Paris Peace Conf. 185.119/29

Memorandum by Dr. A. A. Young

A Suggestion for American Policy With Respect to Indemnities

To make it clear beyond question that an indemnity is compensatory rather than punitive, it is not sufficient that the amount of the indemnity should be limited by the amount of injury actually done to civilians and their property. It is equally necessary—and this is [Page 607] the point of the present proposal—that the proceeds of the indemnity should be used for no other purpose than that of compensating for losses actually incurred.

Thus interpreted, restoration involves payments to the French government, for example, not so much because the national economic fabric has been injured, as because the French government must serve as a trustee for the French civilians who have suffered losses through the aggression of Germany. These losses are not merely the basis of the indemnity; they also define its purpose.

It is likely that the principle just stated will meet with little dissent so far as indemnification for damages to property is concerned. But its real significance is shown more clearly in connection with the problem of compensation for injuries to persons.

Consider, for example, the Belgian claim for compensation on account of the illegal killing of civilians, the high death rate among those forcibly deported to Germany, and the impaired vitality and reduced productive efficiency of the survivors. Now the title of the Belgian government to indemnification, on its own account, for these injuries is questionable. The net economic worth of an average man to a nation is hard to determine. It is not large, however, for every man is a consumer as well as a producer, and only by slow accumulations adds to the wealth of the nation. But the direct economic losses incurred by the Belgian families whose bread-winners have been illegally killed or incapacitated are real, real and measurable.

It would be right to insist that the amount of indemnity to be assigned to Belgium on this account should be measured by the cost of providing an adequate insurance and pension system to cover these personal losses, and that the validation of the claim should be made to depend upon the establishment of such a system.

This is only one out of several possible types of claims where the application of the principle that actual personal compensation is the purpose as well as the measure of the indemnity suggests a solution of what might be otherwise a difficult problem. Furthermore, other reasons may be urged for the adoption of this principle as part of the American policy with respect to indemnities:

It affords a basis for throwing out of court at once certain classes of illogical and extravagant claims.
It points the way toward a solution of the difficult problem of injuries to mercantile shipping.
It will go far to satisfy the expectations of those who expect from the coming settlement, and more particularly from American participation in that settlement, not only a lasting peace but also some definite recognition of the principles of social justice.