REPARATION AND RESTITUTION
[Sidenote: 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.
[Sidenote: Schedule of payments to be presented.]
[Sidenote: 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.
[Sidenote: 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:
[Sidenote: 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.
(c) Damages caused by maltreatment of prisoners.
(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.
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: Interest on Germany's debt.]
[Sidenote: 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
[Sidenote: 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
[Sidenote: 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
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: 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
[Sidenote: The pre-war debts of Alsace.]
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: 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.
[Sidenote: Public utilities in ceded territories.]
[Sidenote: 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.