SECTION VIII

REPARATION AND RESTITUTION

Germany's responsibility for loss and damage.

"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 Germany and her allies."

The total obligation of Germany to pay as defined in the category of damages is to be determined and notified to her after a fair hearing, and not later than May 1, 1921, by an interallied Reparation Commission.

At the same time a schedule of payments to discharge the obligation within thirty years shall be presented. These payments are subject to postponement in certain contingencies. Germany irrevocably recognizes the full authority of this commission, agrees to supply it with all the necessary information and to pass legislation to effectuate its findings. She further agrees to restore to the Allies cash and certain articles which can be identified.

Schedule of payments to be presented.

One thousand million pounds in two years.

As an immediate step toward restoration Germany shall pay within two years one thousand million pounds sterling in either gold, goods, ships, or other specific forms of payment.

This sum being included in, and not additional to, the first thousand million bond issue referred to below, with the understanding that certain expenses, such as those of the armies of occupation and payments for food and raw materials, may be deducted at the discretion of the Allies.

Belgium to be repaid.

Germany further binds herself to repay all sums borrowed by Belgium from her allies as a result of Germany's violation of the treaty of 1839 up to November 11, 1918, and for this purpose will issue at once and hand over to the Reparation Commission 5 per cent gold bonds falling due in 1926.

While the allied and associated Governments recognize that the resources of Germany are not adequate, after taking into account permanent diminution of such resources which will result from other treaty claims, to make complete reparation for all such loss and damage, they require her to make compensation for all damage caused to civilians under seven main categories:

Damage to civilians to be compensated.

(a) Damages by personal injury to civilians caused by acts of war, directly or indirectly, including bombardments from the air.

(b) Damages caused to civilians, including exposure at sea, resulting from acts of cruelty ordered by the enemy, and to civilians in the occupied territories.

(d) Damages to the Allied peoples represented by pensions and separation allowances, capitalized at the signature of this treaty.

(e) Damages to property other than naval or military materials.

(f) Damages to civilians by being forced to labor.

(g) Damages in the form of levies or fines imposed by the enemy.

Work of Reparation Commission.

In periodically estimating Germany's capacity to pay, the Reparation 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.

Refusals in case of default.

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.

Germany's capacity to pay.

The commission shall consist of one representative each of the United States, Great Britain, France, Italy, and Belgium, a representative of Serbia or Japan taking the place of the Belgian representative, when the interests of either country are particularly affected, with all other allied powers entitled, when their claims are under consideration, to the right of representation without voting power. It shall permit Germany to give evidence regarding her capacity to pay, and shall assure her a just opportunity to be heard. It shall make its permanent headquarters at Paris, establish its own procedure and personnel; have general control of the whole reparation problem; and become the exclusive agency of the Allies for receiving, holding, selling, and distributing reparation payments. Majority vote shall prevail, except that unanimity is required on questions involving the sovereignty of any of the Allies, the cancellation of all or part of Germany's obligations, the time and manner of selling, distributing, and negotiating bonds issued by Germany, any postponement between 1921 and 1926 of annual payments beyond 1930 and any postponement after 1926 for a period of more than three years of the application of a different method of measuring damage than in a similar former case, and the interpretation of provisions. Withdrawal from representation is permitted on twelve months' notice.

Guarantees to cover claims.

The Commission may require Germany to give from time to time by way of guarantee, issues of bonds or other obligations to cover such claims as are not otherwise satisfied. In this connection and on account of the total amount of claims, bond issues are presently to be required of Germany in acknowledgment of its debt as follows: 20,000,000,000 marks gold, payable not later than May 1, 1921, without interest; 40,000,000,000 marks gold bearing 2-1/2 per cent interest between 1921 and 1926, and thereafter 5 per cent, with a 1 per cent sinking fund payment beginning 1926; and an undertaking to deliver 40,000,000,000 marks gold bonds bearing interest at 5 per cent, under terms to be fixed by the Commission.

Interest on Germany's debt.

Certificates to represent bonds or goods.

Interest on Germany's debt will be 5 per cent unless otherwise determined by the Commission in the future, and payments that are not made in gold may "be accepted by the Commission in the form of properties, commodities, businesses, rights, concessions, &c." Certificates of beneficial interest, representing either bonds or goods delivered by Germany, may be issued by the Commission to the interested powers, no power being entitled, however, to have its certificates divided into more than five pieces. As bonds are distributed and pass from the control of the Commission, an amount of Germany's debt equivalent to their par value is to be considered as liquidated.

SHIPPING

Right to Allies to have merchant shipping replaced.

The German Government recognizes the right of the Allies to the replacement, ton for ton and class for class, of all merchant ships and fishing boats lost or damaged owing to the war, and agrees to cede to the Allies all German merchant ships of 1,600 tons gross and upward; one-half of her ships between 1,600 and 1,000 tons gross, and one-quarter of her steam trawlers and other fishing boats. These ships are to be delivered within two months to the Separation Committee, together with documents of title evidencing the transfer of the ships free from encumbrance.

"As an additional part of reparation," the German Government further agrees to build merchant ships for the account of the Allies to the amount of not exceeding 200,000 tons gross annually during the next five years.

All ships used for inland navigation taken by Germany from the Allies are to be restored within two months, the amount of loss not covered by such restitution to be made up by the cession of the German river fleet up to 20 per cent thereof.

DYESTUFFS AND CHEMICAL DRUGS

Material to be delivered to Reparations Commission.

In order to effect payment by deliveries in kind, Germany is required, for a limited number of years, varying in the case of each, to deliver coal, coal-tar products, dyestuffs and chemical drugs, in specific amounts to the Reparations Commission. The Commission may so modify the conditions of delivery as not to interfere unduly with Germany's industrial requirements. The deliveries of coal are based largely upon the principle of making good diminutions in the production of the allied countries resulting from the war.

Germany accords option to the commission on dyestuffs and chemical drugs, including quinine, up to 50 per cent of the total stock in Germany at the time the treaty comes into force, and similar option during each six months to the end of 1924 up to 25 per cent of the previous six months' output.

DEVASTATED AREAS

Machinery and animals to be replaced.

Germany undertakes to devote her economic resources directly to the physical restoration of the invaded areas. The Reparations Commission is authorized to require Germany to replace the destroyed articles by the delivery of animals, machinery, &c., existing in Germany, and to manufacture materials required for reconstruction purposes; all with due consideration for Germany's essential domestic requirements.

French damages in coal and fuel to be made good.

Germany is to deliver annually for ten years to France coal equivalent to the difference between the annual pre-war output of Nord and Pas de Calais mines and the annual production during the above ten-year period. Germany further gives options over ten years for delivery of 7,000,000 tons of coal per year to France in addition to the above, of 8,000,000 tons to Belgium and of an amount rising from 4,500,000 tons in 1919 to 1920 to 8,500,000 in 1923 to 1924 to Italy at prices to be fixed as prescribed in the treaty. Coke may be taken in place of coal in the ratio of three tons to four. Provision is also made for delivery to France over three years of benzol, coal tar, and of ammonia. The Commission has powers to postpone or annul the above deliveries should they interfere unduly with the industrial requirements of Germany.

Koran of Caliph Othman and skull of Okwawa.

Germany is to restore within six months the Koran of the Caliph Othman, formerly at Medina, to the King of the Hedjaz, and the skull of the Sultan Okwawa, formerly in German East Africa, to his Britannic Majesty's Government.

Papers taken in 1870.

The German Government is also to restore to the French Government certain papers taken by the German authorities in 1870, belonging then to M. Reuher, and to restore the French flags taken during the war of 1870 and 1871.

Reparations to the Louvain Library.

As reparation for the destruction of the Library of Louvain Germany is to hand over manuscripts, early printed books, prints, &c., to the equivalent of those destroyed.

Belgian works of art.

In addition to the above Germany is to hand over to Belgium wings, now in Berlin, belonging to the altar piece of "The Adoration of the Lamb," by Hubert and Jan van Eyck, the center of which is now in the Church of St. Bavon at Ghent, and the wings, now in Berlin and Munich, of the altar piece of "The Last Supper," by Dirk Bouts, the center of which belongs to the Church of St. Peter at Louvain.

FINANCE

The pre-war debts of Alsace.

German debts not to be assumed by mandatory powers.

Powers to which German territory is ceded will assume a certain portion of the German pre-war debt, the amount to be fixed by the Reparations Commission on the basis of the ratio between the revenue and of the ceded territory and Germany's total revenues for the three years preceding the war. In view, however, of the special circumstances under which Alsace-Lorraine was separated from France in 1871, when Germany refused to accept any part of the French public debt, France will not assume any part of Germany's pre-war debt there, nor will Poland share in certain German debts incurred for the oppression of Poland. If the value of the German public property in ceded territory exceeds the amount of debt assumed, the States to which property is ceded will give credit on reparation for the excess, with the exception of Alsace-Lorraine. Mandatory powers will not assume any German debts or give any credit for German Government property. Germany renounces all right of representation on, or control of, State banks, commissions, or other similar international financial and economic organizations.

Germany to pay cost of armies of occupation.

Germany is required to pay the total cost of the armies of occupation from the date of the armistice as long as they are maintained in German territory, this cost to be a first charge on her resources. The cost of reparation is the next charge, after making such provisions for payments for imports as the Allies may deem necessary.

Funds deposited by Turkey and Austria-Hungary.

Germany is to deliver to the allied and associated powers all sums deposited in Germany by Turkey and Austria-Hungary in connection with the financial support extended by her to them during the war, and to transfer to the Allies all claims against Austria-Hungary, Bulgaria, or Turkey in connection with agreements made during the war. Germany confirms the renunciation of the Treaties of Bucharest and Brest-Litovsk.

Public utilities in ceded territories.

Brazilian coffee to be paid for.

On the request of the Reparations Commission, Germany will expropriate any rights or interests of her nationals in public utilities in ceded territories or those administered by mandatories, and in Turkey, China, Russia, Austria-Hungary, and Bulgaria, and transfer them to the Reparations Commission, which will credit her with their value. Germany guarantees to repay to Brazil the fund arising from the sale of Sao Paulo coffee which she refused to allow Brazil to withdraw from Germany.