Paris Peace Conf. 180.03401/116

IC–176A

Notes of a Meeting Which Took Place at President Wilson’s House in the Place des Etats-Unis, Paris, on Wednesday, April 23, 1919, at 4 p.m.

  • Present
    • United States of America
      • President Wilson
      • Mr. Norman Davis
      • Mr. Baruch
      • Mr. Lamont
      • Mr. McCormick
      • Mr. Dulles
      • Mr. Whitney
    • The British Empire
      • Mr. Lloyd George
      • Lord Sumner
      • Lord Cunliffe
      • Mr. Keynes
      • Mr. Dudley Ward
    • France
      • M. Clemenceau
      • M. Klotz
      • M. Loucheur
      • M. Jouasset
      • M. Cheysson
      • M. Lyon.
      • Sir Maurice Hankey, K. C. B., Secretary
      • Prof. P. J. Mantoux, Interpreter.

Reparation

The Council had before it a printed Memorandum on the various documents prepared by the Committees in connection with Reparation.1

1. Number of Members on Commission. Mr. Lloyd George doubted the expediency of only having one representative for each nation on the Commission. He thought the number should be two as it might be desirable to Members on have two types of men, for example, a financial and judicial expert.

Mr. Davis pointed out that substitute members were provided for.

Mr. Lamont said the point had been carefully considered and provided for by means of coadjutor delegates. It had been considered that if there were two delegates for each of the five nations the Commission would become unwieldy and it would hamper progress. In any case delegates would require experts and sub-commissions would have to be appointed.

[Page 156]

President Wilson pointed out that it was the difference between the Quai d’Orsay Council of Ten and the recent conversations of the Council of Four. Mr. Lloyd George agreed this was a very substantial difference.

M. Clemenceau suggested that the coadjutor delegates practically provided what Mr. Lloyd George asked for.

Mr. Lloyd George said he would not press the matter.

2. The Right of Withdrawal Attention was next drawn to a clause prepared by the American Delegation providing for the right of withdrawal upon six months notice by any nation on the Commission. (This will be found annexed to Clause 23 on page 11 of the Appendix, having been inserted here by a drafting error instead of in Clause 5 of Annex 2.)

President Wilson explained that, in his opinion, no nation ought to withdraw from a Commission but his legal advisers had informed him that no Treaty can be withdrawn from, or even renounced, unless there was a provision to that effect. He thought that public opinion in the United States would demand that there should be such a clause, although he hoped it would never be necessary to use it.

Mr. Lloyd George asked for the substitution of 12 months notice instead of 6.

President Wilson agreed to accept this substitution.

(It was agreed that the clause providing for the right of withdrawal should be adopted with the substitution of 12 months notice instead of 6.)

3. Secrecy.—Appendix: Annex 2, Article 8 Mr. Davis said that the American Delegation considered that the secrecy provision should be withdrawn. The feeling was that to set up a secret clause in a public Treaty would make a bad public impression. If the delegates on the Commission were honest, they would not give out information; if they were dishonest, they would do so whether the clause were there or not.

Mr. Lloyd George pointed out that the object of the clause was not to exclude Governments from making announcements but to prevent the officials on the Commission from doing so. He pointed out that it was vital in matters of finance that information which might affect the money markets should not be allowed to leak out.

President Wilson said that their objections were not to the actual secrecy but they wished to protect the Peace Conference against the attacks of those who declared that everything should be public. He agreed with Mr. Davis that if discreet people were put on the Commission they would not give information away.

Mr. Lamont suggested that every Government would give its own instructions to its own Delegates.

[Page 157]

It was agreed that Article 8 should be deleted.

4. Arrangements for Determining the Amount and Conditions of Bonds, etc.—Appendix: Annex 2, Article (10), Clause (b) Mr. Davis said that the French and Italian Representatives were in agreement with the American Proposal.

Lord Sumner said that the Italians had agreed with the British Delegates; the United States and French Delegates were opposed to the British and Italian Delegates.

Mr. Lloyd George explained that the British experts apprehended that if one Power was in a position to veto an issue of Bonds, it might be able to use this power to extort special terms. They might refuse to agree to an issue of Bonds, unless some special conditions were agreed to.

M. Loucheur said that he agreed with the United States proposal.

Mr. Lloyd George said that as he was alone in this matter, he would not press the objection.

The American proposal for Clause (b) was adopted.

5. Determination of the Rate of Interest M. Loucheur said that a point affecting the rate of interest had been overlooked from Article 20 [16]. He then read of the following extract from an Article prepared on the subject:—

“La Commission déterminera périodiquement, à la majorité, le taux de l’intérêt (au maximum 5 p. 100) dont sera débitée l’Allemagne sur sa dette, telle que l’aura fixée la Commission, et aussi les dates à partir desquelles l’intérêt sera débité sur les montants respectifs de a dite dette.”2

This, M. Loucheur said, was an American proposal. He said that originally a different text had been proposed based on the principle that a rate of 5% should be fixed leaving the Commission the right to fix a lower rate. Mr. Norman Davis had objected to this. M. Loucheur’s recollection was that Mr. Lloyd George had supported Mr. Norman Davis on the ground that he considered it better from a political point of view to determine the rate of interest on the lines now proposed. The original proposal would appear to make concessions to the Germans and would create a bad impression from a political point of view.

Mr. Lloyd George said that if the Germans were given a lower rate than 5% when the Allied and Associated Governments had to pay 5% themselves, public opinion would ask why the Germans should be allowed to pay less. On the other hand, if the general rate of interest should fall, he thought that Germany should have the [Page 158] benefit thereof and that the Commission should have the right to fix a lower rate of interest. So long as we pay 5%, the Germans should pay 5%. The Commission should not have the power to give the Germans any preferential rate of interest. He thought that it was more a question of form than of substance. Did not the American delegates agree that if we paid 5% the Germans should do the same?

President Wilson said that they all did. The only question was as to who should have power to lower the rate.

Mr. Lloyd George proposed to leave this to the Commission. He would rather regulate the payment of interest altogether than the rate.

M. Clemenceau and M. Loucheur said that they agreed.

(On Mr. Lloyd George’s proposal, the drafting of a revised paragraph was left to the Expert Committee.)

6. Interest on Pensions M. Loucheur read the following clause which was a continuance of the clause quoted in the preceding section and which it was proposed should be added to Article 10:—

“L’intérêt sera débité: (1) sur le montant des dommages matériels (pour la fraction correspondant à la valeur d’avant guerre), à partir du 11 novembre 1918; (2) pour les pensions, à partir du jour où elles sont payées par chaque pays intéressé.”3

Mr. Lloyd George considered a proposal as regards interest on material damage to be a mistake. If repairs were made in kind, it would mean interest was being paid on things rebuilt and it would be very difficult to assess the value. He did not, however, press the point. He did object strongly, however, to the arrangement for pensions under Clause (2). He explained that he only wanted equal treatment for damage of all kinds. He could not acknowledge that damage to houses was more important than damage to human life. The latter was irreparable. No fair interest on this could be paid unless the value of the pensions was capitalised. The same thing should be done whether it referred to a house or to a man. Supposing by May 1st, 1921, the Commission had established that the Bill for Housing was five thousand million pounds and for pensions three thousand million pounds. Both ought to be in the same category. He then called attention to Annex I, Article I, Clause (e) and suggested that a clause based on the following words should be substituted for M. Loucheur’s proposal:—

“The amount due to the Allied and Associated Governments to be calculated for all of them as being capitalised cost of such payments [Page 159] on the basis of the scales in force in France at the date of the signature of this Treaty”.

This, he pointed out, would provide that Germany should not be responsible to go on paying for 60 years. The sum would be capitalised as arranged by the Commission.

M. Loucheur said that French delegates would agree.

(Mr. Lloyd George’s proposal was accepted.)

7. The Date From Which Pensions Are To Be Calculated M. Loucheur pointed out that the original date for the calculation of pensions, namely, November, 1918, did not take into account the fact that pensions had been paid by the various Governments long before that date. He suggested that some provision should be made for this.

Mr. Lloyd George pointed out that this would be covered if the words “at the date of the signature of this Treaty” were added in the above clause after the words “capitalised cost”.

(The addition of these words was approved.)

8. Participation of Germany in the Proceedings of the Commission—Appendix: Annex 2, Article 13 Mr. Lloyd George said he did not like the proposal that the Germans should not have power to challenge any proposal of the Commission. He agreed that they should not be able to prolong the discussion for years. Nevertheless, they ought to be able to make representations on any subject.

(At this moment Mr. Lloyd George withdrew to keep another appointment.)

Lord Sumner said that Mr. Lloyd George’s proposal was to leave out the following words: “in the discussion of the general rules as to the measure of damages only”.

President Wilson pointed out that this clause contravened the original bases laid down in Clause 3 of the Reparation Provisions. He proposed to cut the whole clause out.

(After some discussion, it was agreed that the Clause should read as follows:—

“The Commission shall examine into the claims and give to the German Government a just opportunity to be heard but not to take part in any decision of the Commission whatever”.)

9. President Wilson drew attention to the article the American Delegation proposed to substitute.

Basis for Estimating Germany’s Capacity To pay.—Appendis: Annex 2, Article 15 (b) Lord Sumner said that the fact was that at present the burden of taxation was heavier in Allied countries than in Germany. Yet Germany might plead her poverty, and say she could not pay. It was common ground that the actual taxation was a related matter that must be taken into account. (President Wilson agreed.)

[Page 160]

What the British Delegation submitted, and thought it was not too much to ask, was that the Commission should not have the right to relieve Germany until Germany had made an attempt to raise her taxation to the amount borne by the most heavily taxed of the Allied Powers represented on the Commission. They recognised that additional taxation would not necessarily bring in money which could be used to pay outside Germany. They recognised also that such taxation might even depreciate Germany’s capacity to pay. That was the reason why they said that if the taxation was too high the Commission should be permitted to accept the plea of poverty. The British Delegation felt that it was not right that the Commission should be able to remit, unless German taxation was proportionately as high as that of the most heavily taxed Allied country. He agreed it was certainly necessary to trust the Commission, but the whole of these arrangements would be subjected to very close criticism, and it would be difficult to convince public opinion if it thought that Germany could be relieved of taxation on the ground of its poverty, whilst we ourselves were more heavily taxed and had equally heavy engagements to meet. If the Commission exercised great wisdom, he agreed that the difficulty would be avoided.

President Wilson said that under the American scheme the Commission would not be able to admit the plea of poverty unless Germany had taxed herself to an extent at least equal to the taxation of other Powers. He agreed that the Commission must be given some standards of taxation by which to judge of Germany’s ability to pay. It might be, however, that an additional burden would not give a greater yield of power to pay. He felt, however, that it was making a mistake to try to foresee situations too far in advance. If this were done, only second-rate men would be induced to serve on the Commission. He wished to get the biggest men possible, since the financial arrangements of the world would depend on its operations. Hence, he would deprecate definite and rigid instructions, and his French colleagues agreed with him. He thought that the standard of justice was as distinctly laid down in one draft as in the other.

M. Loucheur said he agreed with the American draft.

Mr. Lloyd George (who had meanwhile returned) said he would withdraw his objections.

(The American proposal with the French additions was adopted.)

10. Issue of Certificates by the Commission Regarding Bonds Held for the Benefit of Different Government.—Appendix: Annex 2, Article 16 Mr. Lloyd George accepted the French proposal.

11. Sanctions.—Appendix: Annex 2, Article 18 President Wilson pointed out that the United States representatives [Page 161] had accepted the principle of Sanctions, but were not prepared to approve the form of words proposed in the draft. He then read a simpler and shorter formula.

M. Klotz said that he would accept, with the addition of the words (underlined below) “or financial” after “economic”. The following substitute for the second and third sub-paragraphs of this Article was adopted:—

“The measures which the Allied and Associated Governments shall have the right to take, and which Germany hereby agrees not to consider as acts of war may include economic or financial prohibition and reprisals, and in general such other measures as the respective Government may determine to be necessary in the premise”.

Note Just as the Meeting was breaking up, it was agreed in addition to omit the last paragraph of Article 18.

12. Form of Payment.—Appendix: Annex 2, Article 19 Mr. Lloyd George thought that this Article was too stiff. It would give the Commission power practically to take any property or material to which it took a fancy.

President Wilson agreed with Mr. Lloyd George. He had seen this clause for the first time. What he wanted was to avoid even the appearance of a Brest-Litovsk forced Treaty.

Mr. Lloyd George suggested that his objections would be surmounted by omitting in line 3 “demanded or”. He had no objection to the Commission accepting payment in the forms proposed, but they should not have power to demand it.

President Wilson agreed.

(It was agreed to omit in line 3 the words “demanded or”, and in addition, to omit the second sub-paragraph of Article 19.)

13. Merchant Shipping—(Appendix, Annex 3) German Ships in American Ports President Wilson drew attention to amendments proposed by the United States Delegation, (see Commission on Reparation Supplementary Interim Report of the second Sub-Committee, dated April 18th, 1919, Appendix 2).

President Wilson said that the claim for the German ships seized in United States ports was almost the only reparation claim put forward by the United States of America. Other powers, with their full acquiescence, were to be reimbursed for pensions. In the course of the war, the United States of America had taken over the German ships in their ports and had secured their title to them by law. The ships had been so damaged that millions of dollars had had to be spent on their repairs and new methods that had to be devised. Throughout, these ships had been used for the indispensable transport of the [Page 162] American armies to France. It would not be tolerable to public opinion in the United States if their title to these ships was not recognised. This had nothing to do with the payment of owners which the United States contemplated, but only to their title. It would be intolerable if anyone questioned the title which had been legally established under full process of their rights as a belligerent.

Mr. Lloyd George said that if he went into the whole case, he would show there were serious grounds which made it impossible for the British Government to accept. If he accepted it would not be merely a matter affecting the United States of America. This was an easy matter which he would not contest. It would, however, affect neutrals and other belligerents. Neutrals would benefit by this to the extent of 794,000 tons of shipping. Brazil to the extent of 216,000 tons. This meant a loss not [only?] of cash but of ships which were even more important. Brazil lost 25,000 tons and had seized 216,000 tons in her ports and would consequently profit enormously by the transaction. France lost 950,000 tons and would only be able to keep 45,000 tons; that is to say, France would only get less than 1/20th of her loss. The United States lost 389,000 tons and would get 628,000 tons. The British Empire lost 7,740,000 tons and would only get 400,000 tons. During the war Great Britain after allowing for shipbuilding had lost a balance of 4,500,000 tons. There was a great difference between the value of ships to Great Britain and the United States. It was like the value of ships to a fisherman compared with ships to a swell yachtsman. Great Britain lived on ships and it was a very serious matter to her. There was first the case of the neutrals who would walk off with 800,000 tons. In reply to President Wilson’s suggestion that this could be avoided he thought it would be difficult. The German ships in American ports had been driven to take refuge there by the action of the Navies of France and Great Britain. They only escaped capture because they took refuge in United States’ ports. He could not help thinking that the whole of shipping should be put in “hotchpot”. The United States would then certainly get all that she had lost.

President Wilson said they had lost not only ships but thousands of lives. In other countries such lives were being provided for by reparation arrangements, but that America was making no such claim and it would be intolerable to public opinion if it were not agreed that the United States should retain these ships.

Mr. Lloyd George said he would be glad to enter into an arrangement but objected to the participation of Brazil, who had no claim for walking off with so many ships. Brazil’s whole trade was protected by our Fleet.

President Wilson said this argument did not apply to the United States, who had made an invaluable contribution to the war. The [Page 163] United States did not mean to take over the ships without payment.

Mr. Lloyd George said he did not object to some arrangement whereby the United States would retain all of the enemy ships which they had taken over, but that he did object to the proposed American clauses being put into the Peace Treaty which would permit other countries whose rights were not the same as those of the United States, to retain the enemy ships taken over by them.

Mr. Lloyd George proposed, therefore, that Annex III should stand as at present for insertion without alteration in the Peace Treaty, but that an agreement be made by the Allied Governments with the United States, providing for the retention by the United States of enemy ships now in its possession, against payment.

President Wilson stated this would be acceptable to him provided a satisfactory agreement in accordance with the American amendment is drawn and executed by the Allies with the United States prior to the execution of the Treaty.

(The following alterations were made during the interval when the Conference had broken up into groups. The Secretary was unable to follow the precise reasons for the decision.)

14. Payment in Kind (Appendix 1, Annex 4) After some discussion it was agreed to omit para 2(c) and (d) and the last para of 6.

15. Legislation by Germany. (Main Clauses Para. 10) (It was agreed to omit the following words at the end of para. 10:—”and to the decisions and orders of the above named Commission from time to time.” The para. therefore reads as follows:—”Germany undertakes to pass any legislation and to issue any orders and decrees that may be necessary to give complete effect to these clauses”.)

[16.] Mr. Lloyd George asked what would be the position of Czechoslovakia and Poland.

Powers Entitled To Revive Reparation President Wilson considered that these would not be entitled to claim reparation since they had been part of enemy countries.

Mr. Lloyd George asked what would be the position of Roumania and Serbia, which had annexed very large territories in Transylvania and Jugo-Slavia respectively. These countries would not only escape the debts of the Austrian Empire to which they had formerly belonged, but would also escape the burdens imposed on the Allies. He thought the best plan was that proposed by M. Orlando, that there should be a sort of ledger account in relation to these territories. On one side of the account would be the liability that the annexed territories would have had for a share of the Austrian debt and indemnity and on the other side of the account would be their share in the claim of Roumania and Serbia respectively for indemnity. [Page 164] This would be set off one against the other and their [they?] would be credited with the balance.

Mr. Norman Davis asked what would happen if the balance was a debit instead of a credit.

Mr. Lloyd George said in that case there would be no claim.

17. (The above arrangement was agreed to.) M. Klotz asked what would be the position of the subjects of Allied and Associated countries established in a country like Poland whose property had been destroyed. They would not claim compensation from poland; ought it not to be provided that they should claim against Germany?

Claims by the Subjects of Allied and Associated Powers Resident in Poland and czecho-slovakia

Mr. Lloyd George pointed out that they were provided for by Annex I, Article I (a).

It was also pointed out that they were provided for by Article 3, where the words used were “wherever situated”.

18. Consultation With the Smaller Powers After a somewhat prolonged discussion, the following arrangements were agreed to for consultation with the Powers with special interest on the subject of the reparation clauses. The Expert Committee, which had been advising the Supreme Council, should divide itself into groups and each group should see a group of nations of the Powers with special interests. M. Loucheur undertook to organise this arrangement. Those States which had observations to make should subsequently have the right of consulting the Supreme Council.

19. The Return of Animals Taken From Iinvaded Territories M. Loucheur proposed the following addition to Article 7 of the reparation clauses:—

“Si une moitié au moins des animaux pris par l’ennemi dans les territoires envahis ne peut être identifiée et restituée, le reste, jusqu’à concurrence de la moitié du nombre enlevé, sera livré par l’Allemagne à titre de restitution.”4

(After considerable discussion, it was agreed that M. Loucheur’s proposed addition to Article 7 should not be inserted in the Treaty of Peace; his proposal should, however, form the subject of a separate agreement between the Allies, a draft text of the agreement to be prepared and submitted by M. Loucheur.)

20. categories of Damage M. Klotz proposed the addition of the following new category of damage:—

h) Dépenses engagées par l’Etat, ou pour son compte et avec son autorisation, pour ravitailler, transporter ou secourir la population [Page 165] civile des territoires occupés et la population civile réfugiée ou évacuée.”5

Mr. Lloyd George said that if new categories were put in, the British Government would have a number of new categories which it would wish to introduce.

(It was agreed that the addition proposed by M. Klotz related to a question of the interpretation to be given to the categories already accepted and should be referred without delay for consideration to the Commission on Reparations.)

21. Valuation M. Klotz made a proposal for putting a valuation clause in the Treaty in regard to property for which reparation was to be given. This was necessary owing to the change of value between 1914 and the present time.

(It was agreed that the Expert Committee should meet to prepare a text.)6

The Conclusions, as revised by the Expert Drafting Committee, will be forwarded later.

Villa Majestic, Paris, 23 April 1919.

Woodrow Wilson Papers

[Appendix I to IC–176A]

Reparation

[Note.—Drafting and other minor changes are printed in italics.]6a

1. The Allied and Associated Governments affirm and Germany accepts the responsibility of herself and her Allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of the enemy States.

2. The Allied and Associated Governments recognise that the financial resources of Germany are not adequate after taking into account permanent diminutions of such resources which will result from other treaty clauses to make complete reparation for all such loss and damage. The Allied and Associated Governments, however, require, and the German Government undertakes that she will make compensation for all damage done to the civilian population of the Allied or Associated Powers and to their property by such* aggression by land, by sea and from the air, as defined in the annexed Schedule 1.

[Page 166]

3. The amount of such damage (as set forth under the specific categories attached hereto) for which compensation is to be made by Germany shall be determined by an Inter-Allied Commission, to be constituted in the form and with the powers set forth hereunder and in the Annexes hereto. This Commission shall examine into the claims and give to the German Government a just opportunity to be heard. The findings of the Commission as to the amount of damage defined as above shall be concluded and notified to Germany on or before the 1st May, 1921, as representing the extent of their obligations. The Commission shall concurrently draw up a schedule of payments prescribing the time and manner for securing and discharging the entire obligation within a period of thirty years from the 1st May, 1921. In the event, however, that within the period mentioned, Germany shall have failed to discharge her obligation, then any balance remaining unpaid may, within the discretion of the Commission, be postponed for settlement in subsequent years: or may be handled otherwise in such manner as the Allied and Associated Governments, acting through the Commission, shall determine.

4. The Inter-Allied Commission shall thereafter, from time to time, consider the resources and capacity of Germany and, after giving her representatives a just opportunity to be heard, shall have discretion to extend the date, and to modify the form of payments, such as are to be provided for in Clause 3: but not to cancel any part, except with the specific authority of the several Governments represented upon the Commission.

5. In order to enable the Allied and Associated Powers to proceed at once to the restoration of their industrial and economic life, pending the full determination of their claim, Germany shall pay in such instalments and in such manner (whether in gold, commodities, ships, securities or otherwise) as the Inter-Allied Commission may fix, before the 1st May, 1921, the equivalent of 20,000,000,000 gold marks and pending payment of this sum she shall deposit bonds as security in the manner prescribed in Clause XV (c) (1) of Annex 2 attached hereto. Out of this sum the expenses of the army of occupation subsequent to the armistice shall first be met, provided that such supplies of food and raw materials as may be judged by the Allied and Associated Governments to be essential to enable Germany to meet her obligations for reparation may also, with the approval of the Allied and Associated Governments, be paid for out of the above sum, and the balance shall be reckoned towards liquidation of the above claims for reparation. She shall further deposit bonds as prescribed in Clause XV (c) of Annex 2 attached Thereto.

[Page 167]

Ships shall be handed over by Germany to the Commission at the time and in the manner stated in Annex III and in all respects in compliance therewith.

6. The successive instalments including the above sum paid over by the enemy States in satisfaction of the above claims will be divided by the Allied and Associated Governments in proportions which have been determined upon by them in advance, on a basis of general equity, and of the rights of each.

7. In addition to the payments mentioned above Germany shall effect restitution in cash of cash taken away, seized or sequestrated, and also restitution in kind of animals, objects of every nature and securities taken away, seized or sequestrated, in the cases in which it proves possible to identify them in enemy territory.

8. The German Government undertakes to make forthwith the restitution contemplated by Article 7 and to make the payments contemplated by Articles 3, 4 and 5.

9. The German Government recognises the Commission provided for by Article 3 as the same may be constituted by the Allied and Associated Governments in accordance with Schedule II attached hereto, and agrees irrevocably to the possession and exercise by such Commission of the power and authority given it by Articles 3, 4 and 5. The German Government will supply to the Commission all the information which the Commission may require relative to the financial situation and operations and to the property, productive capacity and stocks and current production of raw materials and manufactured articles of the German Government, its States, Municipalities and other governmental subdivisions and of its nationals and corporations, and accords to the members of the Commission and its authorised agents the same rights and immunities as are enjoyed in Germany by duly accredited diplomatic agents of friendly Powers. The German Government further agrees to provide for the compensation and expenses of the Commission and of such staff as it may employ.

10. Germany undertakes to pass any legislation and to issue any orders and decrees that may be necessary to give complete effect to these clauses and to the decisions and orders of the above-named Commission from time to time.

11. These shall be reckoned as a credit to the German Government in respect of the payments due from it under the above clauses, the following items arising out of other Articles of this Treaty and its Annexes:—

(i.)
Any final balance in favour of Germany under Article of Part IV of the Economic Terms.
(ii.)
Any sums due to Germany in respect of property or material delivered under the Armistice Terms or its extensions.
(iii.)
Any sums due to Germany in respect of transfers under Article XIII of the Financial Terms.
(iv.)
Any sums due to Germany in respect of transfers under Articles 19, 37 and 51 of the Ports, Waterways and Railways Terms.

Annex 1

Compensation may be claimed under Clause 2 above under the following categories of damage.

I

(a.)
Damage to injured persons and to surviving dependents by personal injury to or death of civilians caused by acts of war (including bombardments or other attacks on land, on sea, or from the air, and all the direct consequences thereof, and of all operations of war by the two groups of belligerents wherever arising).
(b.)
Damage caused to civilian victims of acts of cruelty, violence or maltreatment (including injuries to life or health as a consequence of imprisonment, deportation, internment or evacuation, of exposure at sea or of being forced to labour by the enemy), committed or ordered by the enemy wherever arising and to the surviving dependents of such victims.
(c.)
Damage caused to civilian victims of all acts of the enemy in occupied, invaded, or enemy territory injurious to health or capacity to work, or to honour, and to the surviving dependents of such victims.
(d.)
Damage caused by any kind of maltreatment of prisoners of war.
(e.)
As damage caused to the peoples of the Allied and Associated States, all pensions and compensations in the nature of pensions to naval and military victims of war, whether mutilated, wounded, sick or invalided, and to the dependents of such victims, the amount due to the Allied and Associated Governments being calculated for all of them as being the capitalised cost of such payments on the basis of the scales in force in France at the date of the signature of this Treaty.
(f.)
The actual cost of assistance by the Governments of the Allied and Associated States to prisoners of war and to their families and dependents.
(g.)
Allowances by the Governments of the Allied and Associated States to the families and dependents of mobilised persons or persons serving with the forces, the amount due to them for each calendar year in which hostilities occurred being calculated for all of them on the basis of the average scale for such payments in force in France during that year.

II

Damage caused to civilians by being forced by the enemy to labour without just remuneration.

III

Damage in respect of all property wherever situated belonging to any of the Allied or Associated States or to any of their peoples, with the exception of military works or materials, which has been carried off, seized, injured or destroyed by the acts of the enemy on land, on sea or from the air, or damage directly in consequence of hostilities or of any operation of the war.

IV

Damage in the form of levies, fines and other similar exactions imposed by the enemy upon civilian population.

Annex 2

[Page 179][Page 182]
I
The Commission referred to in Articles 3 and following of the above clauses shall be called “The Reparation Commission” and is hereinafter referred to as “the Commission.”
II
The Commission shall consist of five Delegates nominated by the United States of America, Great Britain, France, Italy and Belgium. Each of these Powers will appoint one Delegate and also one coadjutor Delegate, who will take his place in case of illness or of necessary absence, but at other times will only have the right of [Page 170] being present at all proceedings without takmg any part therein.
III
Such of the other Allied Powers as may be interested shall have the right to appoint a Delegate to be present and act as assessor only while their respective claims and interests are under examination or discussion, but without the right to vote.
IV
In case of the death, resignation or recall of any Delegate, coadjutor Delegate or assessor Delegate, a successor to him shall be nominated as soon as possible.
V
The Commission will have its principal permanent Bureau in Paris and will hold its first meeting in Paris as soon as practicable after the signature of the Preliminaries of the Treaty of Peace, and thereafter will meet in such place or places and at such time as it may deem convenient and as may be necessary for the most expeditious discharge of its duties.
VI
At its first meeting the Commission shall elect two of the said five Delegates, one as Chairman and the other as Vice-Chairman, who shall hold office for one year and shall be eligible for re-election. If a vacancy in the Chairmanship or Vice-Chairmanship should occur during the annual period, it shall [Page 171] be forthwith filled by the Commission for the residue of the said period.
VII
The Commission is authorised to appoint all necessary officers, agents and employees who may be required for the execution of its functions, and to fix their compensation; to constitute Sub-Committees, and to take all executive steps necessary for the purpose of discharging its duties; and to delegate authority and discretion to officers, agents and Sub-Committees.
VIII
All Delegates and all officials and persons appointed by the Commission shall be bound to observe secrecy concerning the business and proceedings of the Commission and concerning their duties (communications to the Governments, in conformity with their instructions, being always excepted).
IX
All proceedings of the Commission shall be private, unless, on particular occasions, the Commission shall otherwise determine for special reasons.
X
As to voting, the Commission will observe the following rules:—

When a decision of the Commission is taken, all the Delegates, or in the absence of any of them their coadjutor Delegates, ought to be present. Their votes will be recorded. Abstinence from voting [Page 172] is to be treated as a vote against the proposal under discussion. Assessors have no vote.

On the following questions unanimity is necessary:—
(a.)
Any question involving the sovereignty of any of the Allied and Associated Powers, including the cancellation of the whole or any part of the debt or obligations of Germany.
(b.)
The Commission will from time to time issue for negotiation or sale to third parties, bonds of the hereinafter-mentioned issues delivered by Germany. In doing so, it will have regard both to the financial requirements of the Allied Powers and to the necessity of avoiding depreciation of the bonds still unissued by negotiating excessive amounts. Up to four thousand millions of marks per annum, it may decide upon such issues by a majority, but for the amounts in excess of that sum unanimity shall be required.
(c.)
Any postponement, total or partial, of the payment of instalments falling due between the 1st May, 1921, and the end of 1926 inclusive for a period extending beyond 1930.
(d.)
Any postponement, total or partial, of any instalment falling due after 1926 for a period exceeding three years.
(b.) American Proposal.
In all questions of determining the amount and conditions of bonds or other obligations to be executed by Germany, and of fixing the time and manner for selling, negotiating or distributing such bonds, a unanimous vote of the Commission shall be required.
The Commission is not to apply in any particular case a method of measuring damages different from that which has been previously applied in a similar case except by a unanimous vote.
In case of any difference of opinion among the Delegates, which cannot be solved by reference to their Governments, upon the question whether a given case is one [Page 173] which requires a unanimous vote for its decision or not, the Allied and Associated Powers agree to refer such difference to the immediate arbitration of some impartial person to be agreed upon by their Governments, whose award the Allied and Associated Governments agree to accept.
All other questions shall be decided by the vote of a majority.
XI
Decisions of the Commission, in accordance with the powers conferred upon it, shall forthwith become binding and may be put into immediate execution without further proceedings.
XII
The Commission shall be required to hear, within a period which it will fix from time to time, evidence and arguments on the part of Germany on any question connected with her capacity to pay, if she so desires.
XIII§
The Commission shall be at liberty, but shall not be bound, to allow Germany to take such part, if any, as the Commission may think right, in the discussion of the general rules as to the measure [Page 174] of damages only, but not in any decision of the Commission whatever
XIV
The Commission shall not be bound by any particular code or rules of law or by any particular rules of evidence or of procedure, but shall be guided by justice, equity and good faith. Its decisions must follow the same principles and rules in all cases where they are applicable. It will establish rules relating to methods of proof of claims. It may act on any trustworthy modes of computation.
XV
The Commission shall in general have wide latitude as to its control and handling of the whole reparation problem, and shall have the powers referred to in Clauses III and IV of the Treaty. Subject to the provisions of the Treaty and of its annexes, the Commission is constituted by the several Allied and Associated Governments as the exclusive agency of the said Governments respectively for receiving, selling, holding, and distributing the payment of reparation to be made by Germany pursuant to Articles of the Treaty. The Commission must comply with the following conditions and provisions:—
(a.)
Whatever part of the full amount of the proved claims is not paid in gold, or in ships, securities, and commodities or otherwise, Germany shall be required, under such conditions as the Commission [Page 175] may determine, to cover by way of guarantee by an equivalent issue of bonds or obligations or otherwise, in order to constitute an acknowledgment of the said part of the debt.
(b.)
In exercising the powers given by Clause IV to the Commission, Germany shall be considered as able to pay the amount of the proved claims and the amount of any annual instalment fixed by the Commission in full as they fall due—
1.
As long as her internal taxation for the service of the debt due to the Allies in respect of their proved claims is not at least equal per head of the population of Germany to the amount borne per head of the population by the most heavily taxed of the Allied Powers represented on the Commission as taxation for the service of its public debt, unless the Commission is unanimously of opinion that the German taxation has reached an amount which cannot be increased without diminishing Germany’s capacity to pay.
2.

As long as any sums are paid, either by way of principal and interest or otherwise, for the service of any part of the German war debt 1914–19, or any subsequent debt, or of any debt contracted by her previously to that date, which is held by her nationals.

The sums payable for reparation which Germany is required to pay shall become a charge upon all her revenues prior to the service or discharge of any domestic loan, and the Commission shall make an order to that effect.

[Page 176]

The Commission shall study the German system of taxation from time to time, with a view of ascertaining its relation to the systems of the Powers represented on the Commission, for which purpose Germany will furnish it with all information for which it asks.

(c.)
In order to facilitate and continue the immediate restoration of the Allies’ economic life, the Commission, as provided in clause 5 above, will take from Germany by way of security for and acknowledgment of her debt a first instalment of gold bearer bonds free of all taxes or imposts of every description leviable by the Government of Germany or its States, or by any authority subject to them, on account, in three portions, as follows, the Mark being taken as equivalent to 0358425 grammes of fine gold:—
1.
To be issued forthwith, 20,000,000.000 M. in gold bearer bonds, payable not later than the 1st May, 1921, without interest. There shall be specially applied towards the amortisation of these bonds the payments which Germany is pledged to make in conformity with Article 5 of the Treaty after deduction of the sums used for the reimbursement of expenses of the armies of occupation and for payment of foodstuffs and raw materials. Such bonds as have not been redeemed by the 1st May, 1921, shall then be exchanged for new bonds of the same type as those provided for in 2 below.
2.
To be issued forthwith, further 40,000,000,000 M. gold [Page 177] bearer bonds, bearing interest at 2½ per cent, between 1921 and 1926, and thereafter at 5 per cent., with an additional 1 per cent, on the whole amount of the issue beginning in 1926 for amortisation.
3.
To be issued when, but not until, the Commission is satisfied that Germany can meet her interest obligations to the Allied and Associated Governments (a covering bond for the amount having been delivered by Germany at once), a further instalment of 40,000,000,000 M. gold bearer bonds, bearing interest at 5 per cent, with an additional 1 per cent, on the whole amount of the issue for amortisation.

(b.) American Proposal.

In estimating Germany’s periodical capacity to pay, the Commission shall examine the German system of taxation, first to the end that the sums for reparation which Germany is required to pay shall become a charge upon all her revenues, prior to that for the service or discharge of any domestic loan, and, secondly, so as to satisfy itself that, in general, the German scheme of taxation is fully as heavy proportionately as that of any of the Powers represented on this Commission.

French addition to American clause.

The decision of the Commission relative to the total or partial cancellation of the capital or interest of any verified debt of Germany must be accompanied by a statement of the grounds for its action.

(Note.—Not at present definitely agreed.)

The due interest dates, the manner of applying the amortisation fund, and all similar questions relating to the issue, management, and regulation of the bond issue shall be determined by the Commission from time to time.
Further issues by way of acknowledgment and security may be required as the Commission subsequently determines from time to time.
In the event that bonds, obligations, or other evidence of indebtedness issued by Germany by way of security for or acknowledgement of her reparation debt, are disposed of outright, not by way of pledge, to persons other than the several Governments in whose favour Germany’s original reparation indebtedness was [Page 178] created, then such reparation indebtedness shall be deemed to be extinguished in an amount corresponding with the nominal value of such evidences of indebtedness as have been distributed; and the obligation of Germany in respect to such amount shall thereupon be confined to its obligations expressed in the evidences of indebtedness. Partial extinguishment of Obligation.
XVI (French Proposal.)
The Commission will issue to each Allied and Associated Government interested, in such forms and in such denominations as it may fix, certificates stating that it holds for the benefit of such Government bonds of the above-mentioned issues, and presenting payments to which such Government is entitled.
When bonds are issued for sale or negotiation, a corresponding amount of certificates will be retired.
The Commission will issue to each of the interested Powers, in such form as it will fix:—
1.
A certificate stating that it holds for the account of the said Power bonds of the issues mentioned above, the said certificate, on the demand of the Power concerned, being divisible in a number of parts not exceeding five:
2.
From time to time, after May 1921, certificates stating that it holds for the account of the said Power all other goods delivered by Germany on account of her reparation debt.
XVIIǁ
The Commission will formulate and carry out a scheme for drawing and cancelling the said bonds in proportion to the amounts received on account of amortisation from time to time. The Commission shall also have power to apply the said amounts in purchasing the said bonds in the open market below par from time to time.
When bonds are issued for sale or negotiation, and when goods are delivered by the Commission, an equivalent number of certificates must be withdrawn.
The Commission will establish and put into execution a scheme of drawing and amortisation of the said bonds in proportion to the sums received on account of payments made from time to time and destined for the sinking fund. The Commission will also have the right to employ from time to time the said payments destined for the sinking fund in purchase of the said bonds on the open market below par.
XVIII
In case of voluntary default by Germany in the performance of any obligation, of whatever kind, to comply with and satisfy its decisions, the Commission will forthwith give notice of such default to each of interested Powers and may make such recommendations as to the action to be taken in consequence of such default as it may think necessary.
These measures, which the Allied and Associated Powers shall have the right to take, and which Germany agrees not to regard as acts of war, may be in particular the following:—
1.
Prohibition against German vessels entering ports situated in the territory of the Allied and Associated States or of their possessions and dependencies and from utilising any coaling stations belonging to the said States.
2.
Seizure whether in the ports of the Allied and Associated States, whether on the high sea, of all German vessels, under reserve of [Page 180] the rights of neutrals, which should be safeguarded.
3.
Prohibition from entry into the territories of the Allied and Associated States or of their possessions and dependencies to all German subjects and all goods of German origin.
4.
Prohibition of the negotiation on the territories of the said States of German securities of any kind.
5.
Suspension of all postal, telegraphic, and telephonic communication with Germany.
6.
Seizure on the territories of the said States of all German goods.
The United States Representatives accepted the principle of sanctions, but were not prepared to approve the form of words proposed above.
These rights shall not be exclusive of the exercise of any others.
The engagement of the German Government in the financial protocol6b in the Armistice signed at Treves on the 13th December, 1918, shall be maintained until Germany has paid the first 20,000,000,000 M. bonds referred to in Article, unless the Commission should previously accept some other guarantee in lieu thereof.
XIX
Payments required to be made in gold or its equivalent on account of the proved claims of the Allies may at any time be demanded or accepted by the Commission in the form of properties, chattels, commodities, businesses, rights, and concessions in German territories or in territories other than the territories of Germany, ships, bonds, shares, or securities of any kind, currencies or bonds [Page 181] of Germany or of other States, the value of such substitutes for gold being fixed at a fair and just amount by the Commission itself.
The German Government proposes and undertakes to take any necessary measures to acquire, in cases where it is not already the owner, and to transfer to the Commission all goods, rights, and interests of German nationals which the said Commission may find acceptable.
XX
The Commission, in fixing or accepting payment in specific property, shall have due regard for any legal or equitable interests of nationals of the Allied and Associated Powers or of neutral Powers in such property.
XXI
When all the amounts due from the enemy States under the Treaty of Peace or the decisions of the Commission have been discharged and all sums received, or their equivalents, shall have been distributed to the Powers interested, the Commission shall be dissolved.
XXII
No member of the Commission shall be responsible, except to the Government appointing him, for any action or omission as such member. No one of the Allied or Associated Governments assumes any responsibility in respect of any other Government.
XXIII (American Proposal)
Subject to the provisions of the Treaty this Annex may be amended by the unanimous decision of the Governments represented from time to time upon the Commission. Each Government represented upon the Commission shall have the right to withdraw from representation upon the Commission upon six months’ notice filed with the Commission.

Annex 3

Articles relating to Merchant Shipping

I

1. The enemy Powers recognise the right of the Allied and Associated Powers to the replacement, ton for ton (gross tonnage) and class for class, of all merchant ships and fishing boats lost or damaged owing to the war.

Nevertheless, and in spite of the fact that the tonnage of enemy shipping at present in existence is much less than that lost by the Allied and Associated Powers, the right thus recognised will be enforced on enemy ships and boats under the following conditions:—

The enemy Powers on behalf of themselves and so as to bind all other persons interested, cede to the Allied and Associated Governments the property in all the enemy merchant ships which are of 1,600 tons gross and upwards; in one-half, reckoned in tonnage, of the ships which are between 1,600 tons and 1,000 tons gross; in one-quarter, reckoned in tonnage, of the steam trawlers; and in one-quarter, reckoned in tonnage, of the other fishing boats.

2. The enemy Powers will, within two months of the signature of the Preliminaries of Peace, deliver to a representative of the Allied and Associated Governments, duly authorised by them for this purpose, all the ships and boats mentioned in Article I.

3. The ships and boats mentioned in Article I include all ships and boats which (a) fly, or may be entitled to fly, the enemy merchant flag; (b) are owned by any enemy subject, company or corporation or by any neutral company or corporation which is under the control or direction of enemy subjects; (c) which are now under construction in enemy or in neutral countries.

4. For the purpose of providing documents of title for the ships and boats to be handed over as above mentioned, the enemy Powers will:

(a.)
Deliver to the representative of the Allied and Associated Governments in respect of each vessel a bill of sale or other document [Page 183] of title evidencing the transfer of the entire property in the vessel, free from all encumbrances, charges and liens of all kinds, to that officer;
(b.)
Take all measures that may be indicated by the said representative of the Allied and Associated Governments for ensuring that the ships themselves shall be placed at his disposal.

II

As an additional part of reparation, the German Government agrees to cause merchant ships to be built in German yards for Allied account as follows:—

(1.)
Within three months of the signature of the Preliminaries of Peace, the Allied and Associated Powers will notify the German Government of the amount of tonnage to be laid down in German shipyards in each of the two years next succeeding the three months mentioned above;
(2.)
Within twenty-four months of the signature of the Preliminaries of Peace, the Allied and Associated Governments will notify to the German Government the amount of tonnage to be laid down in each of the three years following the two years mentioned above;
(3.)
The amount of tonnage to be laid down in each year will not exceed 200,000 tons, gross tonnage.
(4.)
The specifications of the ships to be built, the conditions under which they are to be built and delivered, the price per ton at which they are to be accounted for in the reparation account, and all other questions relating to the accounting, ordering, building and delivery of the ships, shall be determined by a Commission nominated by the Allied and Associated Powers.

III

The enemy Powers undertake to restore in kind and in normal condition of upkeep to the Allied and Associated Powers, within two months of the signature of these preliminaries, any boats and other movable appliances belonging to inland navigation which since the 2nd August, 1914, have by any means whatever come into their possession or into the possession of their nationals, and which can be identified.

With a view to make good the loss in inland navigation tonnage, from whatever cause arising, which has been incurred during the war by the Allied and Associated Powers, and which cannot be made good by means of the reparation in kind prescribed in the above paragraph, the enemy Powers agree to cede to the Allied and Associated Powers a portion of the enemy river fleet up to the amount of the reparation in kind mentioned above, provided that such cession shall not exceed 20 per cent, of the river fleet as it existed on the 11th November, 1918.

The conditions of this cession shall be settled by the same arbitrators as are charged with the settlement of difficulties relating to the [Page 184] apportionment of river tonnage resulting from the new international regime applicable to certain river systems or from the territorial changes affecting those systems.

IV

1.
The enemy Powers undertake to take any measures that may be indicated to them by the Allied and Associated Governments for obtaining the full title to the property in all ships which have during the war been transferred, or are in process of transfer, to neutral flags, without the consent of the Allied and Associated Governments.
2.
The enemy Powers abandon in favour of the Allied and Associated Governments all claims of all descriptions against the Allied and Associated Governments and against subjects or citizens of Allied and Associated countries in respect of the detention, employment, loss or damage of any enemy ships or boats.
3.
The enemy Powers abandon in favour of the Allied and Associated Powers any claim to vessels or cargoes sunk by or in consequence of enemy naval action and subsequently salved, in which any of the Allied or Associated Governments or their citizens or subjects may have any interest either as owners, charterers, insurers or otherwise, notwithstanding any decree of condemnation which may have been made by an enemy Prize Court.
4.
The enemy Powers will within three months of the signature of the Preliminaries of Peace take all necessary legislative and administrative measures to enable them to carry out the provisions of this chapter.

Annex 4

1. The Allied and Associated Governments require, and the German Government undertakes, that Germany, in part satisfaction of its obligations above expressed, will, as hereinafter provided, devote her economic resources directly to the physical restoration of the invaded areas of France, Italy and Belgium, to the extent that these Powers shall judge it useful to avail thereof.

2. The Governments of the several Allied and Associated Powers may file, with the Inter-Allied Commission, schedules showing:—

(a.)
Animals, machinery, rolling-stock, equipment, tools and like articles of a commercial character, which have been seized, consumed or destroyed by the enemy, or destroyed in direct consequence of military operations, and which such Governments desire, for the purpose of meeting immediate and urgent needs (in the devastated areas and without re-export) to have replaced by animals and articles of the same nature which are in being in German territory;
(b.)
Reconstruction materials (stones, brick, tile, lumber, window-glass, steel, lime, cement, &c.), machinery, heating apparatus, furniture, and like articles of a commercial character which the said Governments desire to have produced and manufactured in Germany and delivered to them to permit of the restoration of the invaded areas;
(c.)
The number and character of workmen which the said Governments desire to have engaged in clearing the fields of battle and performing reconstruction work in the invaded areas, and the proposed period of employment;
(d.)
Objects of notable artistic, historic or literary value, of a character not susceptible of reproduction which have been seized or destroyed by the enemy or destroyed in direct consequence of military operations, and which the said Governments may desire to have replaced by similar objects which are in being in Germany.

Neither rolling-stock in actual industrial use, nor more than 30 per cent, of the tools and machinery in any one factory in actual industrial use, are to be demanded of Germany.

3. Schedule “A” shall be filed within sixty (60) days after the date of the signature of this Treaty. Schedule “B” shall be filed on or before the 31st December, 1919. Schedule “C” shall be filed within one hundred and twenty (120) days after the date of the signature of this Treaty. Schedule “D” shall be filed on or before the 31st December, 1919. The Schedules shall contain all such details as are customary in commercial contracts dealing with the subject matter, including specifications, acceptable dates, but within four years, and places of delivery, &c., but not price or value, which shall be fixed by the Commission as hereinafter provided.

4. Immediately upon the filing of said Schedules with the Commission, the Commission shall consider what of the labour, materials, animals, &c, mentioned in said Schedules shall be required of Germany. In reaching a decision on this matter the Commission shall take into account such domestic requirements of Germany as it deems essential for the maintenance of Germany’s social and economic life, the prices and dates at which similar articles can be obtained in the Allied and Associated countries as compared with those to be paid for German articles, and the general interest of the Allied and Associated Governments that the industrial life of Germany be not so disorganised as to affect adversely the ability of Germany to perform the other acts of reparation stipulated for. The Commission shall give representatives of the German Government an opportunity and a time to be heard finally as to their capacity to furnish the said labour, materials, articles, animals, &c. The decision of the Commission shall thereupon and at the earliest possible moment be communicated to the German Government and to the several interested Allied and Associated Governments. The German Government undertakes to deliver, and the interested Allied and Associated Governments severally agree to accept the labour, materials, [Page 186] articles, animals, &c, as specified in said communication, provided they conform to the specifications given, or are not, in the judgment of the Commission, unfit to be utilized in the work of reparation.

5. The Commission shall determine the value to be attributed to the labour, materials, articles, animals, &c, to be delivered in accordance with the foregoing, and the Allied or Associated Power receiving the same shall, and hereby agrees, to be charged with such value and the amount thereof shall be treated as a payment by Germany to be divided in accordance with Article 6 (of General Reparation Clauses). The Commission shall have regard to ensuring an equitable correspondence between the value attributed to such acts of reparation and the pecuniary measure of the damage which such acts repair.

6. In the event that Germany shall supply labour in accordance with the foregoing, the work shall be performed under the supervision and direction of engineers or architects selected by the Government of the country in which the work is to be performed, and in accordance with plans and specifications approved by such Government.

The maximum number of workmen that Germany may be required at any one time to provide shall be 500,000 for all Powers. The said workmen shall be subject to rules of discipline and conduct formulated by the Inter-Allied Commission, and it shall be the duty of the country employing such workmen under regulations made by and to the satisfaction of the Commission to ensure to said labourers proper working and living conditions. The Government of any country in which said workmen shall be employed undertakes to abide by and give effect to the rulings of the Commission applicable to said workmen.

Annex 5

The German Government undertakes to accord to the French and Italian Governments the following options for the delivery of coal to France and Italy respectively. The amount of coal to be delivered each calendar year shall be determined and notified to Germany not later than the 1st September of the preceding year.

1. Germany is required to deliver to France 7,000,000 tons per year for ten years. In addition, Germany is required to deliver to France an amount of coal equal to the deficit between the production before the war of the mines of the north and Pas de Calais destroyed by the Germans, and the production of the same mines during the years in question—but not longer than ten years—not to exceed 20,000,000 tons in any one year of the first five years, and 8,000,000 tons in any one year of the succeeding five years.

[Page 187]

2. For the delivery to Italy of not more than the following quantities of coal:—

In period July 1919 to June 1920 million tons.
1920 1921 6
1921 1922
1922 1923 8
1923 1924 }
and the following five years

At least two-thirds of the actual deliveries to be land-borne.

The prices to be paid for such coal delivered under these options to be as follows:—

(a.)
For overland delivery, including delivery by barge, the German pithead price to German nationals, plus the freight to French or Italian frontier, provided that the pithead price does not exceed the pithead price of British coal for export.
(b.)
For sea delivery, the German export price f. o. b. the German ports, or the British export price f. o. b. British ports, whichever may be lower. Railroad tariffs shall not be higher than lowest similar rates.
(c.)
All matters regarding procedure, qualities of coal, times and mode of delivery and payment, and all other details will be regulated by the Inter-Allied Commission.

It is understood that due diligence will be exercised in the restoration of the destroyed Lens and Pas de Calais properties.

[Appendix II to IC–176A]

Commission on Reparation

Supplementary Interim Report of the Second Sub-Committee on Reparation**

Since presenting its first interim report, the Second Sub-Committee has held three meetings in order to conclude its discussions of the enemy merchant fleet considered as a means of reparation, and on other matters. In these meetings the Committee has had the advantage of the advice of experts.

merchant shipping

The Committee started from the principle that the enemy should be required to recognise the right of the Allied and Associated Powers to the replacement, ton for ton and class for class, of all the [Page 188] merchant ships and fishing-boats which they have destroyed or damaged during the war. The Allied merchant tonnage destroyed by the enemy is, in round figures, 10,750,000 tons, and the total enemy merchant shipping tonnage available about 5,500,000 tons. There is, therefore, only enough enemy merchant tonnage to meet about half the Allied claim, and yet it has been deemed necessary to leave the enemy the major portion of his coasting and fishing fleets as being essential to his economic needs.

The Committee agree that the enemy Powers should be required to cede the whole of their merchant tonnage over 1,600 tons gross, half of the vessels between 1,600 and 1,000 tons, and one-quarter of the steam trawlers and of the other fishing craft. This leaves to Germany the greater portion of her coasting and fishing vessels.

An additional means of securing reparation in kind for the merchant ships destroyed during the war is to require Germany to undertake to build merchant ships for the Allies over a period of five years. The maximum amount to be built in any one year is fixed at 200,000 tons, this being about one-third of the total output of all German shipyards before the war.

In addition, the Committee consider it essential that the enemy Powers should be bound to cede to the Allies a certain proportion of the river craft now in their possession. The craft taken by force or otherwise acquired from the Allies during the war, which can be identified, should be restored, and in addition a further amount of river tonnage should be ceded by way of reparation. The total amount to be surrendered is so calculated as not to impair seriously the economic life of the enemy Powers.

Draft clauses for giving effect to these proposals are appended (see Clause C in the Annex), and it is recommended that these clauses should be referred to the Inter-Allied Drafting Committee in order that any necessary amendments of form may be made, so as to enable the clauses to be embodied in the Peace Treaty.

On the main principle, viz., that the enemy should be required to relinquish all title in the merchant shipping and fishing tonnage, the Committee were unanimous. The Commission generally were of opinion that the enemy should be required to cede the tonnage to the Allies as a whole. The American Delegation proposed that the enemy should be required to acknowledge the validity of the seizures made by each individual Allied or Associated Power, and to recognise the title of that Power to the ships which it had seized.

This question is so important and so far-reaching that the Committee consider it desirable to set out the arguments on each side at some length.

[Page 189]

american contention and amendment

The amendment which is offered by the American Delegation for the purpose of validating the title to the seized ships is offered for the reasons following:—

(a)
That no question of title may be raised by any of the enemy Powers or by any of their nationals, or by anyone interested in any manner in such seized ships.
(b)
That no Allied or Associated Power should question the validity of the title to the ships seized by any other Associated or Allied Power.

The amendment relating to the payment of compensation for such seized ships is for the purpose of determining the value and the application of the payment for such ships at the value so determined.

In making these reservations and presenting the amendments, the United States Delegation submits the following:—

(a)
That it does not admit the right of any enemy Power or Allied or Associated Power to question the title to the enemy ships seized during the war under the authority of the Congress of the United States approved the 12th May, 1917, and the proclamation of the President of the United States based thereon.7
(b)
That the amendments are submitted in view of the interpretation made by the British Delegation as set out in the procès-verbal for the twenty-sixth meeting to the effect that paragraph 3 of Clause C (see Annex) is intended to exclude from delivery under the general provisions of Clause C only such enemy ships as have been “captured and definitely condemned by prize courts, and that prize court condemnations were made only in the cases of ships taken by Great Britain and Portugal.

The United States Delegation further submits that as the title to the seized enemy ships should be accepted as valid by the enemy Powers and by the Allied and Associated Powers, the suggestion to transfer such ships to a “pool” for redistribution on the basis of losses, ton-for-ton and category-for-category, is tantamount to asking for a contribution on the part of certain of the Allied and Associated Powers.

The principle involved in such a request would compel a complete analysis and consideration of the causes and progress of the war and the relations of various Allied and Associated Powers to the war and, in addition, a complete survey and determination of the relations of the Allied and Associated Powers to each other.

british and french contention

The British and French Delegations pointed out that the American proposal was open to the following objections:–

[Page 190]

1. It substituted individual for collective action, Germany being bound to recognise as valid the seizures made by each State, instead of ceding the ships to the Allies collectively.

2. It is based frankly and implicity on physical possession, not on justice, and establishes the doctrine that the disposal of enemy ships after a war is decided not by international law or agreement, but by the accident of ships having taken refuge in certain ports to escape capture. In the present war the very large numbers of German and Austrian ships which took refuge in North and South American ports on the outbreak of war fled to these ports and remained there in order to escape capture by the British and French naval forces.

3. If this principle is admitted in the case of an Ally, it will be difficult in practice to prevent the neutrals from adopting it and keeping for their own use, in satisfaction of their claims against Germany, the enemy tonnage in their ports. As this amounts to 794,000 tons, the loss to the Reparation Fund will be considerable.

4. It would cause great injustice, for some of the States which have suffered least from the war, such as the United States and Brazil, will gain most under this proposal, while the States which have suffered most from the war would be seriously injured.

The United States and Brazil would have an absolute priority in the payment of their claims over anyone else, including Belgium, for they would be able to pay themselves.

Under the most favourable circumstances there are not enough enemy ships to replace half the Allied losses, there being only 5,500,000 tons of enemy shipping to meet claims in respect of Allied losses amounting to 10,750,000, but under this arrangement the United States would get nearly twice as much tonnage as they have lost, for they have lost 389,000 tons and would get 628,000. Brazil would get nearly ten times as much as she had lost, for she has lost 25,000 tons and would get 216,000. Great Britain, on the other hand, which has lost 7,746,000 tons, would only be able to keep 480,000, and France, who has lost 950,000 tons, would only be able to keep 45.000.

5. The proposal cannot be made a general rule, because it is obviously impossible to grant to, say, Brazil and Spain, the special right which is now claimed by the United States.

6. The American proposal, if agreed to, would insert in the Treaty of Peace with Germany a clause prescribing the method by which some of the enemy ships are to be allocated amongst the Allied and Associated Powers. The enemy have nothing to do with this allocation, which is a matter for the Allies to settle amongst themselves, and the Treaty should be confined to compelling the enemy to cede the ships to the Allies as a whole.

The Committee approved reporting the clause drafted by the British Delegation (Annex, Clause C) subject to the reservation of the United States Delegation, whose amendment was also to be reported.

Reservations were also made by some of the Delegations, including some representing new countries, who claimed that their nationals were entitled to the property in some of the enemy ships. The Committee felt that they were not competent to consider or decide the [Page 191] claims of this kind, and that they could only deal with the facts as they existed in August 1914. It was understood that a Special Committee had been appointed to investigate claims of this kind.

methods of valuing ships

With respect to the enemy merchant fleet, the Committee agreed that the actual value should be estimated at the date of surrender to the Allies.

The Committee is of the opinion that the work connected with such valuation should be entrusted to an Inter-Allied Commission of Experts.

supply of labour

In considering means of payment which might be imposed on the enemy, the Committee discussed the desirability of requiring the enemy to supply labour for the reconstruction of the devastated regions. The imposition of such a requirement was found likely to give rise to numerous difficulties and complications which were accordingly exhaustively examined by the Committee. On the one hand, representatives of those countries which had suffered greatly at the hands of the enemy during the war felt strongly that the restoration of destroyed towns and ravaged land should be a burden upon the enemy States. They were not, in view of the many attendant difficulties, anxious to avail themselves of enemy labour but, in view of the shortage of labour in their own countries, felt that they had no alternative but to call for it. On the other hand, it was pointed out that the difficulties involved in the utilisation of such labour would be such as really to outweigh any advantage that could be derived from it. The employment of large bodies of enemy workmen in an Allied country might give rise to endless industrial complications in that country in regard to conditions of work, pay, employment, &c. There was considerable ground for thinking that, notwithstanding the most careful safeguards, the quality of this labour might be very unsatisfactory. Further, though under the circumstances the employment of enemy labour in this manner might be completely justified, yet there was a great danger that public opinion might at no very distant date, come to regard it as indistinguishable from forced labour and refuse to tolerate its continuance. After prolonged discussion of the subject and consideration of various detailed proposals for the organisation of such labour, the Committee regrets that it was not possible to arrive at any agreement, and consequently is unable to make any recommendations onthe matter.

[Page 192]

imposition of taxes

Other means of payment which were discussed included calling upon the enemy to levy certain taxes; the total sum derived therefrom to be applied in reduction of the debt to the Allied and Associated Powers. The Committee considered various forms of new tax that might be imposed, including monopolies and capital taxes, and also whether it might not be preferable to force the enemy to increase taxes already in existence without creating new ones. But the Committee came to the conclusion that it was wiser to leave it to the enemy Powers to devise the means of meeting the liabilities they would assume by the signature of the Peace Treaty.

liquid assets

A Sub-Committee of the Financial Commission submitted to the Second Sub-Committee for Reparation two proposals for the control and assurance of the payment of a great part of the liquid assets. The Sub-Committee approved these proposals, which it submits in the form of clauses to be inserted in the Preliminary Peace Treaty (see Annex, Clause D), with the intention that they shall also be applied with regard to the other enemy countries.

chemical and electrical products

The Sub-Committee recommend that the Allied and Associated States should claim an option to require delivery at fair prices to be fixed by the Inter-Allied Commission and credited against reparation a proportion of all and any chemical and electrical products of Germany as follows:—

Present stocks Any or all—subject to the approval of the Inter-Allied Commission.
Stocks of 1920 and 1921 25 per cent, of output
Stocks of 1922 and 1923 20
Stocks of 1924 and 1925 15

For the benefit of the Allies jointly,††

works of art

As to works of art carried off or destroyed, the Committee is unanimously of the opinion that the Clauses A and B to be inserted in the Preliminary Treaty of Peace are applicable to the reparation of this class of damage.

[Page 193]

Having concluded the first consideration of the financial capacity of the enemy States and their means of payment and reparation, the Sub-Committee adopted the following Resolution:—

“It is understood that in adopting the principles and resolutions which have already been adopted, the Sub-Committee does not exclude the adoption of additional resolutions subsequently, or regard those already adopted as exhaustive of all cases.”

The President of the Second Sub-Committee.
Cunliffe

Annex

Clauses Proposed for Insertion in the Treaty of Peace

Clause A—Article Governing Restitution

(See the First Interim Report under “Restitution.”)

The enemy States must make immediate restitution of all property, generally, and of whatsoever kind, belonging to the Allied Powers of which they have possessed themselves for any purpose, and which is now to be found on their territory.

Annex No. of the Treaty provides conditions according to which restitution shall be made.

ANNEX

In accordance with Article No. of the Treaty, the enemy States shall return to the Allied Powers all effects, whether movables or fixtures, public property or that of artificial or natural persons, which enemy nationals have carried off and which are now in enemy territory. This clause applies to each and every object thus carried off which may now be situated in the enemy States.

Accordingly those States shall execute a solemn undertaking immediately to collect from their nationals returns setting forth the whereabouts of effects now in the possession of the said nationals drawn from territories of the Allied and Associated Powers.

Laws shall immediately be enacted which shall provide that every person who fails to make a return will be regarded as a receiver of stolen goods and will be liable to severe penalties to be determined by agreement with the Allied and Associated Powers.

An interval of one month from the signing of the Preliminary Treaty of Peace will be allowed for the making of these returns.

A comprehensive return, setting forth the sources from which objects have been drawn, if they have been identified, the nature of the [Page 194] objects and their present location, shall be made to the Representatives of the Allied and Associated Powers within a period of two months after the signature of the Preliminary Treaty of Peace.

The provisions hereinafter recited show broadly what measures are to be adopted to the end that complete restitution shall be made with the least possible delay. It is the purpose of the High Contracting Parties, however, that all necessary measures shall be taken to assure, in the fullest degree, complete restitution of objects carried off (subject to reservations hereinafter stated in the interest of the Allied and Associated Powers). The enemy Governments formally undertake to do all in their power to facilitate search and return.

The Plan of Procedure that follows is applicable to objects of all sorts; furniture, securities, objects of art, &c.

Plan of Procedure

I

Machines, machine-parts, machine tools, agricultural implements, and necessaries of every sort and industrial or agricultural equipment of every kind, including cattle, beasts of burden, &c, which were taken from the territory occupied by the enemy armies under any pretence whatsoever, by military or civil authority of the enemy, or by private citizen of enemy’s countries, shall be at the disposal of the Allied and Associated Powers for return to the places from which they were taken, if the interested Government so determines.

II

In order to prepare for this restitution, the enemy Government shall, with the utmost expedition, supply the duly appointed representatives of the Allied and Associated Powers with all records, official or private, relating to the objects in question; also with all contracts for sale, lease or other purposes, all correspondence thereto pertaining, all declarations and all useful indications as to their existence, source, change of form, present state and place of deposit.

III

Delegates of the Allied and Associated Governments shall, in their discretion, take steps to make in the enemy countries surveys and examinations on the spot of the objects indicated.

IV

Reshipments shall be made according to special instructions given under the authority of the nation to which the particular objects belong.

[Page 195]

V

Particularly, declarations shall be made with a view to an immediate restitution of all accumulations in yards, on the rails, in boats, or in factories, of belting, electric motors, motor parts, accessories, &c., that have been taken from the invaded territories.

VI

The retaking of an object of any kind that may be found or identified shall in no case be obligatory upon the Allied and Associated Powers, which shall be in no wise bound to take back objects. They shall have the right to declare without assigning cause, that they waive claim to the restitution of particular objects and require reparation in lieu thereof by any other method contemplated by the Treaty.

VII

All expenses incurred in searching for, return and completely reinstalling objects that are restored shall be borne by the enemy Power concerned. The restoration of objects as herein required shall in no case affect the right to recover compensation for what has not been so restored.

VIII

It is formally stipulated that no argument drawn whether from the law or from the interpretation of any text whatsoever shall be invoked by the enemy Powers in order to suspend or delay the execution of any measure of restitution prescribed by the Representatives of the Allied or Associated States. The execution of such a measure shall always be immediate, a right to claim damages accruing only in case it is subsequently adjudged that the measure in question was contrary to the provisions of the Treaty.

Clause B—Article providing for Reparation by Equivalents

(See the First Interim Report.)

In every case where it is a matter of satisfying immediate needs, the Allied States may take away objects in the enemy countries, whether in actual use or not, especially rolling-stock, equipment and tools, timber, live-stock, &c; these to be the equivalent of similar objects removed, consumed, or destroyed by the enemy or worn out as the result of acts of war.

Objects found in enemy countries which have been previously taken from the territory of the Allied States cannot be taken as equivalents, except upon condition that their owners do not claim them in accordance with the procedure laid down in Article of the Treaty of Peace.

[Page 196]

In order that the renewals herein provided for may be effected, an Inter-Allied Commission of members shall be constituted with the duty of deciding the claims of each one of the Allied States in regard to its immediate needs of the objects falling under various categories, and to determine the quantities of those objects which the enemy countries are to deliver, the same to be apportioned in accordance with the recognised needs of each one of the interested parties.

Each allied country shall name Commissions, to be presided over by Delegates of the Inter-Allied Commission, who shall proceed to the enemy countries in order to select and take the objects falling under various categories, within the authorised limitations.

The Chairman of the different National Commissions operating in the same enemy country will be expected to confer together with a view to co-ordinating the work of the Commissions.

Clause CArticles relating to Merchant Shipping

I

1. The enemy Powers recognise the right of the Allied and Associated Powers to the replacement, ton for ton (gross tonnage) and class for class, of all merchant ships and fishing boats lost or damaged owing to the war.

Nevertheless, and in spite of the fact that the tonnage of enemy shipping at present in existence is much less than that lost by the Allied and Associated Powers, the right thus recognised will be enforced on enemy ships and boats under the following conditions:—

The enemy Powers on behalf of themselves and so as to bind all other persons interested, cede to the Allied and Associated Governments the property in all the enemy merchant ships which are of 1,600 tons gross and upwards; in one-half, reckoned in tonnage, of the ships which are between 1,600 tons and 1,000 tons gross; in one-quarter, reckoned in tonnage, of the steam trawlers; and in one quarter, reckoned in tonnage, of the other fishing boats.

2. The enemy Powers will, within two months of the signature of the Preliminaries of Peace, deliver to a representative of the Allied and Associated Governments, duly authorised by them for this purpose, all the ships and boats mentioned in Article I.

3. The ships and boats mentioned in Article I include all ships and boats which (a) fly, or may be entitled to fly, the enemy merchant flag; (b) are owned by any enemy subject, company or corporation or by any neutral company or corporation which is under the control or direction of enemy subjects; (c) which are now under construction in enemy or in neutral countries.‡‡

[Page 197]

4. For the purpose of providing documents of title for the ships and boats to be handed over as above mentioned, the enemy Powers will:

(a.)
Deliver to the representative of the Allied and Associated Governments in respect of each vessel a bill of sale or other document of title evidencing the transfer of the entire property in the vessel, free from all encumbrances, charges and liens of all kinds, to that officer;
(b.)
Take all measures that may be indicated by the said representative of the Allied and Associated Governments for ensuring that the ships themselves shall be placed at his disposal.

II

As an additional part of reparation, the German Government agrees to cause merchant ships to be built in German yards for Allied account as follows:

(1.)
Within three months of the signature of the Preliminaries of Peace, the Allied and Associated Powers will notify the German Government of the amount of tonnage to be laid down in German ship-yards in each of the two years next succeeding the three months mentioned above;
(2.)
Within twenty-four months of the signature of the Preliminaries of Peace, the Allied and Associated Governments will notify to the German Government the amount of tonnage to be laid down in each of the three years following the two years mentioned above;
(3.)
The amount of tonnage to be laid down in each year will not exceed 200,000 tons, gross tonnage.
(4.)
The specifications of the ships to be built, the conditions under which they are to be built and delivered, the price per ton at which they are to be accounted for in the reparation account, and all other questions relating to the accounting, ordering, building and delivery of the ships, shall be determined by a Commission nominated by the Allied and Associated Powers.

III

The enemy Powers undertake to restore in kind and in normal condition of upkeep to the Allied and Associated Powers, within two months of the signature of these preliminaries, any boats and other movable appliances belonging to inland navigation which since the 2nd August, 1914, have by any means whatever come into their possession or into the possession of their nationals, and which can be identified.

With a view to make good the loss in inland navigation tonnage, from whatever cause arising, which has been incurred during the war by the Allied and Associated Powers, and which cannot be made good by means of the reparation in kind prescribed in the above [Page 198] paragraph, the enemy Powers agree to cede to the Allied and Associated Powers a portion of the enemy river fleet up to the amount of the reparation in kind mentioned above, provided that such cession shall not exceed 20 per cent, of the river fleet as it existed on the 11th November, 1918.

The conditions of this cession shall be settled by the same arbitrators as are charged with the settlement of difficulties relating to the apportionment of river tonnage resulting from the new international regime applicable to certain river systems or from the territorial changes affecting those systems.

IV

1.
The enemy Powers undertake to take any measures that may be indicated to them by the Allied and Associated Governments for obtaining the full title to the property in all ships which have during the war been transferred, or are in process of transfer, to neutral flags, without the consent of the Allied and Associated Governments.
2.
The enemy Powers abandon in favour of the Allied and Associated Governments all claims of all descriptions against the Allied and Associated Governments and against subjects or citizens of Allied and Associated countries in respect of the detention, employment, loss or damage of any enemy ships or boats.
3.
The enemy Powers abandon in favour of the Allied and Associated Powers any claim to vessels or cargoes sunk by or in consequence of enemy naval action and subsequently salved, in which any of the Allied or Associated Governments or their citizens or subjects may have any interest either as owners, charterers, insurers or otherwise, notwithstanding any decree of condemnation which may have been made by an enemy Prize Court.
4.
The enemy Powers will within three months of the signature of the Preliminaries of Peace take all necessary legislative and administrative measures to enable them to carry out the provisions of this chapter.

amendments to clause c proposed by the united states delegation (but not accepted by all delegations)

(For explanation, see text of the Second Interim Report, above p. 2.)8

The Enemy Powers recognise as valid:—

1.
The seizure during the war of enemy merchant ships by the Allied and Associated Powers respectively.
2.
The legality and sufficiency of the title to such ships acquired through such seizures irrespective of the process of means used to effect such seizures.
3.
The full divesting of the enemy Powers and of each and every national thereof, and of each and every other party interested in such ships, of any right, title or interest in such seized property.

The enemy Powers on behalf of themselves and so as to bind all other persons interested in such ships, hereby acknowledge the divesting of all and every right, title, property and interest of such enemy Power, and/or of their nationals or others interested in the ships so seized and taken possession of during the War by the Allied and Associated Governments respectively, and further confirm the vesting of such right, title, interest and property in such ships in the Allied and Associated Governments respectively.

The reasonable value of such ships shall be determined and such value shall be charged against the Government holding such ships and at the option of such Government shall be credited to the respective enemy Power which either itself or through its nationals or others formerly owned the same, on all such claims as are finally allowed respectively to such Allied or Associated Power as a result of the Treaty of Peace, and/or shall be credited and paid to any subject, citizen or other national of any enemy Power and/or others having or claiming to have any interest in any such ships as their respective interests may appear.

In the latter event, the balance, if any, shall be credited to such enemy Power which through itself or its subjects, citizens, nationals or others formerly owned such ships.

If such final credit so established in favour of any particular enemy Power, when taken together with other credits that may be allowed such Power under the terms of the Treaty of Peace, exceeds the aggregate of claims allowed in the case of any Allied or Associated Power establishing such credit, the excess shall be used and applied in accordance with the provisions of the Treaty of Peace in respect to such excess credits.

Clause D—Articles providing for control and assurance of the payment of part of their liquid assets by enemy Powers

(Approved by the Second Sub-Committee, subject to the modification that provisions applying to Germany shall be made applicable to the other enemy Powers also.)

article 1

The German Government shall convey to the Allied and Associated Governments, within three months, and along with such details as may be called for, the following information which shall be supplied as of the date of the signature of this Convention:—

(a.)
The total gold reserve in the Reichsbank; in the other banks of issue; and in public treasuries.
(b.)
Whether situated in Germany§§ or outside of Germany.
1.
All Foreign securities and obligations of foreign States held by Germany or its nationals.
2.
All foreign bank notes or other foreign paper currency held by Germany or its nationals.
3.
All foreign bills of exchange held by Germany and its nationals.
(c.)
All property and interest of whatsoever nature belonging to Germany and its nationals and situated in foreign territory such as:—
1.
Immovable property.
2.
Movable property of every kind.
3.
Merchandise.
4.
Cash not included in (b.) 2 above.
5.
Participations and credits of every kind not included in paragraph (b.) 1, 2 or 3 above.
6.
Options and contracts for work or materials, orders unexecuted or incompletely executed that involve products, merchandise, tools, and materials of every kind, and concessions of whatever sort.

article 2

The German Government undertakes to adopt all measures necessary to acquire, if it does not own them already, and to transfer to the Allied and Associated Governments all property and effects above mentioned, for which it may be called upon by the aforesaid Governments. Notice stating the effects to be transferred shall be given within six months from the date of the report which the German Government is to furnish under the terms of Article 1. The transfer is to be effected by the German Government with the least delay possible, and at most within six months of the date of the notice.

Property and effects shall be valued by an Inter-Allied Financial Commission, and the total shall be credited on account of reparation due from Germany to the Allied and Associated Powers.

The provisions of this article shall not apply to property and effects of the German Government or its nationals that, at the date of this Convention, have already been sequestrated by the Allied and Associated Powers, nor to what is situated on territory ceded by Germany.

Clause E

From the date of bringing into force the present Treaty all the concessions, privileges and favours enjoyed on German territory by the subjects of Austria, Bulgaria, Hungary and Turkey, as the result [Page 201] of any act of a German Public Authority after the 1st August, 1914, are assigned and transferred by Germany to the Allied and Associated Powers under conditions which shall be determined by the said Powers.

The same shall apply in respect of the concessions, privileges and favours granted since the 1st August, 1914, and enjoyed on German territory by German subjects as the result of an act of an Austrian, Bulgarian, Hungarian or Turkish Public Authority.

Germany undertakes to cancel any sale, cession, or other measure of disposal of the said concessions, privileges or favours which might interfere with the assignment and transfer of these rights.

For this purpose Germany shall, as from the coming into force of the present Treaty, take all necessary preservative measures, such as requisition, sequestration, seizure, &c.

The Allied and Associated Powers shall not be liable on their part for any claim for compensation or indemnities arising out of the present stipulation.

April 18, 1919.

Additional Note

In the case of ships, as in the case of other property in kind ceded by the Germans to the Allies, there may be cases in which there are claims on the part of the Governments, or citizens, or subjects of Allied and Associated States against the ships or property. These claims should be considered on their merits before the ships or property are distributed or otherwise dealt with by the Allies in the event of the Germans not having satisfied the claims themselves and before credit is given to Germany on account of these ships or other property.

The Committee recommend that the Allied Drafting Committee should have their attention called to these cases and should be asked to formulate a clause for inclusion in the Peace Treaty providing that cases of this kind shall be considered and that provisions be inserted to safeguard the legal and equitable interests of the Allied and Associated Governments and their nationals.

Appendix III

Valuation Clause

Clause (D). The damage for repairing, reconstructing and rebuilding property in the invaded and devastated districts, including reinstallation of furniture, machinery and other equipment, will be measured by the cost at the dates when the work is done.

  1. Appendix I, infra. The text of appendix I printed infra is that of a printed draft of April 21, 1919, and has been substituted for a later revision, probably that of April 29, 1919, which accompanies the minutes of this meeting in the Department files.
  2. Translation: “The Commission shall determine periodically, by majority vote, the rate of interest (to a maximum of 5 percent) to be debited to Germany in respect of her debt as determined by the Commission and also the dates from which interest win be debited upon the respective amounts of the debt”
  3. Translation: “Interest shall be debited: (1) upon the amount of material damages (for the fraction corresponding to the pre-war value) from November 11, 1918; (2) for pensions, from the day on which they are paid by each country concerned.”
  4. Translation: “If a half at least of the animals taken by the enemy in the Invaded areas cannot be identified and restored, the remainder, up to half of the number removed, shall be delivered by Germany under the heading of restitution.”
  5. Translation: “h) Expenses incurred by the State, or for its account and with its authorization, to feed, transport, or relieve the civilian population of the occupied territories and the refugee or evacuated civilian population.”
  6. For this text, see appendix III, p. 201.
  7. Brackets appear in the original.
  8. The French text reads “German aggression.” [Footnote in the original.]
  9. Note to Drafting Committee:—This may not be a complete reference list [Footnote in the original.]
  10. Note to Drafting Committee:—Apparently there are at present no clauses in the Treaty dealing with the status of material “surrendered,” “delivered” or “left in situ” under Clauses 4, 6, 7, 22 and 28 of the Armistice, in particular whether Germany is to receive a credit in respect of the whole or any part of this material. [Footnote in the original.]
  11. This article appears to be inconsistent with the following in No. 3 of the main clauses—’This Commission shall examine into the claims and give the German Government a just opportunity to be heard,” inasmuch as Clause 3 does not limit the questions on which Germany is entitled to be heard. [Footnote in the original.]
  12. This Article appears to be unnecessary in view of Article XV. above. [Footnote in the original.]
  13. Vol. ii, p. 541.
  14. This Annex is not accepted in its present form by the United States Delegation. [Footnote in the original.]
  15. This Report was adopted by the Commission on Reparation on the 19th April, 1919. [Footnote in the original.]
  16. Foreign Relations, 1917, supp. 2, vol. ii, p. 1257.
  17. The French Delegation considers that, as it is difficult to determine at present the production of the electrical and chemical industries in Germany, the percentages given should not be regarded as a maximum. [Footnote in the original.]
  18. Note.—See below for amendment proposed by United States Delegation. [Footnote in the original.]
  19. Ante, p. 187.
  20. Note.—As her boundaries shall have been established by this Treaty. [Footnote in the original.]