Annex II (1 to 23)

1.

The Commission referred to in Article 233 shall be called “The Reparation Commission,” and is hereinafter referred to as “the Commission”.

[Page 460]

Note to VIII, Annex II (1)

CHART OF ORGANIZATION OF THE REPARATION COMMISSION1

—KEY—

1.—REPARATION COMMISSION—United States unofficially represented by Delegate and Assistant Delegate.

2.—AUSTRIAN SECTION AT VIENNA—Has charge of Reparation provisions of St. Germain Treaty. United States unofficially represented.

3.—GENERAL SECRETARIAT

4.—SERVICE OF RESTITUTIONS & REPARATIONS IN KIND—As its name indicates, has charge of all restitutions and deliveries in kind. United States unofficially represented.

5.—FINANCE SERVICE—Handles financial questions, particularly Financial Chapter of Treaty of Versailles. United States unofficially represented.

6.—LEGAL SERVICE—Handles all legal matters, particularly construction of Treaty. United States unofficially represented.

7.—INTELLIGENCE SERVICE—(with Bureau at Berlin) Statistical Organization; gives particular attention to study of financial and economic conditions in Germany. United States not represented.

8.—MARITIME SERVICE—Considers all maritime questions particularly deliveries of German tonnage under Annex III of Part VIII of the Treaty. United States unofficially represented.

9.—ACCOUNTING SERVICE—Keeps Reparation accounts and handles internal finances of Commission.

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10.—VALUATION SERVICE—Engaged in special study of claims of Allied Governments against Germany, particularly under Annex I of Part VIII of the Treaty. United States unofficially represented.

11.—DYESTUFF & PHARMACEUTICAL BUREAU—(Responsible to S.R.R.K) Has charge of all deliveries of dyes and drugs under Annex VI of Part VIII of the Treaty. United States unofficially represented.

12.—COAL BUREAU—(Responsible to S.R.R.K.) Has charge of all deliveries of coal under coal provisions of Treaty. United States unofficially represented.

13.—OFFICE OF REPARATION COMMISSION AT WIESBADEN—(Responsible to S.R.R.K.) Deals with deliveries in kind. United States unofficially represented.

14.—BUREAU FOR THE LIQUIDATION OF WAR MATERIAL AT BERLIN—(Responsible to the S.R.R.K.) Has charge of the liquidation of German war material. United States unofficially represented.

2.

Delegates to this Commission shall be nominated by the United States of America, Great Britain, France, Italy, Japan, Belgium and the Serb-Croat-Slovene State. Each of these Powers will appoint one Delegate and also one Assistant Delegate, who will take his place in case of illness or necessary absence, but at other times will only have the right to be present at proceedings without taking any part therein.

On no occasion shall the Delegates of more than five of the above Powers have the right to take part in the proceedings of the Commission and to record their votes. The Delegates of the United States, Great Britain, France and Italy shall have this right on all occasions. The Delegate of Belgium shall have this right on all occasions other than those referred to below. The Delegate of Japan shall have this right on occasions when questions relating to damage at sea, and questions arising under Article 260 of Part IX (Financial Clauses) in which Japanese interests are concerned, are under consideration. The Delegate of the Serb-Croat-Slovene State shall have this right when questions relating to Austria, Hungary or Bulgaria are under consideration.

Each Government represented on the Commission shall have the right to withdraw therefrom upon twelve months notice filed with the Commission and confirmed in the course of the sixth month after the date of the original notice.

Text of May 7:

Delegates to this Commission shall be nominated by the United States of America, Great Britain, France, Italy, Japan, Belgium and [Page 462] Serbia. Each of these Powers will appoint one Delegate and also one Assistant Delegate, who will take his place in case of illness or necessary absence, but at other times will only have the right to be present at proceedings without taking any part therein. On no occasion shall the Delegates of more than five of the above Powers have the right to take part in the proceedings of the Commission and to record their votes. The Delegates of the United States, Great Britain, France and Italy shall have this right on all occasions. The Delegate of Belgium shall have this right on all occasions other than those referred to below. The Delegate of Japan shall have this right on occasions when questions relating to damage at sea, and questions arising under Article 260 of Part IX (Financial Clauses) in which Japanese interests are concerned, are under consideration. The Delegate of the Serb Croat and Slovene State shall have this right when questions relating to Austria, Hungary or Bulgaria are under consideration.

Each Government represented on the Commission shall have the right to withdraw therefrom upon twelve months’ notice filed with the Commission and confirmed in the course of the sixth month after the date of the original notice.

Note to VIII, Annex II (2)

The original structure of the commission was affected by the policy of the United States, which did not take up the seat assigned to it and did not vacate that seat. Instead, the United States Government kept an “unofficial observer” in the seat for all except a few months of the commission’s existence.

John Foster Dulles sat for the United States on the Organization Committee of the Reparation Commission, which held its first meeting on July 3, 1919. On July 18, 1919 the President, “in connection with the execution of the treaty of peace,” asked the chairman of the Senate Committee on Foreign Relations to consult the committee with regard to the appointment of a representative on the Reparation Commission which was “of so much importance to the business interests of the United States”. The President “would very much appreciate their approval of my appointing provisionally a representative of the United States to act upon the Reparation Commission”. On July 22 the committee

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The Secretary of State on October 13, 1919 discussed the appointment by the United States of a representative on the Reparation Commission, when it should come into being, in a despatch to the Commission To Negotiate Peace. He thought a representative should attend the meetings “in an unofficial capacity”, dependent on the attitude of the commission. “It was well known that the understanding that the United States would be represented on the Reparation Commission had great effect in securing the consent of the various signatories to a commission having such broad powers. It is felt that if the United States gives its approval to the de jure organization and operation of the Reparation Commission some conditions should be attached or understanding reached which would protect our rights and those of the other signatories which we might be inclined to support.”

The response to this was a resolution of the Supreme Council on October 19 for the representation in commissions of states which, without having ratified the treaty, agreed to be represented and for the validity of commission decisions in which representatives of all states designated by the treaty did not participate.

The Secretary of State on November 27, 1919, “in view of the failure of the Senate to ratify the treaty”, ordered the withdrawal of representatives of the United States from all commissions except those dealing with reparation. The next day, however, Mr. Rathbone was instructed to “continue as heretofore”, since the “President considers it advisable that we should continue unofficial representation on Interim Reparation Commission in order to protect American interests.” The representative was instructed by the Treasury on December 27 that, “until further notice you shall, with the approval of the other Governments concerned, attend the meetings of the Commission unofficially”. In order to protect the interests of the United States, he was “to participate unofficially in the discussions of any questions which concern the United States”. He was to use his best endeavors in advocating the adoption of sound constructive policies, for action “unsound from a financial and economic standpoint would seriously affect the United States”. A parallel instruction to the Ambassador in France from the Department of State authorized him to appoint American representatives to sit on subcommittees of the commission “in an unofficial capacity until final action is taken by the United States on the treaty”.

The Reparation Commission came into being with the treaty’s entry into force on January 10, 1920, the personnel of the Organization [Page 464] Committee, which had been functioning since July 3, 1919, going over to the Commission bodily. However, for technical reasons the Organization Committee continued in existence for three months, overlapping its treaty self until March 23, 1920 when its fortieth and last meeting was held. Its preliminary work had been voluminous, engrossing, and highly significant. The representatives of the United States were able and effective workers, whose services were appreciated by their colleagues.

The Acting Secretary of State telegraphed on December 15, 1920 that “Department has practically decided upon full withdrawal of participation by United States on Reparation Commission as well as on other commissions in Europe.” The President maintained this view with respect to the Conference of Ambassadors, and the representative was informed on January 8, 1921 that the occasion for representation on it by the United States “seems to have passed since this country has not accepted the treaty of Versailles and as the most important questions raised by the armistice have been disposed of.”

The representative on the Reparation Commission was maintained “unofficially until further instructions”, which came on February 10 after consultation with the President, that “we should cease to participate in the work of the commission”. A text of the notification to be given was sent, revised the next day, and fully rewritten by the observer, Roland W. Boyden, the following day. In sending a final revision the Secretary of State sought to express the Wilson administration’s attitude. He felt that the United States was not justified in participating in changing a treaty it had not ratified and “that, while we are not in a position to approve or disapprove any such arrangements, we are not willing to renounce our inherent rights, or admit that our failure to ratify the treaty has debarred us from a voice in the determination of such an important matter which concerns us.” He did not wish to approve or indirectly commit the United States to the plan then under consideration. “While no plan can be effective without American approval, unfortunately circumstances here at present would prevent our definite approval of a plan which we might consider thoroughly sound.”

The text of the announcement telegraphed on February 15, 1921 read (Foreign Relations, 1921, i, 9):

The Harding administration took office on March 4, 1921. On March 9 the Secretary of State told Mr. Boyden to remain in Paris; he might “unofficially obtain and report any information of interest”. On the 11th he was instructed to maintain his staff and organization.

On March 1 there had convened at London the Allied Conference which took the decisions preliminary to the completion of the Schedule of Payments made out by the Reparation Commission as provided by article 233 of the treaty. That document was handed to the German delegation by the Allied Conference on May 5 with an ultimatum demanding its acceptance by May 11. On May 6 the President of the Allied Conference invited the United States to cooperate in “the settlement of the international difficulties in which the world is still involved”. He asked whether the Government of the United States was disposed “to be represented in the future, as it was at an earlier date,” to facilitate “American cognizance of our proceedings and, where possible, American participation in them”.

Mr. Boyden on May 7 was instructed “to resume your unofficial position on the Commission. You should, as formerly, keep the Department informed by cable of the discussions and decisions of the Council [sic] with your comments thereon” (Foreign Relations, 1921, i, 14). Mr. Boyden resumed his place on May 10.

John Foster Dulles of the American Commission To Negotiate Peace sat on the Organization Committee of the Reparation Commission [Page 466] from its first meeting on July 3, 1919, and was succeeded by Albert R. Rathbone, an Assistant Secretary of the Treasury, about October 15. He continued to act through the life of the Organization Committee, which held the last of its 40 meetings on March 23, 1920. The status of Mr. Rathbone came under scrutiny from the beginning of his service, which became “unofficial representation” in November 1919.

Mr. Rathbone was head of the “United States Unofficial Delegation, Reparation Commission”, when the commission came into existence in virtue of the entry of the treaty into force on January 10, 1920. Roland W. Boyden was appointed by the Treasury Department to succeed Mr. Rathbone as from April 1, 1920. As “unofficial observer” under instructions he suspended attendance from the 141st to 186th meetings, February 18 to May 10, 1921, the period when the Schedule of Payments was determined. Colonel James A. Logan, Jr., was assigned from the Army as liaison during that time and remained to become assistant unofficial observer on October 5, 1921. He succeeded as observer when Mr. Boyden became the “American citizen member” on September 1, 1924. He left in March 1925 and was succeeded on June 1 by Ralph W. S. Hill until January 12, 1927, when Edwin C. Wilson, a member of the Paris Embassy, took over. Depending on questions to be considered, a higher or lower ranking officer was present. A higher officer was listed as “attended unofficially”; a lower officer was listed among those “in attendance”.

2A.

When the Reparation Commission is deliberating on any point relating to the report presented on April 9, 1924, to the Reparation Commission by the First Committee of Experts appointed by it on November 30, 1923, a citizen of the United States of America appointed as provided below shall take part in the discussions and shall vote as if he had been appointed in virtue of paragraph 2 of the present annex.

The American citizen shall be appointed by unanimous vote of the Reparation Commission within thirty days after the adoption of this amendment.

In the event of the Reparation Commission not being unanimous, the appointment shall be made by the president for the time being of the Permanent Court of International Justice at The Hague.

The person appointed shall hold office for five years, and may [Page 467] be reappointed. In the event of any vacancy the same procedure shall apply to the appointment of a successor.

Provided always that if the United States of America are officially represented by a delegate on the Reparation Commission, any American citizen appointed under the provisions of this paragraph shall cease to hold office and no fresh appointment under these provisions shall be made as long as the United States are so officially represented.

Note to VIII, Annex II (2A)

Amendment enacted by Belgium, France, Great Britain, Italy, Japan, and the Serb-Croat-Slovene State, the Governments represented on the Reparation Commission, acting under paragraph 22, annex II, part VIII, and embodied in an agreement signed by their representatives at London, August 30, 1924 (30 League of Nations Treaty Series, p. 97) and in article 1 of the inter-Allied agreement between the Governments of Belgium, His Britannic Majesty (with Canada, Australia, New Zealand, Union of South Africa, and India), France, Greece, Italy, Japan, Portugal, Rumania, and the Serb-Croat-Slovene State, signed at London August 30, 1924 (ibid., p. 89); both in effect August 30, 1924.

The “American Citizen Member of the Reparation Commission” served from September 1, 1924 until May 17, 1930. He voted “in discussions in the Reparation Commission” and “when the commission was called upon to take a decision on a question connected with the Report of the First Committee of Experts”. Roland W. Boyden occupied this position from September 1, 1924, was succeeded by Thomas Nelson Perkins, Walter P. Cooke, (resigned Mar. 1, 1928), Franklin M. W. Cutcheon, (resigned Oct. 20, 1929), and Robert E. Olds, who had just retired as Under Secretary of State. Appointments were made by the Reparation Commission from nominations known to the Secretary of State or the President.

3.

Such of the other Allied and Associated 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.

4.

In case of the death, resignation or recall of any Delegate, Assistant Delegate or Assessor, a successor to him shall be nominated as soon as possible.

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5.

The Commission will have its principal permanent Bureau in Paris and will hold its first meeting in Paris as soon as practicable after the coming into force of the present Treaty, 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.

6.

At its first meeting the Commission shall elect, from among the Delegates referred to above, a Chairman and a 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, the Commission shall proceed to a new election for the remainder of the said period.

Note to VIII, Annex II (6)

Article 437 provides that the chairman of any commission is entitled to a second vote in the event of an equality of votes. The Reparation Commission sat at Paris, and the customary diplomatic courtesy gave the French delegate the chairmanship of the Organization Committee of the Reparation Commission. After the treaty entered into force, the chairmanship continued with the French delegate. No change was made in this arrangement after the Spa agreement on July 16, 1920 fixed the French percentage of reparation as 52 percent of the receipts.

By paragraph 2 of annex II, the commission was composed of delegates of the United States, Great Britain, France, and Italy who had the right to participate and vote in all proceedings. Delegates named by Japan, Belgium, and the Serb-Croat-Slovene State voted when matters concerning them were under consideration. Other states appointed delegate assessors who participated in discussions without vote.

Belgium, as it happened, was concerned in every crucial question which came before the commission for decision. At such times then, the commission consisted of the representatives of France, Great Britain, Italy, and Belgium, and the French chairman could cast a second vote in the absence of a voting representative of the United States. So, when the commission was often split 2 to 2, France with its casting vote turned the balance in its own favor.

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7.

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 remuneration; to constitute committees, whose members need not necessarily be members of the Commission, and to take all executive steps necessary for the purpose of discharging its duties; and to delegate authority and discretion to officers, agents and committees.

Note to VIII, Annex II (7)

The Reparation Commission delegated part of its authority to the Permanent Managing Committee, composed of the assistant delegates and, as occasion arose, of the American Citizen Delegate provided for by annex II, paragraph 2A, above. The American acted as chairman. The committee held 73 sessions from February 9, 1925 to May 28, 1926.

The Permanent Managing Committee was created by decisions of the Reparation Commission of November 4, 1924 and January 31, 1925. It was given “authority and full power to direct in the name of the commission all current business”, with reservation to the Reparation Commission of decisions in virtue of article 234, interpretation of part VIII, or of the agreements of July 16, 1920, March 11, 1922, or January 14, 1925, decisions as to default or upon general principles and the appointment of the American Citizen Delegate (file 462.00 R 29/3842).

For the powers of the Committee of Guarantees appointed under this provision see this annex, paragraph 12A (d) below. For some account of its work see article 234.

8.

All proceedings of the Commission shall be private, unless, on particular occasions, the Commission shall otherwise determine for special reasons.

9.

The Commission shall be required, if the German Government so desire, 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.

10.

The Commission shall consider the claims and give to the German Government a just opportunity to be heard, but not to take any [Page 470] part whatever in the decisions of the Commission. The Commission shall afford a similar opportunity to the allies of Germany, when it shall consider that their interests are in question.

Note to VIII, Annex II (10)

CLAIMS AGAINST GERMANY

Submitted to the Reparation Commission up to February 12, 1921, (Arrangement of original modified)

[Page 471] [Page 472] [Page 473] [Page 474] [Page 475]

FRANCE
Damage to property:	Paper francs Replacement value
Industrial	38,882,521,479
Buildings	36,892,500,000
Personal	25,119,500,000
Unimproved	21,671,546,225
Public works	2,583,299,425
Property of the state	1,958,217,193
Other damage	2,359,865,000
Shipping losses	5,009,618,722
Damage in Algeria, colonies and abroad	2,105,535,000
Interest at 5 percent since the armistice	4,125,000,000
Damages to persons:
Military pensions	60,045,696,000
Allotments to soldiers’ families	12,936,956,824
Pensions to civilian war victims	514,465,000
Maltreatment of civilians and prisoners of war	1,869,230,000
Assistance to prisoners of war	976,906,000
Insufficient remuneration	223,123,313
Exactions to the detriment of the civil population	1,267,615,939
Total	218,541,596,120
GREAT BRITAIN
	Pounds sterling
Damage to property	28,614,363
Shipping losses	763,000,000
Damage abroad	3,485,550
Damage to river shipping	4,000,000
Damage to persons:
Military pensions	1,706,800,000
Pensions to civilian war victims	35,602,621
Total	£2,541,502,534
Allotments to soldiers’ families	7,597,832,086	francs
CANADA
Civil and military victims and prisoners of war	$2,006,250
NEW ZEALAND
Civil and military victims and prisoners of war	£70,122
AUSTRALIA
Damage to property	£180,339
Civil and military victims and prisoners of war	£285,605
Total	£465,944
SOUTH AFRICA
	South African pounds
Civil and military victims and prisoners of war	255,967
ITALY
Damage to property:	Lire
Industrial	1,541,185,000
Buildings	6,810,729,000
Personal	5,101,185,000
Unimproved	5,995,833,500
Public works and other damage	1,484,615,000
Maritime damage	£128,000,000
Damage to persons:	Francs
Military pensions	31,041,000,000
Allotments to soldiers’ families	6,885,130,395
Civil and military victims and prisoners of war	12,153,289,000	lire
	37,926,130,395	francs
Total	33,086,836,500	lire
	£128,000,000
BELGIUM
Damage to property:	Belgian francs
Industrial	8,316,686,125
Of other	21,457,252,974
Maritime damage	184,708,250
Damage to persons:	French francs
Military pensions	1,637,285,512
Allotments to soldiers’ families	737,930,484
Civil victims	496,131,000
Prisoners of war and families	350,332,652
Insufficient remuneration	144,000,000
Exactions by Germany	3,305,534,802
Total	34,254,645,893	Belgian francs
	2,375,215,996	French francs
JAPAN
	Yen
Damage to property	850,000
Maritime damage	297,593,000
Damage to persons:
Military pensions	70,294,000
Allotments to soldiers’ families	454,063,000
Civil maltreatment:
The civil war victims and prisoners	9,974,000
Total	832,774,000	yen
SERB-CROAT-SLOVENE STATE
Damage to property	8,496,091,000	dinars
Damage to persons	19,219,700,112	French francs
RUMANIA
	Gold francs
Damage to property	9,734,013,287
Damage to persons:
Military pensions	9,296,663,076
Allotments to soldiers’ families	416,703,847
Civilians	11,652,019,978
Total	31,099,400,188	gold francs
PORTUGAL
	Contos
Damage to property	1,774,907
Maritime damage	32,307
Damage to persons:
Military pensions	12,100
Allotments to soldiers’ families	1,436
Civilian war victims	123,511
Total	1,944,261	contos
GREECE
	Gold francs
Damage to property	1,883,182,542
Maritime damage	600,357,000
Damage to persons	1,286,000,000
Military pensions	726,241,434
Allotments to soldiers’ families	497,007,763
Total	4,992,788,739	gold francs
BRAZIL
	Francs
Damage damage	598,405
	Pounds sterling
Maritime damage	1,189,144
Damage to persons:
Military pensions	27,570
	598,405	francs
Total	£1,216,714
CZECHO-SLOVAKIA
Damage to property:
By the war	6,994,228,096	francs
	5,614,947,990	crowns
By the Bolshevik Invasion	618,204,007	francs
	1,448,169,845	crowns
Total	7,612,432,103	francs
	7,063,117,835	crowns
SIAM
	Gold marks
Damage to property	11,900
Damage to persons	1,286,486
Military pensions	139,400
	Francs
Allotments to soldiers’ families	1,169,821
	Gold marks
Mistreatment of civilians and prisoners of war	67,256
Exactions by Germany	7,674,166
Total	9,179,208	gold marks
	1,169,821	francs
BOLIVIA
	Pounds sterling
Damage to property	12,000
Military pensions	4,000
Total	£16,000
PERU
Damage to property	107,389	francs
Maritime damage	£55,236
Damage to persons	£1,000
	107,389	francs
Total	£56,236
HAITI
Damage to property	152,593	francs
Military pensions	180,000	francs
Allotments to soldiers’ families	$20,000
Mistreatment of civilians and prisoners of war	200,000	francs
Assistance to prisoners of war	$60,000
Total	$80,000
	532,593	francs
CUBA
Damage to property	$246,135
Damage to persons	$39,000
Military pensions	$516,000
Total	$801,135
LIBERIA
Damage to property	$1,506,435
Soldiers’ pensions	$2,470,700
Total	$3,977,135
POLAND
Damage to property	12,094,438,780	gold francs
	500,000,000	gold marks
Damage to persons	9,818,830,960	gold francs
Total	21,913,269,740	gold francs
	500,000,000	gold marks
EUROPEAN COMMISSION OF THE DANUBE
Damage to property	1,834,800	gold francs
Damage to persons	488,851	lei
	15,048	French francs

The total value of these claims, reduced to German currency on the basis of available exchange quotations of the period, is approximately 266,000,000,000 gold marks.

For the decision of the Reparation Commission concerning the states entitled to receive reparation, see the notes to article 233. For the settlement with the European Commission of the Danube, see article 352.

11.

The Commission shall not be bound by any particular code or rules of law or by any particular rule 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.

Note to VIII, Annex II (11)

The Reparation Commission laid down rules for the proof of claims. Governments were responsible for justifying their claims which in their definitive form were understood to be “considered as sincere and true by this Government, except in the case where express reservations shall have been made”. Pensions and the various annuities were to be based upon statistical data at the disposition of the commission and the documents upon which claims were based were to be available. Payments of other types already made must be shown by receipts and payments due by statistical evidence. Property damage was found by analytical evaluation (based on claims and estimates accompanied by formulas of calculation) or synthetic evaluation (based on applying a stated average estimate to a determined number of like damages).

12.

The Commission shall have all the powers conferred upon it, and shall exercise all the functions assigned to it, by the present Treaty.

The Commission shall in general have wide latitude as to its control and handling of the whole reparation problem as dealt with in this Part of the present Treaty and shall have authority to [Page 476] interpret its provisions. Subject to the provisions of the present Treaty, the Commission is constituted by the several Allied and Associated Governments referred to in paragraphs 2 and 3 above as the exclusive agency of the said Governments respectively for receiving, selling, holding, and distributing the reparation payments to be made by Germany under this Part of the present Treaty. The commission must comply with the following conditions and provisions:

12.

Text of May 7:

The Commission shall have all the powers conferred upon it, and shall exercise all the functions assigned to it by the present Treaty.

The Commission shall in general have wide latitude as to its control and handling of the whole reparation problem as dealt with in this part of the present Treaty and shall have authority to interpret its provisions. Subject to the provisions of the present Treaty, the Commission is constituted by the several Allied and Associated Governments referred in paragraphs 2 and 3 above as the exclusive agency of the said Governments respectively for receiving, selling, holding, and distributing the reparation payments to be made by Germany under this Part of the present Treaty. The Commission must comply with the following conditions and provisions:—

a) Whatever park 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 may determine, to cover by way of guarantee by an equivalent issue of bonds, obligations or otherwise, in order to constitute an acknowledgment of the said part of the debt.

(b) In periodically estimating Germany’s 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 the Commission.

See note to article 241.

[(c) In order to facilitate and continue the immediate restoration of the economic life of the Allied and Associated countries, the Commission will as provided in Article 235 take from Germany [Page 477] by way of security for and acknowledgment of her debt a first instalment of gold bearer bonds free of all taxes and charges of every description established or to be established by the Government of the German Empire or of the German States, or by any authority subject to them; these bonds will be delivered on account and in three portions, the marks gold being payable in conformity with Article 262 of Part IX (Financial Clauses) of the present Treaty as follows:

Text of May 7:

In order to facilitate and continue the immediate restoration of the economic life of the Allied and Associated countries, the Commission will as provided in Article 235 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 charges of every description established or to be established by the Government of the German Empire or of the German States, or by any authority subject to them; these bonds will be delivered on account and in three portions, the marks gold being payable in conformity with Article 262 of Part IX (Financial clauses) of the present Treaty as follows:

[(1)

To be issued forthwith, 20,000,000,000 Marks gold bearer bonds, payable not later than May 1, 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 235, after deduction of the sums used for the reimbursements of expenses of the armies of occupation and for payment of foodstuffs and raw materials. Such bonds as have not been redeemed by May 1, 1921, shall then be exchanged for new bonds of the same type as those provided for below (paragraph 12, c, (2).

[(2)

To be issued forthwith, further 40,000,000,000 Marks gold bearer bonds, bearing interest at 2½ per cent. per annum between 1921 and 1926, and thereafter at 5 per cent. per annum with an additional 1 per cent. for amortisation beginning in 1926 on the whole amount of the issue.

[(3)

To be delivered forthwith a covering undertaking in writing to issue when, but not until, the Commission is satisfied that Germany can meet such interest and sinking fund obligations, a further instalment of 40,000,000,000 Marks gold 5 per cent. bearer bonds, the time and mode of payment of principal and interest to be determined by the Commission.

[The dates for payment of interest, the manner of applying the amortisation fund, and all other questions relating to the issue, management and regulation of the bond issue shall be determined by the Commission from time to time.

[Page 478]

[Further issues by way of acknowledgment and security may be required as the Commission subsequently determines from time to time.]

Note to VIII, Annex II (12c)

This paragraph (c) and its subparagraphs were annulled by article 2 of the Schedule of Payments of May 5, 1921. The bonds provided for by the paragraph were superseded by the general bonds of Series A, B, and C, remitted by the German Government to the Reparation Commission in accordance with that article.

(d) In the event of bonds, obligations or other evidence of indebtedness issued by Germany by way of security for or acknowledgment of her reparation debt being disposed of outright, not by way of pledge, to persons other than the several Governments in whose favour Germany’s original reparation indebtedness was created, an amount of such reparation indebtedness shall be deemed to be extinguished corresponding to the nominal value of the bonds, etc., so disposed of outright, and the obligation of Germany in respect of such bonds shall be confined to her liabilities to the holders of the bonds, as expressed upon their face.

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

(f) Decisions of the Commission relating to the total or partial cancellation of the capital or interest of any verified debt of Germany must be accompanied by a statement of its reasons.

12A.

a) Notwithstanding the stipulations of subparagraph (c) of Paragraph 12 of Annex II to Part VIII, the Reparation Commission shall have power to increase the rate of interest from 2½ per cent. to 5 per cent. for the period from 1st May, 1921, to 1st May, 1926, on bonds issued or to be issued under subparagraphs (1) and (2) of paragraph 12 (c), and to provide for the commencement of the sinking fund payments on such bonds as from 1st May, 1921, provided that any additional sums required for such increase of interest and payment of sinking fund shall be compensated by the reduction below 5 per cent. of the rate of interest to be debited under paragraph 16 of Annex II to Germany as from the 1st May, 1921, in respect of debt not covered by bonds.

Power is given to the Reparation Commission to call upon [Page 479] Germany for the issue of new bonds bearing 5 per cent. interest and 1 per cent. sinking fund from 1st May, 1921, in exchange for the surrender by the Reparation Commission of bonds already issued under paragraph (c) (1) and (2).

Power is given to the Reparation Commission to defer from 1st May to 1st November, 1921, the date of commencement of interest and of sinking fund on the whole or any part of the new bonds to be issued in exchange for bonds issued under paragraph (c) (1) and (2).

Power is given to the Reparation Commission to consolidate with the general bond issue the special issue of bonds in respect of Belgian debt provided for in Article 232 of the Treaty.

Power is given to the Reparation Commission to divide the total amount of the bonds into series having different priorities of charge.

b) Power is given to the Reparation Commission to require Germany to assign certain revenues and assets to be specified to the service of the bonds either as a whole or as to separate series.

c) Power is given to the Reparation Commission to require such assignment of specific revenues and assets to be specified in the terms of the bonds to be issued under paragraph 12 (c); bonds in which such assignment is specified shall, notwithstanding anything contained in paragraph 12 (b), be deemed to remain part of the reparation indebtedness of Germany, even though disposed of outright to persons other than the several Governments in whose favour Germany’s original reparation indebtedness was created.

d) Power is given to a Committee of Guarantees to be appointed by the Reparation Commission under paragraph 7 of Annex II to supervise the application of the assigned revenues and to prescribe the dates and manner of payment of sums due for the service of the bonds or other payments in respect of the German debt.

The revenues to be assigned by the German Government shall be:—

(1)

The proceeds of all German maritime and land customs and duties and in particular the proceeds of all import and export duties;

(2)

The proceeds of the levy of 25 per cent. on the value of all exports from Germany, except those exports upon which a levy of not less than 25 per cent. is applied under the legislation of any Allied Power;

(3)

The proceeds of such direct or indirect taxes or any other funds as may be proposed by the German Government and accepted [Page 480] by the Committee of Guarantees in addition to or in substitution for the funds specified in (1) or (2) above.

The Committee of Guarantees shall not be authorized to interfere in German administration.

Note to VIII, Annex II (12A, d)

The Committee of Guarantees did not exercise its powers during the application of the Experts’ (Dawes) Plan from September 1, 1924 to May 17, 1930, from which date the Reparation Commission was in liquidation.

e) Power is given to the Reparation Commission to require the issue of bonds without coupons in respect of any part of the debt not for the time being covered by bonds issued in accord with paragraph 12 (c) as amended. The German Government shall be required to issue coupons in respect of such bonds as from such subsequent date as may be determined by the Reparation Commission as and when the Commission is satisfied that Germany can meet interest and sinking fund obligations; the sinking fund payments shall begin at the same date.

Bonds for which coupons have not been issued shall be deemed to be debt not covered by bonds for the purpose of debiting interest under paragraph 16 of Annex II as amended.

Note to VIII, Annex II (12A in toto)

Paragraph 12A was added by the governments represented on the Reparation Commission, Belgium, France, Great Britain, Italy, and Japan, in application of Part VIII, annex II, paragraph 22, by decision of May 5, 1921.

13.

As to voting, the Commission will observe the following rules:

When a decision of the Commission is taken, the votes of all the Delegates entitled to vote, or in the absence of any of them, of their Assistant Delegates, shall be recorded. Abstention from voting is to be treated as a vote against the proposal under discussion. Assessors have no vote.

On the following questions unanimity is necessary:

(a)

Questions involving the sovereignty of any of the Allied and Associated Powers, or the cancellation of the whole or any part of the debt or obligations of Germany;

(b)

Questions of determining the amount and conditions of bonds or other obligations to be issued by the German Government and of fixing the time and manner for selling, negotiating or distributing such bonds;

(c)

Any postponement, total or partial, beyond the end of 1930, of the payment of instalments falling due between May 1, 1921, and the end of 1926 inclusive;

(d)

Any postponement, total or partial, of any instalment falling due after 1926 for a period exceeding three years;

(e)

Questions of applying in any particular case a method of measuring damages different from that which has been previously applied in a similar case;

(f)

Questions of the interpretation of the provisions of this Part of the present Treaty.

In case of differences of opinion between the Delegates on the interpretation of the stipulations of this part of the present Treaty, the question will be submitted by the unanimous agreement of the Delegates to arbitration. The Arbitrator will be selected unanimously by all the Delegates or in default of unanimity will be nominated by the Council of the League of Nations. The finding of the Arbitrator will be binding on all the interested parties.

Note to VIII, Annex II (13f, second par.)

The paragraph is an amendment inserted as the result of a decision of the Supreme Council on August 13, 1921, in virtue of the authority of annex II, paragraph 22, and brought into force by a protocol signed at Paris, November 22, 1924 on behalf of the governments of France, Great Britain, Italy, Japan, Belgium, and the Serb-Croat-Slovene State.

All other questions shall be decided by the vote of a majority.

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 which requires a unanimous vote for its decision or not, such difference shall be referred 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.

14.

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.

15.

The Commission will issue to each of the interested Powers, in such form as the Commission shall fix: [Page 482]

(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 certificates stating the goods delivered by Germany on account of her reparation debt which it holds for the account of the said Power.

The said certificates shall be registered, and upon notice to the Commission, may be transferred by endorsement.

When bonds are issued for sale or negotiation, and when goods are delivered by the Commission, certificates to an equivalent value must be withdrawn.

16.

Interest shall be debited to Germany as from May 1, 1921, in respect of her debt as determined by the Commission, after allowing for sums already covered by cash payments or their equivalent, or by bonds issued to the Commission, or under Article 243. The rate of interest shall be 5 per cent. unless the Commission shall determine at some future time that circumstances justify a variation of this rate.

Text of May 7:

Interest shall be debited to Germany as from 1st May, 1921, in respect heredo [sic] as determined by the Commission, after allowing for sums already covered by cash payments or their equivalent, by bonds issued to the Commission, or under Article 243.

The Commission, in fixing on May 1, 1921, the total amount of the debt of Germany, may take account of interest due on sums arising out of the reparation of material damage as from November 11, 1918, up to May 1, 1921.

Note to VIII, Annex II (16)

The Reparation Commission in a formal interpretation ruled that it had the power to take account of interest accruing between the dates mentioned on the sums representing material damages under article 232 and annex I in reckoning whether or not the damages had been repaired before May 1, 1921.

16A.

In the event of any application that Germany be declared in default in any of the obligations contained either in this part of the present treaty as put into force on January 10, 1920, and subsequently [Page 483] amended in virtue of paragraph 22 of the present annex, or in the Experts’ Plan dated April 9, 1924, it will be the duty of the Reparation Commission to come to a decision thereon. If the decision of the Reparation Commission granting or rejecting such application has been taken by a majority, any member of the Reparation Commission who has participated in the vote may, within eight days from the date of the said decision, appeal from that decision to an Arbitral Commission composed of three impartial and independent persons whose decisions shall be final. The members of the Arbitral Commission shall be appointed for five years by the Reparation Commission deciding by a unanimous vote, or, failing unanimity, by the president for the time being of the Permanent Court of International Justice at The Hague. At the end of the five-year period or in case of vacancies arising during such period the same procedure will be followed as in the case of the first appointments. The president of the Arbitral Commission shall be a citizen of the United States of America.

Note to VIII, Annex II (16A)

Amendment enacted by Belgium, France, Great Britain, Italy, Japan, and the Serb-Croat-Slovene State, the governments represented on the Reparation Commission, acting under paragraph 22, annex II, part VIII, and embodied in an agreement signed by their representatives at London, August 30, 1924 (30 League of Nations Treaty Series, p. 97) and in article 1 of the inter-Allied agreement between the governments of Belgium, His Britannic Majesty (with Canada, Australia, New Zealand, Union of South Africa, and India), France, Greece, Italy, Japan, Portugal, Rumania, and the Serb-Croat-Slovene State signed at London, August 30, 1924 (ibid., p. 89); both in effect August 30, 1924.

17 [old text].

[In case of default by Germany in the performance of any obligation under this Part of the present Treaty, the Commission will forthwith give notice of such default to each of the interested Powers and may make such recommendations as to the action to be taken in consequence of such default as it may think necessary.]

17 [new text].

If a default by Germany is established under the foregoing conditions, the commission will forthwith give notice of such default [Page 484] to each of the interested Powers and may make such recommendations as to the action to be taken in consequence of such default as it may think necessary.

Note to VIII, Annex II (17)

Amendment enacted by Belgium, France, Great Britain, Italy, Japan, and the Serb-Croat-Slovene State, the governments represented on the Reparation Commission, acting under paragraph 22, annex II, part VIII, and embodied in an agreement signed by their representatives at London, August 30, 1924 (30 League of Nations Treaty Series, p. 97) and in article 1 of the inter-Allied agreement between the Governments of Belgium, His Britannic Majesty (with Canada, Australia, New Zealand, Union of South Africa, and India), France, Greece, Italy, Japan, Portugal, Rumania, and the Serb-Croat-Slovene State signed at London August 30, 1924 (ibid., p. 89); both in effect August 30, 1924.

On December 26, 1922 the following formal interpretation was adopted:

The commission in virtue of the old text of paragraph 17 notified defaults of Germany to the Allied Governments on the following questions:

In communicating this first finding of a German default to the creditors the commission made these general remarks:

Application of article 235, letter of March 24, 1921; decision 1064 of the commission at its 153d meeting (file 462.00 R 29/1246);

Application of article 235, letter of May 3, 1921; decision 1250 of the commission at its 182d meeting;

[Page 485]

Delivery of timber, letter of December 26, 1922; Report on the Work of the Reparation Commission from 1920 to 1922, pp. 240–64.

Delivery of coal, letter of January 9, 1923; decision 2321 bis of the commission at its 346th meeting (file 462.00 R 29/2524);

Delivery of coal and livestock, letter of January 16, 1923; decision 2331 bis of the commission at its 348th meeting (file 462.00 R 29/2611);

General default, letter of January 26, 1923; decision 2349 of the commission at its 353d meeting and decision 2378 at the 358th meeting (file 462.00 R 29/2640).

The Belgo-French-Italian occupation of the Ruhr created a crisis in reparation which originated in the program for delivery by Germany to France of timber according to a program for 1922 arranged under the Franco-German Wiesbaden Agreement on October 6, 1921 (Agreements Concerning Deliveries in Kind To Be Made by Germany Under the Heading of Reparations, Reparation Commission II).

On August 28, 1922 the Reparation Commission drew the German Government’s attention to delays of delivery under the program. On September 26 a German delegation explained the causes of delay. On October 20 the French delegation requested the commission to declare Germany in default as regarded its obligation to furnish timber to France during 1922. According to evidence presented, the deficit in German deliveries was 39.5 percent in sawn wood and 57 percent in telegraph poles on September 30. On November 30 “the deliveries were still considerably in arrears”. The Reparation Commission heard representatives of the German Government on December 1. On December 26 the British representative on the commission sharply contested the French request. The debate brought out the fact that 35,000 cubic meters of sawn timber out of an order of 55,000 and 65,000 telegraph poles out of an order of 200,000 had been delivered by December 15. The default decision of December 26, 1922 was as follows (Report on the Work of the Reparation Commission from 1920 to 1922, pp. 142, 240, 266):

French and Belgian troops entered the Ruhr on January 11, 1923 and did not leave until the entry of the Experts’ (Dawes) Plan into force on September 1, 1924, though the occupation had ceased to be significant when the Reparation Commission on April 11 had announced that the report of the First (Dawes) Committee of Experts offered a “practical basis for the rapid solution of the reparation problem.” (See further notes at p. 781.)

When the troops occupied the Ruhr district, reparation payments by Germany, which already was asking for a moratorium, practically ceased. Recoveries in that period, aside from the customs taken, were virtually confined to such seizures and collections as the occupying forces could make. The German Government and people declined to admit the justification of the occupation and attempted a course of passive resistance. Both government and [Page 487] people devoted a large amount of their economic energy to the support of strikers against occupying forces.

The occupation attracted wide-spread attention, which was accentuated by the rapid deterioration of the German financial condition. The percentage of the cost of the dollar as compared with the par of the mark for the first 10 months of 1924 averaged 103,730,600,000,000. As to reparation, occupation resulted in seizures amounting to 503,560,383 gold marks and receipts in various forms of cash of 424,361,913 gold marks, distributed as follows:

France	339,744,207
Belgium	100,841,820
	355,781,489
Italy	62,974,356
United States	61,814,210
Special	6,766,214

18.

The measures which the Allied and Associated Powers shall have the right to take, in case of voluntary default by Germany, and which Germany agrees not to regard as acts of war, may include economic and financial prohibitions and reprisals and in general such other measures as the respective Governments may determine to be necessary in the circumstances.

Note to VIII, Annex II (18)

Articles 2–4 of the inter-Allied agreement of August 30, 1924 (see p. 900) modified the interpretation to be given to this paragraph. Any dispute as to the meaning of their provisions was to be submitted to the Permanent Court of International Justice. Sanctions were not to be imposed under paragraph 18, except in accordance with the terms of the agreement and part I, section III, of the Report of the First (Dawes) Committee of Experts of April 9, 1924, which stated:

The representative of the British Government informed the Reparation Commission in October 1920 that his government renounced the right to seize the property of German nationals in the event of a voluntary German default. The Belgian and Siamese Governments renounced the rights conferred upon them by paragraph 18 in November 1922, and the Japanese Government made a similar declaration to the German Government of which the commission was informed in December 1922 (file 462.00 R 29/374. /377, /341).

19.

Payments required to be made in gold or its equivalent on account of the proved claims of the Allied and Associated Powers may at any time be accepted by the Commission in the form of chattels, properties, commodities, businesses, rights, concessions, within or without German territory, ships, bonds, shares or securities of any kind, or currencies of Germany or other States, the value of such substitutes for gold being fixed at a fair and just amount by the Commission itself.

Note to VIII, Annex II (19)

For a notice of the Wiesbaden, Bemelmans, Gillet, and subsequent agreements respecting deliveries in kind, which were concluded in [Page 489] accordance with the provisions of this paragraph, see the note to annex IV.

19A.

Germany shall on demand provide such material and labour as any of the Allied Powers may, with the prior approval of the Reparation Commission, require towards the restoration of the devastated areas of that Power, or to enable any Allied Power to proceed with the restoration or development of its industrial or economic life. The value of such material and labour shall be determined by a valuer appointed by Germany and a valuer appointed by the Power concerned, and in default of agreement by a referee nominated by the Reparation Commission.

Note to VIII, Annex II (19A)

This paragraph was added by the governments represented on the Reparation Commission, Belgium, France, Great Britain, Italy, and Japan, in application of part VIII, annex II, paragraph 22, by decision of May 5, 1921.

Miscellaneous deliveries under paragraphs 19 and 19A up to December 31, 1922 had been appraised and credited in the amount of 157,998,339 gold marks.

20.

The Commission, in fixing or accepting payment in specified properties or rights, shall have due regard for any legal or equitable interests of the Allied and Associated Powers or of neutral Powers or of their nationals therein.

Note to VIII, Annex II (20)

In March and April 1920 the Reparation Commission published notices in the press of all interested countries relative to the procedure to be followed under this paragraph. On June 25 it appointed a special committee with authority to propose the solution of questions of right, which should be reviewed by the legal section and then submitted to the commission. The work was completed by 1925.

21.

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.

[Page 490]

22.

Subject to the provisions of the present Treaty this Annex may be amended by the unanimous decision of the Governments represented from time to time upon the Commission.

Note to VIII, Annex II (22)

Amendments were adopted to paragraphs 2, 12, 13, 16, 17, and 19 and are printed in place.

23.

When all the amounts due from Germany and her allies under the present Treaty 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.

Note to VIII, Annex II (23)

Article IV of the agreement between Germany, Belgium, the United Kingdom, Canada, Australia, New Zealand, the Union of South Africa, India, France, Greece, Italy, Japan, Poland, Portugal, Rumania, Czechoslovakia, and Yugoslavia signed at The Hague January 20, 1930 (104 League of Nations Treaty Series, p. 243) provided that, on the coming into force of the New Plan (May 17, 1930) “the relations with Germany of the Reparation Commission shall come to an end.” The article continues: “Only those of the functions of these organizations the maintenance of which is necessitated by the New Plan will continue in existence; these functions will be transferred to the Bank for International Settlements.”

The Organization Committee for the Reparation Commission held 52 meetings from July 3, 1919 until May 14, 1920. The Reparation Commission, coming into formal existence on January 10, 1920, held its 555th meeting on May 17, 1930 and its 561st on April 13, 1931. The final report was dated April 15, 1931. In addition the Permanent Managing Committee (see p. 469) held 73 meetings between February 9, 1925 and May 28, 1926.