The roots of the dispute lay in the secret Treaty of London, signed during the war (26 April 1915), and in growing nationalism, especially Italian irredentism and Yugoslavism, which led ultimately to the creation of Yugoslavia.

Italy began immediately to occupy territories ceded to it by the treaty of 1915, while simultaneously the South Slavs formed local governments in opposition to both Italian expansion and Austro-Hungarian authority.

The Chief of the Division of Boundary Geography with the American delegation to the Paris Peace Conference, Douglas Wilson Johnson, wrote at the time, "Any naval power on the [Adriatic] eastern coast must find itself possessing immense advantages over Italy.

"[5] Johnson went on to note that the offer of Pula (Pola), Vlorë (Valona) and a central Dalmatian island group to the Italians effectively settled the strategic problem and balanced the two Adriatic powers.

[6] On 29 October 1918 the Austro-Hungarians evacuated Fiume, and the new Croatian mayor, Rikard Lenac, proclaimed the town's adherence to the National Council of the State of Slovenes, Croats and Serbs.

It was agreed that the Serb troops should evacuate the area that afternoon and that the Italian marines should not be landed for another three days, pending orders from the Supreme Council of the Paris Peace Conference.

Although Rainer agreed, he was countermanded by his superior, on the grounds that he had acted without instruction, and an Italian troops force eighty strong entered the city that afternoon.

Josephus Daniels, United States Secretary of the Navy, wrote to his Chief of Naval Operations, William S. Benson, also American naval advisor to the Paris Peace Commission, that "due to possible Adriatic developments and [American] desire to show sympathy with [the] Slavonic government being formed in the late Austro-Hungarian Empire, consider it desirable to send flag officer ... immediately into the Adriatic.

[12] The Naval Commission began its work in Fiume in early December, but in January the Italian representative, Admiral Vittorio Mola, resigned in protest.

At a meeting in Venice on 8 February Rombo told Admiral Albert Parker Niblack that the Americans did not understand the Adriatic problem, leading to a breakdown in negotiations between the Italians and the rest.

[14] On 8 October 1918, in response to the recent opening of the National Council in Zagreb, the Reichsrat, one of the two parliaments of Austria-Hungary, freed 348 of the 379 sailors still in custody after the mutiny of 1–3 February in Kotor (Cattaro).

On 22–24 October officers conducted talks with sailors in their native languages on all ships explaining Emperor Charles I's plan to federalise Cisleithania, but it was too late to restore morale or loyalty to the crown.

was handed over to the National Council of Slovenes, Croats and Serbs by Admiral Miklós Horthy, acting under orders received from the emperor the previous day.

[16] The formal handover at Kotor took place on 1 November, the same day the Italians sank the battleship SMS Viribus Unitis at Pula, whether yet aware it was a Yugoslav ship or not.

That day, cruisers of the British, French and Italian navies sailed into the Bay of Kotor (Bocche di Cattaro) and the last unoccupied Austro-Hungarian port.

"[18] In Dalmatia, the American occupation zone, the citizens had elected a provisional assembly and a governor, and both supported the nascent State of Slovenes, Croats and Serbs.

In February 1920 the Italians requested four Austro-Hungarian ships allocated to Italy by the Allied Military Committee of Versailles and which were being guarded at Split by American forces.

The nationalist fervour he had stoked, however, broke into open violence in Fiume, where, on 6 July 1919, an element of the Italian population massacred some of the occupying French soldiers.

[24] Tittoni altered the course of negotiations by abandoning the Treaty of London and strengthening the Franco-Italian alliance, but he did not accept President Wilson's proposed "line".

[26] This last compromise aroused the anger of President Wilson, who, in a statement issued 10 February, denounced it as "a positive denial of the principles for which America entered the war".

On 26 February, Clemenceau and British Prime Minister David Lloyd George published a note offering to disavow the January compromise and suggesting that the memorandum of December be similarly sidelined.

[27] It was suggested by some at the time that Lloyd George had personally frustrated the efforts of Wilson by a private agreement with Nitti whereby the latter would support Britain against France on the Eastern (i.e., Russian and Turkish) Question.