Annex I

Note to VIII, Annex I

The German delegation declared that Germany would accept liability under paragraphs 1, 2, 3, 8, 9, and 10 of annex I to article 232, so far as concerned damage to civilians in occupied districts, but insisted on reciprocity under paragraph 4 and definitely rejected paragraphs 5–7 as not based on any legal principle (Foreign Relations, The Paris Peace Conference, 1919, vi, 852). Objection was also raised to an army of occupation which was not needed, Germany being defenseless, and the cost of which would only lessen the payments Germany could make as reparation.

Germany could not accept the Reparation Commission, which would be both party and judge, but proposed the appointment of a German commission to cooperate with the Allied commission, a mixed court of arbitration with a neutral chairman to settle disagreements.

The German Government was “keenly desirous of cooperating by means of German labor in the reconstruction of France and Belgium” and accepted the principle that German taxation should be as heavy as in any Allied state represented on the Reparation Commission; but only on condition that Germany was not partitioned, its industrial system and food basis not disturbed, and its overseas connections, mercantile fleet, and colonies not taken away, and that the territories separated should bear their share of the war debts. The annuity to be paid must be determined not solely by the Reparation Commission, but in agreement with a commission of [Page 456] German experts, for otherwise the direct taxes in Germany would have to be collected by force.

Subject to these reservations, Germany agreed to issue, four weeks after the ratification of the treaty, bonds for 20,000,000,000 marks gold, payable before May 1, 1926, and to make annual payments beginning May 1, 1927, the total not to exceed 100,000,000,000 marks, including payments to Belgium and material delivered by Germany during the armistice. For the first 10 years the annuity should not exceed 1,000,000,000 marks.

The Allies replied that the reparation problem was of such “extraordinary magnitude and complexity” that it could be solved only by “a continuing body, limited in personnel and invested with broad powers to deal with the problem in relation to the general economic situation” (ibid., p. 962). But the German interpretation of the Reparation Commission was “so distorted and so inexact that it is difficult to believe that the clauses of the treaty have been calmly or carefully examined”. The Commission was not a device for interfering with German sovereignty: “its business is to fix what is to be paid; to satisfy itself that Germany can pay; and to report to the Powers, whose delegation it is, in case Germany makes default”. The Commission would have to test whether a sincere application was being given to the principle that German taxation should be as heavy as Allied. There would be no objection to the creation of a German commission to work with the Reparation Commission, and this was “greatly to be desired”.

The Allies were therefore prepared to agree that after the treaty had been signed, Germany might present such evidence, estimates, and arguments as it saw fit and within four months make proposals for the settlement of its reparation obligations, provided (1) the German authorities conferred with the powers directly concerned; (2) the offers were unambiguous; and (3) the categories and reparation clauses were accepted as “matters beyond discussion”. The Allies would give an answer within two months.

The German offer of 100,000,000,000 marks was not so impressive as it seemed. No interest was to be paid, and no substantial payment till 1927; thereafter a series of undefined instalments was to be agreed, which were not to be completed for nearly half a century, “a small return to the victims of German aggression in satisfaction for their past sufferings and their permanent burdens.”

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The Allies declared that they would not withhold from Germany commercial facilities without which the resumption of German industry—“an interest of the Allied and Associated Powers as well as an interest of Germany”—could not take place and were prepared to afford facilities to Germany “for the common good”. Meanwhile the draft treaty “must be accepted as definitive and must be signed”. The only question open was “how best to execute the provisions of the treaty”. The burdens of Germany would be heavy, but they had been imposed “under conditions of justice by people whose social well-being and economic prosperity have been gravely impaired by wrongs which it is beyond the utmost power of Germany to repair”.

For formal decisions in the nature of interpretation for the application of the terms of this annex, see Report on the Work of the Reparation Commission from 1920 to 1922, pp. 43-50 (Reparation Commission V).

Compensation may be claimed from Germany under Article 232 above in respect of the total damage under the following categories:

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.
Damage caused by Germany or her allies to civilian victims of nets 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), wherever arising, and to the surviving dependents of such victims.
Damage caused by Germany or her allies in their own territory or in occupied or invaded territory to civilian victims of all acts injurious to health or capacity to work, or to honour, as well as to the surviving dependents of such victims.
Damage caused by any kind of maltreatment of prisoners of war.
As damage caused to the peoples of the Allied and Associated Powers, all pensions and compensation in the nature of pensions to naval and military victims of war (including members of the [Page 458] air force), 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 each of them as being the capitalised cost of such pensions and compensation at the date of the coming into force of the present Treaty on the basis of the scales in force in France at such date.

Note to VIII, Annex I (5)

The Reparation Commission made decisions as follows:

that administrative expenses were not included in the damage for which compensation might be claimed;
that compensation should not necessarily have the character of fixed cash payments to be repeated at regular intervals; compensation should include (1) cost of medical and surgical aid and prosthetic apparatus furnished after discharge; (2) non-administrative expenses of the National Bureau of Mutilated and Disabled Victims paid in kind; (3) cost of maintaining wards of the nations who were military victims of the war; (4) allowances to unmarried wives of deceased or missing mobilized men; (5) pecuniary indemnities and allowances to families of deceased or missing men so far as they represented a compensation for dependents;
damage was computed only for the categories of pensions and compensation allocated by the French law, not other national laws;
pensions and compensation of colonial troops were to be claimed on the basis of French law;
service pensions granted for length of service were not chargeable to Germany.

Though the question of including pensions in the categories of damages was debated at length in the preliminary peace conference, Germany did not complain of this provision in claiming that the categories exceeded the terms of the armistice, except as civilians were involved. The theory of the provision was that the pensions and other compensations were chargeable to the costs of war since they would not have accrued if the war had not occurred.

The cost of assistance by the Governments of the Allied and Associated Powers to prisoners of war and to their families and dependents.
Allowances by the Governments of the Allied and Associated Powers to the families and dependents of mobilised persons or persons serving with the forces, the amount due to them for each [Page 459] calendar year in which hostilities occurred being calculated for each Government on the basis of the average scale for such payments in force in France during that year.

Note to VIII, Annex I (7)

Allowances granted between the date of the commencement of belligerency of an Allied and Associated State and December 31, 1918 were considered by the Reparation Commission.

The Commission on April 3, 1921 “decided that the period of belligerency mentioned in Article 232, was the period in which a state of war was, in fact or in law, in existence.”

Damage caused to civilians by being forced by Germany or her allies to labour without just remuneration.
Damage in respect of all property wherever situated belonging to any of the Allied or Associated States or their nationals, with the exception of naval and military works or materials, which has been carried off, seized, injured or destroyed by the acts of Germany or her allies on land, on sea or from the air, or damage directly in consequence of hostilities or of any operations of war.
Damage in the form of levies, fines and other similar exactions imposed by Germany or her allies upon the civilian population.