cent. of their territory has gone, two-thirds of their population has gone, millions have been transferred to alien rule without being consulted in the matter at all, and the economic development of the country has been fatally injured by the capricious frontiers imposed at Paris. But, quite apart from that, Hungary has made very great sacrifices since the war. It is true that no money, so far as I know, has been paid, because there has not been any money in the country, but deliveries in kind have been made to Italy, Serbia. Rumania, and even to Greece. Why Greece? You might just as well say that the Portuguese or Brazilians should ask for Reparations in kind.

To prove how unjust these exactions are, it is a notorious fact that these countries, which have obtained Reparations from Hungary in the shape of cattle, have, as soon as they have obtained them, actually sold the cattle to some other State. In addition to these sacrifices, the Hungarian Government have honestly endeavoured to carry out economy. They dismissed at least 11,000 officials last year. The head of the State only draws between £400 and £500 in our money, and a Minister of State of the rank of my noble friend Lord Curzon draws something like £40 in our money. Quite apart from that, this unfortunate country has suffered from severe internal troubles. Everybody remembers the expeditions of the late unfortunate Emperor, which were the cause of the greatest danger to the country. They had an interregnum of Bolshevism that lasted four months, from which every other country, with the exception of Russia, has been saved. The Serbs occupied the only coal-bearing district in the country for a couple of years, and, worse than all, the country has had to suffer from a Rumanian occupation in time of peace which lasted for nearly a year, and which only came to an end after at least eleven ineffectual ultimatums had been launched at Bucharest from Paris. In the course of the occupation of Hungary the Rumanians plundered this unfortunate country to an extent which has been calculated by an expert authority at anything from £80,000,000 to £100,000,000 sterling.

I wish my noble friend, or, for that matter, any other member of this House could go to Hungary, or rather to Rumania, and see the result of the Rumanian occupation. When you enter Rumania from the western side you pass mile after mile of railway material, which was seized in time of peace from Austria-Hungary, and which has been lying rotting and unused there to the present day. I have calculated that if you were to take this looted and derelict railway material and spread it out over a single line it would reach very nearly from Euston to Crewe. To my mind it is one of the most deplorable spectacles that can be witnessed in Europe at the present day, and for wanton waste and selfishness it can only be paralleled by the deliberate damage inflicted by the German Armies in France And the Rumanians are the people who have the sublime impudence to claim Reparations from Hungary at the present moment. So far as my information goes—I do not suppose any attention will be paid to it—I do not see why Hungary, in consequence of what they have suffered, should pay any Reparations at all. That, apparently, is not the view of the Hungarians themselves. In spite of their misfortunes, they are still a proud nation and are prepared to pay, so far as they are able to pay. They are prepared to pay if they are given a chance, and they are prepared also to carry out loyally every provision in the Treaty provided they are given a fair chance.

I do not like to conclude what appears to be a series of complaints without making a suggestion, which no doubt has already occurred to the noble Marquess. The representatives of the Little Entente frequently come to this country for money, and only a few days ago the Rumanian representative was here in search of money. I understand that he met with rather a frigid reception because the Rumanian Government had been passing legislation which has the effect of depriving British subjects of their property. My suggestion is this—that neither Rumania nor any of these Governments should be given one single penny, that every impediment should be put in the way of their raising loans in this country, until they have agreed to a satisfactory settlement of Hungarian Reparations. I do not know whether other noble Lords feel as I do on this matter, but it seems to me a monstrous thing that a civilised State should be condemned to absolute economic ruin in order to gratify political hatred. If the proposals which Hungary has put forward are refused that country will either become the centre and prey of Bolshevism, in which case it will be a plague spot in the centre of Europe, or it will be divided in partition amongst her neighbours. That is a fate which nobody can contemplate with equanimity. Whichever happens, it would be a disaster to Europe, and I trust that the noble Marquess, when he comes to reply, will be able to make some statement which will reassure us, and Europe generally.


My Lords, none of your Lordships who may have visited the new States which once made up Austria-Hungary will feel that my noble friend has, on a single point, exaggerated his case. The severity of the peace settlement in regard to Hungary was extreme, and it has proved, in fact, infinitely harsher than those who were responsible for it contemplated at the time. Let me at once add that, so far as the harshness consisted in the annexation of a great deal of territory, I do not regard that re-arrangement, if it was wrong, as a wrong that should be undone. The re-arrangement of territory that took place has turned out to be a calamity. A future re-arrangement intended to set it right would be a further calamity; that is all. Impossible as it is, and absurd as it is, to expect any living Hungarian not to have some hopes of restoring somewhat of his country's former greatness, I do not believe that that is the direction in which they ought to look, nor do I believe that any of their friends here would encourage them to do so. But the harshness of the peace settlement for Hungary is making it certain that that part of the world must be a menace to future peace, unless Hungary's successful neighbours treat her with the most scrupulous justice, and even with sympathy and liberality.

Your Lordships are probably aware what the map of the ancient kingdom of Hungary looked like, and what the present State of Hungary looks like. If you put a shilling on the top of a half crown that is about how the two areas compare. The arrangement of territory was carried out on the principle of nationalism, and all of us, in general terms, sympathised entirely with the application of that principle to that part of Europe; many of us, perhaps, without clearly realising what its application meant. What it did mean, so far as it was justly applied, was this: That in the midst of a country where people were trading with one another and living more or less prosperously, hundreds and hundreds of miles of new frontiers were run—they were run along no physical feature but upon lines of supposed nationality, as arbitrary as if you were to separate the Highlands of Scotland from the Lowlands and tack them on to Ireland—and along these hundreds of miles of new frontiers there sprung up impediments to trade and intercourse and industry; impediments of currency; Customs barriers; and very harsh passport regulations causing endless personal grievances and hardships.

As to the degree in which these grievances were felt it can be illustrated by referring to the constant recurrence of incidents such as this. An official of the Hungarian Government cannot go to visit his aged and sick mother in what was only a year or two ago his own old country home. That is an instance of which I know, and that is the kind of thing which occurs. I will not state that a man has had to take out a passport, going hundreds of miles in order to get it, before he could cross the road to milk his own cow, but such an instance would illustrate the sort of grievances now existing on the part of thousands of the Hungarian people. That which was done was done in obedience to a Liberal principle, but, nevertheless, it was, as we see now, a careless act of great retrogression towards barbarism, as it set up these barriers to trade, was harmful to the States which annexed the territory and crushing to the State which lost two-thirds of its area. A mere consideration of geographical facts must show that, economically, Hungary is absolutely crushed and in a condition which makes it absurd to expect Reparations.

I should like to add another observation which is pertinent to the economic situation in Hungary. The principle of nationality was enforced in favour of neighbours that surrounded Hungary on all sides, and enforced with a rigour which, if it had been followed elsewhere, would, for example, have sliced off the German parts of Czecho-Slovakia itself and tacked them on to Germany. But whereas, in favour of the Hungarians, economic and geographical considerations were never allowed to be set against the consideration of nationality, it was not so on the other side, and among the annexed portions of Hungarian territory were to be found places which were actually Hungarian in their population but which happened to have coal mines or oil wells, or to be very important railway junctions. The annexation of these places—one can quite understand the pretext for it and the temptation that existed—was really a matter of pure greed, and was a most grievous economic injury to the country from which these Reparations are required. Then, to complete the picture, Reparations are demanded on the top of everything.

Hungary is a country which excites sympathies and antipathies even in the same breast. All of us feel a certain attraction towards that great, vigorous and ancient people, and all of us well know that it has represented in the past a highly conservative, aristocratic society, in many respects an exaggeration of that which we imagine to have been the state of our own country some time in the eighteenth century. Thus sympathies are divided, for there is no doubt that ancient wrongs, or, at any rate, hardships to neighbouring races are to be laid to the door of Hungary if we look at her past history. But they are irrelevant now. The Reparations to be paid are supposed to be paid on account of the war. By whom and to whom are they to be paid? They are to be paid by that constituent element in the German-Austrian combination which entered into the late war with the least gladness and, as is, I believe, now well known, with a good deal of reluctance and not without absolute actual protest on the part of its Ministers.

Reparations are not by any means exclusively to be paid to the people on whom war was made. Part of these Reparations are due to Italy. That country, for reasons such as those which I am endeavouring to suggest, is perfectly willing to let go her hold upon the securities that were pledged for Reparations. Part is to go to the people of ancient Serbia, to whom no one can grudge what they obtain. Part is to go to Rumania, of which Lord Newton has spoken in terms which make it unnecessary for me to say anything more But a very large part of that which has been taken from the Hungarian population because they were our enemies in the war, is being paid over to Transylvanians, to Slovenes, to Croats, to Slovaks, to Czechs, and to a very large number of people concerning whom it is no exaggeration to say that they were no more our Allies during the great war than were the Hungarians themselves. This whole matter is an instance of the greatest hardship which is bound to keep up for a long time to come a rankling sense of injustice, and bound also, as I should have thought must be obvious, to retard in a quite ruinous manner the economic restoration of all that portion of Europe and economically to redound to the harm, and not to the advantage, of the States which are insisting upon these payments.

Let me just say this, in conclusion. It is, to my mind, a very great misfortune that almost every learned or historically-minded or geographically-minded Englishman who travels in South-Eastern Europe and comes back and tells us about the people of whom he has been making friends, is a partisan of one or the other of the races of that portion of the globe, is the friend of that particular race, whatever it may be, and is in consequence generally the enemy of some neighbouring race, whether it be an opposition of Turks and Greeks, Bulgars and Serbs, Hungarians and Czechs, or some other. I can assure your Lordships that it is in no sort of spirit of partisanship on behalf of Hungary, or because my sympathies are limited to a race among which I have friends, that I am approaching this subject, nor will any of your Lordships suggest that Lord Newton has approached it in that spirit.

I think that the statesmen of a country like Czecho-Slovakia, able men to whom, if one's voice could reach them, it would be possible to address an argument of this kind, will, in view of the precarious future before them, make the greatest conceivable mistake if they say: "Here is Hungary feeling herself wronged, distressed and weakened; let us keep her down, let us be sure that she cannot recover her strength sufficiently to be a danger to us." That line of policy and of sentiment must, I believe, in the end be absolutely calamitous to themselves. The true course of statesmanship and of wisdom on the part of any of the peoples surrounding Hungary and of the nations of the Little Entente is, I am absolutely convinced, to look a little forward in the future, to endeavour to re-establish as soon as possible the economic prosperity of the whole of that region of Europe, and to endeavour to efface from the minds of the children of a vanquished people that which cannot, of course, be effaced in a day or two from the minds of their present leaders, that sense of wrong which is something other and far more bitter than the sense of defeat.

I have detained your Lordships longer than I intended, but I entertain the strongest feeling that, whether it be our French friends or our friends in Czecho-slovakia, to the extent to which they are actuated, as they do appear in this matter to be actuated, by the instinct of keeping their ancient enemies down, to that extent they are committing a disastrous error which must in time alienate from them the sympathy of the civilized world, which is of the very greatest importance to thorn and for the lack of which they are very likely in the future to suffer bitterly.


My Lords, having lately been in Hungary, I should like to say with what pleasure I have listened to the speech of Lord Newton. I sincerely hope that his remarks will be sympathetically noted by everybody. Unfortunately, I am afraid there is a great deal of ignorance amongst the general public with regard to the state to which Hungary has been reduced by the Peace Treaty and the enormous reductions that have been made in the economic resources of Hungary—the way in which that nation has lost its forests and minerals and been reduced practically to what has been described as an agricultural rectangle comprising only a small portion of the ancient lands of Hungary.

We should always remember that there is, perhaps, more sympathy between the Hungarian and British peoples than amongst any others in Eastern Europe. I do not suppose there was any country where English prisoners were better and more sympathetically treated than in Hungary, and I wish to mention one little item which may appeal to your Lordships. We are all of us interested in agriculture. Hungary is a country, as your Lordships know, of great plains, lending itself to agriculture on a large scale. To show the economic poverty of the nation at present, I was informed the other day on good authority that, although there are very large numbers of steam ploughs and cultivation plants scattered about the country, most of which came from England, yet by far the greater number are lying idle, simply and solely through lack of fuel and because the Hungarians are unable, owing to the depreciation in currency, to pay for the import of the coal which is necessary to work those plants. I merely mention that as an instance that will appeal to your Lordships. I hope that the way in which the economic resources of the country have been depicted, and the friendly feelings that that country has always had towards England, may be sympathetically noted.


My Lords, I do not wish to go further into the matters mentioned by Lord Newton, because my information would merely support what he has said, but before the noble Marquess replies, I should like to suggest what appears to me to be the only form of remedy, and that a practical remedy. Hungary applied for League assistance on the same lines as that given by the League to Austria. The effect of that on Austria has been marvellous, as regards the reconstruction of industrial and moral life within the Austrian dominion. That was possible in the case of Austria, because the Reparations Commission assented to the remitting of the liens of the Allied and Associated Powers, so that the loan to Austria would be a first charge upon the resources of Austria.

Hungary, as Lord Newton pointed out, made exactly the same application as was made by Austria to the League, and if the Reparation Commission had acted towards Hungary in the same way as it acted towards Austria, I think there is every probability that the financial and economic position of Hungary would have derived the same advantage as has been derived in Austria, and there might be the commencement of new life and industrial energy in Hungary. The question I want to put is simply this: Can the noble Marquess not use the influence of this country, either upon the Reparation Commission or with the Council of the League of Nations, to secure that Hungary shall be given the same advantages as have been given already to Austria? I am sure that on practical grounds that is the way in which an outlet may be found from the present distresses of Hungary, and successfully found if the Reparation Commission take that attitude.


My Lords, following on the remark of Lord Parmoor, I hope that my noble friend, the Leader of the House, when he replies, will be able to give us information with regard to the Customs Duties, or rather Customs barriers, which have been imposed upon Hungary by the surrounding countries Lord Newton, in his recital of the injuries done to Hungary by the Treaty, did not refer to the matter of Customs Duties. It is perfectly impossible for any small country, in a truncated form like Hungary, to have any commercial prosperity if all her neighbours are active to prevent her having any proper trade. I do not know what are the Customs Duties at the present time, but I do know that two years ago they were extremely oppressive, and really rendered all trade impossible on the part of Hungary. It is desirable that we should know whether Hungarian commercial life is being paralysed by any such system at the present time, I think that in that abortive attempt to obtain a peaceful settlement of the whole of Europe by various Treaties one thing ought to have been done, and that was to secure that there should be Free Trade between these countries. If it is the case that the Customs barriers are oppressive. I think an attempt should be made to give some breathing space to Hungary.


My Lords, in replying to my noble friends who have addressed the House, and all of whom have made speeches very sympathetic to Hungary, I will confine myself as closely as I can to the Question on the Paper, and will ask leave of your Lordships not to deal with the extraneous issues, some of which have been alluded to occasionally by Lord Newton and by subsequent speakers. Perhaps the best way in which I can deal with the case and satisfy the House will be by giving a succinct and, so far as I can make it, strictly accurate account of the events which have led up to the position that my noble friends have described, and in some cases deplored, this afternoon.

It was by Article 161 of the Treaty of Trianon that Hungary accepted, along with Austria, complete responsibility for the damage done as a consequence of the war to the Allied and Associated Governments and their nationals by the aggression of Austria-Hungary and her Allies. The Allied and Associated Powers recognised that the two new States, with their diminished territory and resources, would not be able to make complete reparation. For this reason it was left to the Inter-Allied Commission, called the Reparation Commission, to determine the total liability of each of those countries. The payments were to be in instalments, extending over thirty years, dating from May 1, 1921, and Hungary agreed to accept the payments as a first charge on all her assets and Revenues. Actually, as I think Lord Newton said, the Reparation Commission has yet to assess the total liability of Hungary. Towards the end of last year the prospect of such an assessment appeared imminent. At that time, however, His Majesty's Government received repeated intimations from our Minister at Budapest that, in spite of the not inconsiderable efforts of the Hungarian Government to refrain from inflation, and to maintain a financial equilibrium, the Budget deficit and the financial position generally were such that any demand by the Reparation Commission for a large sum would involve Hungary in a financial collapse similar to that from which Austria was then suffering, but is now, I am glad to say, slowly recovering. This presentation of the position was confirmed by expert opinion which we received from other quarters.

Accordingly, in November, 1922, we informed our representative on the Reparation Commission in emphatic terms of our solemn opinion that the Commission, before taking any decisive step, should weigh well the evidence at their disposal as to the economic position of post-war Hungary, and the probable consequences of any large demand for payments. Furthermore, at the beginning of this year it became obvious that Hungary could no longer hold up her head or escape financial collapse unless she were able to obtain a foreign loan. The precedent of Austria, however, made it abundantly clear that no such loan could be raised unless the Hungarian Government were put in a position to offer certain State Revenues as security. But, as a matter of fact, the whole of those Revenues were already mortgaged under the Peace Treaty. Accordingly the Hungarian Government resolved to approach the Reparation Commission in Paris to give them a frank and comprehensive statement of their financial position, and, having convinced them that no Reparation payments were for the time possible, to ask, first, for a moratorium, and, secondly, for the release of the necessary Revenues for the purpose of a long term loan.

In pursuance of this policy, the Hungarian Government first sounded the principal money markets of Europe as to the possibility of raising a loan, if favourable conditions could be shown to exist. Then, the Hungarian Prime Minister, Count Bethlen, and his Minister of Finance went abroad. They visited Paris, and they laid their case before the Commission. They made it clear that they would gladly see the financial position of their country generally, including that of Reparation, referred to the League of Nations, as in the case of Austria. And there was little doubt that they were prepared, should the advice have been given, to accept a measure of foreign control over their finances. Subsequently, the Hungarian Ministers paid a visit to London. My noble friend Lord Newton described this as a melancholy pilgrimage. I own that when I had the opportunity, on more than one occasion, of conversing with Count Bethlen, I did not recognise in him a very melancholy pilgrim; at any rate, my conversation with him was of a character, I think, to abate any melancholy which he might have felt on the other side of the Channel. We were sympathetic to the Hungarian appeal. Our view was that it was the function of the Reparation Commission to give its opinion on the technical questions whether Hungary should be granted a moratorium, and be enabled to raise a foreign loan, and that then the question could be referred to the League to secure the necessary financial and political guarantees.

This view was also held by the Italian Government, and we both earnestly hoped that the Reparation Commission, by a decision on these lines, would make a contribution of first-rate importance to the re-establishment of confidence in the economic stability of that part of Europe. These hopes were, I regret to say, disappointed. The joint British and Italian proposal was opposed by the French representative, as has been pointed out this afternoon, and also by the common delegate representing the countries of the Little Entente, Greece, and Poland, and it was finally defeated, as has been pointed out, by the casting vote of the French president. It was much to be deplored, in our opinion, that the French Government, before they took this step, should not have discussed the position with ourselves. Actually, the Commission recognised that Hungary was in need of a loan, but the release of Revenues was made subject to conditions which rendered it certain that no loan could be raised. Thus a deadlock was produced in these transactions.

But here I am bound to say this, in order to hold the scales absolutely even. There were other parties in the case whose action was not less to be deplored. One would have thought that at the moment when they were asking the principal Allied Powers and the neighbouring States to waive certain legal rights, in the interests primarily of Hungary's financial stability, this would have also been the occasion for avoiding the slightest appearance of contumacy or ill-faith, but this was not what happened. My noble friend Lord Newton said nothing about this or, at any rate, he minimised it, but a number of incidents did occur in Hungary, the effect of which was most unfortunate.

An individual who had given information to the Inter-Allied Military Mission of Control in Hungary in regard to concealed stores of military munitions—and there were such stores—that is, who had informed them of a direct violation of the Treaty, and who had, in so doing, given the Commission the help which they had a right to receive, and which it was the duty of the Hungarian Government to give them, was arrested, tried by a Hungarian military court, and condemned to death. Further, no inclination was shown to yield to certain very legitimate demands of the Ambassadors' Conference in the matter of disarmament. A series of fatal and, as I think, futile frontier incidents was permitted to continue; and, finally, in the case which was somewhat minimised by my noble friend Lord Newton, a very gross instance of obstruction to, and attack upon, the Military Mission of Control in the due discharge of their duties was punished with a quite unpardonable inadequacy.

These incidents made it very difficult for His Majesty's Government to pursue their appeal to Hungary's neighbour States to take a long-sighted view of their own best interests in relation to Hungary's financial position. I do not desire to lay undue stress on this aspect of the case. I am glad to say that Hungary has since realised the great mistake of which she was guilty, and has shown an earnest desire to make amends. The particular incident to which I have-referred, and which Lord Newton mentioned in passing, is now liquidated and may be dismissed, and we can concentrate our attention on what is the really important thing—namely, the financial aspect of the case with which we are confronted. We are, accordingly, giving our full support to the appeal of Hungary to all Powers who are represented on the Reparation Commission, and we have addressed a special appeal to France. Talking of conversations, I had a long conversation on the subject with Dr. Benes, the Foreign Minister of the Czecho-Slovakian State, when he was here the other day, and I was glad to note a friendly attitude on his part. And I am more than hopeful that at the meeting of the Little Entente, to which he was going, and which is due to take place in a few days from now, Jugo-Slavia, his State Czecho-Slovakia, and Rumania will see that their economic and other interests will best be served by enabling Hungary to raise a loan, subject to the necessary conditions and guarantees.

Therefore our attitude may be summed up as follows. We desire to prevent the financial collapse of Hungary, with its incalculable consequences. We desire to see in force a complete scheme of reconstruction, with suitable safeguards at the earliest possible moment, because we know, from the example of Austria, that delay involves larger sums of money, to say nothing of greater sacrifice on the part of the population which we desire to assist. We are further convinced that no financial aid on a sufficient scale can be forthcoming for Hungary except under a scheme supported by the League of Nations. No other body can command the necessary political support to obtain undertakings similar to those which were given in the case of Austria. No other body possesses the necessary influence to secure the placing of loans and the necessary authority to control the financial reforms which the Hungarian Government will have to carry through. And, lastly, we doubt if any scheme for balancing the Hungarian Budget would gain the confidence of the financial world unless it were put forward on the authority of the Financial Committee of the League. We earnestly hope, therefore, that the Reparation Commission will reconsider their decision of May last and will refer the question without delay to the League of Nations. The experts of the League might then work out the scheme of reconstruction with political, military and financial safeguards and guarantees, for submission to the Council of the League at their meeting at the end of this month.

But, my Lords, may I add, m conclusion, this word of entirely friendly advice? If we are to give this assistance, and I think I have promised it in no ungenerous form, a reciprocal obligation rests upon Hungary herself. There is, and it was never more patent than in Lord Charnwood's speech, a great deal of friction in that part of the world. There are all these difficulties arising from Customs Duties and otherwise, inevitable in the lacerated frontiers of States broken up in the agony of war. All these conditions exist, and are a perpetual source of trouble and even of danger. Just as we have appealed to her neighbour States to establish good and friendly relations with Hungary, so it is essential that Hungary should be on good terms with the great Powers of Europe. It would be a very foolish thing on her part if she were to alienate any one of us at the present time, and in order to escape that possible danger, of course she must do her best to fulfil the obligations which she accepted under the Treaty of Trianon. She must retain our confidenee, and she must remove the suspicion of her neighbours whose co-operation is really essential to her future revival and welfare. The noble and learned Lord, Lord Parmoor, asked us to act in the case of Hungary on the lines in which we have already successfully acted in the case of Austria. That is exactly what we are endeavouring to do. The case of Austria and the Austrian loan is there to encourage us, and Hungary will do well to shape her conduct as we will endeavour to shape ours, by that most fruitful example.


My Lords, I have nothing to add in the way of argument or information to the speeches which have already been delivered. I have only a very few words to say. I entirely agree with all that the noble Marquess opposite has just said in regard to all these ex-enemy States, such as Hungary, which are in need of assistance, that it must be made very clear that they have good will, so far as it is in their power, to perform the obligations undertaken by them under the Peace Treaties, particularly the obligation with regard to disarmament, and that they should afford every facility to the Allies to exercise their powers under those Treaties to see that those obligations are being fulfilled. I think it is only right that, whereas in the case of Hungary there was a disposition to interfere with the exercise of those powers or to impede them, it should be made clear that not only must there be no such impediments placed in the way by an ex-enemy State, but that they must show good will to facilitate the performance of their obligations under the Peace Treaties.

I entirely agree with that as a condition; but, subject to that, I must say that I have listened to the speeches which have been made by noble Lords this afternoon with a great deal of sympathy as regards the present condition of Hungary, and with considerable apprehension as to the future. After all, what was the object, or one of the objects, of the Peace Treaty? It was to secure, and rightly to secure, from those enemy States which had been responsible for the war and responsible during warlike operations for doing damage far in excess of that which the operations of war required, that they should to the utmost of their capacity make reparation for the damage that had been done. That was, rightly, one of the objects of the Peace Treaty. But that object has really been defeated by the sort of policy which has been pursued with regard to Hungary. You cannot get any Reparations from a ruined country. Ruin and Reparation are incompatible things.

I fear that Hungary is an illustration of the sort of policy which really prefers seeing an ex-enemy country kept perpetually weak to getting Reparations. I do not believe that the Little Entente, or any group of Powers, can secure permanent peace in that way in their own region of the world. I do not believe that you can secure future peace—of course, you cannot secure Reparations—by keeping any nation permanently bankrupt and miserable. But what fills me with apprehension about the future is the sort of thing of which Hungary is an illustration—the policy which is not going to secure the peace of Europe in future but, on the contrary, is going to turn Europe into a dangerously fertile seed-bed of future war.

To come to the simple illustration of Hungary, the way out is so plain. It is the help given through the League of Nations as it was given in the ease of Austria. We know that there are many people who are sceptical as to whether the League of Nations will fulfil the great hopes which its founders entertained when they brought it into existence. I think that the amount of success it achieves will very greatly correspond to the amount of hope that is generally entertained in regard to it and the amount of encouragement it receives. But this is not an instance of scepticism about future possibilities or ideals. It is simply an instance of following up a success which has already been achieved by the League of Nations in the case of Austria. You have had a similar difficulty with regard to Austria: and the League of Nations has been used with conspicuous success to solve that particular problem. Surely it is of the most elementary statesmanship to say that, having an instrument in the League of Nations which has proved itself successful in dealing with this particular point and this particular difficulty in that case, when you have the same sort of difficulty in the neighbouring country of Hungary the instrument which you have already found a success in a parallel case shall be applied.

I know, of course, that while the Governments of the Allied Powers are so much occupied as they are with very anxious discussions about German Reparations it may be difficult to make progress with any other smaller question, but I welcome the statement which the noble Marquess has made that His Majesty's Government will use all their influence to secure that the precedent of Austria shall be applied in the case of Hungary, and I welcome especially the statement with which the noble Marquess concluded that he had some hope that other nations represented on the Reparation. Commission would also come round to that view.


Perhaps I may be permitted to thank my noble friend not only for his full but, on the whole, extremely satisfactory statement. At the same time, I feel some slight regret that he did not avail himself of the suggestion put before him—namely, that pressure should be put upon the Little Entente people by means of refusing loans to them unless they adopt a more reasonable attitude. My impression is that they would be much more susceptible to arguments of that kind than to any appeal to their higher and better feelings. I would like to add this, that I hope such a trumpery instance as that to which my noble friend alluded this afternoon will not be allowed to stand in the way of a settlement of this question, which is really vital to the peace and prosperity of, Central Europe.