/ 
 
 The Making of the Reparation and 
 Economic Sections of the Treaty 
 
The Making of the Reparation 
 
 and Economic Sections 
 
 of the Treaty 
 
 by 
 BERNARD M. BARUCH 
 
 Economic A rlvir.fr to the A merican Commission to Negotiate 
 Peace, ami Member of the Economic Drafting Committee, 
 the Reparation Commission, the Economic Com- 
 mission, etc.; Member of the Supreme 
 Economic Council; Former Chair- 
 man of the United States 
 War Industries 
 Board. 
 
 Harper &. Brothers Publishers 
 
 New York and London 
 
 / 
 
D< 
 
 "The Making of thb K - 
 
 ■ : 
 
 3 
 
To 
 
 My American Associates 
 
 And to My Colleagues in the 
 
 Allied and Associated Governments 
 
 at the Peace Conference 
 
 In Remembrance 
 
 of days 
 
 crowded with vital endeavor 
 
 in which they labored with 
 
 a common purpose 
 
 to compose 
 
 the affairs of a troubled icorld 
 
 I dedicate this volume 
 
ACKNOWLEDQMENT 
 
 In the writing of this book 
 I have been indebted for ad- 
 vice and assistance to many 
 of my American colleagues 
 associated with me in the 
 matters with which I deal 
 
 B. M. B. 
 
CONTENTS 
 
 PAGE 
 
 Introduction 
 
 How the Reparation Clauses Were Formed .... 13 
 
 Drawing the Economic Clauses *' 
 
 Reparation Clauses 125 
 
 Economic Clauses 1 °^ 
 
 Appendix *°° 
 
 Index 345 
 
INTRODUCTION 
 

INTRODUCTION. 
 
 The Human Equation in the Making op the 
 
 Peace Treaty. 
 
 Much misconception exists and many misstate- 
 ments of fact have been made regarding the repara- 
 tion and economic sections of the Treaty of Peace 
 — clauses vital to the interest of the American peo- 
 ple and even more vital to world stability. As 
 I was intimately concerned with the creation of 
 these sections, my purpose herein is to set forth 
 the problems which the writers of the sections had 
 to meet and why they met them as they did rather 
 than in the various ways suggested by present-day 
 critics. 
 
 Before, however, the subject matter of the 
 clauses in question is presented to the reader, it is 
 essential that he should have a mental picture of 
 the conditions under which they were brought into 
 being. 
 
 The mightiest conflict of mankind had just come 
 to an end. The cannon's sound had but lately died 
 away ; the shock of battle was still upon the world ; 
 the aroused primitive passions of nations and of 
 men had only in a small measure subsided; the 
 world's wounds still bled. 
 
 Within a few hours' travel from the Peace Con- 
 f fence were the battlefields upon which lay 
 900,000 dead Englishmen and colonials; 1,300,000 
 
The Making of the Reparation and 
 
 dead Frenchmen; and the bodies of hundreds of 
 thousands of other Allies. On these fields had been 
 sustained the grievous wounds of many millions of 
 living men. 
 
 From wantonly devastated France had not de- 
 parted the fear and inherent hatred of the enemy 
 who but a few months before had pierced almost to 
 her heart — the traditional enemy who had brought 
 upon her the bitter days of 1870. With the World 
 War already history, the shadow of the Prussian 
 still hung over the Republic. France was lixed in 
 her determination to erect an impregnable wall, 
 economic or geographical, or both, against future 
 German invasion. This, in greater or lesser meas- 
 ure, was the attitude of the other Allies. 
 
 Outraged Belgium was no less outraged, no 
 less fearful. England and her colonies, that with- 
 out stint had given of their best in men and the 
 bedrock resources of au empire, trembled from 
 their four years' travail. Italy, shaken and de- 
 pleted by her long-sustained efforts, had barely es- 
 caped the German heel. Of the smaller Allies, 
 Serbia, Rumania, and Poland had been the victims 
 of merciless German aggression. All of the Allies 
 and Associated Governments were bending under 
 the cumulative burdens that had been the price of 
 victory. 
 
 In France alone there was not a home that had 
 not been seared by the baleful touch of modern 
 war — a terrible, irrevocable fact in substance 
 true of the other Allied countries. Not only in 
 millions of homes had the breadwinner or the son 
 
Economic Sections of the Treaty 
 
 been annihilated, but many homes after the war 
 held pitiful shattered fragments of once sturdy 
 men, now become the apotheosis of living death. 
 
 France came out of the conflict with 1,700,000 
 wounded men. Their presence kept the memory of 
 the war a fiercely burning flame, to which the power- 
 ful emotion of vengeance but added fuel. Facts 
 such as these do not make for cool reasoning; they 
 make for irresistible and elemental human reac- 
 tions. They had to be reckoned with at Paris. They 
 have to be reckoned with now. 
 
 Without exception, the late antagonists of Ger- 
 many were facing almost unbelievable financial con- 
 ditions, seemingly impossible of solution without 
 crushing their whole economic and industrial 
 existence. In order to meet, to grapple with, and 
 to remedy these conditions, they would have to re- 
 sort to taxation methods that appeared humanly 
 out of the question to endure, to drastic readjust- 
 ments of the entire fabric of their national life. 
 
 Eelief from this burdensome taxation had been 
 promised from time to time by the leaders in the 
 various countries. These promises in many in- 
 stances were based upon false and exaggerated 
 ideas of Germany's capacity to pay. 
 
 Further, one must realize the impaired and in 
 many instances destroyed economic life of the 
 Allied Powers — a depletion and destruction which 
 made the ensuing burdens seem impossible. Ger- 
 many had swept over Belgium and northern 
 France. She had ruined mines ; she had destroyed 
 factories or removed machinery ; she had devastated 
 

 The Making of the Reparation and 
 
 homes and farms; and she had either appropriated 
 to her own purpose or driven away domestic ani- 
 mals. 
 
 Wherever, on land or on sea or in the air, the 
 German power had been exercised, it had left an 
 aftermath of misery or bitterness or hate. 
 
 Public opinion in the various Allied and Asso- 
 ciated countries had been aroused to a "white 
 heat of fear, hatred, and distrust. Facing these 
 facts, one can easily realize the impossibility of ar- 
 riving at a treaty free from passion and a sense 
 of wrong. 
 
 The Allied leaders had agreed to a peace 
 upon the basis of President Wilson's address 
 of January 8, 101S (containing the Fourteen 
 Points) and the principles of settlement enunciated 
 in his subsequent addresses. These principles had 
 been formulated not in the interest of Germany, 
 but to promote the real interest of the Allies them- 
 selves and to advance the cause of world peace and 
 future security. Nevertheless, at an election held 
 after the armistice and agreement as to the basic 
 terms of peace, tin 1 English people, by an over- 
 whelming majority, returned to power their Prime 
 Minister on the basis of an increase in the severity 
 of these terms of the peace, especially those of 
 reparation. 
 
 The French position, as evidenced by the expres- 
 sions of the press of all political parties and by the 
 speeches of the Deputies, showed an equally exact- 
 ing attitude as to reparations. The apparently 
 unanimous sentiment of the French people was 
 
Economic Sections of the Treaty 
 
 perhaps typified in the placards which, during 
 the days of the Peace Conference, covered the 
 walls of Paris and of other cities, proclaim- 
 ing, Que UAllemagne paye d'abord (Let Ger- 
 many pay first). The French. Government, in fact, 
 found it impossible during the months following the 
 armistice to secure the adoption of any immediate 
 taxation measures by the Chamber of Deputies. 
 This body very justly insisted that the burdens of 
 the war should in the first instance be assumed 
 by Germany. 
 
 No one can understand the peace treaty who 
 does not know and cannot measure the human con- 
 ditions under which it was brought forth. It is 
 singular but true that peace seemed very beautiful 
 during the war, but almost hateful when the war 
 ended. From a superficial survey of the conditions 
 that prevailed at the Peace Conference, one would 
 have been quite justified in assuming that many of 
 the participants preferred war with all its horrors 
 to any peace short of that which they demanded. 
 Their demands had their genesis in deep-rooted and 
 almost ineradicable hatreds and in the insistent 
 desire for iself-protection against future danger. 
 
 Not a few among the Allies were so intent 
 upon momentary gains as to imperil the en- 
 tire structure of world-peace, which after all 
 was the real purpose of the Conference. Though 
 the peace delegates individually were able and 
 high-minded, they were bound to the wheel of 
 their national aspirations. Therefore they were un- 
 able or unwilling to yield on questions that con- 
 
The Making of iJie Reparation and 
 
 cerned their ovn national advantages or safeguards 
 against future German aggressions. 
 
 If the ideal peace, which some demand, had been 
 actually undertaken, with all that it seemingly in- 
 volved of sacrifice and unselfishness, the result 
 would have been the overthrow of at least three of 
 the major governments. It would have been fol- 
 lowed further by the substitution of other repre- 
 sentatives who would have come into power under 
 a popular mandate requiring them to be even more 
 cxaiting in their terms. 
 
 I call attention to the record on this point, which 
 shows that approximately three hundred members 
 of the House of Commons addressed a telegram to 
 the British Prime Minister demanding fulfillment 
 of the terms promised in the khaki campaign 
 pledges and requiring him to proclaim his inten- 
 tions. So compelling was the despatch that he was 
 under the necessity of returning to London to re- 
 assure the House of his intention to insist upon 
 exacting fullest compliance with the demands that 
 had been formulated in the heat of war passion and 
 during the excitement of a general election. 
 
 For further example, Premier Hughes of the 
 Australian Commonwealth insisted that everv 
 Australian who had placed a mortgage on his house 
 to buy a Avar bond was as definitely entitled to rep- 
 aration as was every Frenchman whose house had 
 been burned by the Germans. 
 
 These two examples are concrete indications of 
 the conditions with which the writers of the repara- 
 tion clauses had to contend. A different story might 
 
 G 
 
Economic Sections of the Treaty 
 
 have been told and «a different treaty written if 
 some of the critics had had the courage, clarity, and 
 force to impress their present-day views upon their 
 own representatives at Paris. But the Americans 
 and others had the charity to remember that the 
 horrors of war were still heavy upon the world. 
 Try as men might, and I submit that they did try, 
 the spirit of vengeance or of selfish advantage could 
 not be entirely eradicated from the minds of the 
 framers of the treaty. On them the pressure of 
 public opinion in their respective countries was 
 being constantly exerted. 
 
 In the reparation clauses, the Conference was 
 not writing a mere contract of dollars and cents ; it 
 was dealing with blood-raw passions still pulsing 
 through the people's veins. It was impossible, I 
 repeat, to ignore the human factors, but provision 
 was made whereby they could be reduced or elimi- 
 nated later and whereby the Reparation Commis- 
 sion in the processes of enforcement might become 
 a flexible instrument of wisdom and justice. 
 
 There are cross-currents in the tides of circum- 
 stance against which principles and men, no matter 
 how strong they may be, are at times unable to 
 make headway. These cross-currents may have 
 their rise in great passions that cannot be stilled 
 until they have run their course. It would be 
 idle to assert that the atmosphere in which the 
 Treaty of Versailles was made was free from enmity 
 and vengeance; it would be transcending human 
 nature if such were the case. 
 
 The treaty was made in the still smouldering 
 
The Making of the Reparation and 
 
 furnace of human passion. It could not have boon 
 otherwise. The memory of the millions of dead and 
 wounded, of property and homos ruthlessly, wan- 
 tonly, ami methodically destroyed, and of the hid- 
 eousness of the warfare but recently ended, ma 
 it necessary to face the impossibility of arriving at 
 a fully idoal treaty. But stops are provided in the 
 olastio mechanism of the Reparation Commission 
 which "will enable us, in the calmer days to come, 
 to climb nearer to perfection, 
 
 1 believe that every fair-minded man who can 
 speak familiarly on the subject will agree that the 
 repression and minimizing of the vengeful elements 
 in the treaty wore due in largest measure to Wo 
 row ^ ilson and the high purposes he set for 
 ultimate attainment The treaty may not embrace 
 all he desired, but 1 believe that .it embodies all 
 that could have boon obtained. 
 
 It is a fundamental mistake to assume that the 
 treaty ends where i: really begins. The signing of 
 the document on June 28, L919, at Versailles did 
 not complete its history: it really began it. / 
 measure of its worth lies in the pn m s -e- 
 
 cution and the \ irit in which it is carried out 
 all of the - -tract. 
 
 It is true that the treaty is a severe treaty. The 
 only question in dispute is: Poos it embody the 
 best attainable justice and wisdom? 
 
 1 affirm that the problems presented a: Paris 
 which 1 here diseuss wove dealt with as effectively 
 as possible at the time. If it were impossible to 
 
Economic Sections of the Treaty 
 
 secure a treaty which was other than a human docu- 
 ment, a method, however, was provided for remov- 
 ing later the obstacles (hat at Paris proved to be 
 insurmountable. I am confident that in the Repara- 
 tion Commission there was created a flexible instru- 
 ment qualified to help effectuate a just, and proper 
 peace, it' that desire and purpose be really present. 
 When the world more Cully and humanely under- 
 stands and measures the problems in question, they 
 can be soberly and wisely resolved. 
 
 If we so will it, there is that in the treaty which 
 enables us to look forward with hope instead of 
 backward with hate. 
 
NOTE 
 
 It should be said that in the pages to follow I 
 address myself only to those matters with which I 
 was directly concerned in the making of the treaty. 
 Where reference is made to the treaty, I have 
 specifically in mind the reparation and economic 
 sections. 
 
 It should be said further that I alone am respon- 
 sible for the statements made in this volume. 
 
HOW THE REPARATION CLAUSES 
 WERE FORMED 
 
For purposes of specific reference, the reparation 
 and economic section* of the treat 11, with marginal 
 explanatory notes, have been reprinted verbatim at 
 the back of this book. The reader will find the 
 marginal notes of value in liis scrutiny of the 
 clauses. The marginal notes to the reparation 
 clauses have been prepared especially for this 
 volume. Those for the economic clauses appear 
 substantially as they were written when the clause* 
 were drawn. The notes to the economic clause*, 
 particularly, illustrate the manner in winch the 
 momic Commission kept itself informed as to 
 the progress of its work. 
 
I. 
 
 Bow THE Reparation Clauses Were Formed. 
 
 At a plenary meeting of the Peace Conference 
 held on the 25th of January, 1919, it was decided 
 to apportion among various commissions the sev- 
 eral subjects <<> be dealt with. 
 
 These commissions operated under the general 
 direction of the Council of Ten composed of the 
 chiefs of the delegations of the five principal 
 Allied and Associated Powers and their Ministers 
 of Foreign Affairs. 1 
 
 Among the bodies thus established was the Com- 
 mission on Reparation, which was charged by the 
 Conference with examining into and reporting on 
 (1) the amount which the enemy countries ought 
 to pay by way of reparation; (2) what they were 
 capable of paying, and (3) by what method, in 
 what form, and within what time payment should 
 1k3 made. 
 
 The members of this commission and the nations 
 which they represented were as follows : 
 
 United States of America: 
 
 Mr. Bernard M. Baruch, Chairman of the United States 
 
 War Industries Board. 
 Mr. Norman H. Davis, Commissioner of Finance. 
 
 lSubsequently the Council of Ten was replaced by a Coun- 
 cil of Four, composed of the heads of state of the 
 United States, of Great Britain, of France, and of Italy. 
 This Council was otherwise known as the Supreme 
 Council or the Big Four. 
 
 15 
 
The Making of the Reparation and 
 
 Mr. Vance C, McCormick, Chairman of the War Trade 
 Board. 
 
 Mr, Jerome Greene, Secretary, 
 
 British Empire : 
 
 The Rt. Hon. \v. M. Hushes, Prime Minister of Australia. 
 The Rt, Hon. Lord Sumner of ibstone, Lord of Appeal in 
 
 Ordinary. 
 The Rt. Hon. Lord Cunliffe, Former Governor of the Bank 
 of England. 
 
 Mr. Dudley Ward, of the British Treas- 
 ury, Secretary. 
 
 France : 
 
 M. L. L. Kiot.-. Minister of Finance, 
 
 M, Loucheur, Minister of industrial Reconstruction, 
 
 M, Albert l.obrun. Minister of Liberated Districts. 
 
 M. Cheysson, Inspector of Financ 
 Secretary. 
 
 Italy: 
 
 M. Salandra, Deputy, former President of the Ministerial 
 
 Council. 
 M. Eugenio Chiesa, Deputy. 
 M. d'Ameiio, Counselor of the Supreme Court. 
 
 M. Foberti, Chief of Section, Ministry 
 of the interior, Secretary. 
 
 Belgium: 
 
 M. Van den lleuvel, Minister of State. 
 M. Despret, Supreme Court; Director of the Bank of 
 Brussels. 
 
 M. Bourquin, Professor at University 
 of Brussels. Judicial Consul for the 
 Ministry of Affairs, See; eta 
 
 Greece : 
 
 M. Romanes. Special Envoy and Minister Plenipotentiary 
 
 to Paris. 
 M. Michalacopoulos, Minister of State. 
 
 M. Speransa, Director of Ministry of For- 
 eign Affairs, Secretary. 
 
 16 
 
Economic Sections of the Treaty 
 
 Poland : 
 
 M. Olchowski, Director of Department of War Indemni- 
 ties at the Ministry of Finances. 
 M. Chamiec, Director of the National Loan Bank. 
 M. Zalewski, Secretary. 
 
 Portugal : 
 
 M. Egaa Moniz, Minister of Foreign Affairs. I 
 
 M. Freire d'Andrade, Professor of the Faculty of Sciences, 
 
 former Minister of Foreign Affairs. 
 
 M. Joao de Bianchi, Secretary. 
 
 Japan : 
 
 M. Kengo Mori, Financial Agent in the Japanese Em- 
 
 bassy at London and Paris. 
 M. IT. Nagaska, Councilor of the Japanese Emhassy in 
 
 Paris. 
 M. K. Tatsumi, Director of the Specio Bank of Yokohama. 
 M. K. Aokl, Secretary. 
 
 Rumania : 
 
 M. Danielopol, Envoy Extraordinary and Minister from 
 
 the King to Washington; former Director of the 
 National Bank of Rumania; former Deputy. 
 M. Zahariade, Civil Engineer, Inspector General, Assist- 
 ant Director of Railroads, Member of Upper Board of 
 Public Works. 
 
 M. Misu, Secretary. 
 
 Serbia : 
 
 M. Stoyanowitch, Deputy, former Minister. 
 
 M. Miloch Savtchitch, former Minister. 
 
 M. Drag-Doutschitch, Secretary. 
 
 Czechoslovak Republic : 
 
 M. Benes, Minister of Foreign Affairs. 
 
 M. Osuski, Charge d'Affaires. 
 
 M. Slavick, Secretary. 
 
 iReplaced by Mr. Alfonso Costa, after the meeting of March 
 11, 1919. 
 
 17 
 
The Making of the Reparation and 
 
 Mr. Klotz, the French Minister of Finance, was 
 chosen chairman of the commission and Mr. W. H. 
 Hughes, Prime Minister of Australia and Mr. Van 
 den Henvel of Belgium, vice-chairmen. 
 
 The American representatives selected as their 
 legal adviser John Foster Dulles, an international 
 lawyer, who had had experience in several inter- 
 national conferences. Later on Thomas TV. La- 
 mont, a representative of the United States Treas- 
 ury, was named as au alternate to Korman Davis. 
 The American committee was assisted by a corps 
 of experts, who had previously made an in- 
 tensive field examination beginning immediately 
 with the conclusion of the armistice. This group 
 contained General McKinistry, Colonel Dillon, 
 Leland L. Summers, and other engineers. Thev 
 were assisted and advised by Prof. Allyn Young. 
 Jerome D. Greene became the secretary of the 
 American delegation and of the Interallied Repara- 
 tion Secretariat. 
 
 The first meeting of the Commission on Repara- 
 tion was held on Monday, February 3, 1919. It was 
 then decided that the commission should proceed to 
 consider the principles of reparation, and each, of 
 the nations represented on the commission was in- 
 vited to file a statement of the principles as con- 
 ceived bv it. 
 y The American reparation delegates approached 
 their task with a fairly definite program. As to the 
 actual physical damage wrought by Germany, their 
 knowledge probably surpassed that of any other 
 delegation. This was the result of field exanrina- 
 
 18 
 
Economic Sections of the Treaty 
 
 tions which had been conducted by a number of the 
 experts referred to above immediately at the conclu- 
 sion of the armistice. 
 
 The American principles were based on pre- 
 armistice negotiations as to what were to be 
 the "terms of peace." President Wilson in his 
 Fourteen Points had originally stipulated for 
 healing acts to repair the structure and validity 
 of international law and for the restoration of in- 
 vaded areas. Before accepting these terms the 
 Allies stated that by restoration they understood 
 "that compensation will be made by Germany for 
 all damage done to the civilian population of the 
 Allies and their property by the aggression of Ger- 
 many, by land, by sea, and from the air." 
 
 This interpretation had been accepted by the 
 United States and by Germany. Accordingly, the 
 American delegates prepared and filed with the 
 reparation section of the Peace Conference a state- 
 ment of reparation principles which involved: 
 
 (1) That Germany make good the damage resulting 
 directly from acts clearly in violation of international law, 
 such as the breach of the Treaty of Neutrality in favor of 
 Belgium, illegal treatment of prisoners of war, etc. 
 
 (2) That Germany make good her pre-armistice agree- 
 ment as to compensation for all damage to the civilian 
 population and their property, this being construed by the 
 American delegation to mean direct physical damage to 
 property of non-military character and direct physical injury 
 to civilians. 
 
 The American delegation was the only one to pre- 
 sent any definite scheme of reparation. The other 
 
 3 19 
 
The Making of the Reparation and 
 
 delegations merely filed general statements to the 
 effect that the war being a wrongful act by Ger- 
 many, Germany was responsible for all the loss and 
 damage, direct and indirect, which resulted there- 
 from. 
 
 One of the Allies went even further and made 
 claim for loss and damage resulting from the fact 
 that the armistice was concluded so unexpectedly 
 that the termination of hostilities involved it in 
 financial losses. In no statement of principles 
 other than that of tbe United States was any refer- 
 ence made to the pre-armistice negotiations as a 
 foundation for, or limitation of, the Allies' rights 
 to reparation. 
 
 The American program, as the most concrete and 
 flefinite, at once became the basis of discussion. 
 During several weeks of debate, it was subjected 
 to the criticism of the other delegations, all of 
 which, with the exception of the Belgian delega- 
 tion, which was acquiescent, took strong exception 
 
 to it. J 
 / 
 
 Damage vs. War Costs. 
 
 The American contention was that. we. did not 
 have a piece of plain, white, unscratched paper 
 upon which to write the treaty, but that there 
 already was written upon it, because of the ac- 
 ceptance of the Fourteen Points, a limitation which 
 stated that only reparation of damage should be 
 collected, and not the costs of the war. 
 
 The argument in favor of war costs was led by 
 the British delegation, comprising Mr. Hughes, 
 
 20 
 
Economic Sections of the Treaty 
 
 Premier of Australia, Lord Sumner, and Lord Cun- 
 liffe. It was natural that the British should have 
 vigorously supported the inclusion of war costs. 
 
 Mr. Lloyd George had just been re-elected to 
 power on a platform of collecting from Germany 
 the costs of the Avar, "shilling for shilling, and ton 
 for ton." The American program absolutely op- 
 posed this, and would have brought little repara- 
 tion to the British dominions. That for Great 
 Britain would have been limited to shipping losses 
 and damages from aerial raids. 
 
 Although the attitude of Great Britain was thus 
 quite natural, it was somewhat surprising that she 
 was able to rally to her program France, Serbia, 
 and other nations which had suffered substantial 
 material damage. In accordance with the calcula- 
 tion of the American experts, the American pro- 
 gram of reparations would have led to payments 
 by Germany being apportioned among the Allied 
 Powers somewhat as follows: 
 
 France 43 per cent. 
 
 British Empire 19 " 
 
 iBelgium 24 " 
 
 Italy 6 " 
 
 Serbia 4 " 
 
 Rumania 3 " 
 
 Scattering 1 " 
 
 Under the British scheme of inclusion of war 
 costs, the proportion would have been somewhat as 
 
 iThis relatively high percentage for Belgium is due to the 
 exceptional position of Belgium as regards war costs 
 which was provided for in the American program. 
 
 21 
 
The Making of the Reparation and 
 
 follows (the figures as a basis are very rough calcu- 
 lations, but will serve to illustrate the poiut) : 
 
 France 2 4 per cent. 
 
 British Empire 40 " " 
 
 Belgium 1 7/10 " 
 
 Italy C 
 
 Serbia 1 3/10 " 
 
 United States 25 
 
 Scattering 2 " " 
 
 It was obvious, therefore, that the American pro- 
 posa] was the more advantageous for the chief 
 sufferers from the war unless Germany could pay a 
 principal capital sum largely in exeess of that re- 
 quired, in accordance with the American program, 
 to make good actual physical damage, personal in- 
 jury to civilians, etc. The Americans stressed the 
 fact that Germany's capacity of payment could 
 scarcely extend appreciably beyond that needed to 
 meet the American program. Nevertheless the dele- 
 gations of France, Serbia, and to an extent even of 
 Belgium, did not openly espouse this program, 
 which afforded them a particularly favorable posi- 
 tion, chiefly because the program seemed to in- 
 volve a sparing of Germany against which their 
 public opinion revolted. 
 
 It is but fair to say that the arguments pre- 
 sented by the English and French delegations, 
 which were more active than others, Avere based 
 upon cogent reasons. The English contention, of 
 course, was influenced by the mandate that had been 
 given by their people in the election following the 
 armistice. As a legal basis for this claim the Brit- 
 
Economic Sections of the Treaty 
 
 ish contended that they had agreed to make peace 
 not merely on the President's Fourteen Points, but 
 upon the principles enunciated in his subsequent 
 addresses. They further contended that among 
 these principles was the declaration that the settle- 
 ment should be based on the justice of each item of 
 the treaty. 
 
 Mr. Hughes in particular argued with force that 
 the reparation clauses of the treaty would not be 
 just unless they provided an adequate reparation 
 for the heavy losses in blood and treasure which 
 had been incurred by the British, dominions, 
 even though these dominions had been spared 
 from actual physical destruction. He was ear- 
 nestly supported by Lord Sumner, one of the 
 recognized leading jurists of Great Britain. Both 
 Mr. Hughes and Lord Sumner also likened the 
 situation of Great Britain to that of Belgium, on 
 the ground that Great Britain's war costs had re- 
 sulted from Germany's breach of the Treaty of 
 Neutrality of Belgium, to which treaty Great 
 Britain was a party. 
 
 The French argument in favor of the inclusion 
 of war costs was based on the terms of the signed 
 armistice agreement of November 11, 1918. This 
 agreement contained the following clause : 
 
 Nineteen. — With the reservation that any future claims 
 and demands of the Allies and the United States of America 
 remain unaffected, the following financial conditions are 
 required: Reparation for damage done. 
 
 This clause was followed by provisions respecting 
 German public securities, Russian and Rumanian 
 
 23 
 
The Making of the Reparation and 
 
 gold, etc. It was the French claim that this gen- 
 eral reservation occurring subsequently to the dis- 
 cussions between the Allies, the United States, and 
 Germany as to the terms of peace left the Allies 
 free to present any claim for reparation which they 
 saw fit. 
 
 In contending against these points the Americans 
 urged that the specific declaration of the Allies re- 
 lating particularly to the question of the amount 
 of compensation to be paid by Germany was bind- 
 ing as against general statements, contained in the 
 President's addresses. These statements had not 
 been definitely const rued. They urged additionally 
 that the pre-armistice negotiations as to the terms 
 of peace which had been conducted by the heads of 
 the Allied states were not subject io modification 
 by the terms o[' the armistice agreement of Novem- 
 ber 11, L918. The latter was a military document 
 designed only to insure the Allies being in a posi- 
 tion to enforce the peace arrangements previously 
 entered into. 
 
 The texts of the opening and closing addresses 
 of Mr. Dulles and addresses by Mr. Hughes and Mr. 
 Klotz a. re contained in the addenda to this volume. 
 A reading ol' the arguments will give an apprecia- 
 tion of the difficulties inherent in the solution of 
 these problems, as well as of the vigor with which 
 the conflicting viewpoints were urged. 
 
 The debate which the American program had 
 evoked did in fact impress the other delegates. 
 They could not, however, bring themselves to adopt 
 this program. The American delegation thereupon 
 
 21 
 
Economic Sections of the Treaty 
 
 proposed that the question of the inclusion of war 
 •costs be referred without prejudice to the Supreme 
 Council. Mr. Hughes, earnest and sincere, fight- 
 ing to the last for war costs, attempted to force a 
 vote prior to this reference to the Supreme Council. 
 He "wais confident that this would have shown the 
 American delegation as a minoritv of one. 
 
 However, the motion for a vote was lost, and 
 the matter was referred to the Supreme Coun- 
 cil without a record of the decision of the 
 delegations upon the question. After this ac- 
 tion, taken in accordance with the American 
 suggestion, the formulation of the reparation 
 clauses of the treaty passed from the reparation 
 section of the Peace Conference and became sub- 
 ject to the direct treatment of Mr. Wilson, Mr. 
 Lloyd George, Mr. Clemenceau, and Mr. Orlando, 
 with their several technical advisers. 
 
 President Wilson was on the ocean returning to 
 America when the Supreme Council first took into 
 its hands the problem of reparations. The Amer- 
 ican delegation had, however, presented to the 
 President by wireless a full and impartial report 
 of the divergent points of view. They requested 
 his instructions as to whether they should persist 
 in their original attitude with reference to war 
 costs. 
 
 The President replied to the effect that the 
 American delegation should dissent, and if neces- 
 sary dissent publicly, from a procedure which "is 
 clearly inconsistent with what we deliberately 
 led the enemy to expect and cannot now hon- 
 
 25 
 
The Making of the Reparation and 
 
 orably alter simply because we have the 
 power." 
 
 Fortified by this vigorous support from the Presi- 
 dent, the American delegates, in informal confer- 
 ence, were able shortly to secure the acquiescence 
 of Mr. Lloyd George, Mr. Clemenceau, and Mr. 
 Orlando in the fundamental principle originally 
 enunciated by the American delegation. This 
 was that Germany's reparation obligations were 
 to be determined in accordance with a fair con- 
 struction of the Allies' pre-armistice declaration 
 and that such construction excluded imposing upon 
 Germany the "costs of the war." but was limited 
 to what may be called actual damage. 
 
 There remained to be settled precisely what 
 should be considered as damage as distinct from 
 war costs. After considerable discussion and de- 
 bate, the thirty-one categories of damage which had 
 been reported by the Commission on Reparation 
 were reduced to ten (see page 32). On these 
 there was general agreement except as to pensions 
 and separation allowances. 1 The inclusion of these 
 items was vigorously urged by all the Allies, partic- 
 ularly Great Britain and France. With the aban- 
 donment of general war costs, these items afforded 
 the only remaining basis for a large financial com- 
 pensation from Germany for the tremendous sacri- 
 fices in blood and treasure which had been made by 
 the British Empire. The French were insistent in 
 
 iBy separation allowances is meant pay by the governments 
 to families and relatives who normally depended for 
 their support upon persons in military service. 
 
 26 
 
Economic Sections of the Treaty 
 
 view of the demands of their people that Germany 
 should pay and thus relieve this sorely tried people, 
 who have suffered more than the world probably 
 will ever realize. 1 / 
 
 Unless the French delegates w r ere firmly con- 
 vinced of Germany's ability to pay considerably in 
 excess of a capital sum of $15,000,000,000, it is 
 difficult to understand their acceptance of the in- 
 clusion of pensions and separation allowances in 
 the categories which Germany had to pay. It was 
 forcibly brought to their attention that probably 
 Germany could not pay much more than a capital 
 sum of $15,000,000,000. Hence, if pensions and sep- 
 aration allowances were included in the bill pari- 
 passu with the other categories, France would not 
 receive so large an amount as if these items were 
 left out. 
 
 Without pensions and separation allowances, the 
 bill against Germany was estimated to be approxi- 
 mately $15,000,000,000, which it was generally 
 thought she could pay. France would have re- 
 ceived full payment for her devastated areas. With 
 the inclusion of pensions and separation allow- 
 ances without a priority for the devastated areas, 
 France would have a larger bill to present, but 
 
 lMy first-hand observations of the unnecessary destruction 
 in Belgium and France has convinced me that the 
 devastated areas of Belgium, France, Italy, Poland, 
 Serbia and Rumania should receive preferred consid- 
 eration. The loss of cattle to a peasant means at least 
 as much to him as does the loss of a ship to a great 
 merchant. 
 
 21 
 
The Making of the Reparation and 
 
 would receive a less sum of money than if she had 
 excluded these items. On the other hand, England 
 and her dominions would get more. 
 
 Sooner or later, if the amount of Germany's in- 
 debtedness is fixed at about a capital sum of $15,- 
 000,000,000, France must insist either upon a 
 priority for her devastated areas or a larger per- 
 centage than her claims under the categories would 
 entitle her to; otherwise she will lose out. 
 
 There was a division among* the American 
 delegation which made it frankly hesitant between 
 maintaining on the one hand its original strict and 
 possibly legalistic construction of the pre-armistice 
 declaration (which would have excluded pensions 
 and separation allowances), and supporting on the 
 other hand a liberal construction which would ad- 
 mit, the right of compensation for damage to the 
 homes and families behind the front as well as dam- 
 age to Hie houses at the front. 
 
 Some advanced the principle that financial loss 
 resulting from the absence of a wage earner did 
 not cause any more "damage to the civilian popu- 
 lation" than did an equal financial loss involved 
 in the payment of taxes to provide military equip- 
 ment and like war costs. On the other hand, 
 it would not be easy to meet the contention that 
 Germany should be liable for compensation not 
 merely for damage to the buildings upon which 
 civilians depended for housing, but also for injury 
 or loss of life of those upon whom the civilians de- 
 pended for support. Payment for a destroyed 
 chimney was not to be placed above compensation 
 
 28 
 
Economic Sections of the Treaty 
 
 for a lost life or a pension for a blinded or wounded 
 soldier. 
 
 In addition, it was argued that the inclusion of 
 these terms would not increase the amount which 
 Germany Avould pay. Her debit without them would 
 amount to all that she could pay as a capital sum. 
 It was urged that it merely changed the propor- 
 tion of the distribution of collections among the 
 Allies on what seemed to them to be a more equit- 
 able and satisfactory basis. 
 
 The final argument that won the unanimous 
 approval of what was known as the Big Four was 
 a memorandum submitted by General Smuts. He, 
 as is well known, was one of the most liberal and 
 courageous men at the Peace Conference. This 
 memorandum read as follows : 
 
 NOTE ON REPARATION. 
 
 The extent to which reparation can be claimed from 
 Germany depends in the main on the meaning of the last 
 reservation made by the Allies in their note to President 
 Wilson, November, 1918. That reservation was agreed to by 
 President Wilson and accepted by the German Government 
 in the armistice negotiations, and was in the following 
 terms: 
 
 "Further, in the conditions of peace laid down in his 
 address to Congress on January 8, 1918, the President 
 declared that invaded territories must be restored, as 
 well as evacuated and made free. The Allied Govern- 
 ments feel that no doubt ought to be allowed to exist 
 as to what this provision implies. By it they under- 
 stand that compensation will be made by Germany for 
 all damage done to the civilian population of the 
 
 29 
 
The Making of the Reparation and 
 
 Allies and to their property by the aggression of Ger- 
 many by land, by sea, and from the air." 
 
 In this reservation, a careful distinction must be made 
 between the quotation from the President, which refers to 
 the evacuation and restoration of the invaded territories, 
 and the implication which the Allies find in that quotation 
 and which they proceed to enunciate as a principle of gen- 
 eral applicability. The Allies found in the President's pro- 
 vision for restoration of the invaded territories a general 
 principle implied of far-reaching scope. This principle is 
 that of compensation for all damage to the civilian popula- 
 tion of the Allies in their persons or property, which re- 
 sulted from the German aggression, and whether done on 
 land or sea or from the air. By accepting this compre- 
 hensive principle (as the German Government did), they 
 acknowledged their liability to compensation for all damage 
 to the civilian population or their property wherever and 
 however arising, so long as it was the result of German 
 aggression. The President's limitation to restoration of the 
 invaded territories only of some of the Allies was clearly 
 abandoned. 
 
 The next question, is how to understand the phrase 
 "civilian population" in the above reservation, and it can 
 bo most conveniently answered by an illustration. A shop- 
 keeper in a village in northern France lost his shop through 
 enemy bombardment, and was himself badly wounded. He 
 would be entitled as one of the civilian population to com- 
 pensation for the loss of his property and for his personal 
 disablement. He subsequently recovered completely, was 
 called up for military service, and after being badly wounded 
 and spending some time in the hospitals was discharged as 
 permanently unfit. The expense he was to the French Gov- 
 ernment during this period as a soldier (his pay and main- 
 tenance, his uniform, rifle, ammunition, his keep in the 
 hospital, etc.) was not damage to a civilian, but military 
 loss to his Government, and it is therefore arguable that 
 the French Government cannot recover compensation for 
 
 30 
 
Economic Sections of the Treaty 
 
 such expense under the above reservation. His wife, how- 
 ever, was, during this period, deprived of her bread-winner, 
 and she therefore suffered damage as a member of the 
 civilian population, for which she would be entitled to 
 compensation. In other words, the separation allowances 
 paid to her and her children during this period by the 
 French Government would have to be made good by the 
 German Government, as the compensation which the allow- 
 ances represent was their liability. After the soldier's dis- 
 charge as unfit, he rejoins the civilian population, and as 
 for the future he cannot (in whole or in part) earn his 
 own livelihood, he is suffering damage as a member of the 
 civilian population, for which the German Government are 
 again liable to make compensation. In other words, the 
 pension for disablement which he draws from the French 
 Government is really a liability of the German Government, 
 which they must under the above reservation make good to 
 the French Government. It could not be argued that as he 
 was disabled while a soldier he does not suffer damage as a 
 civilian after his discharge if he is unfit to do his ordinary 
 work. He does literally suffer as civilian after his dis- 
 charge, and his pension is intended to make good this dam- 
 age, and is therefore a liability of the German Government. 
 If he had been killed in active service, his wife as a civilian 
 would have been totally deprived of her bread-winner, and 
 would be entitled to compensation. In other words, the 
 pension she would draw from the French Government would 
 really be a liability of the German Government under the 
 above reservation, and would have to be made good by them 
 to the French Government. 
 
 The plain, common-sense construction of the reservation 
 therefore leads to the conclusion that, while direct war 
 expenditure (such as the pay and equipment of soldiers, the 
 cost of rifles, guns, and ordinance and all similar expendi- 
 tures) could perhaps not be recovered from the Germans, 
 yet disablement pensions to discharged soldiers, or pensions 
 to widows and orphans, or separation allowances paid to 
 their wives and children during the period of their military 
 
 31 
 
The Making of the Reparation and 
 
 service are all items representing compensation to members- 
 of the civilian population for damage sustained by them, 
 for which the German Government are liable. What was 
 spent by the Allied Governments on the soldier himself, or 
 on the mechanical appliances of war, might perhaps not be 
 recoverable from the German Government under the reserva- 
 tion, as not being in any plain and direct sense damage to 
 the civilian population. But what was, or is, spent on the 
 citizen before he became a soldier or after he has ceased to 
 be a soldier or at any time on his family, represents com- 
 pensation for damage done to civilians and must be made 
 good by the German Government under any fair interpreta- 
 tion of the above reservation. This includes all war pen- 
 sions and separation allowances, which the German Govern- 
 ment are liable to make good, in addition to reparation or 
 compensation for all damage done to property of the Allied 
 peoples. 
 
 (Signed) J. C. Smuts. 
 Pari., March 31, 1919. 
 
 Categories. 
 
 It thus having been decided to include pensions 
 and separation allowances, the categories of dam- 
 age for which Germany is held responsible were 
 finally formulated as follows: 
 
 Compensation may be claimed from Germany under Arti- 
 cle 2 32 above in respect of the total damage under the fol- 
 lowing categories: 
 
 (1) Damage to injured persons and to surviving depend- 
 ents 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 conse- 
 quences thereof, and of all operations of war by the two 
 groups of belligerents wherever arising. 
 
 32 
 
Economic Sections of the Treaty 
 
 (2) Damage caused by Germany or her allies to civilian 
 victims of acts of cruelty, violence or maltreatment (in- 
 cluding injuries to life or health as a consequence of 
 imprisonment, deportation, internment or evacuation, of ex- 
 posure at sea or of being forced to labour), wherever aris- 
 ing, and to the surviving dependents of such victims. 
 
 (3) 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. 
 
 (4) Damage caused by any kind of maltreatment of 
 prisoners of war. 
 
 (5) As damage caused to the people 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 air force), whether mutilated, 
 wounded, sick or invalided, and to the dependents of sucn 
 victims, the amount due to the Allied and Associated Gov- 
 ernments being calculated for each of them as being the 
 capitalized 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. 
 
 (6) The cost of assistance by the Government of the 
 Allied and Associated Powers to prisoners of war and to 
 their families and dependents. 
 
 (7) Allowances by the Governments of the Allied and 
 Associated Powers to the families and dependents of mobi- 
 lised person or persons serving with the forces, the amount 
 due to them for each calendar year in which hostilities oc- 
 curred being calculated for each Government on the basis 
 of the average scale for such payments in force in France 
 during that year. 
 
 (8) Damage caused to civilians by being forced by Ger- 
 many or her allies to labour without just remuneration. 
 
 33 
 
The Making of the Reparation and 
 
 (9) 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. 
 
 (10) Damage in the form of levies, fines and other simi- 
 lar exceptions imposed by Germany or her allies upon the 
 civilian population. 
 
 Special Provisions For Belgium. 
 
 There remained, as a question of principle, the 
 special position for Belgium which the American 
 memorandum had originally proposed. All of the 
 principal Allied and Associated Powers, having ac- 
 cepted the view that their own claims to recovery 
 of war costs should be renounced, were reluctant to 
 admit an exceptional position for Belgium — a posi- 
 tion which, however sound in international law, 
 would be difficult to explain to their own people. 
 The American experts had filed with the Supreme 
 Council a formal reservation of the rights of 
 Belgium as construed by the United States. The 
 representatives of Belgium were encouraged by 
 American sympathy and by the stand of the Presi- 
 dent. They finally secured provisions for compen- 
 sating Belgium for the entire loss to which she had 
 been subjected as a result of Germany's violation 
 of the Treaty of Neutrality. 
 
 A further special measure in aid of Belgium was 
 
 34 
 
Economic Sections of the Treaty 
 
 adopted at the same time. The general principle 
 accepted fry the Allied and Associated Powers was 
 that they would share in Germany's reparation 
 payments in proportion to their allowed claims. 
 To permit the immediate restoration of Belgium 
 it was, however, felt equitable to accord to 
 Belgium a certain priority in time of payment. An 
 arrangement was accordingly entered into whereby 
 Belgium will receive, on account of the reparation 
 payments to which she is entitled, the equivalent 
 of 2,500,000,000 gold francs, as preferred payment 
 out of the first cash, securities, and deliveries in 
 kind received from Germany pursuant to the 
 Treaty of Peace. 
 
 A final principle of major importance was 
 that of " joint and several liability." It was 
 urged by some that each of the Allies should look 
 exclusively to reparation from that enemy country 
 with which 'it had chiefly been in military opposi- 
 tion. This would have meant, in effect, that Italy, 
 Serbia, Greece, and Kumania would have had to 
 secure their reparation exclusively from the Austro- 
 Hungarian Empire, which was so dismembered and 
 in so critical a financial condition that hope of 
 reparation from this source was highly problem- 
 atical. These nations under the leadership of Italy 
 therefore regarded it as of great importance that 
 this principle should be established : that all of the 
 assets of the enemy states should he pooled into 
 one fund and that all of the Allied and Associated 
 states should share in this fund in proportion to 
 their approved claims. This latter principle, which 
 
 4 35 
 
The Making of the Reparation and 
 
 was fully concurred in by the American delegation, 
 was ultimately accepted. 1 
 
 The conditions of peace thus took concrete form 
 with the reparation principles formulated in gen- 
 eral accord with those which the American delega- 
 tion had originally proposed. These principles are 
 found in the following- articles of the treaty: 
 
 Article 231, recognizing Germany's moral responsibility 
 for the war and its consequences. 
 
 Article 232, providing for Germany's obligation to make 
 compensation in accordance with the pre-armistice declara- 
 tion. 
 
 Article 232 (third paragraph), providing for special com- 
 pensation for Belgium for war expenses resulting from the 
 violation of her neutrality. 
 
 With the settlement of the principles of repara- 
 tion, consideration was given to the scarcely less 
 important question of the methods of its perform- 
 ance. The problem presented itself in three main 
 aspects : 
 
 First, restitution of objects removed but still 
 in being; second, reparation in kind of prop- 
 erty destroyed; third, financial restitution. 
 
 Restitution is provided for wherever objects have 
 been taken away and are capable of identification. 
 Where cash has been taken away or seized, restitu- 
 tion of an equivalent amount can be required with- 
 out the necessity of identifying the exact coin or 
 paper currency which has been seized; such identi- 
 
 lReparation payments made by Austria, Hungary, and Bul- 
 garia are to go into the general reparation fund. 
 
 36 
 
Economic Sections of the Treaty 
 
 fication being in the nature of the case practically 
 impossible. 
 
 Because of world shortages of the articles neces- 
 sary to permit effective reparation, direct repara- 
 tion in kind from Germany was thought of para- 
 mount importance where money alone would not 
 suffice to restore the injured party to Ms pre-war 
 position. 
 
 Ships. 
 
 "With, regard to ships, there was general agree- 
 ment that practically all of Germany's merchant 
 marine should be surrendered as part replacement 
 of the losses caused by German submarine activ- 
 ities. The question of the allocation of these ships 
 among the different Allied and Associated Powers 
 proved one of the troublesome problems of the Con- 
 ference. It is here briefly described as typical of 
 the divergence in national points of view which 
 almost every economic problem presented, and the 
 solution of which was made possible only by 
 mutual concession and appreciation of the position 
 of the others. 
 
 The French proposed to allocate to the Allied 
 and Associated Powers in proportion to their 
 respective war losses, and to place in a pool 
 for that purpose, all ships which on August 
 1, 1914, flew the German flag. This would 
 have resulted in the pooling of all ships con- 
 demned by prize court (chiefly British) and 
 ships seized in the Western Hemisphere (chief- 
 ly by the United States and Brazil). 
 
 37 
 
The Making of the Reputation and 
 
 The British proposed the pooling of all ships 
 which on the da to of the coming into force of the 
 treaty were entitled to fly the German flag-. This, 
 in British opinion, would have pooled ships seized 
 by the United States, Brazil, Cuba, etc., without 
 prize-court decisions, and would have left undis- 
 turbed the title to ships which had been passed 
 through the prize court. 
 
 The American delegates proposed that title to all 
 German ships seized during the war should be con- 
 firmed in the captor nation, and that only the re- 
 maining German ships be placed in the pool. 1 
 
 Mr. Lloyd George strongly urged that ships, 
 which were at most only useful additions to the 
 economic resources of other nations, constituted 
 the very life blood of the British Empire. He pro- 
 tested the injustice of a principle that, in one 
 case, would permit a nation which had not been an 
 active belligerent to increase its tonnage nearly ten- 
 fold while only live per cent, of Great Britain's 
 tonnage losses would be replaced. 
 
 Mr. Clemenceau urged the claims of France as 
 being in a financial situation which rendered it 
 exceedingly burdensome for her to pay foreign 
 charter hire for her imports. He pointed out that 
 
 lGerman shipping taken over by the United States during 
 the war should not be confused with German shipping 
 surrendered to the Allies under Armistice Agreements 
 for use in the repatriation of troops and for relief pur- 
 poses. Certain of these latter ships, including the 
 IMPERATOR, were temporarily allocated to the United 
 States for operation and subsequently were returned 
 by the United States. 
 
 38 
 
Economic Sections of the Treaty 
 
 during the war France had abandoned ship con- 
 struction so as to devote herself exclusively to other 
 forms of war activities to which her industries 
 were better adapted. 
 
 President Wilson declined to accede to any prop- 
 osition that would involve the surrender by the 
 United States of ships which had been taken over 
 by act of Congress. 
 
 A suggested solution was that the United States 
 should retain all vessels seized by her; but this ac- 
 tion was not to be extended to other nations of the 
 Western Hemisphere. It was not possible, how- 
 ever, that the United States, despite its far greater 
 contribution to the Avar, should accept a more 
 favored position than that accorded to her Pan- 
 American associates, who to some extent had 
 entered the war under the inspiration of and as an 
 expression of sympathy towards the United States. 
 
 The problem was finally solved by agreeing to 
 place all the belligerents on an equality. The right 
 Avas recognized to retain seized German tonnage 
 upon the condition that payment be made for 
 reparation account up to the fair value of ships 
 retained in excess of those apportioned to replace 
 war losses. 
 
 Coal. 
 
 Owing to generally decreased production, and in 
 part to the destruction of the war, the world's coal 
 situation was so acute that reparation in the form 
 of coal deliveries was considered of great impor- 
 tance. Though Germany might pay in money or in 
 manufactured goods, France feared that without 
 
 q 
 
 
 
The Making of the Reparation and 
 
 assured deliveries of coal, she would find her fur- 
 naces idle, her workmen unemployed, and her indus- 
 trial reconstruction delayed. This depended in 
 great measure on the repair of the Lens coal fields, 
 which had been destroyed with such a deliberation 
 and thoroughness that five years will hardly suffice 
 to restore them. 
 
 The first coal demand upon Germany is thus for 
 the delivery to France annually for ten years of 
 an amount of coal equal to the difference between 
 the current production and the pre-war produc- 
 tion of the destroyed French mines. This amount 
 is not to exceed 20,000,000 tons per annum for 
 the first five years and 8,000,000 tons per annum 
 for the succeeding five years. France, on her 
 part, undertakes to exercise due diligence in re- 
 pairing the mines. Germany herself has been 
 given the opportunity to make proposals whereby 
 her own engineers will repair the mines as a credit 
 on Germany® repa ration account. As the mines 
 are gradually restored to normal operations, the de- 
 liveries on this account will diminish and may cease 
 entirely before the expiration of the contract. 
 
 The second series of coal demands is subordi- 
 nate to the first and of a different character. 
 France, Belgium, and Italy have always been large- 
 ly dependent upon German exports of coal. These 
 nations felt a real and quite understandable ap- 
 prehension. It was that this dependence might in 
 future be utilized by Germany to extort economic 
 concessions, whicb in effect would largely nullify 
 the reparation and economic terms of the treaty. 
 
 40 
 
Economic Sections of the Treaty 
 
 Accordingly, as a second category of coal provi- 
 sions, France and Belgium are given an option upon 
 German coal up to the normal pre-war exports of 
 Germany to those countries, and provision is made 
 for Italy's necessities. These options can only "be 
 exercised in the event that the Separation Com- 
 mission considers that their exercise will not un- 
 duly disturb the economic life of Germany. That 
 is, if Germany has coal for export, she must export 
 it to these countries rather than to others. The 
 price of the coal to France, Belgium, and Italy is to 
 be the same as that charged to German citizens. 
 
 There is much misunderstanding regarding the 
 coal clauses. As slated above, the Reparation 
 Commission can authorize under the treaty (Part 
 VIII, Annex 5, Paragraph 10) the postponement 
 or cancellation of deliveries, if it considers that 
 the full exercise of the options would interfere un- 
 duly with the industrial requirements of Germany. 
 
 There is a great fallacy prevailing as to the pro- 
 duction and distribution of raw materials in the 
 world. Only in time of war and blockade are the 
 location and ownership of coal or other raw ma- 
 terials important. At all other times the producer 
 desires to sell to those who can use his raw material. 
 The principal supply of cotton in the world is in the 
 Southern states, yet great mills liave been built for 
 the manufacture of cotton goods in Europe. Rubber 
 and tin are produced outside the limits of the 
 United States, Germany, and France, and yet great 
 factories are built in those countries for their use. 
 
 41 
 
The Making of the Reparation and 
 
 It will bo found that the French who demanded 
 and the Germaus who objected to the coal clauses 
 were unnecessarily alarmed. When normality in 
 production of coal in Germany and Europe re- 
 turns;, the producer will find the most available 
 market for coal where it had. previously existed. 
 This will take place only when that section of 
 Europe containing coal gets hack to work. This is 
 largely within the hands of the Germans themselves. 
 
 The following statement from a resume of 1 1 err 
 Karl P. Yon Siemens, chairman of the Siemens & 
 llalske Company of Berlin, on the industrial situa- 
 tion in Germany, is illuminating and interesting in 
 this matter : 
 
 The chairman, proceeding to discuss the economic life 
 of the country, stated that it is too frequently asserted that 
 thiB is dependent upon other countries and that the Germans 
 will soon come into swing again if they can again obtain 
 the necessary raw materials from abroad. In his opinion 
 this argument may be correct in regard to one or two in- 
 dustries, but it is not the case with many of them, and in 
 these instances the decline is just as great as in those which 
 need foreign materials. The principal thing lacking is coal, 
 not because the Germans have lost too much coal, or have 
 to make deliveries to their late enemies, but because an 
 insufficient quantity of coal is produced as compared with 
 former peace times, and cannot be distributed among 
 consumers. 
 
 The coal provisions are therefore of a negative 
 rather than positive character, designed to prevent 
 Germany from exercising economic pressure upon 
 France, Belgium, and Italy by arbitrarily withhold- 
 ing the normal movements of her coal to these 
 
 42 
 
Economic Sections of the Treaty 
 
 nations. The option granted by the treaty upon 
 a portion of German chemicals and dyestuffs is 
 similar, and transitory in character and purpose, 
 lasting for only five years. 
 
 When Europe stops fighting and gets back to 
 work there will be no shortage of coal or other 
 necessities of life. 
 
 Reconstruction Material. 
 
 To expedite the reconstruction of the devastated 
 areas, it was held advisable to require Germany 
 to deliver construction material such as wood, 
 cement, brick, certain types of machinery, etc. 
 This right can be exercised only under very care- 
 fully drawn restrictions and through the medium 
 of the Reparation Commission. To the commission 
 is reserved the right, after examining lists of de- 
 sired articles which must be prepared within a 
 short period of time, to decide whether the demand 
 shall be forwarded to Germany as one which Ger- 
 many can meet without undue injury to German 
 economic life. In no event shall deliveries extend 
 for more than four years. The Reparation Commis- 
 sion has further to take into account whether the 
 desired materials can be secured elsewhere in the 
 world's markets under equally advantageous condi- 
 tions as to price and time of delivery. 
 
 Cattle. 
 
 The devastated areas had been completely de- 
 nuded of live stock, which had been driven away or 
 consumed by the armies of occupation. Estimates 
 
 43 
 
The Making of the Reparation and 
 
 furnished by the German Government showed that 
 the live stock of Germany was little, if any, numeri- 
 cally inferior to the pre-war supply. There had 
 been, to be sure, a considerable decrease in the 
 weight of cattle ami in (he quantity of milk produc- 
 tion. This resulted from the shortage in Germany 
 of suitable cattle-feed. It was lack of food for 
 cattle rather than lack of cattle that was the 
 limiting factor in the production of milk and meat 
 iu Germany. The food situation of Germany 
 would not be appreciably affected by a small re- 
 duction in the numbers of live stock. It was thus 
 apparent that it would be entirely equitable to re- 
 place in Prance, Belgium, or Italy a small percent- 
 age of the pre-war live stock of the devastated 
 areas, by deliveries in kind from Germany. 
 
 The justice of the foregoing provisions for repa- 
 ration in kind was suggested on the ground of the 
 economic rnthlessness with which Germany prose- 
 cuted the war. The reparation delegates were pre- 
 sented with convincing evidence that the German 
 armies had systematically destroyed industrial 
 property with no military reason, but for the sole 
 purpose of rendering the Allied states unable to 
 resume their economic life after the war. Wher- 
 ever possible, and in preference to destruction, the 
 Germans actually carried away, for installation in 
 Germany, important units of machinery. The same 
 procedure had been followed with regard to live 
 stock, which had been either consumed or driven 
 back into Germany; and the fine-blooded cattle and 
 horses of northern France and Belgium had been 
 
 U 
 
Economic Sections of the Treaty 
 
 advertised for Bale and for breeding purposes in 
 Germany. 
 
 The provisions of the treaty for reparation in 
 kind will operate only partially to make good the 
 results of this destructive economic warfare prose- 
 cuted by Germany. 
 
 How Much Should Germany Pay? 
 
 While the most Immediate and satisfactory form 
 of reparation is reparation in kind, obviously only 
 a relatively small proportion of "categories of dam- 
 age*' could be compensated for in this way. These 
 categories of damage, which Germany was to be 
 obligated to meet under the terms of the treaty, are 
 the basis from which will be figured or assessed the 
 amount of Germany's indebtedness, credit being 
 given for reparation in kind. 
 
 The greater part of reparation, particularly after 
 the first two or three years, would necessarily take 
 the form of money payments or bonds. The ques- 
 tion of the amounts, periods, and method of pay- 
 ment to be required of Germany proved, perhaps, 
 the most troublesome single problem of the Peace 
 Conference. The committee to deal with this subject 
 was among the first to be appointed and the last 
 to make its report. 
 
 The first thought, and a perfectly proper one, 
 that occurs is, Why was not a fixed sum determined 
 and settled in the Treaty of Peace? The American 
 contingent contended all the way through for a 
 fixed and reasonable sum. Their reasons were that 
 it was better for all concerned to have a definite 
 
 45 
 
The Making of the Reparation and 
 
 amount. It was well for the Allies so that they 
 would know exactly what they could depend upon 
 to aid in the rehabilitation of their own financial 
 and economic life, and it was well for Germany and 
 the other debtor nations to know what they had to 
 pay, so that they could set about paying it. While 
 all might have agreed that a fixed sum should bo 
 determined within tin 1 limit of Germany's ability to 
 pay, many difficulties appeared. 
 
 No one know how much Germany owed. No one 
 yet knows how much Germany owes. No one knew 
 how much Germany could pay. No one yet knows 
 how much Germany can pay. There was a wide 
 divergence among the Allied experts as to what 
 Germany could pay. The amounts discussed 
 varied from $8,000,000,000 to $120,000,000,000, 
 both extremes, singularly, being of English origin. 
 One of the difficulties in the situation was that a. 
 certain great English financial expert asserted with 
 confidence that Germany could pay the latter fig- 
 ure. The amount of damages under the treaty 
 categories was estimated by various delegates at 
 from 82o.000,000,000 to several times that sum. 
 
 Another obstacle in the way of fixing- a def- 
 inite sum was the unwillingness of the various 
 delegations to present official estimates of the 
 amount of their damage. During meeting after meet- 
 ing of the first sub-committee of the Commission 
 on Reparation, the American delegates urged and 
 pleaded for figures of damages. They recognized 
 that no precisely accurate figures could then, if 
 ever, be given. There were, however, methods of 
 
 46 
 
Economic Sections of the Treaty 
 
 computation available which could be trusted to 
 give approximately accurate results. The American 
 delegates themselves had such estimate^ not only 
 for the United Sial.es, but for other nations. The 
 figures were based on the field examinations 
 and studies made; by American experts. But 
 while each nation sought access to these American 
 estimates as a guide to the damage suffered by. 
 other nations, no nation was willing to accept the 
 Americas estimate as applicable to itself. 
 
 The British delegation was disposed to support 
 the American delegation in its efforts to secure 
 definite figures and itself finally filed a provisional 
 estimate of British losses. The French remained 
 obdurate to the end and refused to make any esti- 
 mate of their losses, on the ground that at that 
 time such estimates would be only guess-work, and 
 that the least conscientious guesser would be the 
 greatest gainer. 
 
 Finally, the American delegation, took the posi- 
 tion that it could not consent to demanding any 
 fixed sum from Germany unless satisfied of damage 
 to at least that amount. 
 
 The refusal of most of the Allies to introduce any 
 evidence of their own on this point or to accept the 
 American est i mates was, therefore, one of the com- 
 pelling reasons leading to the postponement of fix- 
 ing the amount of the German indemnity to a time 
 when Ihe amount of damage could be more scien- 
 tifically estimated. The American delegates could 
 with difficulty resist giving opportunity for scien- 
 tific and careful estimation and checking of each 
 
 47 
 
The Making of ihc Reparation and 
 
 nation's claims. It was fairly obvious that such 
 claims would exceed Germany's ability to pay, yet 
 the precise accuracy of each claim was none the 
 less of great practical moment. This was the more 
 true, since these claims were then expected to con- 
 stitute the basis upon which each nation was to 
 share in the payments that Germany makes. 
 
 The situation was further complicated by the at- 
 titude of the peoples of the nations involved. They 
 demanded the uttermost farthing from Germany 
 under the categories, on the theory that their 
 burdens should not be made heavier to themselves 
 and lighter to Germany. Germany in 1S70 had been 
 enabled to extract from France $1,000,000,000, an 
 amount then not dreamed possible of payment. 
 Germany, had in a short, period of time, grasped 
 such a large share of the world's trade as to create 
 a perhaps exaggerated impression of her commer- 
 cial and financial powers and recuperative ability. 
 These facts made even the most conservative 
 pause in determining the amount within her ability 
 to pay. Indeed, there was divergence of opinion 
 even among delegations as to the amount that Ger- 
 many could pay. 
 
 Many doubted the wisdom of collecting too large 
 an amount because of the adverse effect it might 
 have upon the creditor nations, and argued along 
 the following; line : 
 
 *» 
 
 Obviously only a relatively small portion of Germany's 
 debt could be paid out of her then existing resources. The 
 limit of her resources was agreed upon to be not more 
 than $5,000,000,000, including ships, credits, etc. From 
 
 48 
 
Economic Sections of the Treaty 
 
 this amount was to be subtracted the payment for the 
 armies of occupation and amounts necessary for food and 
 raw materials for Germany's rehabilitation. Further pay- 
 ments would have to be earned by the performance of serv- 
 ices for the rest of the world in the form primarily of 
 exports. 
 
 The amount of reparation thus becomes the measure oT 
 service which the world is willing that Germany should 
 render to it. Large reparations could be paid only undef 
 conditions whereby the world affords Germany every en- 
 couragement to render to the balance of the world more 
 service than the balance of the world renders to Germany. 
 It further implies that the Allied and Associated Powers 
 will force the German people to surpass their own in 
 modesty of living, in industry, and in productive energy. 
 Qualities which every Allied Government would desire to 
 inculcate into their own people would be adopted by the 
 German people, thanks to the external coercion which the 
 Allied and Associated Powers would be threatening. 
 
 Germany would become the workshop of the world. Not 
 only would the world's market be opened to the goods made 
 in Germany, but the economic life of the world would neces- 
 sarily adjust itself to the dependence upon German service. 
 Once the reparation period were passed, it would be impos- 
 sible for the economic fabric of the world at once to be 
 readjusted to independence of that service upon which it 
 had long become dependent. Trade would continue to move 
 in its accustomed channels. Now, however, Germany's ex- 
 cess of service to the world would be at a price, with the 
 result that the value of service rendered by Germany as 
 reparation during the next generation would, in large part, 
 be recovered by Germany in succeeding generations, and 
 Germany would dominate the economic movement of the 
 world. 
 
 In the unanimous report of the reparations sec- 
 tion of the Peace Conference, it is stated that large 
 reparation payments will require that Germany 
 
 49 
 
The Making of the Reparation and 
 
 "turn herself into a nation of exporters organized 
 for the purpose of paving the reparation claims 
 of the Associated Governments, * * * The develop- 
 ment by the enemy countries of such a policy as 
 just described may lead to the creation, especially 
 in Germany, of an organization so highly developed 
 and so skillful as to be calculated in the future to 
 have considerable and perhaps unfavorable influ- 
 ence upon the markets of the world." 1 
 
 While the force of the foregoing observations 
 appealed in principle to some, it was natural 
 that the various Allied and Associated Towers 
 should have different practical reactions. France, 
 burdened with debts, with great industrial areas 
 blasted, with man power shattered, was concerned 
 primarily with securing relief during the next gen- 
 eration. In the face of immediate financial and 
 economic problems of extreme gravity, the specter 
 of German economic supremacy thirty years hence 
 did not appear alarming, particularly as France 
 herself had never been a dominant factor in in- 
 ternational trade. 
 
 This attitude of France was largely shared by 
 Italy and Serbia. Belgium, however, was appar- 
 ently more apprehensive of the danger of forcing 
 
 lit was also brought forward that a crushing policy would 
 precipitate an exodus of Germans and a consequent 
 Germanizing of Poland, Russia and the Balkans. This 
 would result in a greater future danger for the Allies 
 than even the menace just passed. A hopelessly 
 burdened Germany, with the attendant social reflexes, 
 was not a pleasant picture for her neighbors and the 
 world in general to contemplate. 
 
 50 
 
Economic Sections of the Treaty 
 
 Germany to organize into a. great industrial ma- 
 chine. Great Britain should logically have been 
 even more apprehensive, as being less dependent 
 upon relief from Germany and as desirous herself 
 to play the principal role . of manufacturer 
 and broker for the world. The English were, how- 
 ever, reluctant frankly to adopt a policy of moderate 
 reparation, which, however much in the real interest 
 of Great Britain, would have involved a direct 
 repudiation of election pledges. 
 
 The United States, while directly involved to a 
 relatively small amount, was interested from the 
 standpoint of stabilizing world conditions. If it is 
 to be a recipient of German reparation payments, 
 it will be only to a comparatively small extent. 
 But unquestionably the industrial and financial de- 
 velopment of the whole world for a long time to 
 come will be largely influenced by the reparation 
 settlement. 
 
 The Americans continually brought forward the 
 necessity of fixing a definite sum. 1 They urged the 
 necessity of doing so because of the needs of the 
 Allies themselves. They urged that money given 
 now and expended would be of greater value than a 
 larger sum received later. They urged the crying 
 need of all the Allied peoples for rehabilitation 
 and readjustment, and the necessity for this pur- 
 pose of a new basis of credit. "What they had in 
 
 Hn an endeavor to compromise the different views, an tin- 
 successful effort was made to fix more definite terms 
 by arranging for a minimum and maximum sum. 
 
 5 51 
 
The Making of the Re pa rat ion and 
 
 mind was the preservation of the economic struc- 
 ture and the saving of Europe from bankruptcy. 
 
 The President and his financial advisers passed 
 days and weeks vainly endeavoring to convince 
 their colleagues in the Allied and Associated Gov- 
 ernments that it was impossible for Germany to 
 pay anything like the sums required under the 
 categories. They further submitted that even if 
 this were possible, the Allied Governments could 
 not afford, and would in time recognize that it was 
 not to their advantage, to exact payments that 
 could be made only at the expense of their own 
 trade. Therefore, in the American view it was to 
 the interest of the Allied and Associated Govern- 
 ments to fix a reasonable, definite amount that 
 Germany could pay and that they could afford to 
 have her pay. 
 
 It is pertinent to point out that at the time in 
 question it was intimated in one quarter that if 
 insistence were made on fixing a definite amount 
 before the Allies had a chance to present their 
 claims and to study and know more fully the ability 
 of Germany to pay — a sum which might prove later 
 on to be less than Germany could pay — the Allies 
 might be in a position where they could put forth, 
 the following claim : 
 
 If you ask us to lessen our claims upon Germany for in- 
 demnity, which she admits she owes, what will you do for 
 the loan made to us for the prosecution of a war which was 
 as much your war as our war, the amount of which clearly 
 exceeds our ability to pay unless we are allowed to get 
 the last possible dollar out of Germany? 
 
 52 
 
Economic Sections of the Treaty 
 
 Of course, it was generally recognized that the 
 indebtedness of the Allies to the United States had 
 no relation to Germany's reparation obligations to 
 the Allies. As a matter of fact, the economic and 
 financial recovery of the Allies, and hence their 
 ability to pay America, would be increased rather 
 than diminished by reducing and fixing Germany's 
 debt at an amount which could be paid and which 
 could be capitalized as a means of obtaining funds 
 therefrom for immediate reconstruction purposes. 
 
 It is interesting to observe that one of the fore- 
 most critics of the treaty and of the President's 
 position upon it, and the one, perhaps, who advo- 
 cates the smallest fixed sum for Germany to pay 
 which has been seriously urged, couples his argu- 
 ment with a provision that the United States shall 
 cancel the entire indebtedness due her from the 
 Allies. Not only so, but he suggested that the 
 United States shall also be guarantor of a new 
 series of bonds to be issued for the rehabilitation 
 of Europe. 
 
 To expect that these problems could receive any 
 wise final solution at the Peace Conference itself 
 discloses a visionary confidence that ignores the 
 complexity of the questions and the difficulty of the 
 conditions under which the peace negotiators had to 
 labor. 
 
 The world demanded and was entitled to ex- 
 pect a prompt formulation of conditions of peace. 
 Final solution of the reparation clauses necessarily 
 had to be deferred. The difficulties were accentu- 
 ated by the need of securing acceptance of the 
 
 53 
 
The Making of the Reparation and 
 
 reparation solution by the affected nations that 
 were to be signatories to the treaty. All of 
 these nations were interested in reparations from 
 varying points of view. 
 
 Furthermore, reparations had become a leading 
 popular and political issue among the European 
 allies. The white heat of war had not yet had time 
 to cool. Reparation was popularly regarded as a 
 measure of moral retribution rather than as an in- 
 dex of future trade, movements. This popular feel- 
 ing could not but influence the peace delegates. 
 
 One must be either ignorant, vicious, or an im- 
 practical idealist to contend that in the forego- 
 ing circumstances it was humanly possible to have 
 found at the Peace Conference a sound, definitive 
 solution of the German reparation problem which 
 would have met with ratification. 1 No one man or 
 group of men is responsible for the conditions 
 which created this situation; they inhered in the 
 character of the war itself and in the war's after- 
 math. 
 
 The American delegates realized at last the in- 
 surmountable obstacles to fixing at that time a rea- 
 sonable amount of reparation. Thus they came to 
 the conclusion that they should not assume the re- 
 sponsibility of objecting to an effort by the Allies 
 
 lEver since the pinning of the treaty the Allies have heen 
 seeking a specific solution, yet without definite success. 
 This will come only after time has helped to cool pas- 
 sions, when calm judgment prevails, and when Ger- 
 many fully realizes that she must meet her obliga- 
 tions. 
 
 54 
 
Economic Sections of the Treaty 
 
 to collect from Germany what she owed them, pro- 
 vided they would agree to certain safeguards 
 against the dangers of such a course. 
 
 The United States, relatively speaking, had no 
 great direct interest in what Germany was to pay, 
 but she had a sincere desire for all nations con- 
 cerned that the world should not be thrown into 
 disorder and its commerce deranged by an attempt 
 to create and collect a debt which could not be paid. 
 
 Because of misrepresentations and misconcep- 
 tions as to the amount that Germany could pay and 
 as to the amounts which she owed, it was impossible 
 to agree upon an amount to be exacted from her. 
 What she could pay was in any event less than t]\e 
 amount that she should pay. The American dele- 
 gates, therefore, consented reluctantly to the pres- 
 ent arrangement. That arrangement is by no 
 means, however, what it is represented to be by the 
 critics, for it offers decided safeguards that they 
 fail to mention. 
 
 The Peace Conference accordingly adopted a pro- 
 visional solution of the question of the amounts to 
 be paid by Germany in succeeding years. The ex- 
 perts of the Allied and Associated Powers were in 
 substantial agreement that the quick, realizable 
 surplus assets of Germany amounted to about 
 15,000,000,000. This figure was accordingly adopted 
 to measure the values which Germany must sur- 
 render by May 1, 1921. 
 
 The value of reparation in kind — namely, ships, 
 coal, reconstruction material, etc., — made prior to 
 this date, is accounted as a credit toward the sum. 
 
 55 
 
The Making of the Reparation and 
 
 The sum is likewise inclusive of amounts to be paid 
 by Germany toward the expenses of the armies of 
 occupation. Further flexibility is given to this par- 
 ticular reparation clause. It is in the power of the 
 Reparation Commission to permit Germany to de- 
 duct from the $5,000,000,000 the necessary funds 
 to pay for such food and raw materials as the Re- 
 paration Commission deems necessary to be im- 
 ported into Germany. 
 
 The question of further payments by Ger- 
 many is left unsettled, but with a direction 
 that it be determined by May 1, 1921. The power 
 to fix this amount is vested in the Reparation Com- 
 mission. To this commission the Peace Conference 
 sought to give those attributes that the Peace Con- 
 ference itself had lacked but which were recog- 
 nized as essential to an intelligent solution of the 
 reparation problem. 
 
 The Reparation Commission. 
 
 The character and powers of the Reparation 
 Commission may be outlined as follows : 
 
 (1) The Reparation Commission is compact in character. 
 Provision is made for five delegates to be named respectively 
 by Great Britain, France, Italy, the United States, and Bel- 
 gium, the latter, when shipping matters are under discus- 
 sion, being replaced by Japan, and when Austrian, Hungar- 
 ian, and Bulgarian questions are being considered, replaced 
 by the Kingdom of the Serbs, Croats, and Slovenes. The 
 commission is thus from the standpoint of membership a 
 practicable and workable body. 
 
 (2) The Reparation Commission is invested with broad 
 power. It is appointed as agent of all the Allied and Asso- 
 
 K 
 
 6 
 
Economic Sections of the Treaty 
 
 ciated Powers for the purpose of collecting reparations, and 
 is given general control and handling of the entire repara- 
 tion problem. In particular it has the power to fix the 
 amount of reparation for which Germany is liable. Possibly 
 the most unusual power which the commission possesses is 
 that of interpreting conclusively the reparation provisions 
 of the treaty. The commission may thus override tech- 
 nical difficulties and inconsistencies of expression. Indeed, 
 it is invited to treat the reparation clauses of the treaty in 
 a practical business-like way with disregard, if need be, of 
 legal and diplomatic technicalities. 
 
 (3) The Reparation Commission is afforded time to study 
 maturely the problems upon which it must pass, although, 
 on the other hand, it must act with reasonable diligence. By 
 May 1, 1921, when Germany's first installment has been 
 paid, the Reparation Commission must have determined 
 the amounts, dates, and methods of future payments. Even 
 this solution may, however, be subsequently adjusted if 
 events should prove it to be unworkable. 
 
 Decisions of the Eeparation Commission are not 
 "revisions'' of the treaty. Any such revision would 
 require resubmission of the treaty and its approval 
 by new parliamentary ratifications. The decisions 
 of the Reparation Commission are executory with- 
 out action by any government, except in the case of 
 reducing or canceling the amount of the debt or of 
 certain postponements. 
 
 The general power and discretion vested in the 
 Reparation Commission cannot, however, be exer- 
 cised arbitrarily. Certain fundamental principles 
 are established for the guidance of the Reparation 
 Commission. 
 
 The first, and perhaps the most important, of 
 these principles, is that reparation is to be collected 
 
 57 
 
The Making of the Reparation and 
 
 with due regard to the economic life of Germany. 
 One of the weightiest matters that confronted the 
 Peace Conference was whether the Allied right to 
 reparations should be used to destroy Germany 
 economically. 
 
 Obviously such destruction would of itself limit 
 the amount of reparation obtainable. One can- 
 not eat his rake and have it too. But there 
 were many who preferred to see Germany crip- 
 pled economically even at the expense of fu- 
 ture reparations. This view did not prevail, 
 and one of the reiterated instructions to the 
 Reparation Commission is that it shall have 
 due regard for the economic life of Germany. The 
 coal options are to be enforced only with regard to 
 the industrial needs of Germany (Par. 10, Annex 
 V). Reconstruction material is to be demanded 
 only in relation to the industrial life of Germany 
 ( Tar. 4, Annex IV). In their interpretive note to 
 Germany of June 1G, 1910, the Allied and Asso- 
 ciated rowers made the following declaration: 
 
 The resumption of German industry involves access by the 
 German people to food supplies, and by the German manu- 
 facturers to the necessary raw materials and provision for 
 their transport to Germany from over-seas. The resumption 
 of German industry is an interest of the Allied and Asso- 
 ciated Powers, as well as an interest of Germany. They are 
 fully alive to this fact and therefore declare that they wiM 
 not Avithhold from Germany commercial facilities without 
 which this resumption cannot take place, but that, subject 
 to conditions and within limits, which cannot be laid down 
 in advance, and subject also to the necessity for having 
 due regard for the special economic situation created for 
 
 58 
 
Economic Sections of the Treaty 
 
 Allied and Associated countries by German aggression and 
 the war, they are prepared to afford to Germany facilities 
 in these directions for the common good. 
 
 The foregoing declaration contemplated in par- 
 ticular the temporary retention by Germany of cer- 
 tain ships to carry essential imports until new Ger- 
 man construction could meet this need. 
 
 Before passing on any question involving Ger- 
 many's capacity of payment, the Reparation Com- 
 mission is required to give Germany adequate op- 
 portunity to be heard (Par. 9, Annex II). The 
 only defaults by Germany which subject her to 
 penalty and retaliatory action are wilful defaults 
 (Par. 18, Annex II, and Article 430). 
 
 A second great guiding principle established as 
 an instruction to the Reparation Commission is that 
 the performance of reparation by Germany should 
 be limited to the period -of one generation — i. e., 
 thirty years from May 1, 1921. 
 
 It may be true that the financial burdens 
 of the war cannot be liquidated in one gen- 
 eration. Nevertheless, these financial burdens 
 differ radically from reparation obligations that 
 might involve a certain subjection to foreign 
 control. It did not seem either equitable or wise to 
 extend the latter type of obligation beyond the 
 period of the generation which could be charged 
 with a share in the moral responsibility of the war. 
 
 From a practical standpoint, the present capital 
 values of a sum payable without interest after 
 thirty years is very small. To have required in- 
 terest payments on sums due after thirty years 
 
 59 
 
The Making of the Reparation and 
 
 would have meant the practical impossibility of 
 ever discharging the principal of the debt. 
 
 The essential spirit underlying the reparation 
 settlements is thus aptly described in the following 
 sentences from the Allied and Associated note to 
 Germany above referred to : 
 
 The vast extent and manifold character of the damage 
 caused to the Allied and Associated Powers in consequence 
 of the war has created a reparation problem of extraordi- 
 nary magnitude and complexity, only to be solved by a 
 continuing body, limited in personnel and invested with 
 broad powers to deal with the problem in relation to the 
 general economic situation. The Allied and Associated 
 Powers, recognizing this situation, themselves delegate 
 power and authority to a Reparation Commission. This 
 Reparation Commission is, however, instructed by the treaty 
 itself so to exercise and interpret its powers as to insure, 
 in the interest of all, an early and complete discharge by 
 Germany of her reparation obligations. It is also instructed 
 to take into account the true maintenance of the social, 
 economic, and financial structure of a Germany earnestly 
 striving to exercise her full power to repair the loss and 
 damage she has caused. 
 
 A careful analysis can but sustain the above quo- 
 tation. It is frequently asserted that the repara- 
 tion clauses are "impossible" of performance. Such, 
 statement is fallacious, because it is provided that 
 any demonstrated incapacity of execution in itself 
 excuses lack of performance. As noted, no penalty 
 is stipulated except for the execution of those obli- 
 gations u-hich Germany can, but toil fully refuses, 
 to perform. 
 
 There is not an important reparation demand 
 made upon Germany which cannot be adjusted 
 
 CO 
 
Economic Sections of the Treaty 
 
 under the treaty to meet Germany's needs and 
 capacity. It is true that this creates a regime 
 of some uncertainty, entailing economic disad- 
 vantages. The machinery, however, is established 
 whereby this uncertainty can and should be rapidly 
 dissipated under conditions far more conducive to 
 a wise settlement than those which prevailed dur- 
 ing the first four months of 1919. 
 
 Unfriendly critics charge that the Reparation 
 Commission will be an instrument of oppression. 
 That is the extreme German view. 1 The American 
 delegates who took part in the drafting of the 
 reparation clauses believe that the representatives 
 of the other nations who participated in preparing 
 the reparation settlement meant to be just. The 
 Americans are convinced that in the execution of 
 the reparation clauses justice and wisdom will pre- 
 vail. Interests both selfish and humane will de- 
 mand this outcome. 
 
 German Bonds. 
 
 While the ultimate amount to be paid by Ger- 
 many was thus left to the judgment of the Repara- 
 tion Commission, the Allies desired to have in their 
 hands certain evidences of indebtedness issued by 
 
 Ht is claimed that Germany and future generations of Ger- 
 mans will have to bear a great burden. This is true, 
 and it is justly true. While Germany should not be put 
 to impossible tasks, her burden certainly should be no 
 less, but logically and in justice should be greater 
 than that of the nations and peoples whom she has 
 wronged. 
 
 61 
 
 
The Making of tlic Reparation and 
 
 Germany. Such evidence might be available for 
 realization for some immediate credit, and would 
 correspond roughly with the provisional estimates 
 as to Germany's capacity to pay. The bonds rep- 
 resenting this evidence could not be put into cir- 
 culation until the Reparation Commission unani- 
 mously so determined. It was accordingly provid- 
 ed that Germany upon the coming into force of the 
 treaty should issue to the Reparation Commission 
 certain bonds. These bonds are of four issues. 
 
 The first is an issue of 20,000,000,000 gold marks 
 payable May 1, 1921, without interest. These 
 bonds correspond to and will be discharged in part 
 by the $5,000,000,000 (20,000,000,000 gold marks), 
 which as above described was fixed as the amount 
 that it was estimated Germany should be able to 
 raise in the immediate future principally out of 
 accumulated assets. Of this $5,000,000,000, part 
 might be used to pay for the expenses of the 
 armies of occupation, and part for essential food 
 and raw material imports. But it is stip- 
 ulated that if the initial payment does not suf- 
 fice to discharge the full 20,000,000,000 marks of 
 bonds due May 1, 1921, the balance shall be car- 
 ried forward and converted into bonds of a later 
 (the third) series due in 1951. 
 
 The second issue of bonds is to cover the war 
 costs of Belgium. The amount of these bonds has 
 not been definitely fixed, but it will be about 1,000,- 
 000,000 gold marks to fall due on May 1, 192C. 
 
 The third series of bonds is to the amount of 
 40,000,000,000 gold marks ($10,000,000,000) bear- 
 
 62 
 
Economic Sections of the Treaty 
 
 ing interest at 2y 2 per cent, from 1921 to 192G and 
 5 per cent, thereafter with 1 per cent, for amortiza- 
 tion. This, it was estimated, would retire the 
 bonds in about 1951 or in the thirty-year period 
 fixed as the period for Germany's reparation 
 obligations. 
 
 There is a contingent agreement to issue a fourth 
 series of bonds for another installment of 40,000,- 
 000,000 gold marks. These bonds, however, can- 
 not be issued until the Reparation Commission is 
 satisfied that Germany can meet the interest and 
 sinking fund obligations on this and on the second 
 and third series of bonds. 
 
 Further issues by way of acknowledgment and 
 security may be made as the commission subse- 
 quently determines from time to time. 
 
 Additional safeguards are thrown around these 
 bond issues by the provision that it requires the 
 unanimous consent of the Reparation Commission 
 to determine the amount and conditions of bonds 
 or other obligations to be issued by the German 
 Government. The same consent is required to fix 
 the time and manner for selling, negotiating, and 
 distributing such bonds. 
 
 It is sometimes asserted that by these bond pro- 
 visions the treaty has already fixed an amount to 
 be paid by Germany that is beyond her capacity, 
 and that thus the treaty is "impossible of fulfill- 
 ment" and must be "revised." This contention 
 ignores many essential facts. The aggregate of 
 bonds to be delivered without further affirmative 
 action of the Reparation Commission is about 
 
 G3 
 
The Making of the Reparation and 
 
 $16,000,000,000. Of this sum, $5,000,000,000, or 
 as much of this sum as possible, is to be discharged 
 by the initial payment and by various credits pro- 
 vided for by the treaty. This would leave $11,000,- 
 000,000 of bonded indebtedness plus whatever part 
 of the §5,000,000,000 is not discharged as stated 
 above. 
 
 These bonds are delivered to the Reparation 
 Commission merelv as "security and acknowledge 
 ment" for the payment of the amount which will 
 ultimately be fixed. Without unanimous action 
 of the Reparation Commission, they cannot be ne- 
 gotiated or distributed. They in no sense involve 
 a final pre-judgment of the amount Germany will 
 in the end be called upon to pay. Even if they did, 
 the amount is subject to cancellation or diminu- 
 tion. 1 Irrespective of those bond provisions, the 
 amount of Germany's liability remains open for 
 fixation in accordance with the cooler judgment of 
 the Governments represented in the Reparation 
 Commission. 
 
 The German Attitude Toward Reparation. 
 
 The reparation clauses were in substantially 
 the form that has been described when the 
 treaty was handed to the German peace dele- 
 gation, which was given the opportunity to 
 present its observations thereon. The German 
 comments, which were very lengthy, were de- 
 
 lThis requires the unanimous consent of the Governments 
 represented on the Reparation Commission. 
 
 64 
 
Economic Sections of the Treaty 
 
 voted in large part to criticism of the supposed 
 excessive and inquisitorial powers of the Repara- 
 tion Commission. The reply did, however, contain 
 an express recognition of Germany's willingness to 
 assume all damage and war costs that had fallen 
 upon Belgium as a result of the violation of Bel- 
 gium's neutrality. It also contained Germany's 
 recognition of obligation to make good the devasta- 
 tion caused in France. The Germans further made 
 a definite proposal for fixing the amount of their 
 liability. The sum proposed by Germany was 100,- 
 000,000,000 gold marks payable without interest. 
 Of this sum 20,000,000,000 marks was to be paid by 
 May 1, 1026. Hut against this sum Germany de- 
 manded as credits not merely the items which were 
 provided as credits in the conditions of peace, but 
 also the value of war material delivered under the 
 armistice terms, the value of public property in 
 ceded territory, and a proportionate part of the 
 German public debt (including war debt), which 
 could be attributed to ceded territory. 
 
 The remaining 80,000,000,000 marks would be 
 paid thereafter in annuities, not exceeding 1,000,- 
 000,000 gold marks per annum for the first ten 
 years. At the end of ten years the amount of annu- 
 ities was to be arrived at by a mutual agreement. 
 This German offer as a whole was further condi- 
 tioned on Germany receiving certain concessions in 
 respect of other economic terms of the treaty. 
 
 The American delegates recognized that the Ger- 
 man offer as made could scarcely be regarded as 
 satisfactory, particularly on account of the numer- 
 
 65 
 
The Making of the Reparation and 
 
 OUS credits and conditions that Germany de- 
 manded. It was likewise unsatisfactory because 
 of the low amount of the annuities suggested, 
 which would have deferred final payment for 
 many years, and thus greatly reduce t ho present 
 capital value of the sum offered. The Americans 
 did feel, however, that the German offer was 
 sufficiently substantial to afford hope that some 
 satisfactory: definite sum might bo arrived at. Ac- 
 cordingly, the American delegation, with the au- 
 thorization of the President, again renewed its 
 efforts to induce the Allies to fix by the treaty the 
 final amount which Germany would be required to 
 pay, and it again presented the arguments show- 
 ing the advisability ami wisdom of such action. 1 
 
 With reference io the German counter-proposal 
 concerning reparation, the following verbatim 
 memorandum shows the line of reasoning of the 
 American delegation at that time and the argu- 
 ments presented to the conferees: 
 
 June 3, 1919. 
 
 (1) The Gorman counter-proposal offering, subject to 
 various credits payments to aggregate 100 milliards of 
 
 iThe Americans, with the approval of the President, made 
 an effort to arrange a meeting with the German eco- 
 nomic advisors for the purpose of discussing repara- 
 tlonal and economic matters. In this effort they were 
 supported generally by tbe economic and business ad' 
 visers of the various governments. The military ad- 
 visors almost without exception were opposed to this 
 meeting. But it was impossible to obtain the unani- 
 mous support of the leaders of state. 
 
 66 
 
Economic Sections of the Treaty 
 
 marks sold, raises the question of whether a determined 
 effort should not again be made to fix Germany's reparation 
 liability in terms of definite figures. 
 
 (2) The American reparation delegates have always 
 been unanimous in the belief that the treaty should fix a 
 definite sum for Germany to pay. The considerations ad- 
 vanced by the German reply in favor of a fixed sum are not 
 new in themselves, but are reinforced by a comprehension, 
 daily becoming clearer, of the critical financial situation 
 of Europe. 
 
 (3) There have been but two principal arguments against 
 the fixation of a definite sum — namely: 
 
 (a) It is impossible to tell today just how much Germany 
 might be able to pay within the next generation. A mis- 
 calculation might release Germany, at heavy cost to the 
 Allies, from a just liability which, it would subsequently 
 develop, Germany was fully capable of discharging. Ger- 
 many's liability should, therefore, be expressed elastically, 
 so as to insure the utilization of Germany's full future 
 capacity of payment to make good the almost unlimited 
 damage caused by her. 
 
 (b) The political situation among the Allies is so un- 
 settled, and the popular expectation of relief by payments 
 from Germany runs so high, that it might have serious 
 political consequences to name definitely Germany's lia- 
 bility. Even the highest figure which has been considered 
 would disappoint popular expectations. 
 
 (4) With respect to the latter argument, it may be ob- 
 served that the financial and economic situation of Europe 
 is so serious that no government would adopt, merely as a 
 matter of domestic politics, a policy which is not defensible 
 on its merits. The only political consequences to be taken 
 into account are those relating to the stability of govern- 
 ment in general. It is conceivable that a severe popular 
 
 6 67 
 
The Making of the Reparation and 
 
 disillusionment at this time might lead to social unrest, 
 which would have really serious national and international 
 consequences. It seems far more probable that to continue 
 to perpetuate uncertainty as to the amount of Germany's 
 payments will merely postpone an awakening- until a time 
 when the situation may be even more critical. In the inter- 
 vening period the people will not have exerted their fullest 
 efforts to aid themselves, as would have been the case had 
 they earlier realized their real situation. 
 
 (5) With regard to the argument that there is danger 
 today of underestimating Germany's capacity to pay. it 
 may be said that this risk is perfectly real and fully recog- 
 nized. It is. however, a risk which must be balanced against 
 the risk of attempting to secure from Germany more than 
 she can pay, or adopting a procedure which destroys Ger* 
 many's incentive to pay. Of the two risks the latter is 
 infinitely the more serious. To seek too much jeopardizes 
 the whole; to obtain too little involves only the loss of the 
 difference between what is, and what might have been. paid. 
 
 (6) It is further to be observed that what the world 
 requires, and requires immediately, is a new basis of credit. 
 A dollar today is probably worth two dollars five years from 
 now. A definite obligation assumed by Germany, under 
 conditions which warrant us in believing that Germany 
 herself has the will and believes she has capacity to dis- 
 charge such obligation, will servo as an immediate basis of 
 credit. A far larger amount assumed under equally satis- 
 factory conditions eighteen months from now would not 
 begin to have the same practical value. Also a la 
 amount imposed today at the point of the bayonet and in 
 the face of declarations by Germany (which will be ac- 
 cepted by conservative persons throughout the world) that 
 the sum is far in excess of her capacity, would prove of 
 little or no value as a basis of credit. 
 
 (7) The present reparation plan is, in our opinion, open 
 to the serious objection that it may, in practice, operate to 
 
 6S 
 
Economic Sections of the Treaty 
 
 destroy economic incentive on the part of the present genera- 
 tion in Germany. Germany is set a task without end, and 
 the more she labors the more will be taken from her. 
 Furthermore, little is obtainable under the plan in the im- 
 mediate future, aside from deliveries of bonds, which will 
 not command the confidence of investors because, among 
 other things, they may be followed by an indefinite amount 
 of similar bonds. And it will be in the interests of Germany 
 herself to destroy popular confidence in the initial install- 
 ments of bonds taken from her, as once these bonds acquire 
 any marketable value, still further issues will be taken 
 from Germany. 
 
 (8) Europe's need is immediate. Any substantial delay 
 in securing from Germany an obligation having a substan- 
 tial present value may involve consequences which will 
 approach a disaster. The risks involved in delay far out- 
 weigh the difference between such definite sum as might be 
 fixed today and the most optimistic estimates which have 
 been made as to Germany's capacity. 
 
 (9) We therefore strongly recommend that the oppor- 
 tunity offered by Germany's counter-proposal be taken ad- 
 vantage of to fix a definite obligation which Germany will 
 assume in a manner at least semi-voluntary. The German 
 people can then be left free from the continuing interference 
 and control of the Reparation Commission to work out their 
 own problem in their own way. Under such conditions there 
 is every reason to believe that the German people will again 
 become a stabilizing, productive, and constructive factor in 
 the world's economy. 
 
 (10) To secure acceptance by Germany of a high figure, it 
 may be necessary to leave Germany a certain amount of 
 working capital and sufficient shipping to meet her domestic 
 requirements. This, in principle, we are prepared to 
 recommend. 
 
 69 
 
The Maling of the Reparation and- 
 
 At one time it appeared as if the American efforts 
 would come to a successful termination. 1 But al- 
 though some changes were made 1 in other sections of 
 the treaty as a result of the German reply, a sud- 
 den fear seized some of the Allies that too great 
 changes might be brought about. The Americans 
 were, therefore, unable to make the reparations 
 more definite. Every other delegation solidly and 
 stolidly refused io move. If at that time there was 
 one apparently unanimous opinion among the dele- 
 gates of the Allied and Associated Powers, it was 
 that the reparation clauses should stand as made. 
 Thev felt that they had already made a tremendous 
 concession in limiting their claims to reparation 
 in such a way as to exclude war eosts. To rix a 
 sum before examination of the facts was to them 
 like giving Germany a quit-claim in the dark. 
 
 Where questions of principle were involved, and 
 particularly the conditions of the pre-armistice 
 agreements, the American delegation, under the 
 leadership of President "Wilson, could and did take 
 
 iThe American delegation was particularly encouraged as 
 the result of a conference of the members of the British 
 cabinet called by the Prime Minister to consider the 
 German reply. It is understood that some of the 
 cabinet members were inclined to make changes in 
 various parts of the Treaty along the line of the Amer- 
 ican contention. Some changes were made, but the 
 support expected by the Americans for the fixing of a 
 definite sum was not forthcoming. Obviously, certain 
 present-day critics have either not been in possession of 
 these facts or, possessing them, have misinterpreted 
 them. 
 
 70 
 
Economic Sections of the Treaty 
 
 a definite position. It refused to make compromises 
 which would have involved a departure from a fair 
 construction of the pre-armistice terms. Once, 
 however, these questions of principle had been set- 
 tled, and the basis for determining Germany's 
 debt had been fairly arrived at, the question of 
 letting Germany off with less than she owed was a 
 matter of expediency and not of principle. In this 
 question the final word necessarily had to rest with 
 the creditor nations, of which the United States 
 was not one of outstanding importance, so far as 
 financial claims were concerned. 
 
 The most that the American delegation could do 
 Avas to urge upon its associates, in their own and in 
 the whole world's interest, the necessity and prac- 
 tical wisdom of fixing Germany's liability. When, 
 however, they were not persuaded, the American 
 delegation felt that it had done all that it properly 
 could do in the circumstances. To have adopted 
 any other course and to have insisted as a matter of 
 right that creditors of Germany should waive in 
 part their admittedly just claims against Germany 
 might have encouraged the effort to re-open the 
 Avhole question of Interallied indebtedness and re- 
 financing. 
 
 I refer here to the proposition brought forward 
 to the effect that bonds for part of the repara- 
 tions to the value of £1,800,000,000 ($9,000,000,- 
 000) as from January 1, 1925 (the date from which 
 they bear interest), should be issued by enemy 
 states or by certain states acquiring enemy ter- 
 ritory. The proposition further provided that 
 
 71 
 
The Making of the Reparation and 
 
 these bonds should be guaranteed by the prin- 
 cipal Allied and Associated Governments, by the 
 three Scandinavian Governments, and by the Gov- 
 emments o( Holland and Switzerland. 
 
 It was proposed under this scheme that the Tint- 
 ed States should guarantee 20 per cent. o( the issue. 
 In the event of any of the guarantor Governments 
 failing to meet their guarantees, the remaining 
 guarantor Governments might be obligated to 
 double their original proportionate share. That 
 might have made it necessary for the United States 
 to guarantee 40 per rent., or about $3,450,000,000. 
 No serious consideration was ever given to this plan. 
 Bnt it is evidence of an attitude on the part of 
 others which would have been strengthened if 
 through our insistence a fixed definite sum had 
 been made before the Allies had had an opportunity 
 ;o examine all of the matters ami had come to the 
 conclusion of the necessity in their own interest 
 of fixing this definite sum. 'While these arguments 
 may not have been tenable, it can easily be per- 
 ceived that they might have been embarrassing. 
 
 The conditions of peace, in so far as they 
 related to reparations, were not modified as a 
 result of the German observations. The Allied 
 reply contented itself with explaining a number of 
 points with reference to the powers o( the Repara- 
 tion Commission, which had been misunderstood by 
 the Germans. Ft was thought by the American 
 delegation that the elastic provisions in the repara- 
 tion clauses afforded instrumentality whereby, 
 when the world came to a liberal view of its situa- 
 
 72 
 
Economic Sections of the Treaty 
 
 lion, :i definite, reasonable sum could be arrived 
 at which would be to the advantage of the creditor 
 ii;i( ions. 
 
 This view is being justified by the various 
 conferences that have been and are now (July, 
 1920), taking place, at which discussions have 
 been ami are revolving around the fixing of a def- 
 inite sum. Belief in the elasticity of the coal 
 clauses lias been justified by the action taken modi' 
 fying the deliveries of coal to meet the situation. 
 
 Doubtless, any one of the Allied and Associated 
 nations might itself have negotiated a separate 
 treaty with Germany, which <o the nation concerned 
 would be more satisfactory than the treaty actually 
 signed. It should be borne in mind, however, that 
 the immediate and grave danger that faced the 
 world after the conclusion of the armistice with 
 Germany and that faced all those at the Peace 
 Conference was that the tweul v-seven nations com- 
 prising the Allied and Associated Towers could not 
 agree among themselves. 
 
 The present relation be! ween Italy and the King- 
 dom of the Serbs, Croats, and Slovenes with regard 
 to Flume illustrates how readily the Allied and 
 Associated Towers might have become broken 
 among themselves. If, estranged from one an- 
 other, they had left the Peace Conference with- 
 out an agreed basis for their future relations, 
 an appalling situation would have resulted, and 
 a period of world-wide chaos would have been in- 
 augurated. 
 
 An important date in the history of the world is 
 
 73 
 
The Making of the Be pa rat ion and 
 
 May 7, 1910, when the Allied and Associated Powers 
 finally agreed among themselves on the conditions 
 
 of the future peace. This agreement was reached 
 j and a solution found only through a spirit of mu- 
 tual concession. History will judge whether the 
 leaders who made the necessary concessions were 
 wise and had a just appreciation of international 
 values. For each nation to have insisted upon a 
 treaty which embodied exclusively its own ideals 
 and promoted exclusively its own national inter- 
 ests would have involved separate and conflicting 
 treaties of peace. This would have divided the 
 world into many hostile camps and precluded any 
 harmonious co-operation in the scheme of repara- 
 tion and in the rehabilitation of the world. 
 
 This volume goes to press as the Allies have con- 
 cluded a conference with the Germans at Spa, The 
 
 deliberations there showed the impossibility of 
 having arrived at a perfect solution of reparations 
 in the Taris conference. It is becoming increasingly 
 plain that the reparation clauses were framed to 
 make possible a successful future solution of the 
 problems involved. 
 
 As the needs of the Allies are better understood, 
 as Germany's ability to pay is more definitely dis- 
 closed, as her willingness to meet her obligations 
 is increasingly manifested, and, above all, as the 
 anger and hatred engendered by the war cool, a 
 wiser solution becomes possible. The final outcome 
 
 74 
 
Economic Sections of the Treaty 
 
 must carry with it the sanction of a public opinion 
 awakened to the needs of the world. The machinery 
 of the Reparation Commission awaits this aroused 
 opinion. 
 
DRAWING THE ECONOMIC CLAUSES 
 
II. 
 
 Drawing the Economic Clauses. 
 
 The outbreak of the war disrupted all business 
 and all social relations between nationals 1 of the 
 belligerent states. One of the problems with which 
 the Peace Conference had to deal was the re-estab- 
 lishment of these relations on a satisfactory basis. 
 
 The framers of the economic clauses were faced 
 with the same conditions and enshrouded in the 
 same atmosphere that I have endeavored to depict in 
 the opening pages of this book. Each nation, with 
 its destroyed or crippled business, felt that it was 
 entitled to special treatment in order that it should 
 be placed in a position to carry its burdens and take 
 its former place in the world's trade. Practically 
 the whole industrial life of the Allies had been con- 
 verted from a peace to a war footing. To convert it 
 back from war to peace and to reestablish financial 
 arrangements and trade routes would require time. 
 
 In addition, the Allies saw in front of them a Ger- 
 many with machinery and factories intact and 
 ready immediately to get into competition for the 
 world's market. The unfair trade practices of Ger- 
 many had sunk deeply into the minds and hearts of 
 the Allies, who were determined that, at least for 
 a transition period, until they were able to get 
 on their fret, these 1 practices should not be renewed. 
 
 1A general term meaning citizens or subjects. 
 
 79 
 
The Making of the Reparation and 
 
 The Allied delegations particularly and forcibly 
 alleged that the German differential or discrimina- 
 tory tariff had been used as a definite weapon of 
 commercial aggression and that in discussions in 
 Germany respecting the tariff it was often referred 
 to as a means of imposing Germany's will upon 
 other nations. Furthermore, they asserted that Ger- 
 many had so quickly mastered such a huge share of 
 the world's trade that there was a great danger to 
 the Allies that if Germany were left free to use her 
 previous methods, they would soon be economically 
 crushed unless at least a temporary relief was given 
 from the use of such methods. 
 
 It was with much difficulty that the Allies were 
 convinced against their desire and what they be- 
 lieved to be the necessity of placing permanent and 
 very severe restrictions upon Germans and German 
 trade. In the end, however, the restrictions or pro- 
 hibitions that were imposed are only temporary and 
 transitory, are no real hardship upon Germany, and 
 are justifiable in all the circumstances. 
 
 In passing it may be said that it was always the 
 Americans who had to take the lead in arguing 
 against extreme measures. As can be imagined, this 
 was by no means an agreeable posit ion. Any appar- 
 ent restrictions are in no sense a measure of the 
 original demands. Repeatedly it had to be brought 
 to the attention of all concerned that a crippling of 
 the industries of Germany would prevent the pay- 
 ment of any large sum of reparation and was con- 
 trary to the spirit of the terms set for peace. But 
 at all times one was forcibly struck with the spirit 
 
 SO 
 
Economic Sections of the Treaty 
 
 of fairness and conciliation of the various delega- 
 tions. There was a general desire to give up as far 
 as possible for the common good what appeared to 
 each delegation to be just and necessary demands. 
 Many subjects in dispute were left to the decision 
 of the American representatives. 
 
 At an early stage of the conference the Eco- 
 nomic Drafting Committee, composed of one rep- 
 resentative of each of the five great Powers, was 
 appointed for the purpose of recommending to the 
 conference economic measures for incorporation 
 into the treaty. 
 
 This task, while perhaps loss conspicuous than 
 that entrusted to the Reparation Commission, was 
 probably of equal importance. It embraced the 
 work of laying the foundations for the re- 
 newal of private business and public and pri- 
 vate intercourse generally between the two sets 
 of enemy countries. The stipulations ultimate- 
 ly framed for this purpose doubtless affect di- 
 rectly a larger number of persons in the activities 
 of their daily lives than do any other provisions of 
 the treaty. They are concerned witli private busi- 
 ness and private property rights of nationals of 
 the belligerent countries and with commercial and 
 social relations and treaty arrangements to which 
 these countries were parties before the war. 
 
 The Economic Drafting Committee was composed 
 of Mr. Bernard M. Baruch, representing the United 
 States; Mr. Georges Clementel, Minister of Com- 
 merce of France; Sir Hubert Llewellyn Smith, 
 permanent secretary of the British Board of Trade : 
 
 81 
 
The Making of the Reparation- and 
 
 Mr. Crespi, representing Italy; and Mr. Ivenejo 
 Tatsumi, representing Japan. 
 
 The committee divided its discussion under two 
 broad heads : 
 
 First, that of transitory measures covering a 
 period of rehabilitation following the war; and, 
 second, that of the re-establishment of relations 
 broken off by the outbreak of the war. 
 
 The subject of transitory measures involved not 
 alone temporary prohibitions against discrimina- 
 tory practices of Germany, but the question of the 
 allocation among nations of raw material for a 
 short period until the former belligerent countries 
 could have an opportunity to readjust themselves. 
 Proposals concerning these measures were based in 
 large part upon the so-called Paris Economic Con- 
 ference, which had looked forward to an economic 
 alliance among the Allies and a boycott of Germany 
 after the war had closed. The United States, of 
 course, was not a party to the Paris Economic Con- 
 ference, and at the time the intent of this confer- 
 ence was not concurred in by America. 
 
 The discussion of transitory measures contem- 
 plated among other tilings a division of raw mate- 
 rials by the interested nations. The American 
 representative soon convinced the others that so far 
 as the United States was concerned the development 
 of such a scheme was not practicable and was at 
 variance with the terms of the armistice. He made 
 clear in particular the obstacles of dealing with do- 
 mestic questions of this kind which were, so far as 
 the United States was concerned, matters peculiarly 
 
 82 
 
Economic Sections of the Treaty 
 
 within the province of Congress. As being indica- 
 tive of the possible attitude of Congress, lie called 
 attention to its action at an earlier date in refusing 
 to grant a credit of $1,500,000,000 for the purchase 
 of raw materials in America for the benefit of 
 Allied countries. 
 
 The French particularly were very insistent 
 upon the adoption of the proposed transitory 
 measures and urged them vigorously, not only be- 
 fore the drafting commission and the economic com- 
 mission, but also before the Supreme Economic 
 Council. While the position of the several coun- 
 tries was appreciated, the American representatives 
 in all three of these bodies took an unequivocal 
 stand against these proposals, except Avith regard 
 to certain measures for food relief. They felt that 
 the action advocated should be undertaken through 
 private rather than through public instrumental- 
 ities. 
 
 Another question which was discussed to some 
 extent was the advisability of limiting the amount 
 of materials that might be permitted to go into 
 Germany as compared with other countries. The 
 idea underlying suggestions with respect to this 
 matter was to give the Allied and Associated 
 countries for a temporary period an advantage over 
 Germany iu the supply of raw materials. Pro- 
 posals of this kind were opposed by the American 
 and other representatives on the ground that an 
 economic war should not be conducted against 
 Germany after the conclusion of peace. Such pro- 
 posals, apart from their being regarded as wrong 
 
 7 83 
 
The Making of the Reparation and 
 
 in principle, of course would necessitate negotia- 
 tions respecting questions involving matters of 
 domestic concern and would require Congressional 
 action for their consummation. 
 
 With reference to the subject of economic co- 
 operation, it is only fair to state the position of 
 some of the delegations in order to show the con- 
 ditions which were forcing them to ask for such 
 co-operation which they felt in all justice they were 
 entitled to. 
 
 There had been great industrial co-operation 
 during the war. This was becoming more definite 
 and more perfected as (lie war went on. Not alone 
 Mas there a single command in (he field and on the 
 sea, but we were gradually headed toward a cen- 
 tral command, under American leadership, of the 
 s1 rategy behind the line controlling the material re- 
 sources of the world, of which there was continuing 
 mobilization for the purposes of the war. This 
 mobilization of the industrial resources of the 
 world achieved such good results that the Allies 
 believed the co-operation should be continued for 
 a period of readjustment and rehabilitation. 
 
 There is very little general knowledge of the 
 extent to which this great industrial co-ordination 
 had taken place. Not alone had there been a 
 mobilization of the resources of America, but the 
 United States and the Allies in their efforts to ob- 
 tain success in the war had reached beyond their 
 own borders. Through international co-ope ration 
 they were commencing to control the production, 
 allocation, and prices of many things throughout 
 
 84 
 
Economic Sections of the Treaty 
 
 the world, even of those things not produced within 
 their own territories. This control was working so 
 smoothly and to such general satisfaction that the 
 Allies desired its continuation at least for a short 
 period of reconstruction. 
 
 The American representative contended that the 
 control should end with the war, and that with 
 peace there should be a restoration of personal 
 initiative. As a matter of fact such control could 
 not be continued without special Congressional 
 legislation, to which the American representatives 
 thought Congress and American producers would 
 very properly be opposed. The control that had 
 been in effect during the war was more or less 
 voluntary, and born of the need of the hour. 
 
 The following is the substance of a brief general 
 statement by a French representative of the French 
 position with regard to the necessity of economic 
 relief and co-operation : 
 
 It was not only a part of Fiance that was devastated, but 
 the whole, for the whole of France had been turned over 
 to war purposes. There was a lack of stability in France 
 that had been brought about by a state of war for four and 
 a half years. One tenth of the territory of France had been 
 invaded by the enemy and destroyed, this being the region 
 wherein lay the deposits of iron, coal, etc. France was 
 obliged to import many times as much as she formerly did. 
 All of her exports had been suppressed and no distinction 
 could be made between France's devastated areas and 
 France as a whole. The entire country had been thrown 
 out of joint by the war. 
 
 Aii extemporaneous statement of an Italian r. p- 
 
 83 
 
The Making of the Reparation and 
 
 resentiitive is so illuminating that its substance is 
 given below : 
 
 To my mind the most important point is the restoration 
 of the economic regime, and this is a question that we must 
 discuss first. Italy is now in a very serious condition. We 
 had a debt at the end of December of 65,000,000,000 lire, 
 and this will be increased by next December to 90,000,000.- 
 000. The wealth of Italy was calculated during the war 
 at SO, 000, 000, 000 and after the war at 120.000.000,000 
 lire, or $24,000,000,000; and so we calculate we shall have 
 a debt at the end of next December equal to three-fourths 
 of our national wealth. 
 
 If we reckon what the financial burden on the Italian 
 people will be, we must figure first this debt of $18,000,- 
 000,000, on which there will be interest and amortization 
 charges, the latter at 2 or 3 per cent.; a general taxation of 
 7 to 8 milliard lire; the general running expenses of the 
 country amounting to 5.000.000,000 lire — altogether 
 we shall have a general taxation of 12,000,000,000 to 
 13,000,000,000 lire or $2,500,000,000. In this case each 
 Italian would have to pay a lira of taxation per day. The 
 average wage of an Italian during the war was 2 i<j lire per 
 day. If you take children, women, and old people who do 
 not work, you may state that during the war the earning 
 capacity of the average Italian was 2 lire per day. Then 
 each Italian will have to pay a tax of a lira a day, which 
 is exactly one-half of his earnings. Suppose that the wages 
 double, it will still be an unbearable taxation; for if the 
 earnings go up, so will the expenses, since everything will 
 cost more. 
 
 So the restoration of the economic system is for Italy a 
 question of life or death, and we think it must be done in 
 two ways: We must restore our commercial balance — that 
 is, the balance between imports and exports — and we must 
 restore what we call the contributing capacity. We must 
 have a system under which each Italian will be able to pay 
 the tax to defray the general expenses as well as the debts 
 
 S6 
 
Economic Sections of the Treaty 
 
 of the country. We have been expending during the war, 
 in the last years especially, six times the amount of money 
 which we received from our exports; in other words, the 
 amount of our imports has during the last year been six or 
 seven times greater than our exports. So our debt is grow- 
 ing enormously, and it will still grow enormously. We are 
 still now importing six times as much as we actually export, 
 because our industrial export has been cut to nothing, has 
 been so destroyed by the war that we view the future with 
 great anxiety. 
 
 On the other hand, the contributing capacity is so low 
 that we must find some way to reduce the taxation on the 
 people, or some way to increase their earnings. So you can 
 see that Italy cannot recover if this unhappy condition is 
 permitted to continue. If the preliminary policy is not 
 settled, we shall be not a free but a weak, contributor state, 
 economically speaking. 
 
 I need not remind you that Italy, having fought with all 
 her energy and having given nearly all of her wealth for 
 the war, is altogether a devastated country. From our 
 viewpoint we cannot see that only the northern part of 
 Italy has been devastated. It is all devastated. What the 
 enemy has not devastated, the staggering taxes have. There- 
 fore how is it possible for a country that has given so much 
 of its wealth to come into any agreement under such 
 desperate conditions? I quite expect that you will consider 
 this tragic condition of Italy. We are prepared to do our 
 best, but before we can you must give us the great help 
 required. 
 
 The Economic Drafting Committee submitted a 
 report to the Supreme Council, whereupon the so- 
 called Economic Commission was organized for 
 the purpose of framing stipulations to deal with 
 subjects which had been considered by the com- 
 mittee as proper for incorporation into the treaty. 
 Thomas W. Lamont and myself were designated 
 
 87 
 
The Making of the Reparation and 
 
 American members of the commission. Realizing 
 the scope and technical nature of the work that 
 would be involved, I had previously called to my 
 assistance in my capacity as the American repre- 
 sentative on the Economic Drafting Committee, 
 the following gentlemen because of their expert 
 knowledge of the subjects to be considered: 
 
 Dr. Frank W. Taussig, then chairman of the 
 United States Tariff Commission; Alex Legge, 
 vice-chairman of the United States War In- 
 dustries Board and general manager of the In- 
 ternational Harvester Company, which has busi- 
 ness establishments in every important country 
 of the world; Leland L. Summers, a mechani- 
 cal engineer of an international reputation, who 
 had been the technical adviser of the War Indus- 
 hies Board and who possessed a knowledge of Eng- 
 lish, French, and German manufacturing proc- 
 esses; Charles U. MacDowell, formerly head of the 
 Chemical Division of the United States War In- 
 dustries Board; Fred K. Nielsen, who is now the 
 solicitor for the Department of State; Bradley W. 
 Palmer, of Boston, who had been sent to Paris by 
 the Alien Property Custodian, for whom he had 
 acted as counsel; John C. Pennie, of New York, a 
 noted expert in international and American patent 
 law; and J. Bailey Brown, of Pittsburgh, an expert 
 in patents, trade-marks, and copyrights. Prof. 
 Allyn Young, already attached to the Peace Com- 
 mission, served as an alternate for Mr. Lamont. 
 
 The following countries were origiuallv given 
 representation on the Economic Commission : The 
 
 SS 
 
Economic Sections of the Treaty 
 
 United States, the British Empire, France, Italy, 
 Japan, Belgium, Brazil, CMna, Poland, Portugal, 
 Rumania, and Serbia. 
 
 The work of the commission was apportioned 
 among sub-commissions, which presented their 
 conclusions to the commission for its action. The 
 report of the full commission was finally sub- 
 mitted to the Supreme Council for its considera- 
 tion substantially in the form in which the Eco- 
 nomic Clauses appear in the text of the treaty. 
 
 Part X of the treaty, designated Economic 
 Clauses, comprises provisions in which the United 
 States has a more direct and permanent interest 
 than in any others, aside from the Covenant of the 
 League of Nations. These provisions are concerned 
 largely with technical subjects that enter into in- 
 ternational relations. Such subjects were dealt 
 with by men- possessing the necessary technical 
 training. However, these stipulations are readily 
 comprehended by the lay mind from the standpoint 
 of their general purport and are discussed briefly 
 from that standpoint. 
 
 The so-called Economic Clauses of the treaty 
 are not "impossible" of performance, as we some- 
 times hear it said of the economic provisions of the 
 treaty gonorally. Nor can it correctly be said that 
 they are unjustly onerous upon Germany. Nor 
 are they in derogation of the letter or the spirit of 
 any of President Wilson's Fourteen Points. 
 
 The several subdivisions of this interesting part 
 of the treaty entitled Economic Clauses are desig- 
 nated as follows: 
 
 89 
 
The Making of the Reparation and 
 
 (1) Commercial Relations; (2) Treaties; (3) 
 Debts; (4) Property, Rights, and Interests; (5) 
 Contracts, Prescriptions, Judgments; (6) Mixed 
 Arbitral Tribunal; (7) Industrial Property. The 
 comprehensive nature of the articles embraced by 
 these designations is indicated by a mere enumera- 
 tion of them. 
 
 Commercial Relations. 
 
 Among the most important provisions under the 
 general classification of Commercial Relations are 
 those pertaining to German customs duties and the 
 regulation of questions relating to exports and im- 
 ports generally. The salient features of these stip- 
 ulations, which are found in Articles 264 to 270, 
 may be briefly indicated. 
 
 A temporary maximum rate of dnty of six 
 months' duration on imports from the Allied and 
 Associated Powers is prescribed— namely, the most 
 favorable duties applied to imports on July 31, 
 1914. This provision applies for a further period 
 of thirty months to certain commodities, respecting 
 which special agreements ^vitli Allied and Associ- 
 ated Powers existed before the war, in addition to 
 certain products which, it seems, found an exclu- 
 sive or almost exclusive market in Germany before 
 the war. Certain temporary tariff concessions are 
 secured to products shipped into Germany from 
 Luxemburg, and from territories ceded to France 
 and Poland. Most-favored-nation treatment in 
 matters relating to tariffs and laws and regulations 
 with regard to prohibition pertaining to exports 
 
 90 
 
Economic Sections of the Treaty 
 
 and imports is secured to the Allied and Associated 
 Towers for a period of five years. The general 
 nature of these stipulations may be briefly indi- 
 cated. 
 
 No great severity appears to be involved in the 
 requirement imposed on Germany to maintain for 
 a period of six months the most favorable rates of 
 customs duties which were in force for imports into 
 Germany on July 31, 1914. And there seems to 
 be no reason to question the sincerity of those na- 
 tions, some of them sorely ravaged by w r ar, which 
 insisted that the economic situation in their conn- 
 tries made a definite German tariff for a temporary 
 period highly important to them ; that such a period 
 was necessary in order to avoid serious economic 
 disturbance by a sudden change of tariff. At the 
 end of this brief period Germany will be free to 
 alter her rates. Probably at least six months' time 
 to effect a readjustment will be required. 
 
 For a period of five years from the coming into 
 force of the treaty, products which originate and 
 come from Alsace and Lorraine are exempted from 
 payment of customs duties on importation into 
 Germany up to the average amount sent annually 
 into Germany from 1011 to 1913. 1 Similar conces- 
 
 iAt the end of the Franco-Prussian war, similar arrange- 
 ments were made for the admission into Fiance of 
 goods originating in Alsace-Lorraine. The duration of 
 such arrangements was shorter than that provided in 
 the Treaty of Versailles, due to the fact that the 
 industries of Alsace-Lorraine in 1871 were much less 
 specialized than they are today, and required less time 
 for readjustment. 
 
 91 
 
The Moling of the Reparation and 
 
 sions are made to Poland, with respect to territory 
 ceded to her, for a period of three years, and for 
 fire years to Luxemburg, which has for a long time 
 enjoyed the benefits of the German Customs Union. 
 The Germans do not appear to haye found seri- 
 ously objectionable these provisions haying for their 
 purpose the temporary protection of these terri- 
 tories during - a transition period, so that the latter 
 may not be abruptly deprived of their former mar- 
 kets, which had previously existed through German 
 channels. 
 
 The provisions securing the application, for the 
 period of three years, to imports of certain products 
 from Allied and Associated countries of the most 
 favorable rates of the German tariff which were 
 in force in 1914, have a similar purpose. Certain 
 products, the output of which in countries border- 
 ing on Germany was especially adjusted to German 
 needs, are by these provisions temporarily assured 
 of markets enjoyed before the war. 
 
 By stipulations in the nature of the so-called 
 favored nation clauses found in the usual commer- 
 cial treaties, Germany is forbidden to discriminate 
 against the Allied and Associated Towers in mat- 
 ters relating to imports and exports. She is obliged 
 to adhere for a period of five years to a non-discrim- 
 inatory regime, such as obtains at present under 
 the laws of the United States and, I believe, under 
 the laws of England and not a few of the Allied and 
 Associated countries. By a number of treaties 
 she was bound to adhere to such a regime before 
 the war. Treaties of this character were wiped out 
 
 92 
 
Economic Sections of the Treaty 
 
 in the Treaty of Peace so far as the Allied and 
 Associated Powers were concerned. The treaty 
 affords a temporary substitute arrangement with 
 regard to foreign trade relations. It is difficult to 
 perceive any harshness in this arrangement. 
 
 Summarizing the general effect of stipulations 
 in the treaty relating to the foreign commerce, it 
 appears that Germany exercises full sovereign 
 rights over imports and exports, subject only to the 
 transitory requirement that all of the Allied and 
 Associated Powers must be treated on a footing of 
 absolute equality among themselves and with other 
 foreign countries, and to certain temporary limita- 
 tions respecting gold exports and respecting the 
 fixed customs duties and the temporary concessions 
 to which I have called attention. 
 
 Germany might prohibit all exportation or im- 
 portation. She can make partial prohibitions, but 
 such prohibitions must not be discriminatory 
 against any of the Allied and Associated Powers 
 as compared with any other foreign country during 
 this temporary and transitory period. And she is 
 free to fix any tariff rates subject to the temporary 
 limitations just mentioned. 
 
 It is of particular importance to such countries 
 as Poland, Serbia, Italy, and France, which have 
 suffered so greatly from the war, that Germany 
 shall be restrained for a temporary period from em- 
 ploying any methods of commercial discrimina- 
 tion against them. Doubtless it can be confidently 
 hoped that at the end of such a limited period the 
 
 93 
 
The Making of the Reparation and 
 
 economic disturbances resulting - from the war will 
 be so adjusted and the passions engendered by the 
 war so allayed as to permit the conclusion of rea- 
 sonably satisfactory commercial arrangements be- 
 tween the various belligerent countries. 
 
 Mention may be made in this connection of Arti- 
 cles 323 and 327, which refer to commercial rela- 
 tions, but which are found in a section of the treaty 
 under a different designation. They secure na- 
 tional and most-favored-nation treatment to vessels 
 of the Allied and Associated Powers with respect 
 to cargoes carried by them, shipping charges, and 
 regulations of various kinds. 1 
 
 Articles 274 and 275 have for their purpose the 
 protection of nationals of the Allied and Associ- 
 ated countries against unfair trade practices in 
 Germany. The German Government is required to 
 adopt appropriate measures to protect the produce 
 or manufacture of any of the Allied and Associ- 
 ated Towers from all forms of unfair competition 
 in commercial transactions. It is obligated to 
 prevent the importation, exportation, manufacture, 
 distribution, sale, or offering for sale in German 
 territory of all goods bearing upon themselves de- 
 scriptions or marks which have a tendency to con- 
 vey, directly or indirectly, a false indication of the 
 origin, type, nature, or special characteristics of 
 such goods. 
 
 iThese articles are limited in their unilateral form to a 
 five-year period. At the end of the five years they apply 
 only to such of the Allies as give reciprocal privilege. 
 
 94 
 
Economic Sections of the Treaty 
 
 A section of the treaty, embracing Articles 276 
 to 279, contains a number of important provisions 
 in the nature, broadly speaking, of those found in 
 commercial treaties. These provisions secure to 
 nationals of each of the contracting countries the 
 right to do business in the other, unhampered by 
 discrimination in matters of taxation and of prop- 
 erty regulations of various sorts. 
 
 Article 27S in this section of the treaty seems to 
 have some exceptional interest to the United 
 States, in view of our large alien immigration, and 
 in view of the attitude of this country with re- 
 gard to the effect of the naturalization of for- 
 eigners. 
 
 This article obligates Germany to recognize 
 any new nationality acquired by her nationals un- 
 der the laws of the Allied and Associated Powers, 
 and to regard such persons as having, in conse- 
 quence of the acquisition of such new nationality, 
 in all respects severed their allegiance to their 
 country of origin. The language of the article is 
 carefully framed so as to eliminate any question 
 of dual nationality on the part of a person who 
 easts off his German allegiance. Although the ob- 
 ligations of these provisions are binding on Ger- 
 i many only, it seems possible that the article may 
 have value as a precedent in dealing with the ques- 
 tion of conflicts of nationality. 
 
 In the section just mentioned the Allied and 
 Associated Powers secure to themselves the right 
 to send consular officers to Germany. 
 
 95 
 
The Making of the Reparation and 
 
 Ti, 
 
 It was of course important that an arrangement 
 should be provided for in the Treaty oi Peace with 
 
 ird to the status of treaties o( all so 3 to which 
 Germany and the Allied and Associated Powers 
 
 e parties before the war. The subject was very 
 carefully dealt with by Articles 282 to 295 in a wav 
 that should leave little room for future compila- 
 tions. All vexatious questions as to the effect of 
 war on treaties ate eliminate 
 
 atv enumerates a very considerable list 
 ' SO-called multilateral treaties — that is. interna- 
 tional agreements between three or more nati< 
 and it is declared that such agreements alone shall 
 be applied between Germany and those of the Al- 
 lied and Associated Pow ersw ho are parties thereto. 
 The subject of bilateral treaties which Germany 
 had concluded with each of the Allied ami Associ- 
 ated Powers is dealt with in a different way. These 
 agreements are in effect declared abrogated in the 
 Treaty of Peace. The right is accorded to each of 
 the Allied or Associated Powers to revive, by giv- 
 ing notice to Germany within six months, anv 
 treaty or convention which each of the Allied and 
 Associated Towers may desire to continue in effect 
 Treaty stipulations at variance with the Treaty of 
 Peace may not be revived. 1 11 oases of difference of 
 opinion on this point it is provided that appeal shall 
 bo made to the decision of the League o( Nations. 
 
 • for the revival of treaties . 
 a useful procedure lor 1 aty relations 
 
 96 
 
Economic Sections of the Treaty 
 
 with Germany. With regard to numerous treaties 
 such a readjustment is doubtless highly desirable. 
 II was not regarded as unfair to Germany (hat only 
 the Allied and Associated rowers should have the 
 right to revive treaties. Apparently no injury can 
 result to Germany from this situation. The treaty 
 prevents nations from splitting up in a manner 
 prejudicial to Germany any treaty it is desired to 
 revive. The treaties that may be revived are inde- 
 pendent agreements, such as commercial treaties, 
 consular conventions, and extradition treaties. 
 Generally speaking, they stipulate reciprocal rights 
 in behalf of each of the contracting parties. If one 
 kind of a treaty is revived and another is allowed 
 to lapse because, perhaps, it lias become obsolete 
 and is no longer responsive to present needs, both 
 of the contracting parties are similarly affected. 
 
 Furthermore, treaties of this character generally 
 contain stipulations under which they can be abro- 
 gated on a year's notice by either parly. Germany 
 will therefore be able to denounce a. treaty which 
 she does not desire lo have continued in existence 
 afler it has been revived by an Allied or Associated 
 Power. 
 
 It is my understanding that the arrangement lias 
 peculiar advantages for the United States. Our 
 treaty relations with Germany are based almost en- 
 l Lrely on old I reaties concluded a long time a^o with 
 the independent slates, which were united to form 
 the (Herman Empire. T am informed that vexatious 
 questions have arisen from time to time as to the 
 Legal effect of these treaties with regard to their 
 
 97 
 
The Making of the Reparation and 
 
 application between our Government and the Gov- 
 ernment of the German Empire, with which they 
 were not negotiated. 
 
 The provisions in the Peace Treaty under the 
 heading of Commercial Relations, taken as a whole, 
 
 would adequately protect our Government's inter- 
 ests during a period in which treaty relations with 
 Germany might be directly adjusted between the 
 two Governments on a more satisfactory basis than 
 that existing before the war. The situation result- 
 ing from these stipulations which have been dis- 
 cussed may be briefly summarized. 
 
 Provision is made in the treaty for equality of 
 treatment in all matters relating to customs duties 
 and shipping charges. By comprehensive stipula- 
 tions everything- needed in the way of a naturalisa- 
 tion treaty is provided. Concise provisions deal 
 Aviih rights of American citizens to do business in 
 Germany, and the protection of their property 
 rights generally. The right to send consular offi- 
 cers to Germany is secured. 
 
 The section devoted to treaties contains some fur- 
 ther miscellaneous provisions of more or less 
 interest which do not affect the general situation 
 outlined above. They relate chiefly to agree- 
 ments concluded by Germany with the Allies. Ger- 
 many is required to recognize as abrogated agree- 
 ments concluded by her with Austria. Hungary, 
 Bulgaria, or Turkey since the first of August. 1014, 
 until the coming into force of the Peace Treaty. 
 She must similarly recognize as abrogated agree- 
 ments concluded with Uussia or with any state or 
 
 OS 
 
Economic Sections of the Treaty 
 
 Government of which the territory previously 
 formed a part of Russia or with Rumania before 
 August 1, 1914, or after that date until the coming 
 into force of the Peace Treaty. 1 She must secure to 
 the Allied and Associated Powers the benefits 
 granted to Austria, Hungary, Bulgaria, or Turkey 
 by agreements concluded before August 1, 1914. 
 
 Debts. 
 
 By Article 206 and the Annex thereto a scheme 
 is provided for the settlement of debts due by na- 
 tionals of the enemy countries to each other as 
 well as certain public debts. The purpose of the 
 scheme is mainly to facilitate an adjustment of pri- 
 vate commercial transact ions in a complete and ex- 
 peditious manner, without private litigation, and 
 without, the difficulties which might arise out of 
 such litigation as a result of the application of 
 diverse rules and principles by the municipal 
 tribunals of the various countries. The plan of 
 settlement is, briefly stated, as follows: 
 
 Clearing offices are established for the {settle- 
 ment, of debts between each Allied and Associated 
 Government and Germany. Each of the contract- 
 ing parties establishes a clearing office for the col- 
 lection and payment of debts. Sums due to the na- 
 tionals of one of the contracting parties by nationals 
 of the other will be debited to the clearing office 
 of the country of the debtor, and paid to the credi- 
 
 lThis abrogates the Brest-Litovsk and Bucharest treaties. 
 8 99 
 
The Making of the Reparation and 
 
 tor by the clearing office of the country of the 
 creditor. 
 
 The contracting- parties obligate themselves to 
 guarantee payments of all debts due by their na- 
 tionals, with certain exceptions. They farther agree 
 to forbid payment of such debts by their nationals 
 aad to forbid all communication between the in- 
 terested persons with regard to the settlement of 
 debts otherwise than through clearing offices. 
 
 Ii is optional with an Allied or Associated state 
 as to whether it will be a party to this scheme of 
 settling debts. Unless within one month from the 
 coming into force of the treaty it gives notice that 
 it desires to participate in the clearing office scheme, 
 the provisions in respect thereof will not apply be- 
 tween it and Germany. 
 
 The proceeds 01 property of German nationals 
 which is within Allied and Associated countries, 
 and which is liquidated in accordance with pro- 
 visions of the treaty relating to the retention and 
 liquidation of property of enemy nationals, may be 
 used by such countries to pay debts owing to their 
 nationals. Such proceeds will be accounted for 
 through the clearing offices. 
 
 The merits of this plan can probably be definitely 
 determined only in the light of experience. Much 
 confusion and controversy, both of a private and 
 a public nature, might perhaps result from the 
 efforts of persons to effect private settlement in the 
 future directly or through, the tribunals of each 
 nation. On the other hand, the obligation of a 
 nation to guarantee debts of its nationals might 
 
 100 
 
Economic Sections of the Treaty 
 
 prove a difficult and disagreeable one to carry into 
 effect. And action by a Government to prevent pri- 
 vate adjustment of debts might result in an un- 
 fortunate interference with, private transactions. 
 
 Probably a controlling consideration with the 
 Government of the United States, should it become 
 a party to the treaty, would be the objection to a 
 scheme which would make necessary the use of 
 private property of enemy nationals for the spe- 
 cific purpose of satisfying debts, or in any way 
 place restriction on the disposition of such prop- 
 erty by this government. Provisions of the treaty, 
 to which I shall later refer, were so framed that 
 Congress will have a free hand in disposing of such 
 property, if the clearing-office scheme shall not be 
 adopted. 
 
 With respect to the attitude of the United 
 States relative to these stipulations, it seems per- 
 tinent to take into consideration that the situation 
 of nationals of the Allied Governments at the out- 
 break of the war appears somewhat different from 
 that of citizens of the United States when this 
 country became a belligerent. 
 
 The Allies were suddenly plunged into war. 
 The Governments of Great Britain and France, 
 in order to avoid most serious financial disasters 
 at the beginning of the war, had found it neces- 
 sary to guarantee a great many private obliga- 
 tions, such as acceptances by bankers whose 
 principals were in Germany, and to protect the 
 interests of their citizens in various ways. Long 
 prior to the end of the war, these countries had 
 
 101 
 
The Making of the Reparation and 
 
 studied in detail a plan under which debts could 
 be adjusted after the war. The United States 
 entered the conflicl two and a half years after the 
 outbreak of the war in Europe, and its citizens had 
 then had an opportunity to adjust their business 
 affairs with Germans to war conditions. Contracts 
 made for some time prior to our entrance into the 
 war must seemingly have been entered into with 
 some knowledge of the risks incurred. 
 
 The clearing house plan may be desirable and 
 necessary for some o\' the Allied countries, but it 
 was considered by the American representatives at 
 Paris that it might be undesirable, if not impos- 
 sible, for the United States. For that reason they 
 took steps to have the adoption o( the scheme made 
 optional. 
 
 Property. Eights, and Interests. 
 
 Articles 297 and 298 and the Annex following 
 them deal with the disposition of the property of 
 enemy nationals found in the territory of each bel- 
 ligerent nation at the outbreak of war. 
 
 During the war the principal belligerent coun- 
 tries had generally taken posession of all or some 
 part of private enemy property within their respec- 
 tive dominions, and in some countries sales of some 
 such property had been made. When the United 
 States entered the war, the taking over of private 
 property and businesses had already proceeded far 
 in other countries, and Congress authorized similar 
 measures here. It became necessary to provide in 
 the treaty for the situation created by such acts. By 
 the Trading with the Enemy Act which contained 
 
 102 
 
Economic Sections of the Treaty 
 
 this authorization it was provided that claims of 
 enemies for seized property should be settled after 
 the end of the war as Congress should direct. This 
 was construed by American representatives on the 
 Peace Commission to mean that the policy of our 
 Government in dealing with such property was not 
 to be determined until after the end of the war, 
 when various fads and conditions which could not 
 be known before that time could be definitely ascer- 
 tained. 
 
 Therefore, in the absence of any defined policy 
 by the United States, we thought it our duty to 
 preserve for Congress unimpaired freedom to deal 
 with all questions relating to enemy property. This 
 seemed the more clearly our duty, since we had no 
 means of ascertaining facts, isuch as those respect- 
 ing the treatment of American property by Ger- 
 many, which might have bearing on a final de- 
 cision. Consequently, we thought it proper to op- 
 pose all suggestions which were made requiring a 
 permanent disposition of the property in any way. 
 
 Germany is obligated to restore sequestered 
 property belonging to nationals of the Allied and 
 Associated Powers on demand of the owners "if it 
 still exists in specie," and to pay over the proceeds 
 of property that has been sold. She must make 
 compensation for damages inflicted upon property 
 by the application of "exceptional war measures." 
 Such damages are to be determined by a tribunal of 
 three members. 
 
 The Allied and Associated Powers "reserve the 
 right to retain and liquidate" the property of Gcr- 
 
 103 
 
The Making of the Reparation and 
 
 man nationals within their territory, and to hold 
 such property "as a pledge" for the payment of cer- 
 tain obligations due to their nationals. These ob- 
 ligations are: Claims of such nationals in respect 
 of damage committed to their property within 
 German territory ; debts owing to them by German 
 nationals, and claims growing out of acts com- 
 mitted by the German Government or any Ger- 
 man authorities since July 31, 1914, and before 
 an Allied or Associated Power, desiring to make 
 such claims, entered the war. 
 
 The last mentioned class of claims would cover 
 any claims the United States might desire to make 
 on account of the sinking of such vessels as the 
 J.itsilania, the Fri/r, the Susse®, and the Leelana/W, 
 or on account of other pre-war arts committed by 
 the German authorities in violation of the rights of 
 American citizens. 
 
 German property and the net proceeds re- 
 sulting from its liquidation may further be 
 charged by the Allied and Associated Powers 
 with the payment of claims of their nationals with 
 regard to their property in territory of other enemy 
 Powers, in so far as those claims are otherwise un- 
 satisfied. Justification of this provision, if advan- 
 tage is taken of it, will have a basis on the theory 
 of joint responsibility resulting from the fact that 
 German}'- and her allies acted as a unit in carrying 
 on the war, and showed by their conduct toward 
 private enemy property that they acted on a similar 
 theory as to joint responsibility on the part of the 
 Allied and Associated Powers. 
 
 104: 
 
Economic Sections of the Treaty 
 
 Any property or proceeds of property not used 
 by an Allied or Associated Power for the purposes 
 just mentioned may be retained,' and if retained the 
 cash value thereof must be used to pay the repara- 
 tion demanded of Germany. 
 
 Germany undertakes to compensate her nationals 
 for property retained by the Allied and Associated 
 Governments. 
 
 The treaty does not contemplate the taking of 
 property of enemy nationals without some form of 
 compensation. The question of taking of property 
 is left to the determination of each of the Allied or 
 Associated Powers in its own discretion, and if in 
 any case the property is taken for purposes per- 
 mitted by the treaty Germany is required to make 
 compensation. 
 
 The treaty provides that the proceeds of prop- 
 erty of German nationals "shall be subject to 
 disposal by such Power in accordance with its 
 laws and regulations." 
 
 Therefore, if the United States should ratify the 
 treaty, the power of Congress to deal with German- 
 owned property in the United States would be the 
 same as it was prior to the conclusion of the treaty. 
 There is, therefore, no conflict between the treaty 
 and the Trading with the Enemy Act, by Section 
 12, of which it is provided, as has been pointed out, 
 that the ultimate disposition of seized property 
 shall be determined by Congress after the war. 
 
 The treaty authorizes seizure and liquidation of 
 property on a more extensive scale than that con- 
 templated by the Trading with the Enemy Act. 
 
 105 
 
The Making of the Reparation and 
 
 Tudor the act the Alien Property Custodian has 
 seized only property of persons resident within 
 German territory and territory under German 
 military occupation, and property of persons whom 
 the President has, pursuant to the act, included 
 within the term "enemy." Under the treaty the 
 Allied and Associated Towers reserve the right to 
 retain and liquidate the property of German 
 nationals within their territories, irrespective of 
 the residence of the owners. 
 
 The disposition of such property by each of the 
 Allied and Associated Powers obviously raises a 
 grave question. Irrespective of whether under in- 
 ternational law a belligerent country has a strict 
 legal right to confiscate property of enemy na- 
 tionals within its territory, we know that confisca- 
 tion has been generally severely condemned in 
 modern times. The practice of confiscation has 
 virtually become obsolete, except in the case of 
 reprisals which can be justified by the disregard of 
 private rights. 
 
 As heretofore observed, under the treaty the 
 Government of the United States is not committed 
 to any course which might be regarded as confisca- 
 tory. Congress may decide that the property shall 
 be used for any or all of the purposes specified in 
 the treaty, and it may provide for the return of all 
 or a part of the property to its German owners. 
 
 The principle of the inviolability of private prop- 
 erty which a nation finds within its territory on 
 the outbreak of war has always been upheld by the 
 Government of the United States. And our Gov- 
 
 106 
 
Economic Sections of the Treaty 
 
 eminent has throughout its existence as a nation 
 championed the establishment of a similar im- 
 munity for private property at sea. Whether our 
 Government will abandon these principles and re- 
 sort to the use of the property of enemy nationals 
 which lias been sequestered by the Alien Property 
 Custodian during the war can be settled by Con- 
 gress alone. 
 
 In view of the conditions specified in the treaty 
 under which the Allied and Associated Powers re- 
 serve the right to retain property of enemy 
 nationals, the retention of such property would not 
 constitute absolute confiscation. The property can 
 be taken to pay just claims against Germany, debts 
 against German nationals, and the general repara- 
 tion obligations; and the German Government un- 
 dertakes to pay its nationals for property so used. 
 It was admitted by Germany that she could not 
 meet her obligations without drawing on the 
 property of her nationals abroad. Some of the 
 Allied Powers utilized the foreign investments of 
 their nationals during the war, giving their own 
 Government securities in exchange. 1 
 
 As has been pointed out, it is optional with the 
 Allied and Associated Powers as to whether or not 
 they will use private property for the payment of 
 claims in the manner authorized by the treaty. 
 Perhaps an effort will be made by the United 
 States, should it become a party to the treaty, and 
 by other nations, to effect some settlement of claims 
 
 lSee pp. 338, 339, 340, 341, and 342 in the Addenda. 
 
 107 
 
The Making of the Reparation anil 
 
 with the German Government, which will render 
 unnecessary the appropriation of all or any private 
 property for such purpose. It seems possible that 
 under the terms of the treaty the assets of.-'Ger- 
 many are so pledged for other reparation purposes 
 that none would be available for this particular 
 purpose. However, an interpretation might be 
 given the treaty so ;is to make possible a settlement 
 of claims for which German-owned property is held 
 as a pledge, so that the pledge would not neces- 
 sarily need to be retained in order that such a 
 settlement might be effected. 
 
 Possibly some nations may sec tit io draw a dis- 
 tinction between certain classes of property or be- 
 tween certain classy of persons and effect a dispo- 
 sition of property on a basis oi' such a distinction. 
 There is a large amount of German Government or 
 quasi-German Governmenl property and perhaps 
 some apparently privately owned property fostered 
 by the German Government, that can he used for 
 the purpose o\' paying claims. This class of prop- 
 erty might well be distinguished from strictly 
 private property. 
 
 Contracts. Prescriptions. Judgments. 
 
 The considerations relating to the adjustment of 
 pre-war contracts were somewhat similar to those 
 respecting the settlement o\' pre-war debts. For the 
 European countries the war began suddenly ami un- 
 expectedly, abruptly terminating all business re- 
 lations with Germany. For them the war had 
 lasted more than four years, and tbe possible injus- 
 
 10S 
 
Economic Sections of the Treaty 
 
 tice of canceling some pre-war contracts that might 
 have survived was considered a negligible factor in 
 view of the great advantage of constituting a def- 
 inite legal status for all such pending matters. In 
 this situation they concluded that in the interest of 
 all concerned all pre-war contracts should be an- 
 nulled. On the other hand, in the United States 
 the situation had adjusted itself to a great extent 
 to war conditions in the two and a half years dur- 
 ing which the war had lasted before we entered it. 
 Undoubtedly many contracts of an innocent char- 
 acter made before our entrance into the war were 
 still in existence. 
 
 Under our jurisprudence tho state of war serves 
 to dissolve some classes of contracts and only to sus- 
 pend others, and our judicial decisions have ruled 
 that those contracts in which no public interest is 
 involved, and the performance of which, was not 
 rendered inequitable on account of new conditions 
 produced by the war, it would be unjust and in- 
 equitable to disturb. Consequently, the Americans 
 were of opinion that to require the general cancel- 
 lation of all existing contracts, including those 
 which our courts had decided should not be dis- 
 turbed, would constitute an unnecessary and 
 unjustifiable interference with the private rights of 
 our citizens, and furthermore might entail substan- 
 tial claims against our Government. 1 
 
 lOur views on that subject were expressed in a con- 
 temporaneous memorandum that will be found in the 
 Addenda, page 343. 
 
 109 
 
The Making of the Reparation and 
 
 Articles 299 to 303, inclusive, and an Annex fol- 
 lowing them, deal with contracts entered into with 
 German nationals prior to the war by nationals of 
 the Allied and Associated countries. The general 
 purpose of these provisions is, as in the ease of 
 provisions with regard to debts, to prescribe cer- 
 tain definite rules, so that questions concerning 
 such matters as are not governed by international 
 law may not be left altogether to the probable 
 conflicting decisions of national tribunals in the 
 respective countries. 
 
 Provision is made for a general dissolution of 
 contracts from the time that the parties to a con- 
 tract became enemies. Exception to such dissolu- 
 tion is made as to debts or other pecuniary obli- 
 gations arising out of any act done or money paid 
 under a contract, and further as to particular 
 classes of contracts specified in the treaty. 
 
 A general exception to the cancellation of con- 
 tracts is provided for in the case of any contract of 
 which the execution "shall be required in the gen- 
 eral interest," within six months from the date of 
 the coming into force of the treaty, by Allied and 
 Associated Governments of which one of the parties 
 is a national. 
 
 If the execution of the contract thus kept 
 alive would, owing to the alteration of trade condi- 
 tions, cause one of the parties substantial injury. 
 a mixed arbitral tribunal will be empowered to 
 grant the prejudiced party equitable compensa- 
 tion. 
 
 As in the case of the provisions relating to debts, 
 
 110 
 
Economic Sections of the Treaty 
 
 it will be difficult to determine, except in the light 
 of experience, the advantages or disadvantages of 
 these stipulations respecting the dissolution of 
 contracts. The United States, Brazil, and Japan 
 are, by a provision in the treaty, excepted from the 
 greater portion of them. This provision was in- 
 serted with a view to avoiding any doubtful ques- 
 tions that might arise from the interference with 
 private rights by treaty stipulations, "having re- 
 gard to the provisions of the Constitution and law 
 of the United States of America, of Brazil, and of 
 Japan," as stated in Article 299(c). It is to be 
 hoped that American citizens will be largely suc- 
 cessful in adjusting their pre-war contractual rela- 
 tions with German nationals directly, or through 
 proper judicial tribunals. 
 
 It should be observed that, in case the United 
 States should become a party to the treaty, it will 
 not be entirely excepted from these stipulations re- 
 specting contracts. It will not be excluded from 
 Article 301, which prescribed certain rules regard- 
 ing negotiable instruments; nor from Article 302, 
 which provides that, if a judgment in respect of 
 any dispute which may have arisen has been given 
 during the war by a German court against a na- 
 tional of an Allied or Associated state in a case in 
 which he was not able to make his defense, the 
 Allied or Associated national who has suffered 
 prejudice thereby shall be entitled to recover com- 
 pensation to be fixed by a mixed arbitral tribunal. 
 
 Admittedly some of these provisions relative to 
 the dissolution of contracts are one-sided. An. 
 
 Ill 
 
 J 
 
The Making of the Reparation and 
 
 illustration is the provision which confers only on 
 the Allied and Associated Powers the right to main- 
 tain in force certain contracts, "in the general in- 
 terest" (Article 299, b). Another is that which 
 provides a remedy against the decisions of German 
 tribunals rendered during the war, but no such 
 reciprocal remedy against the decisions of courts in 
 the Allied and Associated countries (Article 302). 
 Such provisions will doubtless be found objection- 
 able to persons who hold the view that the treaty 
 should hare been framed altogether on the theory 
 that the Allied and Associated Powers should not 
 have permitted themselves to take any steps for 
 the protection of their nationals, the benefits of 
 which should net be accorded also to German 
 nationals. Such persons doubtless fail to take into 
 full account, among other pertinent things, the 
 lack of faith, at the time of the treaty negotiations, 
 on the part of all the Allied and Associated coun- 
 tries in the German Government and the German 
 people. 
 
 Mixed Arbitral Tribunal. 
 
 By Article 304. a Mixed Arbitral Tribunal is es- 
 tablished between each of the Allied and Associated 
 Powers, on the one hand, and Germany, on the 
 other hand. The tribunal is composed of three 
 members, one being appointed by each of the Gov- 
 ernments concerned, and the third, who shall net 
 as president, being chosen by agreement between 
 the two Governments, and. failing such agreement, 
 
 112 
 
Economic Sections of the Treaty 
 
 by the Council of the League of Nations or by Mr. 
 Gustavo Ador, the former President of Switzerland. 
 The third member must be a national of a country 
 that remained neutral during the war. 
 
 This tribunal is given jurisdiction to deal with 
 questions, to which I have called attention, with re- 
 spect to claims for damages to property of nationals 
 of the Allied and Associated Powers in Germany, 
 debts owing by enemy nationals to each other, and 
 contractual relations between them. Perhaps 
 among the functions of the court claims for dam- 
 ages done to property in Germany is of most in- 
 terest to American citizens. 
 
 Concise rules governing the procedure of the 
 court have been formulated. Certain authority is 
 also conferred upon the court to prescribe such 
 rules. It is provided that the language in 
 which the proceedings are to be conducted shall, 
 unless otherwise agreed, be English, French, Italian, 
 or Japanese, as may be determined by the Allied 
 or Associated Towers concerned. There w T ill 
 probably be no difficulty in any given case in 
 reaching an agreement as to the use of one of the 
 well-known tongues in which the proceedings of 
 similar tribunals are generally conducted. French 
 will doubtless be the language most generally em- 
 ployed by these mixed tribunals. American citi- 
 zens, if the United States ratifies the treaty, will 
 be enabled to present their cases in English. This 
 shouTrl be of considerable convenience to them, and 
 it would entail no hardship on Germany. 
 
 A method just and satisfactory to the nations 
 
 113 
 
The Making of the Reparation and 
 
 concerned for the determination of private rights 
 of various kinds seems to have been provided by 
 the establishment of this tribunal. 
 
 Industrial Property. 
 
 Articles 306-311, inclusive, deal with the read- 
 justment of the rights of the citizens of all of the 
 nations at war, in the matter of industrial, literary, 
 and artistic property — that is, patents, trade-mark 
 registrations, and copyrights. 
 
 It is important to bear in mind that these ar- 
 ticles deal not only with rights to industrial prop- 
 erty as between Germany and the Allied and Asso- 
 ciated Powers, but also with rights to industrial 
 property as between the Allied and Associated 
 Powers themselves. 
 
 From the very outbreak of hostilities between 
 Germany and the Allies, the filing of appli- 
 cations for letters patent, and for the registra- 
 tion of trade-marks and copyrights in Germany, 
 was greatly hampered by censorship and blockade, 
 and w T as ultimately prohibited, in so far as the 
 United States was concerned, by a presidential 
 proclamation shortly after the entry of the United 
 States into the war. So also, the payment of Gov- 
 ernment fees for the maintenance in force of Ger- 
 man patents owned by citizens of the United States 
 was inhibited by the proclamation. 
 
 Furthermore, inasmuch as the manufacturing fa- 
 cilities of the Allies were being increasingly devoted 
 to the production of materials for carrying on 
 
 114 
 
Economic Sections of the Treaty 
 
 the war, American inventors in other lines could 
 find no field for the exploitation of their 
 invention in any of the belligerent countries, 
 and refrained from filing applications there- 
 for within the periods provided for that purpose in 
 the existing treaties ; nor could the American own- 
 ers of patents in the Allied countries conform to the 
 laws of those countries which, in most cases, re- 
 quired the actual exploitation of the invention on a 
 commercial scale in order to maintain the patent in 
 force. Consequently, American owners of patents 
 granted either by Germany or by the Allied and 
 Associated Powers discovered that, as the result of 
 the war, their patents had, to a large extent, become 
 void, and that their rights of priority for filing 
 valid applications in Germany and in the countries 
 of the Allied and Associated Powers had for the 
 most part lapsed. 
 
 This portion of the treaty restores to American 
 citizens the lapsed patents upon the payment of 
 normal fees required for that purpose. It also per- 
 mits American citizens to file in Germany and in 
 the Allied and Associated countries applications for 
 letters patent with the same claim of priority 
 which, they would have possessed if filed within the 
 periods provided for by treaties, conventions, or 
 statutes, relating to the matter. The only restric- 
 tion upon the rights thus restored is that they shall 
 be subject in the case of patents and designs to the 
 imposition of such conditions as each Allied or As- 
 sociated Power may deem reasonably necessary for 
 the protection of persons who have manufactured 
 
 9 115 
 
The Making of iJw Reparation and 
 
 or made use of the invention during the period when 
 the rights had lapse J. 
 
 The rights of United States citizens to the con- 
 tinued protection afforded by the patents which 
 they own abroad, and the acquisition of other 
 patents which they were practically prevented 
 from acquiring during the war. is. therefore, taken 
 of by the treaty: and the rights of third 
 parties, both in this country and abroad, who have 
 had such inventions in use. are properly left to the 
 control of the particular Allied or Associated 
 Powers concerned. 
 
 American citizens are particularly concerned 
 with this revival of foreign patents because, as a 
 consequence o( the war. foreign patents, in most of 
 the countries, became void for failure to pay the re- 
 newal fees, and for failure continuously to exploit 
 the subject matter of the patent. In this regard, 
 the citizens of foreign countries, including Ger- 
 many, had the absolute advantage that United 
 States patents are granted for an unrestricted term 
 of seventeen years, without any requirement for 
 exploitation o\' the invention and without renewal 
 fees of any kind. The articles o( the treaty provid- 
 ing for the revival of lapsed patents owned by 
 citizens of the United States are. therefore, in the 
 direct interest oi the citizens of the United States 
 and to their ureal advantage. 
 
 During the war the Federal Trade Commission. 
 by authority of law. granted licenses to United 
 States citizens under a large number o\ United 
 States patents owned by German nationals. So 
 
 116 
 
Economic Sections of the Treaty 
 
 also during the war the Alien Property Custodian, 
 by like authority, .seized and sold or otherwise liqui- 
 dated many German-owned patents. Article 30G of 
 the treaty provides that all acts done by virtue of 
 special measures taken during the war under legis- 
 lative, executive, or administrative authority of any 
 Allied or Associated Power in regard to the rights 
 of German nationals in industrial, literary, or 
 artistic property, shall remain in force and shall 
 continue to maintain their full effect. Conse- 
 quent ly, these acts of the Government of the United 
 States, through the Federal Trade OommissiOD and 
 the Alien Property Custodian, are recognized as 
 valid, continuing and unrevoked by the conclusion 
 of peace. 
 
 II became necessary dming the war for the Allied 
 and Associated Powers to make use of all of the 
 facilities at their command to insure its successful 
 outcome. In so doing, it is quite probable that in- 
 ventions covered by various German patents were 
 employed. Under peace conditions it would have 
 been necessary for the Government of the United 
 Stales to pay to the owners of these patents many 
 millions of dollars in the form of royalties, profits, 
 or damages for such infringement. It is, of course, 
 unthinkable that the Government of the United 
 States, or any one acting under its authority, should 
 he called upon to pay tribute to the enemy for 
 tilings done in the prosecution of the war. Article 
 306 of the treaty therefore precludes the making of 
 any claim in this regard by Germany or German 
 nationals against the United States or any other of 
 
 117 
 
The Making of the Reparation and 
 
 the Allied or Associated Powers (or against any 
 person acting in their behalf or with their assent) 
 for infringement of patents thus used, or for the 
 sale or use of any products incident to the manu- 
 facture thereof. 
 
 This provision, however, is restricted to aets done 
 by the Government or on its behalf or with its as- 
 sent. It does not extend to individual infringements 
 of patents having nothing to do with war activities 
 and therefore not concerned with the national de- 
 fense, and which are, therefore, not in the quasi- 
 contraband class. In so far as the United States is 
 concerned. German-owned patents not already dealt 
 with by the Federal Tre.de Commission or by the 
 Alien Property Custodian, and which do not come 
 under the category of those used by the Government 
 of the United States, or on its behalf or with its 
 consent in the prosecution of the war, are outside 
 Of the provisions of Article 306. They are subsist- 
 ing private rights not affected by the provisions of 
 the treatv. 
 
 i 
 
 Subject to the provisions of national legislation 
 to the contrary, funds resulting from the applica- 
 tion of war measures to German industrial prop- 
 erty rights are dealt with in the same way as other 
 sums due to German nationals are directed to be 
 dealt with in other provisions of the treaty to which 
 I have called attention. And, similarly, snms pro.- 
 duced by any measures taken by ilie German Gov- 
 ernment in respect of the rights of nationals of the 
 Allied and Associated Powers are treated in the 
 same way as other debts due from German na- 
 
 11S 
 
Economic Sections of the Treaty 
 
 tionals. Obviously, industrial property has no 
 special characteristic which should take it out of 
 tin' treatment accorded to property in general, so 
 that these provisions may be regarded as merely 
 confirmatory of the provisions to the same effect 
 in other parts of the treaty relating to property in 
 general. 
 
 By a provision of some exceptional interest, the 
 Allied and Associated Powers reserve the right to 
 impose such restriction on industrial, literary, and 
 artistic property, of German nationals "as may be 
 considered necessary for national defense or in 
 the public interest, or for assuring the fair treat- 
 ment by Germany of the rights of industrial, lit- 
 erary, and artistic property held in German terri- 
 tory by its nationals, or for securing the due ful- 
 fillment of all the obligations undertaken by Ger- 
 many in the present treaty." 
 
 In the course of the war it was learned that, in the 
 past, improper use had been made b} r Germans of 
 their patents in foreign countries, by combinations 
 intended to suppress or hamper the development of 
 foreign industries. The provision above referred to 
 reserves to each of the Allied or Associated Powers 
 the right to impose, after the conclusion of peace, 
 conditions or restrictions on the employment of 
 German-owned industrial property in the several 
 Allied or Associated countries, in cases where the 
 national defense or the public interest may so re- 
 quire. The municipal law of Germany has always 
 had such a reservation, but it is lacking in the legis- 
 lation of the United States. 
 
 119 
 
Making of the Reparation and 
 
 In s - the United States is erned, 
 
 . it is important thai the treaty makes 
 this reservj I that it is accepted by Ger- 
 
 many, so that in case any improper use by 
 
 v van patent - - si mid 
 
 in take plat . the power to deal with it would 
 ■ - • \ vd by agreement, and eon Id be put 
 into effect by an act of Congress Inasmuch as 
 Germany has always had a similar reservation, the 
 t of this part ot" the treaty is to plaee the two 
 countries on pr* illy the same footing. There is 
 no reason to infer from this part of the treaty a pur- 
 se on the part of the Allied and Associated 
 Powers to deal with German rights other than in a 
 spirit of justice, and it is unthinkable that these 
 rights should be otherwise dealt with by the Gov* 
 eminent of the United S 
 
 Articles 309 and 310 of the treaty were not eon- 
 sented toby the United States, and it is particularly 
 stipulated in those articles that they shall not ap- 
 ply as between the United States on the one hand, 
 and Germany on the other. 
 
 Article 309 provides that no action shall bo 
 brought and no claim made by persons residing 
 carrying on business within the territory of Ger- 
 many on the one part, and within the terri; the 
 Allied and Ass 1 Powers on the other, or by 
 persons who are citiiens of such powers 
 lv. or by any one deriving title during the war from 
 such persons, by reason of any action which has 
 taken plaee within the territory of the other party 
 between the declaration of war and the coming into 
 
 120 
 
"Economic Sections <>f the Treaty 
 
 effect of the treaty, which might constitute an in- 
 fringement <>l' the rights of industrial, literary, and 
 arl isi ic property, either existing at any time during 
 I in- war or revived thereafter. 
 
 Iu other words, Article 309 includes a reciprocal 
 release as between Germany on the one hand, and 
 
 the Allied and Associated 1'owers on the oilier 
 
 hand, of causes of action growing out of the 
 
 infringement <>l' patents, and other forms Of indus- 
 trial, literary, and artistic property during the 
 war. II was deemed advisable <>n both ethical 
 and legal grounds to except the United Slates 
 from this article. The acceptance ol* the article 
 
 would have amounted to an agreement by the 
 United States that no suits should be brought 
 Cor infringement of American-owned German 
 pateids in exchange for a similar agreement by 
 Germany that no suits should be brought Tor in- 
 fringement of German-owned American patents, for 
 the period covering I he war. 
 
 It seemed arbitrary for the United States to 
 barter the rights of its citizens to sue in Ger- 
 many for infringement committed on German 
 soil during the war, in exchange for the right 
 of German citizens to sue for infringe at com- 
 mitted on United States soil during the war. 
 We were unable to see why llie right of an 
 American citizen to sue in Germany for infringe- 
 ment of his German patent- on a typewriting ma- 
 chine, for instance, should be exchanged for the 
 right of a German citizen to sue for infringement 
 of his United States patent on a process for refining 
 
 121 
 
The Making of the Reparation and 
 
 oil. Moreover, it is doubtful whether the treaty 
 power of the United States is of so broad a scope 
 as to permit of a sacrifice of the property rights of 
 
 its own nationals without providing compensation. 
 Article 310 (from which, as above noted, the 
 
 United States is excepted) proposes in substance 
 
 that all license contracts for the exploitation of in- 
 dustrial property and for the reproduction of liter- 
 ary and artistic works entered into before the dee- 
 laration of war between German subjects on the 
 one part, and the nationals of the Allied and Asso- 
 ciated Powers on the other, are to be considered as 
 canceled by the war: with a further provision that 
 the beneficiary of the license shall be entitled to a 
 period of six months in which he may exacl from 
 the patentee a new license under conditions wlihh, 
 in default of agreement between the parties, ate to 
 be fixed by a special tribunal established for that, 
 purpose by the Government of the country in which 
 the patent or the like had been granted. 
 
 It may well be doubted whether the outbreak of 
 the war of itself terminated license contracts. If 
 not terminated, the license privileges possessed by 
 eiti - f the United States under Gorman-owned 
 United States patents are no doubt valuable to the 
 licensees, and we were unable to find any good rea- 
 son for their annulment, even if it were within the 
 treaty-making power of the rutted States. More- 
 over, it seemed to us more than doubtful whether 
 the provision in Article 310 for the compulsory re- 
 newal of such licenses, upon new terms to be exact- 
 
 122 
 
Economic Sections of the Treaty 
 
 od from the licensor, would be acceptable to public 
 sentiment in the United States. 
 
 I have given a brief and rough outline of provi- 
 sions originally framed by the so-called Economic 
 Commission for insertion into the treaty. These 
 provisions deal with political questions, commer- 
 cial and industrial subjects from the standpoint of 
 international relations, and private rights in vari- 
 ous aspects. They involve technical and difficult 
 questions of domestic law, of international law, and 
 of international practices. To harmonize views, 
 policies, interests, and legal problems was no 
 simple task. On the one hand, it may appear to 
 some that certain subjects were improperly incor- 
 porated into a treaty of peace, or were dealt with 
 too much in detail. On the other hand, it would 
 seem that there should not be too ready criticism 
 of the purpose of the framers of the treaty in seek- 
 ing by comprehensive stipulations to avoid as far 
 as possible future international or private complica- 
 tions resulting from the interruption by war of in- 
 tercourse between the rowers and between their 
 respective nationals. 
 
 The statement is often heard that the Americans 
 did not protect their national interests in the peace 
 negotiations. This statement, I contend, is at vari- 
 ance with the facts. As regards reparation and 
 economic provisions of the treaty in which, as has 
 been seen, the United States lias such an extensive, 
 direct, interest, it may be affirmed that no justifica- 
 tion for such a statement can be found in the light 
 of even the most critical and technical examination, 
 
 123 
 
REPARATION CLAUSES 
 
Summary 
 of Contents. 
 
 SEPARATION. 
 
 Comment. 
 
 Section I. 
 
 GENERAL PROVISIONS. 
 
 Article 231. 
 
 Germany's 
 responsi- 
 bility. 
 
 The Allied and Associated Governments Amora i 
 affirm and Germany accepts the responsi- fS?iithe llty 
 bility of Germany and her allies for caus- oTt^X™ 
 
 ,, ., , , , . , . , ,i notafinan- 
 
 lnc- all the loss and damage to which the ciairespon- 
 
 * ° sibility. 
 
 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. 
 
 Article 232. 
 
 Germany's 
 inability 
 to make 
 complete 
 reparation. 
 
 Germany's 
 reparation 
 obligations. 
 
 The Allied and Associated Governments 
 recognize that the resources of Germany 
 are not adequate, after taking into account 
 permanent diminutions of such resources 
 which will result from other provisions of 
 the present Treaty, to make complete repar- 
 ation for all such loss and damage 
 
 The Allied and Associated Governments, JJjJJJjgJJ, 
 however, require, and Germany undertakes, ow language 
 
 127 
 
Reimburse- 
 ment to Bel- 
 gium for her 
 war coats. 
 
 JRcparatio): Clauses 
 
 that she will make compensation for all ^snef 
 damage done to the civilian population of SjSJiS, 
 the Allied and Associated Powers and to Schwas 
 their property during the period of the omuiy.' 
 belligerency of each as an Allied or Asso- 
 ciated Power against Germany by such ag- 
 gression by land, by sea and from the air, 
 and in general all damage as defined in An- 
 nex I hereto. 
 
 In accordance with Germany's pledges, 
 already given, as to complete restoration 
 for Belgium, Germany undertakes, in addi- 
 tion to the compensation for damage else- 
 where in this Part provided for, as a conse- 
 quence of the violation of the Treaty of 
 1839, to make reimbursements of all sums 
 which Belgium has borrowed from the Al- 
 lied and Associated Governments up to No- 
 vember 11, 191S, together with interest at 
 the rate of five per cent. (5% ) per annum 
 on such sums. This amount shall be de- 
 termined by the Reparation Commission, 
 and the German Government undertakes 
 thereupon forthwith to make a special issue 
 of bearer bonds to an equivalent amount 
 payable in marks gold, on May 1, 192G, or, 
 at the option of the German Government, 
 on the 1st of May in any year up to 1926. 
 Subject to the foregoing, the form of such 
 bonds shall be determined by the Repara- 
 tion Commission. Such bonds shall be 
 handed over to the Reparation Commission, 
 
 This special 
 position for 
 Belgium is 
 derived from 
 Germany's 
 own admis- 
 sions as to 
 her liability 
 on account of 
 tli<' violation 
 ot Belgian 
 neutrality. 
 
 128 
 
Reparation Clause* 
 
 which has authority to take and acknowl- 
 edge receipt thereof on behalf of Belgium. 
 
 Ti.a Article 233. 
 
 Reparation 
 Commission, 
 its powers 
 
 and duties. Tlie amount of the above damage for 
 
 which compensation is to be made by Ger- 
 many shall be determined by an Inter-Al- 
 lied Commission, to be called the Repara- 
 tion Commission and constituted in the 
 form and with the powers set forth here- 
 under and in Annexes II to VII inclusive 
 hereto. 
 
 This Commission shall consider the 
 claims and give to the German Government 
 a just opportunity to be heard. 
 
 The findings of the Commission as to the 
 amount of damage defined as above shall be* 
 concluded and notified to the German Gov 
 eminent on or before May 1, 1021, as rep 
 resenting the extent of that Government's 
 obligations. 
 
 The Commission shall concurrentlv draw 
 up a schedule of payments prescribing the 
 time and manner for securing and discharg- 
 ing the entire, obligation within a period 
 of thirty years from May 1, 1021. If, how- 
 ever, within the period mentioned Ger- 
 many fails to discharge her obligations, 
 any balance remaining unpaid may within 
 the discretion of the Commission, be post- 
 poned for settlement in subsequent years, 
 
 120 
 
5 S 
 
 otherwise in s 
 as \ Iss I G ra- 
 
 the V 
 
 iii this Part of 
 
 . - ... I . 
 
 
 
 
 A:. 
 
 i 
 
 ss as] 
 L, L921, from time to time, cons the 
 • - - and capacity of Germany, and, 
 af ter g i _ her i sentath es a just i 
 
 nuiiry to be hoard, shall have discretion 
 to extend the date, and to modify the form 
 payments, - i h as are to be provided for 
 in . Lance with Article 233; bur not 
 part, except with the spe< 
 anl &s< reral G ents repre- 
 
 sented upon the C ss on. 
 
 Article 2 
 
 - 
 
 In order to enable the Allied and Asso- 
 rted Powers to proceed at once to the 
 restoration of their industrial and economic 
 life, pending the full determination of their 
 claims, Germany shall pay in such instal- 
 ments and in such manner (whether in gold, 
 commodities, ships, securities or otherwise) 
 the Reparation Commission may ti\. 
 during L919, 1920 and the qui months 
 
 of L921, the equivalent of 20,000,000,000 
 
 130 
 
Reparation Clause* 
 
 Reparation 
 iii kind. 
 
 * 
 
 ion 
 i to 
 
 10 
 
 gold marks. Out of iliis sum the expense* jJ^Sfi 
 of the armies of occupation subsequent to gSJJiJJS^ 
 the Armistice of November 11, 1918, shall EBftftha 
 firs! be met, and siicl) supplies of food and !2Ki°food 
 raw materials as may be judged by the Gov- mate 
 emments Of the Principal Allied and Asso- 
 ciated rowers to be essentia] to enable Ger- 
 many to meet her obligations for reparation 
 may also, with the approval of the said 
 Governments, be paid for out of the above 
 
 sum. The balance sliall be reckoned to- 
 wards liquidation of the amounts due for 
 reparation. Germany shall further deposit 
 bonds as prescribed In paragraph 12 (c) 
 of Annex IT hereto. 
 
 Article 236. 
 
 Germany further agrees lo the direct ap- Thesedeiiv- 
 
 ' . erics in kind 
 
 plica! ion of her economic resources to rep- am* wrist 
 
 ■gainst tli'' 
 
 aration as specified in Annexes III, IV, V, initial and 
 
 * 7 7/ BUnscqucnt 
 
 and VI, relating respectively to merchant g*JJ5SJ|J , te 
 shipping, to physical restoration, to coal above - 
 and derivatives of coal, and to dyestuffs and 
 olher chemical products; provided always 
 that the value of the property transferred 
 and any services rendered by her under 
 these Annexes, assessed in the manner 
 i herein prescribed, sliall be credited to her 
 Inwards liquidation of her obligations un- 
 der the above Articles. 
 
 i::i 
 
Reparation Clauses 
 Article 237. 
 
 Division of 
 reparation 
 among the 
 damaged 
 
 nations. 
 
 The successive instalments, including the 
 above sum, paid over by Germany in satis- 
 faction of the above claims will be divided 
 by the Allied and Associated Governments 
 in proportions which have been determined 
 upon by them in advance on a basis of gen- 
 eral equity and of the rights of each. 
 
 For the purposes of this division the 
 value of property transferred and services tfiatnatioM 
 
 ■^ * • receit mg 
 
 rendered under Article 243, and under An- ^nTS 1 " 
 
 nexes III, IV, V, VI, and VII, shall be ESSZ^ 
 
 reckoned in the same manner as cash pay- RepaStfo? 
 
 nients effected in that year. tunJ ' 
 
 Thia 
 operates so 
 
 Restitution 
 of stolen 
 articles. 
 
 Article 238. 
 
 In addition to the payments mentioned 
 above Germany shall effect, in accordance 
 with the procedure laid down by the Repar- 
 ation Commission, restitution in cash of 
 cash taken away, seized or sequestrated, 
 and also restitution of animals, objects of 
 every nature and securities taken away, 
 seized or sequestrated, in the cases in which 
 it proves possible to identify them in terri- 
 tory belonging to Germany or her allies. 
 
 Until this procedure is laid down, resti- 
 tution will continue in accordance with the 
 provisions of the Armistice of November 
 11, 1918, and its renewals and the Protocols 
 thereto. 
 
 .32 
 
Reparation Clauses 
 Article 239. 
 
 The German Government undertakes to 
 make forthwith the restitution contem- 
 plated toy Article 238 and to make the pay- 
 ments and deliveries contemplated by Ar- 
 ticles 233, 234, 235 and 236. 
 
 Article 240. 
 Faciiitosto The German Government recognizes the 
 
 be accorded 
 
 «on R oSSS'iB- Commission provided for by Article 233 as 
 •ion. ^g same mav fo e constituted by the Allied 
 
 and Associated Governments in accordance 
 with Annex II, and agrees irrevocably to 
 the possession and exercise by such Com- 
 mission of the power and authority given to 
 it under the present Treaty. 
 
 The German Government will supply to 
 the Commission all the information which 
 the Commission may require relative to the 
 financial situation and operations and to 
 the property, productive capacity, and 
 stock and current production of raw ma- 
 terials and manufactured articles of Ger- 
 many and her nationals, and further any 
 information relative to military operations 
 which in the judgment of the Commission 
 may be necessary for the assessment of Ger- 
 many's liability for reparation as defined in 
 Annex I. 
 
 The German Government will accord to 
 the members of the Commission and its au- 
 
 133 
 
Rt ion CUm& s 
 
 thorised agents the same rights and im- 
 
 munities as . -.-many by duly 
 
 . d diploma: gents of friendly 
 Powers, 
 
 Germany further agrees to y for 
 
 salsu - and cv ses of the Commiss 
 and of such s - .: may employ. 
 
 Article 241, 
 
 Germany undertakes to pass, issue aud 
 maintain iu force any legislation, orders 
 and de< i - may be ssary to give 
 
 aplet<. - provis 
 
 A 
 
 The pre - :" this of the present 
 
 Treaty do not apply to the property, rights 
 and interests referred toinS . ens 111 and 
 IV of Van X i V Clauses) of the 
 
 present Treaty, nor to the product of their 
 liquidation, es far as concerns any 
 
 final balance in favour ol many under 
 Article 243 (a). 
 
 Article _ i 
 
 The following shall be reckoned as credits * 
 i 
 faw. t» Germany in respect of her reparation ■ ™ x 
 
 obligations : :uv 
 
 rsta very 
 
 (a) Any final balance in favour of Ger- 
 many under Section V I Alsace-Lorraine) of 
 Part III (Political Clauses for Europe- 
 
 134 
 
Reparation Clauses 
 
 and Sections III and IV of Tart X (Eco- 
 nomic Clauses) of the present Treaty; 
 
 (b) Amounts due to Germany in respect 
 of transfers under Section IV (Saar Basin) 
 of Tart IT I (Political Clauses for Europe), 
 Tart IX (Financial Clauses), and Part XII 
 (Ports, Waterways and Railways) ; 
 
 (c) Amounts which in the judgment of 
 the Reparation Commission should be cred- 
 ited to Germany on account of any other 
 transfers under the present Treaty of prop- 
 erly, rights, concessions or other interests. 
 
 In no case however shall credit be given 
 for properly restored in accordance with 
 Article 238 of the present Part. 
 
 Article 244. 
 
 Cession of 
 
 cables. 
 
 The transfer of the German submarine 
 cables which do not form the subject of par- 
 ticular provisions of the present Treaty is 
 regulated by Annex VII hereto. 
 
 ANNEX I. 
 
 The cate- 
 gories of 
 damage 
 for which 
 Germany 
 li liable. 
 
 Compensation may be claimed from Ger- nbam* 
 
 r * tutes the. 
 
 many under Article 232 above in respect of agreed inter- 
 
 * r pretation of 
 
 the total damage under the following cate- *»»epre- 
 
 o o armistice 
 
 rrnrinc • declaration. 
 
 ^ OIRJ> - (See Article 
 
 232). 
 
 (1) Damage to injured persons and to 
 surviving dependents by personal injury to 
 
 135 
 
Reparation Claut 
 
 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 oper- 
 ations of war by the two groups of belliger- 
 ents wherever arising. 
 
 (2) Damage caused by Germany or her 
 allies to civilian victims of acts of cruelty, 
 violence or maltreatment (including in- 
 juries 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. 
 
 (3) Damage caused bv 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 surviv- 
 ing dependents of such victims. 
 
 (4) Damage caused' by any kind of mal- 
 treatment of prisoners of war. 
 
 (5) As damage caused to the people of 
 the Allied and Associated Powers, all pen- 
 sions and compensation in the nature of 
 pensions to naval and military victims of 
 war (including members of the air force), 
 whether mutilated, wounded, sick or in- 
 valided, and to the dependents of such vic- 
 tims, the amount due to the Allied and As- 
 sociated Governments being calculated for 
 
 136 
 
Reparation Clauses 
 
 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. 
 
 i, 6 ) The cost of assistance by the Govern- 
 ment s of the Allied and Associated Powers 
 to prisoners of war and to their families 
 and dependents. 
 
 (7) Allowances by the Governments of 
 the Allied and Associated Powers to the 
 families and dependents of mobilised per- 
 sons or persons serving with, the forces, the 
 amount due to them for each calendar year 
 in which hostilities occurred being calcu- 
 lated for each Government on the basis of 
 the average scale for such, payments in force 
 in France during that vear. 
 
 (S) Damage caused to civilians by being 
 forced by Germany or her allies to labour 
 without just remuneration. 
 
 (9) Damage in respect of all property 
 wherever situated belonging to any of the 
 Allied or Associated States or their na- 
 tionals, 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 oper- 
 ations of war. 
 
 10— 
 01 
 
Reparation Clauses 
 
 (10) Damage in tlie form of levies, fines 
 and other similar exactions imposed by 
 Germany or her allies upon the civilian 
 population. 
 
 AXXEX II. 
 
 The 
 
 Reparation 
 
 Commission. 
 
 1. 
 
 The Commission referred to in Article 
 233 shall he called ''The Reparation Com- 
 mission" and is hereinafter referred to as 
 ''the Commission." 
 
 Ita member- 
 ship. 
 
 2. 
 
 Delegates to this Commission shall be 
 nominated by the United States of America, 
 Great Britain, France, Italy, Japan, Bel- 
 gium and the Serb-Croat-Slovene State. 
 Each of these Powers will appoint one Dele- 
 gate and also one Assistant Delegate, who 
 will take his place in case of illness or neces- 
 sary 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 Towers have the 
 right to take part in the proceedings of the 
 Commission and to record their votes. The 
 Delegates of the United States, Great Brit- 
 ain, France and Italy shall have this right 
 on all occasions. The Delegate of Belgium 
 
 138 
 
Right of 
 withdrawal. 
 
 Participation 
 of other 
 interested 
 states. 
 
 Reparation Clauses 
 
 shall have this right on all occasions other 
 than those referred to below. The Dele- 
 gate of Japan shall have this right on oc- 
 casions when questions relating to damage 
 at sea, and questions arising under Article 
 200 of Tart IX (Financial Clauses) in 
 Avhich 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 considera- 
 tion. 
 
 Each Government represented on the 
 Commission shall have the right to with- 
 draw therefrom upon twelve months' 1 notice 
 filed with the Commission and confirmed in 
 the course of the sixth month after the date 
 of the original notice. 
 
 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 respec- 
 tive claims and interests are under exami- 
 nation or discussion, but without the right 
 to vote. 
 
 In case of the death, resignation or recall 
 of any Delegate, Assistant Delegate or As- 
 sessor, a successor to him shall be nomi- 
 nated as soon as possible. 
 
 139 
 
Reparation Clauses 
 6. 
 
 The Commission will have its principal 
 permanent Bureau in Paris and will hold 
 its first meeting in Paris as soon as practi- 
 cable after the coming into force of the pres- 
 ent 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. 
 
 7. 
 
 The Commission is authorized 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 Com- 
 mission, and to take all executive steps nec- 
 essary for the purpose of discharging its 
 
 140 
 
Germany's 
 
 ri^ht, to be 
 heard. 
 
 Frocedure. 
 
 Reparation Clauses 
 
 duties ; and to delegate authority and discre- 
 tion to officers, agents and committees. 
 
 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 
 part whatever in the decisions of the Com- 
 mission. The Commission shall afford a 
 similar opportunity to the allies of Ger- 
 many, when it shall consider that their in- 
 terests are in question. 
 
 11. 
 
 The Commission shall not be hound by 
 any particular code or rules of law or by any 
 particular rule of evidence or of procedure, 
 
 141 
 
The Commis- 
 sion as agent 
 of the Allied 
 and Associ- 
 ated Powers 
 and its broad 
 authority. 
 
 Reparation Clauses 
 
 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 com- 
 putation. 
 
 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 interpret its provi- 
 sions. Subject to the provisions of the pres- 
 ent Treaty, the Commission is constituted 
 by the several Allied and Associated Gov- 
 ernments referred to in paragraphs 2 and 3 
 above as the exclusive agency of the said 
 Governments respectively for receiving, sell- 
 ing, holding, and distributing the reparation 
 payments to be made by Germany under 
 this Part of the present Treaty. The Com- 
 mission must comply with the following con- 
 ditions and provisions: 
 
 These pro- 
 visions and 
 the unusual 
 authority 
 they confer 
 are designed 
 to make the 
 reparation 
 clauses and 
 the Repara- 
 tion Commis- 
 sion workable 
 and business- 
 like In 
 character. 
 
 instructions (a) Whatever part of the full amount of 
 
 to the v * 
 
 commission. the proved claims is not paid in gold, or in 
 
 142 
 
Reparation Clauses 
 
 ships, securities and commodities or other- 
 wise, Germany shall be required, under such 
 conditions as the Commission may deter- 
 mine, to cover by way of guarantee by an 
 equivalent issue of bonds, obligations or 
 otherwise, in order to constitute an ac- 
 knowledgment of the said part of the debt. 
 
 (b) In periodically estimating Germany's 
 capacity to pay, the Commission •shall ex- 
 amine the German system of taxation, first, 
 to the end that the sums for reparation 
 which Germany is required to pay shall be- 
 come 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 proportionate- 
 ly as that of any of the Powers represented 
 on the Commission. 
 
 Bondiaaues. (c) In order to facilitate and continue These bonds 
 
 cannot be 
 
 the immediate restoration of the economic distributed or 
 
 negotiated 
 
 life of the Allied and Associated countries, without 
 
 " unanimous 
 
 the Commission will as provided in Article pa"a g n rapb (See 
 235 take from Germany by way of security 13) 
 for and acknowledgment of her debt a first 
 instalment of gold bearer bonds free of all 
 taxes and charges of every description estab- 
 lished or to be established by the Govern- 
 ment of the German Empire or of the Ger- 
 man States, or by any authority subject to 
 them; these bonds will be delivered on ac- 
 
 143 
 
Reparation Chiu< - 
 
 count and in three portions, the marks cold 
 being parable in conformity with Article 
 2 _ of Part IX (Finau Clauses) of the 
 present Treaty as folk >: 
 
 (1) To be issued forthwith, 20,000,000,* 
 000 marks gold bearer bonds, payable not 
 later than May 1. 10-1. without interest 
 There shall be specially ap] towai 
 
 amortisation of these bonds the payments 
 which Germany is pledged to make in con- 
 formity with Article 235, after deduction of 
 the sums used for the reimbursement of ex- 
 penses of the armies of occupation and for 
 payment of foodstuffs and raw materials. 
 Such bonds as have not been redeemed by 
 May 1. 1021. shall then be exchanged or new 
 bonds of the same type as those provided for 
 below (paragraph 12, e. (2) ). 
 
 (2) To be issued forthwith, further 10,- 
 000.000.000 marks gold bearer bonds, bear- 
 ing interest at l! 1 - per cent per annum be- 
 tween 1921 and 1926, and thereafter at 5 
 per cert, per annum with an additional 1 
 per cent for amortisation beginning in 1926 
 ou 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 sink- 
 ing fund obligations, a further instalment 
 of 40,000,000,000 marks gold 5 per cent. 
 
 141 
 
Reparation Clauses 
 
 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 Commis- 
 sion from time to time. 
 
 Further issues by way of acknowledgment 
 and security may be required as the Com- 
 mission subsequently determines from time 
 to time. 
 
 Evaluation 
 of damages 
 to tha in- 
 vaded areas. 
 
 (d) In the event of bonds, obligations or 
 oilier evidence of indebtedness issued by 
 Germany by way of security for or acknowl- 
 edgment of her reparation debt being dis- 
 posed of outright, not by way of pledge, to 
 persons oilier than the several Governments 
 in whose favour Germany's original repara- 
 tion indebtedness was created, an amount 
 of such reparation indebtedness shall he 
 deemed to be extinguished corresponding to 
 the nominal value of the bonds, etc., so dis- 
 posed of outright, and the obligation of Ger- 
 many in respect of such bonds shall be con- 
 fined to her liabilities to the holders of the 
 bonds, as expressed upon their face. 
 
 (e) The 
 
 damage 
 
 for repairing, recon- 
 
 structing and rebuilding property in the in- 
 vaded and devastated districts, including re- 
 
 The principle 
 of "replace- 
 ment value" 
 is here 
 adopted. 
 
 145 
 
Reparation Clauses 
 
 installation of furniture, machinery and 
 other equipment, will be calculated accord- 
 ing 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 state- 
 ment of its reasons. 
 
 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 re- 
 corded. 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 ; 
 
 146 
 
Arbitration 
 of certain 
 differrncrg 
 within the 
 Commission. 
 
 11 
 
 Reparation Clauses 
 
 (c) Any postponement, total or partial, 
 beyond the end of 1930, of the payment of 
 instalments falling dne between May 1, 1921, 
 and the end of 1926 inclusive ; 
 
 (d) Any postponement, total or partial, 
 of any instalment falling dne after 1926 for 
 a period exceeding three years; 
 
 (e) Questions of applying in any partic- 
 ular case a method of measuring damages 
 different from that which has been previ- 
 ously applied in a similar case; 
 
 (f) Questions of the interpretation of 
 the provisions of this Part of the present 
 Treaty. 
 
 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 ac- 
 cept. 
 
 14. 
 
 Decisions of the Commission, in accord- pc effect of 
 
 this clause 
 
 ance with the powers conferred upon it, is t° render 
 
 147 
 
Reparation Clauses 
 shall forthwith become binding and may be unnecessary 
 
 ° ^ submission 
 
 put into immediate execution 
 further proceedings. 
 
 without of jgi££ 
 
 ernments 
 represented. 
 
 Issue of 
 Participation 
 Certificates 
 to interested 
 Governments. 
 
 15. 
 
 The Commission will issue to each of the 
 interested Powers, in such form as the Com- 
 mission shall fix : 
 
 ( 1 ) A certificate stating that it holds for 
 the account of the said Power bonds of the 
 issues mentioned above, the said certificate, 
 on the demand of the Power concerned, be- 
 ing divisible in a number of parts not ex- 
 ceeding five; 
 
 (2) From time to time certificates stat- 
 ing the goods delivered by Germany on ac- 
 count 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 negoti- 
 ation, and when goods are delivered by the 
 Commission, certificates to an equivalent 
 value must be withdrawn. 
 
 Tho number 
 of certificates 
 is restricted 
 to avoid a 
 possible 
 tendency of 
 Governments 
 to negotiate 
 tha Commis- 
 sion's own 
 certificates. 
 
 Interest on 
 the Debt. 
 
 16. 
 
 Interest shall be debited to Germany as 
 from May 1, 1921, in respect of her debt as 
 determined by the Commission, after allow- 
 ing for sums already covered by cash pay- 
 
 148 
 
Reparation Clauses 
 
 Notification 
 by Commis- 
 sion in case 
 of default. 
 
 Remedies in 
 event of 
 voluntary 
 default. 
 
 nients or their equivalent, or by bonds is- 
 sued to the Commission, or under Article 
 243. The rate of interest shall be 5 per 
 cent, unless the Commission shall deter- 
 mine at some future time that circum- 
 stances justify a variation of this rate. 
 
 The Commission, in fixing on May 1, 
 1921, the total amount of the debt of Ger- 
 many, may take account of interest due on 
 sums arising out of the reparation of ma- 
 terial damage as from November 11, 1918, 
 up to May 1, 1921. 
 
 17. 
 
 In case of default by Germany in the per- 
 formance 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. 
 
 18. 
 
 The measures w T hich the Allied and Asso- 
 ciated 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 respec- 
 tive Governments may determine to be nec- 
 essary in the circumstances. 
 
 It is particu- 
 larl}* to be 
 noted that 
 these re- 
 prisals can 
 be taken only 
 in the event 
 of a volun- 
 tary default 
 by Germany. 
 
 149 
 
Payment may 
 be accepted 
 otherwise 
 than In 
 money or 
 bonds. 
 
 Reparation Clauses 
 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 Com- 
 mission in the form of chattels, properties, 
 commodities, business, 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 Commis- 
 sion itself. 
 
 This meets a 
 suggestion 
 made by 
 German}' in 
 her observa- 
 tions on the 
 conditions of 
 peace. It is 
 optional 
 with Ger- 
 many to 
 tender pay- 
 ment in this 
 form under 
 thia para- 
 graph. 
 
 20. 
 
 Rights of 
 Allies and 
 Neutrals to 
 be safe- 
 guarded. 
 
 The Commission, in fixing or accepting 
 payment in specified properties or rights, 
 shall have due regard for any legal or equi- 
 table interests of the Allied and Associated 
 Powers or of neutral Powers or of their na- 
 tionals therein. 
 
 Thia prevents 
 
 reparation 
 
 payments 
 
 being made 
 at tha ex- 
 pense of 
 Allies or 
 Neutrals and 
 out of what 
 is really their 
 property. 
 
 21. 
 
 "No member of the Commission shall be 
 responsible, except to the Government ap- 
 pointing him, for any action or omission 
 as such member. No one of the Allied or 
 Associated Governments assumes any re- 
 sponsibility in respect of any other Gov- 
 ernment. 
 
 150 
 
Reparation Clauses 
 
 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. 
 
 Dissolu(i"T 
 of th<: ( oni- 
 inission. 
 
 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. 
 
 ANNEX III. 
 
 Reparation 
 in kind for 
 .-hipping 
 losses. 
 
 1. 
 
 Germany recognises the right of the Al- 
 lied and Associated Powers to the replace- 
 ment, ton for ton (gross tonnage) and class 
 for class, of all merchant ships and fishing 
 bouts lost or damaged owing to the war. 
 
 Nevertheless, and in spite of the fact 
 that the tonnage of German shipping at 
 present in existence is much less than that 
 lost by the Allied and Associated Powers in 
 consequence of the German aggression, the 
 right thus recognised will be enforced on 
 
 151 
 
Reparation Clauses 
 
 German ships and boats under the follow- 
 ing conditions : 
 ships ceded i<he German Government, on behalf of 
 
 by Germany. " 
 
 themselves and so as to bind all other per- 
 sons interested, cede to the Allied and Asso- 
 ciated Governments the property in all the 
 German merchant ships which are of 1,600 
 tons gross and upwards; in one-half, reck- 
 oned in tonnage, of the ships which are be- 
 tween 1,000 tons and 1,600 tons gross; in 
 one-quarter, reckoned in tonnage, of the 
 steam trawlers; and in one-quarter, reck- 
 oned in tonnage, of the other fishing boats. 
 
 The German Government will, within 
 two months of the coming into force of the 
 present Treaty, deliver to the Reparation 
 Commission all the ships and boats men- 
 tioned in paragraph 1. 
 
 3. 
 
 The ships and boats mentioned in para- 
 graph 1 include all ships and boats which 
 (a) fly, or may be entitled to fly, the Ger- 
 man merchant flag; or (b) are owned by 
 any German national, company or corpora- 
 tion or by any company or corporation be- 
 longing to a country other than an Allied 
 or Associated country and under the control 
 or direction of German nationals; or (c) 
 
 152 
 
Reparation Clauses 
 
 are now under construction (1) in Ger- 
 many, (2) in other than Allied or Associ- 
 ated countries for the account of any Ger- 
 man national, company or corporation. 
 
 4. 
 
 For the purpose of providing documents 
 of title for the ships and boats to be handed 
 over as above mentioned; the German Gov- 
 ernment will: 
 
 (a) Deliver to the Reparation Commis- 
 sion in respect of each vessel a bill of sale 
 or other document of title evidencing the 
 transfer to the Commission of the entire 
 property in the vessel, free from all en- 
 cumbrances, charges and liens of all kinds, 
 as the Commission may require; 
 
 (b) Take all measures that may be in- 
 dicated by the Reparation Commission for 
 ensuring that the ships themselves shall be 
 placed at its disposal. 
 
 5. 
 
 As an additional part of reparation, Ger- 
 many agrees to cause merchant ships to be 
 built in German yards for the account of 
 Allied and Associated Governments as fol- 
 lows : 
 
 (a) Within three months of the coming 
 into force of the present Treaty, the Repara- 
 tion Commission will notify to the German 
 
 153 
 
Reparation Clauses 
 
 Government the amount of tonnage to be 
 laid down in German shipyards in each of 
 the two years next succeeding the three 
 months mentioned above. 
 
 (b) Within two years of the coming into 
 force of the present Treaty, the Reparation 
 Commission will notify to the German Gov- 
 ernment the amount of tonnage to be laid 
 down in each of the three years following 
 the two years mentioned above. 
 
 (c) The amount of tonnage to be laid 
 down in each year shall not exceed 200,000 
 tons, gross tonnage. 
 
 (d) The specifications of the ships to be 
 built, the conditions under which they are 
 to be •built and delivered, the price per ton 
 at which they are to be accounted for by 
 the Reparation Commission, and nil other 
 questions relating to the accounting, order- 
 ing, building and delivery of the ships, shall 
 be determined by the Commission. 
 
 G. 
 
 Germany undertakes to restore in kind 
 and in normal condition of upkeep to the 
 Allied and Associated Powers, within two 
 months of -the coining into force of the pres- 
 ent Treaty, in accordance with procedure to 
 be laid down by the Reparation Commis- 
 sion, any boats and other movable appli- 
 ances belonging to inland navigation which 
 
 154 
 
Reparation Clauses 
 
 since August 1, 1914, have by any means 
 whatever come into her possession or into 
 the possession of her nationals, and which 
 can be identified. 
 
 With a view to make good the loss in in- 
 land navigation tonnage, from whatever 
 cause arising, Avhich has been incurred dur- 
 ing the Avar by the Allied and Associated 
 Powers, and which cannot be made good by 
 means of the restitution prescribed above, 
 Germany agrees to cede to the Reparation 
 Commission a portion of the German river 
 fleet up to the amount of the loss mentioned 
 above, provided that such cession shall not 
 exceed 20 per cent, of the river fleet as it 
 existed on November 11, 1918. 
 
 The conditions of this cession shall be 
 settled by the arbitrators referred to in Ar- 
 ticle 339 of Part XII (Ports, Waterways 
 and Railways) of the present Treaty, who 
 are charged with the settlement of diffi- 
 culties relating to the apportionment of 
 river tonnage resulting from the new in- 
 ternational regime applicable to certain 
 river systems or from the territorial changes 
 affecting those systems. 
 
 7. 
 Germany agrees to take any measures 
 that may be indicated to her by the Repara- 
 tion Commission for obtaining the full title 
 to the property in all ships which have dur- 
 ing the war been transferred, or are in proc- 
 
 155 
 
purposes. 
 
 Be partition Clauses 
 
 ess of transfer, to neutral flags, without the 
 consent of the Allied and Associated Gov- 
 ernments. 
 
 8. 
 
 Germany -waives all claims of any de- ™ 9 i "°t r ' 
 scription against the Allied and Associated S^fS^ 
 Governments and their nationals in respect f3i"t' u ' :i 
 of the detention, employment, loss or dam- SSlu^ 
 age of any German ships or boats, excep- amb&eefor 
 tion being made of payments due in respect repatriation 
 of the employment of ships in conformity 
 "with the Armistice Agreement of January 
 13, 1919, and subsequent Agreements. 
 
 The handing over of the ships of the Ger- 
 man mercantile marine must be continued 
 without interrupt ion in accordance with 
 the said Agreement. 
 
 9. 
 
 Germany waives all claims to vessels or 
 cargoes sunk by or in consequence of naval 
 action and subsequently salved, in which 
 any of the Allied or Associated Govern- 
 ments or their nationals may have any in- 
 terest either as owners, charterers, insurers 
 or otherwise, notwithstanding any decree of 
 condemnation which may have been made 
 by a Prize Court of Germany or of her 
 allies. 
 
 15G 
 
Reparation Clauses 
 ANNEX IV. 
 
 1. 
 
 taktadfw TIie Allied and Associated Powers re- 
 
 a?eas. evastated quire, and Germany undertakes, that in 
 part satisfaction of her obligations ex- 
 pressed in the present Part she will, slz here- 
 inafter provided, devote her economic re- 
 sources directly to the physical restoration 
 of the invaded areas of the Allied and As- 
 sociated Powers, to the extent that these 
 Powers may determine. 
 
 2. 
 
 The Allied and Associated Governments 
 may file with the Reparation Commission 
 lists showing: 
 
 berepfa^d. ( a ) Animals, machinery, equipment, 
 tools and like articles of a commercial char- 
 acter, which have been seized, consumed or 
 destroyed by Germany or destroyed in direct 
 consequence of military operations, and 
 which such Governments for the purpose of 
 meeting immediate and urgent needs, desire 
 to have replaced by animals and articles of 
 the same nature which are in being in Ger- 
 man territory at the date of the coming into 
 force of the present Treaty; 
 
 (b) Reconstruction materials (stones, 
 bricks, refractory bricks, tiles, wood, win- 
 
 157 
 
Reparation Clausi s 
 
 dow-glass, steel, lime, cement, etc.), ma- 
 chinery, boating apparatus, furniture and 
 
 like articles of a commercial character 
 which the said Governments desire to have 
 produced and manufactured in Germany 
 and delivered to them to permit of the resto- 
 ration of the invaded areas. 
 
 Lists to be 
 filed with the 
 on. 
 
 3. 
 
 The lists relating to the articles men- 
 tioned in 2 (a) above shall be tiled within 
 sixty days after the date of the coining into 
 force of the present Treaty. 
 
 The lists relating to the articles in 2 (b) 
 above shall be filed on or before December 
 31, 1019. 
 
 The lists shall contain all such details as 
 are customary in commercial contracts 
 dealing with the subject matter, including 
 specifications, dates of delivery (but not ex- 
 tending over more than four years), and 
 places of delivery, hut not price or value, 
 which shall be fixed as hereinafter provided 
 by the Commission. 
 
 
 Action on 
 lists by the 
 Commission. 
 
 Immediately upon the filing of such lists 
 with the Commission, the Commission shall 
 consider the amount and number of the ma- 
 terials and animals mentioned in the lists 
 provided for above which are to be required 
 
 158 
 
 The Ootninis- 
 mnd 
 to t;ike into 
 account the 
 maintenance 
 of Germany's 
 economic life 
 and to give 
 Germany an 
 opportunity 
 lo be heard. 
 
tiepara I ion Clauses 
 
 of Germany. In reaching a decision on this 
 mailer the Commission shall take into ac- 
 count such domestic requirements of Ger- 
 many as it deems essential for the mainte- 
 nance of Germany's social and economic life, 
 the prices and dates at which similar arti- 
 cles can be obtained in the Allied and Asso- 
 ciated countries as compared with those to 
 be fixed for German articles, and the general 
 interest of the Allied and Associated Gov- 
 ernments that the industrial life of Germany 
 be not so disorganised as to affect adversely 
 the ability of Germany to perform the other 
 acts of reparation stipulated for. 
 
 Machinery, equipment, tools and like ar- 
 ticles of a commercial character in actual 
 industrial use are not, however, to be de- 
 manded of Germany unless there is no free 
 stock of such articles respectively which is 
 not in use and is available 1 , and then not in 
 excess of 30 per cent, of the quantity of 
 such articles in use in any one establishment 
 or undertaking. 
 
 The Commission shall give representa- 
 tives of the German Government an oppor- 
 tunity and a time to be heard as to their ca- 
 pacity to furnish the said materials, arti- 
 cles and animals. 
 
 The decision of the Commission shall 
 thereupon and at the earliest possible mo- 
 ment be communicated to the German Gov- 
 
 159 
 
Reparation Clau> 5 
 
 eminent and to the several Interested Allied 
 and Associated Gk 
 
 The German Government undertakes to 
 deliver the materials, articles and animals 
 as specified in the said communication, and 
 the interested Allied and Associated Gov- 
 ernments severally agree to accept the same, 
 provided they conform to the specification 
 r are not. in the judgment of the 
 Commission, unfit to he utilised in the work 
 
 reparation. 
 
 Mr 
 
 o. 
 
 The Commission shall determine the value 
 to he attributed to the materials, articles 
 and animals to he delivered in accordance 
 with the foregoing, and the Allied or Asso- 
 ciated Power receiving the same agrees t^ 
 he charged with such value, and the amount 
 thereof shall he treated as a payment by 
 Germany to he divided in accordance with 
 Article 237 of this Part of the present 
 Treaty. 
 
 In eases where the right to require physi- 
 cal restoration as above provided is exer- 
 cised, the Commission shall ensure that the 
 amount to be credited against the repara- 
 tion obligation of Germany shall be the fair 
 value of work done or materials supplied by 
 Germany, and that the claim made by the 
 interested Power in respect of the damage 
 so repaired by physical restoration shall be 
 
 160 
 
deliveries of 
 animals 
 
 Reparation Clauses 
 
 discharged to the extent of the proportion 
 which the damage thus repaired bears to the 
 whole of the damage thus claimed for. 
 
 6. 
 
 • 
 
 V/.l''''.' r ',':'i"f As an immediate advance on account of 
 the animals referred to in paragraph 2 (a) 
 above, Germany undertakes to deliver in 
 equal monthly instalments in the three 
 months following the coming into force of 
 the present Treaty the following quantities 
 of live slock: 
 
 (1) To the French Government. 
 
 500 stallions (3 to 7 years) ; 
 30,000 fillies and mares (18 months to 
 7 years), type: Ardennais, 
 Bonlonnais or Belgian; 
 2,000 bulls (18 months to 3 years) ; 
 90,000 milch cows (2 to 6 years) ; 
 1,000 rams; 
 100,000 sheep; 
 10.000 goats. 
 
 (2) To the Belgian Government 
 
 200 stallions (3 to 7 years), large 
 Belgian type; 
 
 5,000 mares (3 to 7 years), large Bel- 
 gian type; 
 
 5,000 fillies (18 months to 3 years), 
 large Belgian type; 
 
 161 
 
Reparation Clauses 
 
 2.000 bulls (18 months to 3 years) ; 
 
 50,000 milch cows (2 to 6 years); 
 
 40,000 heifers; 
 
 200 rams; 
 
 20,000 sheep; 
 
 15.000 sows. 
 
 The animals delivered shall bo of average 
 
 health and condition. 
 
 To the extent that animals so delivered 
 cannot be identified as animals taken awa.\ 
 or seized, the value of such animals shall be 
 credited against the reparation obligations 
 of Germany in accordance with paragraph 
 5 of this Annex. 
 
 7. 
 
 Without waiting for the decisions of the 
 Commission referred to in paragraph t of 
 this Annex to be taken. Germany must con- 
 tinue the delivery to France of the agricul- 
 tural material referred to in Article III of 
 the renewal dated January 16, 1919, of the 
 Armistice. 
 
 AXXEX V. 
 
 Reparation German v accords the following options 
 
 in the form " 
 
 ot coai and for the deliverv of coal and derivatives of 
 
 coal products. 
 
 coal to the undermentioned signatories of 
 the present Treaty. 
 
 162 
 
'or France. 
 
 Reparation Clauses 
 2. 
 
 Germany undertakes to deliver to France The second 
 
 17 provision of 
 
 seven million tons of coal per year for ten *y£*J . 
 years. In addition, Germany undertakes replacement 10 
 to deliver to France annually for a period SSSSoJS" 
 
 , . , c i coal mines, 
 
 not exceeding ten years an amount ot coal haaapri- 
 
 . , , oritv. (See 
 
 equal to the difference between the annual Paragraph 100 
 
 production before the war of the coal mines 
 
 of the Nord and Fas de Calais, destroyed as 
 
 a result of the war, and the production of 
 
 the mines of the same area during the years 
 
 in question : such delivery not to exceed 
 
 twenty million tons in any one year of the 
 
 first five years, and eight million tons in any 
 
 one year of the succeeding five years. 
 
 It is understood that due diligence will 
 be exercised in the restoration of the de- 
 stroyed mines in the Nord and the Pas de 
 Calais. 
 
 3. 
 
 ror Belgium. Germany undertakes to deliver to Belgium 
 eight million tons of coal annually for ten 
 years. 
 
 4. 
 
 For Italy. 
 
 12 
 
 Germany undertakes to deliver to Italy 
 up to the following quantities of coal: 
 
 163 
 
Reparation Glauses 
 
 July 1019 to June 1920.. 
 
 4 1 o million tons, 
 
 — 1920 — 
 
 1921.. 
 
 6 — 
 
 — 1921 — 
 
 1022.. 
 
 T 1 j — 
 
 — 192-2 — 
 
 1023.. 
 
 8 — 
 
 — 1923 — 
 
 1024.. 
 
 8y 2 - 
 
 and each of the following 
 
 
 live rears .... 
 
 
 81 -. — 
 
 At least two-thirds of the actual deliveries 
 to be land-borne. 
 
 5. 
 
 E^Lnburg. Germany further undertakes to deliver an- 
 nually to Luxemburg, if directed by the 
 Reparation Commission, a quantity of coal 
 equal to the pre-war annual consumption of 
 German coal in Luxemburg-. 
 
 6. 
 
 Price.*. TJie ppiceg tQ be pai( j fop coa j deliyered 
 
 under these options shall be as follows; 
 
 (a) For overland delivery, including de- 
 livery by barge, the German pithead price to 
 German nationals, plus the freight to 
 French, Belgian, Italian or Luxemburg 
 frontiers, provided that the pithead price 
 does not exceed the pithead price of British. 
 coal for export. In the case of Belgian 
 bunker coal, the price shall not exceed the 
 Dutch bunker price. 
 
 Railroad and barge tariffs shall not be 
 higher than the lowest {similar rates paid in 
 Germany. 
 
 164 
 
Coal 
 
 products. 
 
 Reparation Clauses 
 
 (b) For sea delivery, the German export 
 price f. o. b. German ports, or the British 
 export price f. o. b. British ports, whichever 
 may be lower. 
 
 7. 
 
 The Allied and. Associated Governments 
 interested may demand the delivery, in place 
 of coal, of metallurgical coke in the propor- 
 tion of 3 tons of coke to 4 tons of coal. 
 
 8. 
 
 Germany undertakes to deliver to France, 
 and to transport to the French frontier by 
 rail or by water, the following products, 
 during each of the three years following the 
 coming into force of this Treaty : 
 
 Benzol 35,000 tons. 
 
 €oal tar 50,000 tons. 
 
 Sulphate of ammonia. . 30,000 tons. 
 
 All or pan of the coal tar may, at the op- 
 tion of the French Government, be replaced 
 by corresponding quantities of products of 
 distillation, such as light oils, heavy oils, 
 anthracene, naphthalene or pitch. 
 
 9. 
 
 The price paid for coke and for the ar- 
 ticles referred to in the preceding paragraph, 
 shall be the same as the price paid by Ger- 
 
 1G5 
 
 Coke. 
 
Reparation Clause* 
 
 man nationals under the same conditions 
 of shipment to the French frontier or to the 
 German ports, and shall be subject to any 
 advantages which may be accorded similar 
 
 products furnished to German nationals. 
 
 Supervision 
 .ind modifi- 
 i .ition by 
 Reparation 
 t'onuuission. 
 
 10. 
 
 The foregoing options shall be exercised 
 through the intervention of the Reparation 
 Commission, which, subject to the specific 
 provisions hereof, shall have power to de- 
 termine all questions relative to procedure 
 and the qualities and quantities of products, 
 the quantity of coke which may be substi- 
 tuted for coal, and the times and modes of 
 delivery and payment. In giving notice to 
 the German Government of the foregoing 
 options the Commission shall give at least 
 120 days' notice of deliveries to be made 
 after January 1, 1020, and at least 30 days' 
 notice of deliveries to be made between the 
 coming into force of this Treaty and Janu- 
 ary 1, 1920. Until Germany has received 
 the demands referred to in this paragraph, 
 the provisions of the Protocol of December 
 25. 1018, (Execution of Article VI of the 
 Armistice of November 11, 1918) remain 
 in force. The notice to be given to the Ger- 
 man Government of the exercise of the right 
 of substitution accorded by paragraphs 7 
 and 8 shall be such as the Reparation Com- 
 mission may consider sufficient. If the 
 
 Th<> Commis- 
 sion is 
 required to 
 take into 
 account the 
 industrial 
 reqiiirt'inents 
 of Germany 
 anj may 
 modify 
 the coal 
 deliveries 
 accordingly. 
 
 166 
 
Repartition Clauses 
 
 'Commission shall determine that the full 
 exercise of the foregoing options would in- 
 terfere unduly with the industrial require- 
 ments of Germany, the Commission is au- 
 thorised to postpone or to cancel deliveries, 
 and in so doing to settle all questions of 
 .priority; but the coal to replace coal from 
 destroyed mines shall receive priority over 
 other deliveries. 
 
 ANNEX VI. 
 
 Reparation Germany accords to the Reparation Com- 
 
 in trio form « x 
 
 ofdyostiiff mission an option to require as part of 
 
 and eneinieiil x IX 
 
 reparation the delivery by Germany of such 
 quantities and kinds of dyestuffs and chem- 
 ical drugs as the Commission may desig- 
 nate, not exceeding 50 per cent, of the total 
 stock of each and every kind of dyestuff 
 and chemical drug in Germany or under 
 German control at the date of the coming 
 into force of the present Treaty. 
 
 This option shall be exercised within sixty 
 days of the receipt by the Commission of 
 such particulars as to stocks as may be 
 considered necessary by the Commission. 
 
 2. 
 
 Germany further accords to the Repara- 
 tion Commission an option to require de- 
 
 1G7 
 
 deliverle 
 
Be pa rat ion Clause* 
 
 liverv during the period from the date of 
 the coming into force of the present Treaty 
 until January 1, 1920, and during each 
 period of six months thereafter until Jan- 
 uary 1, 1925, of any spec! tied kind of dye- 
 stuff and chemical drug up to an amount 
 not exceeding 25 per cent, of the German 
 production of such dyestuffs and chemical 
 drugs during the previous six months pe- 
 riod. If in any case the production during 
 such previous six months was, in the opin- 
 ion of the Commission, less than normal, 
 the amount required may he 25 per cent, of 
 the normal production. 
 
 Such option shall be exercised within 
 four weeks after the receipt of such particu- 
 lars as to production and in such form as 
 may he considered necessary by the Tom- 
 mission; these particulars shall be fur- 
 nished bv the German Government imme- 
 
 « 
 
 diately after the expiration of each, six 
 months period. 
 
 For dyestuffs and chemical drugs deliv- 
 ered under paragraph 1, the price shall he 
 fixed bv the Commission having regard to 
 pre-war net export prices and to subsequent 
 increases of cost. 
 
 For dvestuffs and chemical drugs deliv- 
 ered under paragraph 2. the price shall be 
 fixed by the Commission having regard to 
 
 IGS 
 
Reparation Clauses 
 
 pre-war net export prices and subsequent 
 variations of costs, or the lowest net selling 
 price of similar dyestuffs and chemical 
 drugs to any other purchaser. 
 
 4. 
 
 All details, including mode and times of 
 exercising the options, and making delivery, 
 and all other questions arising under this 
 arrangement shall be determined by the Rep- 
 aration Commission; the German Govern- 
 ment will furnish to the Commission all 
 necessary information and other assistance 
 which it may require. 
 
 5. 
 
 The above expression "dyestuffs and 
 chemical drugs" includes all synthetic dyes 
 and drugs and intermediate or other prod- 
 ucts used in connection with dyeing, so far 
 as they are manufactured for sale. The 
 present arrangement shall also apply to cin- 
 chona bark and salts of quinine. 
 
 ANNEX VII. 
 
 cables ceded. Germany renounces on her own behalf 
 and on behalf of her nationals in favour of 
 the Principal Allied and Associated Powers 
 all rights, titles or privileges of whatever 
 nature in the submarine cables set out be- 
 low, or in any portions thereof : 
 
 1G9 
 
Reparation Clans 
 
 Emden-Vigo : from the Straits of Dover 
 
 to off Vigo; 
 Emden-Brest: from off Cherbourg to 
 
 Brest : 
 Emden-Teneriffe : from off Dunkirk to 
 
 off Teneriffe : 
 Enulen-Azores (1) : from the Straits 
 
 of Dover to Fayal : 
 Enulen-Azores (2) : from the Straits 
 
 of Dover to Fayal : 
 Azores-New- York {!) : from Fayal to 
 
 New York: 
 Azores-New- York (2) : from Fayal to 
 
 the longitude of Halifax; 
 Teneriffe-Monrovia : from off Teneriffe 
 
 to off Monrovia : 
 
 Monrovia-Lome: 
 
 . . .flat 2 o 30'N.; 
 
 from about i .. .,.,,,. , n . . 
 
 ( long. :< 40 ^ . of Greenwich ; 
 
 \ Fit/ :2°20'N.; 
 to about. . . | long :5Q 3(y w Ql Greenwicll . 
 
 and from Jlat ^^IS'X.; 
 about I long. :0° 00' 
 
 to Lome; 
 
 Lome-Duala: from Lome to Duala; 
 
 Monrovia-Fernambneo: from off Mon- 
 rovia to off Pernambneo: 
 
 Constantinople-Oonstanza : from Con- 
 stantinople to Constanza; 
 
 Yap-Shanghai, Yap-Guam, and Yap- 
 Menado (Celebes) : from Yap Island 
 
 170 
 
Reparation Clause* 
 
 to Shanghai, from Yap Island to 
 Guam Island, and from Yap Island 
 to Menado. 
 
 The value of the above mentioned cables 
 or portions thereof in so far as they are 
 privately owned, calculated on the basis of 
 the original cost less a suitable allowance 
 for depreciation, shall be credited to Ger- 
 many in the reparation account. 
 
 Section TT. 
 
 SPECIAL PROVISIONS. 
 
 Special 
 articles to 
 
 tt? restored. 
 
 To France. 
 
 Article 245. 
 
 Within six months after the coming into 
 force of the present Treaty the German Gov- 
 ernment must restore to the French Govern- 
 ment the trophies, archives, historical sou- 
 venirs or works of art carried away from 
 France by the German authorities in the 
 course of the war of 1870-1871 and during 
 this last war, in accordance with a list 
 which will be communicated to it by the 
 French Government; particularly the 
 French fla^s taken in the course of the war 
 of 1870-1871 and all the political papers 
 taken by the German authorities on October 
 10, 1S70, at the chateau of Oercay, near 
 Brunoy (Seino-ot-Oise) belonging at the 
 lime to Mr. Kuher, formerly Minister of 
 State. 
 
 171 
 
Reparation Clauses 
 
 To the 
 Hedjaz. 
 
 To Great 
 Britain. 
 
 Article 246. 
 
 Within six months from the coming into 
 force of the present Treaty, Germany will 
 restore to His Majesty the King of the Hed- 
 jaz the original Koran of the Caliph Oth- 
 man, which was removed from Medina by 
 the Turkish authorities and is stated to 
 have been presented to the ex-Emperor 
 William II. 
 
 Within the same period Germany will 
 hand over to His Britannic Majesty's Gov- 
 ernment the skull of the Sultan Mkwawa 
 which was removed from the Protectorate 
 of German East Africa and taken to Ger- 
 many. 
 
 The delivery of the articles above re- 
 ferred to will be effected in such place and 
 in such conditions as may be laid down by 
 the Governments to which they are to be 
 restored. 
 
 Article 247. 
 
 to Belgium. Germany undertakes to furnish to the 
 University of Louvain, within three months 
 after a request made by it and transmitted 
 through the intervention of the Repara- 
 tion Commission, manuscripts, incunabula, 
 printed books, maps and objects of collec- 
 tion corresponding in number and value to 
 those destroyed in the burning by Germany 
 
 172 
 
Reparation Clauses 
 
 of the Library of Louvain. All details re- 
 garding such replacement will he deter- 
 mined by the Reparation Commission. 
 
 Germany undertakes to deliver to Bel- 
 gium, through the Reparation Commission, 
 within six months of the coming into force 
 of the present Treaty, in order to enable 
 Belgium to reconstitute two great artistic 
 works : 
 
 ( 1 ) The leaves of the triptych of the Mys- 
 tic Lamb painted by the Van Eyck brothers, 
 formerly in the Church of St. Bavon at 
 Ghent, now in the Berlin Museum ; 
 
 (2) The leaves of the triptych of the Last 
 Supper, painted by Dierick Bouts, formerly 
 in the Church of St. Peter at Louvain, two 
 of which are now in the Berlin Museum 
 and two in the Old Pinakotkek at Munich. 
 
 Reparation 
 and Treaty 
 costa a first 
 charge on 
 German pub- 
 lic assets. 
 
 PART IX. 
 FINANCIAL CLAUSES. 
 
 Article 248. 
 
 Subject to such exceptions as the Repara- 
 tion Commission may approve, a first charge 
 upon all the assets and revenues of the Ger- 
 man Empire and its constituent States 
 shall be the cost of reparation and all other 
 costs arising under the present Treaty or 
 any treaties or agreements supplementary 
 
 173 
 
 The Repara- 
 tion Commis- 
 sion may 
 create excep- 
 tions, and 
 thus provide 
 for Germany 
 raising 
 money for 
 other than 
 Treaty pur- 
 poses. The 
 charge does 
 not extend 
 
Reparation Claw 
 
 thereto or under arrangements concluded g 
 
 between Germany and the Allied and Asso- {Y 
 
 dated Powers during the Armistice or its ****** 
 
 extensions. 
 
 cental of jj p t0 j£ aj ^ 1921 q^ G ormau Govern- 
 
 export of sold. * « 
 
 ment shall not export or dispose of, and 
 shall forbid the export or disposal of, gold 
 without the previous approval of the Allied 
 and Associated Powers acting through the 
 Reparation Commission. 
 
 Article l!49. 
 
 costs of the There shall be paid by the German Gov- 
 
 occup.v eminent the total cost of all armies of the 
 
 Allied and Associated Governments in oc- 
 cupied German territory from the date of 
 the signature of the Armistice of November 
 11, 1918, including the keep of men and 
 beasts, lodging and billeting, .pay and al- 
 lowances, salaries and wages, bedding, heat- 
 ing, lighting, clothing, equipment, harness 
 and saddlery, armament and rolling-stock, 
 air services, treatment of sick and wounded, 
 veterinary and remount services, transport 
 service of all sorts (such as by rail, sea or 
 river, motor lorries'!, communications and 
 correspondence, and in general the cost of 
 all administrative or technical services the 
 working of which is necessary (or the train- 
 ing of troops and for keeping their numbers 
 
 174 
 
Reparation Clauses 
 
 up to strength and preserving their military 
 efficiency. 
 
 The cost of such liabilities under the 
 above heads so far as they relate to pur- 
 chases or requisitions by the Allied and As- 
 sociated Governments in the occupied terri- 
 tories shall be paid by the German Govern- 
 ment to the Allied and Associated Govern- 
 ments in marks at the current or agreed 
 rate of exchange. All other of the above 
 costs shall be paid in gold marks. 
 
 Article 250. 
 
 Non-military 
 property 
 surrendered 
 under the 
 Armistice 
 to be credited 
 tu Uermany. 
 
 Germany confirms (lie surrender of all 
 material handed over to the Allied and As- 
 sociated Powers in accordance with, the 
 Armistice of November 11, 1918, and sub- 
 sequent Armistice Agreements, and recog- 
 nises the title of the Allied and Associated 
 rowers to such material. 
 
 There shall be credited to the German 
 Government, against the sums due from it 
 to the Allied and Associated Powers for 
 reparation, the value, as assessed by the 
 Reparation Commission, referred to in Ar- 
 ticle 233 of Part VITT (Reparation) of the 
 present Treaty, of the material handed over 
 in accordance with Article VII of the Ar- 
 mistice of November 11, 1918, or Article III 
 of the Armistice Agreement of January 1G, 
 1919, as well as of any other material 
 
 175 
 
Reparation Clauses 
 
 handed over in accordance with the Armis- 
 tice of November 11, 1918, and of subse- 
 quent Armistice Agreements, for which, as 
 having non-military value, credit should 
 in the judgment of the Reparation Com- 
 mission be allowed to the German Govern- 
 ment. 
 
 Property belonging to the Allied and As- 
 sociated Governments or their nationals re- 
 stored or surrendered under the Armistice 
 Agreements in specie shall not be credited 
 to the German Government. 
 
 Article 251. 
 
 priority The priority of The charges established by 
 
 jf Treaty l 
 
 charges. Article 218 shall, subject to the qualifica- 
 tions made below, be as follows : 
 
 (a) The cost of the armies of occupation 
 as defined under Article 219 during the Ar- 
 mistice and its extensions ; 
 
 (b) The cost of any armies of occupation 
 as defined under Article 219 after the com- 
 ing into force of the present Treaty; 
 
 (<) The cost of reparation arising out of 
 the present Treaty or any treaties or con- 
 ventions supplementary thereto; 
 
 (d) The cost of all other obligations in- 
 cumbent on Germany under the Armistice 
 Conventions or under this Treaty or any 
 
 176 
 
May 1, 1021. 
 
 Reparation Clauses 
 
 treaties or conventions supplementary 
 thereto. 
 
 The payment for such supplies of food and provision for 
 
 tit safeguarding 
 
 raw material for Germany and such other Germany's 
 
 " food and raw 
 
 payments as may be judged by the Allied JgKSL*, 
 and Associated Powers to be essential to ESSs? 
 enable Germany to meet her obligations in SSrn?i u "' 
 respect of reparation will have priority to 
 the extent and upon the conditions which 
 have been or may be determined by the Gov- 
 ernments of the said Powers. 
 
 Article 252. 
 
 The right of each of the Allied and Asso- 
 ciated Powers to dispose of enemy assets 
 and property within its jurisdiction at the 
 date of the coming into force of the present 
 Treaty is not affected by the foregoing pro- 
 visions. 
 
 Article 253. 
 
 Nothing in the foregoing provisions shall 
 prejudice in any manner charges or mort- 
 gages lawfully effected in favour of the 
 Allied or Associated Powers or their na- 
 tionals respectively, before the date at which 
 a state of war existed between Germany and 
 the Allied or Associated Power concerned, 
 by the German Empire or its constituent 
 States, or by German nationals, on assets in 
 their ownership at that date. 
 
 177 
 
Credit to 
 German}' on 
 account of 
 pre-war debt 
 attributable 
 to ceded 
 territory. 
 
 Reparation Clauses 
 Article 254. 
 
 The Powers to which. German territory is 
 ceded shall, subject to the qualifications 
 made in Article 255, undertake to pay : 
 
 (1) A portion of the debt of the German 
 
 Empire as it stood on August 1, 
 1914, calculated on the basis of 
 the ratio between the average for 
 the three financial years 1911, 19 L2, 
 1913, of such revenues of the ceded 
 territory, and the average for the 
 same years of such revenues of the 
 whole German Empire as in the 
 judgment of the Reparation Com- 
 mission are best calculated to rep- 
 resent the relative ability of the re- 
 spective territories to make pay- 
 ment ; 
 
 (2) A portion of the debt as it stood on 
 
 August 1, 1914, of the German 
 State to which the ceded territory 
 belonged, to be determined in ac- 
 cordance with the principle stated 
 above. 
 
 Such portions shall be determined by the 
 Reparation Commission. 
 
 The method of discharging the obligation, 
 both in respect of capital and of interest, so 
 assumed shall be fixed by the Reparation 
 Commission. Such method may take the 
 
 178 
 
Exception 
 in the case 
 of Alsace- 
 Lorraine. 
 
 Partial 
 exception in 
 the raso of 
 Poland. 
 
 Reparation Clauses 
 
 form, inter alia, of the assumption by the 
 Tower to which the territory is ceded of 
 Germany's liability for the German debt 
 held by her nationals. But in the event of 
 the method adopted involving any payments 
 to the German Government, such payments 
 shall be transferred to the Reparation Com- 
 mission on account of the sums due for repa- 
 ration so long as any balance in respect of 
 such sums remains unpaid. 
 
 Article 255. 
 
 • To* 9 exeep- 
 
 (1) As an exception to the above provi- tion is based 
 
 v ' l l on the like 
 
 sion and inasmuch as in 1871 Germany re- action of 
 
 ^ Germany 
 
 fused to undertake any portion of the bur- &»i87i. 
 den of the French debt, France shall be, in 
 respect of Alsace-Lorraine, exempt from any 
 payment under Article 254. 
 
 (2) In the case of Poland that portion of 
 the debt which, in the opinion of the Repara- 
 tion Commission, is attributable to the 
 measures taken by the German and Prus- 
 sian Governments for the German colonisa- 
 tion of Poland shall be excluded from the 
 apportionment to be made under Article 
 254. 
 
 (3) In the case of all ceded territories 
 other than Alsace-Lorraine, that portion of 
 the debt of the German Empire or German 
 States which, in the opinion of the Repara- 
 
 13 
 
 179 
 
Reparation Clauses 
 
 tion Commission, represents expenditure by 
 the Governments of the German Empire or 
 States upon the Government properties re- 
 ferred to in Article 256 shall be excluded 
 from the apportionment to be made under 
 Article 2o± 
 
 Article 25G. 
 
 Credit to 
 Germany 
 for public 
 property 
 in ceded 
 territory. 
 
 Exception 
 in the case 
 of Alsace- 
 Lorraine. 
 
 Powers to -which German territory is ceded 
 shall acquire all property and possessions 
 situated therein belonging to the German 
 Empire or to the German States, and the 
 value of such acquisitions shall be fixed by 
 the Reparation Commission, and paid by the 
 State acquiring the territory to the Repara- 
 tion Commission for the credit of the Ger- 
 man Government on account of the sums 
 due for reparation. 
 
 For the purposes of this Article the prop- 
 erty and possessions of the German Empire 
 and States shall be deemed to include all 
 the property of the Crown, the Empire or 
 the States, and the private property of the 
 former German Emperor and other Royal 
 personages. 
 
 In view of the terms on which Alsace-Lor- ™^, a * 
 raine was ceded to Germany in 1S71, France uke 
 shall be exempt in respect thereof from mak- 
 ing any payment or credit under this Arti- 
 cle for any property or possessions of the 
 German Empire or States situated therein. 
 
 in 1871. 
 
 180 
 
Reparation Clauses 
 
 Belgium also shall be exempt from mak- 
 ing any payment or any credit under tbis 
 Article for any property or possessions of 
 the German Empire or States situated in 
 German territory ceded to Belgium under 
 the present Treaty. 
 
 Article 257. 
 
 ? u P e ™ a " . In the case of the former German terri- 
 
 debt allocated 
 
 to bladmL tories, including colonies, protectorates or 
 l s mandate? er dependencies, administered by a Mandatory 
 under Article 22 of Part I (League of Na- 
 tions) of the present Treaty, neither the 
 territory nor the Mandatory Power shall be 
 charged with any portion of the debt of the 
 German Empire or States. 
 
 All property and possessions belonging id 
 the German Empire or to the German States 
 situated in isuch territories shall be trans- 
 ferred with the territories to the Manda- 
 tory Power in its capacity as such and no 
 payment shall be made nor any credit given 
 to those Governments in consideration of 
 this transfer. 
 
 For the purposes of this Article the prop- 
 erty and possessions of the German Empire 
 and of the German States shall be deemed 
 to include all the property of the Crown, 
 the Empire or the States and the private 
 property of the former German Emperor 
 and other Royal personages. 
 
 181 
 
Reparation Clauses 
 Article 258. 
 
 Waiver by 
 
 Germany I 
 
 rights in 
 banks, et 
 of her former 
 allies and 
 in Rus 
 
 Financ-inl 
 adjustment) 
 with r< 
 to Turkey, 
 Austria- 
 Hungary, 
 Roumania 
 and Russia. 
 
 Germany lenounces all rights accorded to 
 her or her nationals by treaties, conventions 
 or agreements, of whatsoever kind, to repre- 
 sentation upon or participation in the con- 
 trol or administration of commissions, state 
 banks, agencies or other financial or eco- 
 nomic organizations of an international 
 character, exercising powers of control or 
 administration, and operating in any of the 
 Allied or Associated States, or in Austria. 
 Hungary, Bulgaria or Turkey, or in the de- 
 pendencies o( these States, or in the former 
 Russian Empire. 
 
 Article 259, 
 
 (1) Germany agrees to deliver within one 
 month from the date of the coming into 
 force of the present Treaty, to such author- 
 ity as the Principal Allied ami Associated 
 Powers may designate, the sum in gold 
 which was to be deposited in the Reichsbank 
 in the name of the Council of the Adminis- 
 tration of the Ottoman Public Debt as se- 
 curity for the first Issue o( Turkish Govern- 
 ment currency notes. 
 
 (2) Germany recognises her obligation to 
 make annually for the period o\' twelve years 
 the payments in gold for which provision 
 is made in the German Treasury Bonds de- 
 
 182 
 
Reparation Clauses 
 
 posited by her from time to time in the name 
 of the Council of the Administration of the 
 Ottoman Public Debt as security for the sec- 
 ond and subsequent issues of Turkish Gov- 
 ernment currency notes. 
 
 (3) Germany undertakes to deliver, with- 
 in one month from the coming into force of 
 the present Treaty, to such authority as the 
 Principal Allied and Associated Powers 
 may designate, the gold deposit constituted 
 in the Reichsbank or elsewhere, represent- 
 ing the residue of the advance in gold agreed 
 to on May 5, 1915, by the Council of the Ad- 
 ministration of the Ottoman Public Debt to 
 the Imperial Ottoman Government. 
 
 (4) Germany agrees to transfer to the 
 Principal Allied and Associated Powers any 
 title that she may have to the sum in gold 
 and silver transmitted by her to the Turk- 
 ish Ministry of Finance in November, 1918, 
 in anticipation of the payment to be made 
 in May, 1919, for the service of the Turkish 
 Internal Loan. 
 
 (5) Germany undertakes to transfer to 
 the Principal Allied and Associated Pow- 
 ers, within a period of one month from the 
 coming into force of the present Treaty, 
 any •sums in gold transferred as pledge or 
 as collateral security to the German Govern- 
 ment or its nationals in connection with 
 
 1S3 
 
Reparation Clan- • 
 
 loans made by them to the Austro-Hungar- 
 ian Government. 
 
 (6) Without prejudice to Article 292 of 
 Tart X (Economic Clauses) of the present 
 Treaty. Germany confirms the renunciation 
 
 provided for in Article XV of the Armistice 
 of November 11, 1918, of any benefit dis- 
 closed by the Treaties of Bucharest and of 
 Prest-Litovsk and by the treaties supple- 
 mentary thereto. 
 
 -many undertakes to transfer, either to 
 Roumania or to the Principal Allied and 
 Associated Powers as the case may be, all 
 monetary instruments, specie, securities and 
 negotiable instruments, or goods, -which she 
 has received under the aforesaid Treaties. 
 
 7 | The sums of money and all securi- 
 ties, instruments and goods of whatsoever 
 nature, to be delivered, paid and transferred 
 under the provisions of this Article, shall be 
 disposed of by the Principal Allied and As- 
 sociated Powers in a manner hereafter to be 
 determined by these Powers. 
 
 Agreement 
 by Genua • 
 to cev'e r - 
 in public 
 util 
 
 ss -■; 
 
 Sta: 
 
 Article 260. 
 
 Without prejudice to the renunciation of 
 any rights by Germany on behalf of herself 
 or of her nationals in the other provisions 
 of the present Treaty, the Reparation Com- 
 mission may within one year from the com* 
 
 1S4 
 
Reparation Clauses 
 
 ing into force of the present Treaty demand 
 thai the German Government become pos- 
 sessed of any rights and interests of German 
 nationals in any public utility undertaking 
 or in auy concession operating in Russia, 
 China, Turkey, Austria, Hungary and Bul- 
 garia, or in the possessions or dependencies 
 of these States or in any territory formerly 
 belonging to Germany or her allies, to be 
 ceded by Germany or her allies to any 
 Power or to be administered by a Mandatory 
 under the present Treaty, and may require 
 that the German Government transfer, 
 within six months of the date of demand, 
 all such lights and interests and any simi- 
 lar rights and interests the German Gov- 
 ernment may itself possess to the Repara- 
 tion Commission. 
 rviv.ito Germany shall be responsible for in- 
 
 owners wno v ■*■ 
 
 ; to , i''T,Xnm-' ! d < Miini lying her nationals so dispossessed, 
 S,!™ 11 " and the Reparation Commission shall credit 
 Germany, on account of sums due for rep- 
 aration, with such sums in respect of the 
 value of the transferred rights and interests 
 as may be assessed by the Reparation Com- 
 mission, and the German Government shall, 
 within six: months from the coming into 
 force of the present Treaty, communicate 
 to the Reparation Commission all such 
 rights and interests, whether already 
 granted, contingent or not yet exercised, 
 and shall renounce on behalf of itself and 
 
 1S5 
 
s s 
 
 - • -aals in Allied and As- 
 
 sociated Powers all such rights and inter- 
 ests which haw not boon so communicated. 
 
 \ . 261. 
 
 - 
 or 
 
 - 
 - 
 
 rmanj undertakes to transfei to the 
 Allied and Associated Powers any clah a 
 
 Diaj have to payment or repayment by 
 the GoYernmen - Austria, Hungary, Bul- 
 gai Tn: key. and. in particular, b 
 
 claims which ma> arise, new or hereafter. 
 m the fulfilment of undertakings made 
 by Germany during the war to these Gov- 
 ernments. 
 
 A : 262. 
 
 1 
 
 -<-r 
 
 Any monetary obligation due bv Ger- 
 
 many arising out of the present Treaty and 
 expressed in terms of gold marks shall be 
 payable at the option of the creditors in 
 pounds sterling payable in London; geld 
 dollars of the United States of America pay- 
 able in New York; geld francs payable in 
 Paris: or gold lire payable in Kerne. 
 
 For the purpose of this Article the geld 
 veins mentioned above shall be defined as 
 being of the weight and fineness o\' gold as 
 enacted bv law on January 1. 101 I. 
 
 IS6 
 
Reparation ( 'lauses 
 Article 263. 
 
 ^ i "; i i: ; l , iii Germany gives a guarantee to the Bra- 
 toBraiii. zilian Government that all sums represent- 
 ing the gale of coffee belonging to the State 
 of Sao Paolo in the ports of Hamburg, Brem- 
 en, Antwerp and Trieste, which were de- 
 posited with the Bank of BleichrOder at Ber- 
 lin, shall be reimbursed together with inter- 
 est al the rate or rates agreed upon. Ger- 
 many having prevented the transfer of the 
 sums in question to the State of Sao Paolo 
 at the proper time, guarantees also that the 
 reimbursement shall be effected at the rate 
 of exchange of the day of the deposit. 
 
ECONOMIC CLAUSES 
 
Attached to the text of the Economic 
 Clauses as here printed are marginal notes 
 which were prepared by the American dele- 
 gation to aid in the consideration of the 
 Treaty in its draft form. The notes on the 
 left summarize the contents of the several 
 clauses; those on the right mention points 
 of significance to the American negotiators. 
 The notes are not in every detail the same 
 as those that were attached to the draft 
 Treaty, but in essentials they conform to 
 the original, and they indicate in what way 
 the American economic staff did its work. 
 
ECONOMIC CLAUSES. 
 Section I. 
 
 COMMERCIAL RELATIONS. 
 
 Chapter I. 
 
 customs regulations, duties and 
 restrictions. 
 
 Article 264. 
 
 Equality of 
 
 duties for 
 all states. 
 
 Equality and 
 regulation of 
 imports. 
 
 Germany undertakes that goods the prod- JJ^}^,** 
 uce or manufacture of any one of the Allied If™ ^« 83 
 or Associated States imported into German flS aIS' 
 territory, from whatsoever place arriving, 280) 
 shall not be subjected to other or higher 
 duties or charges (including internal 
 charges ) than those to which the like goods 
 the produce or manufacture of any other 
 such State or of any other foreign country 
 are subject. 
 
 Germany will not maintain or impose any 
 prohibition or restriction on the importa- 
 tion into German territory of any goods the 
 produce or manufacture of the territories 
 of any one of the Allied or Associated 
 States, from whatsoever place arriving, 
 
 191 
 
Economic Clauses 
 
 which shall not equally extend to the impor- 
 tation of the like goods the produce or manu- 
 facture of any other such State or of any 
 other foreign country. 
 
 Article 265. 
 
 No discrim- 
 ination by 
 indirect 
 methods. 
 
 Germany further undertakes that, in the Jmn^five* 
 
 matter of the regime applicable on impor- 
 tation, no discrimination against the com- 
 merce of any of the Allied and Associated 
 States as compared with any other of the 
 said States or any other foreign country 
 shall be made, even by indirect means, such 
 as customs regulations or procedure, meth- 
 ods of verification or analysis conditions 
 of payments of duties, tariff classification 
 or interpretation, or the operation of mo- 
 nopolies. 
 
 years unless 
 
 ie of 
 Nations acta 
 (Sea Article 
 280.) 
 
 Article 266. 
 
 No discrim- 
 ination .13 
 da ex- 
 ported goods. 
 
 Nations acts. 
 S e Article 
 280.) 
 
 In all that concerns exportation Germany to cease at 
 
 1 * end of five 
 
 undertakes that goods, natural products or years unless 
 
 • * League of 
 
 manufactured articles, exported from Ger- 
 man territory to the territories of any one 
 of the Allied or Associated States shall not 
 be subjected to other or higher duties or 
 charges (including internal charges) than 
 those paid on the like goods exported to 
 any other such State or to any other foreign 
 country. 
 
 192 
 
Economic Clauses 
 
 Germany will not maintain or impose any 
 prohibition or restriction on the exportation 
 of any goods sent from her territory to any 
 one of the Allied or Associated States which 
 shall not equally extend to the exportation 
 of the like goods, natural products or manu- 
 factured articles, sent to any other such 
 state or to any other foreign country. 
 
 All favors to 
 bo granted 
 equally. 
 
 Article 267. 
 
 Every favour, immunity or privilege in 
 regard to the importation, exportation or 
 transit of goods granted by Germany to 
 any Allied or Associated State or to any 
 other foreign country whatever shall si- 
 multaneously and unconditionally, without 
 request and without compensation, be ex- 
 tended to all the Allied and Associated 
 States. 
 
 To ceaso at 
 end of five 
 years unless 
 Leaffue of 
 Nations acta . 
 (See Artielo 
 2S0.) 
 
 Article 268. 
 
 Alsace- 
 Lorraine 
 products 
 free into 
 Germany 
 for rive years. 
 
 The provisions of Articles 264 to 267 in- 
 
 Automat- 
 ically enda 
 
 elusive of this Chapter and of Article 323 *J£ r 8 five 
 of Part XII (Ports, Waterways and Rail- 
 ways) of the present Treaty are subject to 
 the following exceptions: 
 
 (a) For a period of five years from the 
 coming into force of the present Treaty, 
 natural or manufactured products which 
 both originate in and come from the terri- 
 
 193 
 
Economic Clauses 
 
 Alsace tex- 
 tiles to move 
 freely for 
 finishing 
 operations. 
 
 Polish prod- 
 ucts free 
 into Ger- 
 many for 
 three years. 
 
 Automat- 
 ical h' ends 
 
 torics of Alsace and Lorraine reunited to 
 France shall, on importation into German 
 customs territory, be exempt from all cus- 
 toms duty. 
 
 The French Government shall fix each 
 year, by decree communicated to the German 
 Government, the nature and amount of the 
 products which shall enjoy this exemption. 
 
 The amount of each product which may be 
 thus sent annually into Germany shall not 
 exceed the average of the amounts sent an- 
 nually in the years 1911-1913. 
 
 Further, during- the period above men- 
 tioned the German Government shall allow y^S. flTe 
 the free export from Germany and the free 
 re-importation into Germany, exempt from 
 all customs duties and other charges (in- 
 cluding internal charges), of yarns, tissues, 
 and other textile materials or textile prod- 
 ucts of any kind and in any condition, sent 
 from Germany into the territories of Alsace 
 or Lorraine, to be subjected there to any 
 finishing process, such as bleaching, dye- 
 ing, printing, mercerisation, gassing, twist- 
 ing or dressing. 
 
 (6) During a period of three years from A^J" a ^ 
 the coming into force of the present Treaty *J£« t three 
 natural or manufactured products which 
 both originate in and come from Polish ter- 
 ritories which before the war were part of 
 Germany, shall, on importation into Ger- 
 
 191 
 
Economic Clauses 
 
 man customs territory, be exempt from all 
 customs duty. 
 
 The Polish Government shall fix each year, 
 by decree communicated to the German Gov- 
 ernment, the nature and amount of the 
 products which shall enjoy this exemption. 
 
 The amount of each product which may be 
 thus sent annually into Germany shall not 
 exceed the average of the amounts sent an- 
 nually in the years 1911-1913. 
 
 c"™n*ed. (c) The Allied and Associated Powers ^j^^ 
 reserve the right to require Germany to ac- five years, 
 cord freedom from customs duty, on impor- 
 tation into German customs territory, to 
 natural products and manufactured articles 
 which both originate in and come from the. 
 Grand Duchy of Luxemburg, for a period 
 of five years from the coming into force of 
 the present Treaty. 
 
 The nature and amount of the products 
 which, shall enjoy the benefits of this regime 
 shall be communicated each year to the 
 German Government. 
 
 The amount of each product which may 
 be thus sent annually into Germany shall 
 not exceed the average of the amounts sent 
 annually in the years 1911-1913. 
 
 Article 269. 
 
 man^uS"' During the first six months after the 
 ™*n\n force coming into force of the present Treaty, 
 
 14 195 
 
Economic Clauses 
 
 c°e r rtlin n oth!r S ' tlie duties imposed by Germany ou imports 
 mahfun-"" from Allied and Associated States shall not 
 thi a m e months be higher than the most favourable duties 
 
 more. 
 
 Reservations 
 as to occu- 
 pied regions. 
 
 years. 
 
 which were applied to imports into Ger- 
 many on July 31, 1914. 
 
 During a further period of thirty months f c c ° e °^ ion 
 after the expiration of the first six months, o^SSiiy 
 this provision shall continue to be applied fearVholm- 
 exclusively with regard to products which, GermaiVof 
 
 vensref ul 
 
 being comprised in Section A of the First duties on 
 Category of the German Customs Tariff of independent 
 
 particularly on 
 
 December 25, 1902, enjoyed at the above- the German 
 
 * market. 
 
 mentioned date (July 31, 1914) rates con- Automat- 
 
 \ •' ' ically ends 
 
 ventionalised by treaties with the Allied **• three 
 and Associated Powers, with the addition 
 of all kinds of wine and vegetable oils, of 
 artificial silk and of washed or scoured 
 wool, whether or not they were the subject 
 of special conventions before July 31, 1911. 
 
 Article 270. 
 
 The Allied and Associated Powers re- 
 serve the right to apply to German terri- 
 tory occupied by their troops a special 
 customs regime as regards imports and ex- 
 ports, in the event of such a measure being 
 necessary in their opinion in order to safe- 
 guard the economic interests of the popula- 
 tion of these territories. 
 
 196 
 
Economic Clauses 
 
 Chapter II. 
 
 SHIPPING. 
 
 Article 271. 
 
 Most-favored- 
 nation treat- 
 ment for fish- 
 ing and coast- 
 ing vessels. 
 
 As regards sea fishing, maritime coasting To eease at 
 
 007 ° end of five 
 
 trade, and maritime towage, vessels of the years unless 
 
 ' ° > League of 
 
 Allied and Associated Powers shall enjoy, fa^tid!" 
 
 in German territorial waters, the treatment 280) 
 accorded to vessels of the most favoured 
 nation. 
 
 Article 272. 
 
 Police of 
 North Sea 
 fisheries. 
 
 Nations acts. 
 (See Article 
 280.) 
 
 Germany agrees that, notwithstanding to cease at 
 
 J ° ' ° end of five 
 
 any stipulation to the contrary contained in {£*" JJ'JJ 88 
 the Conventions relating to the North Sea 
 fisheries and liquor traffic, all rights of in- 
 spection and police shall, in the case of fish- 
 ing-boats of the Allied Powers, be exercised 
 solely by ships belonging to those Powers. 
 
 Ship certifi- 
 cates and 
 documents. 
 
 Article 273. 
 
 In the case of vessels of the Allied or As- Permanent. 
 sociated Powers, all classes of certificates 
 or documents relating to the vessel, which 
 were recognized as valid by Germany before 
 the war, or which may hereafter be recog- 
 nised as valid by the principal maritime 
 States, shall be recognised by Germany as 
 
 197 
 
Economic Clauses 
 
 Regis: - 
 ships of 
 countries 
 having no 
 sea-coast. 
 
 valid and as equivalent to the correspond- 
 ing certificates issued to German vessels. 
 
 A similar recognition shall be accorded Permanent 
 to the certificates and documents issued to 
 their vessels by the Governments of new 
 States, whether they have a sea-coast or 
 not, provided that such certificates and 
 documents shall be issued in conformity 
 with the general practice observed in the 
 principal maritime States. 
 
 The High Contra eting Parties agree to Permanent, 
 recognise the flag flown by the vessels of an 
 Allied or Associated Power having no sea- 
 coast which are registered at some one spe- 
 cified place situated in its territory ; such, 
 place shall serve as the port of registry of 
 such vessels. 
 
 Chapter III. 
 
 UNFAIR COMPETITION. 
 
 Article 274. 
 
 False wrap- 
 pings and 
 markings 
 to bfl sup- 
 pressed br 
 German 
 d\ eminent. 
 
 Germany undertakes to adopt all the 
 necessary legislative and administrative 
 measures to protect goods the produce or 
 manufacture of anv one of the Allied and 
 Associated Powers from all forms of unfair 
 competition in commercial transactions. 
 
 Germany undertakes to prohibit and re- 
 press by seizure and by other appropriate 
 
 This is in 
 accord with 
 the Madrid 
 Convention. 
 The Allies 
 do not here 
 enter on any 
 reciprocal 
 engagement, 
 but the im- 
 portant 
 Allied coun- 
 tries already 
 reciprocate. 
 
 198 
 
Economic Clauses 
 
 remedies the importation, exportation, man- 
 ufacture, distribution, sale or offering for 
 sale in its territory of all goods bearing 
 upon themselves or their usual get-up or 
 wrappings any marks, names, devices, or 
 description whatsoever which are calculated 
 to convey directly or indirectly a false in- 
 dication of the origin, type, nature, or spe- 
 cial characteristics of such goods. 
 
 Germany 
 to enforce 
 regional ap- 
 pellation of 
 wines and 
 spirits as set- 
 tled by other 
 states which 
 act recipro- 
 cally in these 
 matters. 
 
 Article 275. 
 
 Germany undertakes on condition that '££££££ 
 reciprocity is accorded in these matters to reciprocity. 
 respect any law, or any administrative or 
 judicial decision given in conformity with 
 such law, in force in any Allied or Asso- 
 ciated State and duly communicated to her 
 by the proper authorities, defining or regu- 
 lating the right to any regional appellation 
 in respect of wine or spirits produced in the 
 State to which the region belongs, or the 
 conditions under which, the use of any such, 
 appellation may be permitted; and the im- 
 portation, exportation, manufacture, dis- 
 tribution, sale or offering for sale of prod- 
 ucts or articles bearing regional appel- 
 lations inconsistent with such law or order 
 shall be prohibited by the German Govern- 
 ment and repressed by the measures pre- 
 scribed in the preceding Article. 
 
 199 
 
Economic Clauses 
 
 Chapter IV. 
 
 treatment of nationals of allied and 
 associated powers. 
 
 Article -70. 
 
 National 
 treatment 
 
 as rec 
 
 No indirect 
 • .a. 
 
 V - a' 
 
 •nent 
 as regards 
 
 t-LXS?. 
 
 Germany undertakes: 
 
 (a) Not 10 subject the nationals of the 3^ 
 Allied and Ass< ciated Powers to any pro- 
 hibition m regard to the exercise ot occupa- 
 
 , , . me-. 
 
 tions, professions, trade and mdustrv. - 
 
 SS0.J 
 
 which shall not be equally applicable to all 
 aliens without exception; 
 
 (6) Not to subject the nationals of the 
 Allied and Associated Powers in regard to 
 the rights referred to in paragraph (a) to 
 any regulation or restriction which might 
 contravene directly or indirectly the stipu- 
 lations of the said paragraph, or which shall 
 be other or more disadvantageous than 
 those which are applicable to nationals of 
 the most favoured nation: 
 
 (c) Not to subject the nationals of the 
 Allied and Associated Powers, their prop- 
 erty, lights or interests, including com- 
 panies and associations in which they are 
 interested, to any charge, tax or impost, 
 direct or indirect, other or higher than those 
 which are or may be imposed on her own 
 nationals or their property, rights or in- 
 terests : 
 
 200 
 
Economic Clauses 
 
 National 
 treatment 
 
 in general. 
 
 (d) Not to subject the nationals of any 
 one of the Allied and Associated Powers to 
 any restriction which was not applicable 
 on July 1, 1914, to the nationals of such 
 Powers unless such restriction is likewise 
 imposed on her own nationals. 
 
 Article 277. 
 
 Protection The nationals Of the Allied and AsSOCi- Permanent, 
 
 under local 
 
 laws generally, a ted Powers shall enjoy in German terri- 
 tory a constant protection for their persons 
 and for their property, rights and interests, 
 and shall have free access to the courts of 
 law. 
 
 Article 278. 
 
 Germany undertakes to recognise any Permanent. 
 new nationality which has been or may be 
 acquired by her nationals under the laws of 
 the Allied and Associated Powers and in 
 accordance with the decisions of the compe- 
 tent authorities of these Powers pursuant 
 to naturalisation laws or under treaty stip- 
 ulations, and to regard such persons as hav- 
 ing, in consequence of the acquisition of 
 such new nationality, in all respects severed 
 their allegiance to their country of origin. 
 
 Article 279. 
 
 The Allied and Associated Powers may Permanent, 
 appoint consuls-general, consuls, vice-con- 
 suls, and consular agents in German towns 
 
 Recognition 
 of new 
 
 nationalities 
 acquired by 
 German and 
 Allied and 
 
 associated 
 
 countries. 
 
 Consuls and 
 consular 
 agents to be 
 admitted. 
 
 201 
 
Economic Clauses 
 
 and pons. Germany undertakes to approve 
 the designation of the consuls-general, con- 
 sols, vice-consuls, ami consular agents, 
 
 whose names shall lv notified to her, and 
 to admit thorn to the exercise of their func- 
 tions in conformity with the usual rules and 
 customs. 
 
 Chapter V. 
 
 GENERAL ARTICLES. 
 
 Article 2S0. 
 
 Period of 
 time dor] _- 
 
 whu-b a 
 of the pre- 
 ceding obli- 
 
 remaiu in 
 etlevt. 
 
 The obligations imposed on Germany by 
 
 Chapter 1 and by Articles 1'Tl and 272 of 
 Chapter II above shall eease to have effect 
 tive years from the date of the coming into 
 force of the present Treaty, unless other- 
 wise provided in the text, or unless the 
 Council of the League of Nations shall, at 
 least twelve months before the expiration 
 of that period, decide that these obligations 
 shall bo maintained for a further period 
 with or without amendment. 
 
 Article 276 of Chapter IV shall remain in 
 operation, with or without amendment, 
 after the period of five years for stub fur- 
 ther period, if any. not exceeding five years, 
 as may be determined by a majority of the 
 Council of the League of Nations, 
 
 202 
 
Economic Clauses 
 
 Article 281. 
 
 ao'™.ent. If ^io Gorman Government engages in 
 RtaS? international trade, it shall not in respect 
 Smfunityai thereof have or be deemed to have any 
 knvereign. j.jo^ts, privileges or immunities of sov- 
 ereignty. 
 
 Section II. 
 tebatibs. 
 
 Article 282. 
 
 From the coming into force of the present 
 Treaty and subject to the provisions there- 
 of the multilateral treaties, conventions and 
 agreements of an economic or technical 
 character enumerated below and in the sub- 
 sequent Articles shall alone be applied as 
 between Germany and those of the Allied 
 and Associated Powers party thereto: 
 
 Relat t T,?, , (1) Conventions of March 14, 1884, De- u.s.aptrty. 
 
 re-established v ' ' ' 
 
 muwLterai cember 1, 1886, and March 23, 1887, and 
 3$Xl Final Protocol of July 7, 1887, regarding 
 the protection of submarine cables. 
 
 (2) Convention of October 11, 1900, re- Kur0 « 1<an - 
 garding the international circulation of 
 motor-cars. 
 
 (3) Agreement of May 15, 1886, regard- European, 
 ing the sealing of railway trucks subject to 
 customs inspection, and Protocol of May 
 18, 1907. 
 
 203 
 
 tiouul umi 'in;. 
 
Economic Clauses 
 
 (4) Agreement of May 15, 1SS6, regard- Europe*, 
 ing the technical standardisation of rail- 
 ways. 
 
 (6) Convention of July 5, 1S90, regard- o.s.apartar. 
 ing the publication of customs tariffs and 
 the organisation of an International Union 
 for the publication of customs tariffs. 
 
 (6) Convention of December 31, 1913. European " 
 aiding the unification of commercial 
 
 statistics. 
 
 (7) Convention of April 25, 1907, regard- European. 
 ing the raising of the Turkish customs 
 tariff. 
 
 (5) Convention of March 14, 1S57, for u.s.aparty. 
 the redemption of toll dues on the Sound 
 
 and Belts. 
 
 (9) Convention of June 22, 1861, for the European " 
 redemption of the State Toll on the Elbe. 
 
 (10) Convention of July 1G, 1SC3, for the European, 
 redemption of the toll dues ou the Scheldt. 
 
 (11) Convention of October 29, 1888, re- 
 garding the establishment of a definite ar- 
 rangement guaranteeing the free use of the 
 Suez Canal. 
 
 (12) Convention of September 23, 1910, g^JEg, 
 respecting the unification of certain regu- £55r«5 
 lations regarding collisions and salvage at 
 
 sea. 
 
 204 
 
Economic Clauses 
 
 (13) Convention of December 21, 1904, European. 
 regarding the exemption of hospital ships 
 from dues and charges in ports. 
 
 (44) Convention of February 4, 1898, re- European. 
 garding the tonnage measurement of ves- 
 sels for inland navigation. 
 
 (15) Convention of September 26, 1900, European. 
 for the suppression of night work for 
 women. 
 
 (1G) Convention of September 26, 1906, u.s.a P arty. 
 for the suppression of the use of white phos- 
 phorus in the manufacture of matches. 
 
 (17) Conventions of May 18, 1904, and u.s.a P arty. 
 May 4, 1910, regarding the suppression of 
 the White Slave Traffic. 
 
 (IS) Convention of May 4, 1910, regard- u - s - a party - 
 ing the suppression of obscene publications. 
 
 (19) Sanitary Conventions of January c.s. aP arty. 
 30, 1892, April 15, 1893, April 3, 1894, 
 
 March 19, 1897, and December 3, 1903. 
 
 (20) Convention of May 20, 1875, regard- European - 
 ing the unification and improvement of the 
 metric system. 
 
 (21) Convention of November 29, 1906, European - 
 regarding the unification of pharmacopceial 
 formula? for potent drugs. 
 
 (22) Convention of November 16 and 19, u. s. a party. 
 1885, regarding the establishment of a con- 
 cert pitch. 
 
 205 
 
Economic Clans - 
 
 Convention of June 7. 1905, regard- fr— t— ■ 
 ing the creation of an International Agri- 
 cultural Institute at Rome. 
 
 (24) Conventions of November 3, 1881, *•»> 
 and April 15, 1889, regarding precautionary 
 measures against phylloxera. 
 
 5] Convention of March 19, 1902, re- JJ,« U 
 
 garding the protection of birds useful to 
 agriculture. 
 
 (26) Convention of June 1-. 1902, as to 
 the protection of minors. 
 
 A:: 283, 
 
 Prom the coming into force of the present 
 
 Treaty the High Contracting Parties shall 
 apply the conventions and agreements here- 
 inafter mentioned, in so far as concerns 
 them, on condition that the special stipu- 
 lations contained in this Article are ful- 
 filled by German v. 
 
 Posted Conventions : 
 
 Conventions and agreements of the Uni- r - s »r , * rtr - 
 versa] Postal Union concluded at Vienna, 
 July 4. 1891. 
 
 Conventions and agreements of the Postal 
 Union signed at Washington, June 15, 1897. 
 
 Conventions and agreements of the Postal 
 Union signed at Rome, May 26, 1906. 
 
 206 
 
Economic Clauses 
 
 Germany 
 to conclude 
 reciprocal 
 postal and 
 telegraphic 
 
 n(rriM'iiiciit8 
 
 widi the new 
 states. 
 
 U. S. not a 
 
 party. 
 
 Telegraph i<- ( 'on rent ions : 
 
 International Telegraphic Conventions p ar ty. nota 
 signed at St. Petersburg July 10-22, 1875. 
 
 Regulations and Tariffs drawn up by the 
 International Telegraphic Conference, Lis- 
 bon, June 11, 1908. 
 
 Germany undertakes not to refuse her 
 assent to the conclusion by the new States 
 of tlie special arrangements referred to in 
 the conventions and agreements relating to 
 the Universal Postal Union and to the In- 
 ternational Telegraphic Union, to which the 
 said new States have adhered or may adhere. 
 
 Article 281. 
 
 Application 
 of Radio- 
 Telegraphic 
 
 convention. 
 
 Oermany to 
 be bound by 
 poHsiblc new 
 radio- 
 telegraphic 
 convention. 
 
 From the coming into force of the present USa P art y- 
 Treaty the High Contracting Parties shall 
 apply, in so far as concerns them, the In- 
 ternational Radio-Telegraphic Convention 
 of July 5, 1912, on condition that Germany 
 fulfils the provisional regulations which 
 will be indicated to her by the Allied and 
 Associated Powers. 
 
 If within five yearn after the coming into Aiugedtobe 
 
 necessary 
 
 force of the present Treaty a new conven- for military 
 tion regulating international radio-tele- 
 graphic communications should have been 
 concluded to take the place of the Conven- 
 tion of July 5, 1912, this new convention 
 shall bind Germany, even if Germany should 
 
 reasons. 
 
 207 
 
Economic Clauses 
 
 refuse either to take part in drawing up the 
 convention, or to subscribe thereto. 
 
 This new convention will likewise replace 
 the provisional regulations in force. 
 
 Revival of 
 North Sea 
 fisheries 
 convention. 
 
 Revival of 
 North Sea 
 liquor trutiic 
 convention 
 
 Article 285. 
 
 From the coming into force of the present 
 Treaty, the High Contracting Parties shall 
 apply in so far as concerns them and under 
 the conditions stipulated in Article 272, the 
 conventions hereinafter mentioned : 
 
 (1) The Conventions of May 6, 1882, and European. 
 February 1, 1889, regulating the fisheries in 
 
 the North Sea outside territorial waters. 
 
 (2) The Conventions and Protocols of European. 
 November 16, 1887, February 14, 1893, and 
 April 11, 1894, regarding the North Sea 
 liquor traffic. 
 
 Revival of 
 
 International 
 
 Conventions 
 
 covering: pat- 
 ents, trade- 
 marks, and 
 copyrights. 
 
 Article 2SG. 
 
 The International Convention of Paris of u-s. apart?. 
 March 20, 1883, for the protection of in- 
 dustrial property, revised at Washington on 
 June 2, 1911 ; and the International Con- 
 vention of Berne of September 9, 1886, for 
 the protection of literary and artistic works, 
 revised at Berlin on November 13, 190S, and 
 completed by the additional Protocol signed 
 at Berne on March 20. 1914, will again come 
 
 20S 
 
Renewal of 
 Convention 
 relating 
 to civil 
 procedure. 
 
 Economic Clauses 
 
 into effect as from the coming into force of 
 the present Treaty, in so far as they are not 
 affected or modified by the exceptions and 
 restrictions resulting therefrom. 
 
 Article 2S7. 
 
 From the coming into force of the present Europe- 
 Treaty the High Contracting Parties shall 
 apply, in so far as concerns them, the Con- 
 vention of The Hague of July 17, 1905, re- 
 lating to civil procedure. This renewal, 
 however, will not apply to France, Portu- 
 gal and Koumania. 
 
 Article 288. 
 
 National 
 treatment 
 of German 
 trade in 
 Samoa to 
 terminate. 
 
 The special rights and privileges granted These rights, 
 
 * ° x o o granted by U. 
 
 to Germany by Article 3 of the Convention s. and Great 
 
 " " Britain, were 
 
 of December 2, 1899, relating to Samoa shall ft™ K^ 
 be considered to have terminated on August JS mt 
 4, 1914. 
 
 Article 289. 
 
 Revival of 
 bilateral 
 treaties with 
 Germany, in 
 whole or in 
 part, upon 
 notification by 
 Allied or 
 Associated 
 Powers, 
 
 Each of the Allied or Associated Powers, 
 being guided by the general principles or 
 special provisions of the present Treaty, 
 shall notify to Germany the bilateral treat- 
 ies or conventions which such Allied or 
 Associated Power wishes to revive with Ger- 
 many. 
 
 209 
 
Economic Claus s 
 
 - - 
 
 ■ th 
 
 Sis 
 
 Bilateral 
 tre.it ies and 
 com 
 
 - re- 
 vived remain 
 ! red. 
 
 The notification referred to in the present 
 Article shall be made either directly or 
 through the intermediary of another Tower. 
 Receipt thereof shall be acknowledged in 
 
 writing by Germany. The date of tlie re- 
 vival shall be that of the notification. 
 
 The Allied and Associated Towers under- 
 take among Themselves not to revive with 
 Germany any eon vent ions or treaties which 
 are not in accordance with the terms of the 
 present Treaty. 
 
 The notification shall mention any pro- 
 visions of the said conventions and treaties 
 which, not being in accordance with the 
 terms of the present Treaty, shall not be con- 
 sidered as revived. 
 
 In ease of any difference of opinion, the 
 League of Nations will be called on to de- 
 cide. 
 
 A period of six months from the coming 
 into force of the present Treaty is allowed to 
 the Allied and Associated Towers within 
 which to make the notification. 
 
 Only those bilateral treaties and conven- 
 tions which have been the subject of sueh a 
 notification shall be revived between the 
 Allied and Associated Towers and Ger- 
 many: all the others are and shall remain 
 abrogated. 
 
 The above regulations apply to all bilat- 
 eral treaties or conventions existing be- 
 tween all the Allied and Assoeiated Powers 
 
 -•.:ch the 
 Allied Powetl 
 
 dtvUle what 
 treaties shall 
 
 h eJ. 
 t -^ tbfl term 
 ot these 
 treaties 
 QermuGF 
 will still be 
 
 . o re- 
 mmn Most 
 
 cf them l\v 
 
 c t .v rive 
 months' 
 notice. 
 
 £10 
 
Economic Clauses 
 
 Enemy 
 treaties en- 
 tered Into 
 during the 
 
 \V;ir are 
 abrogated by 
 this clauBe. 
 
 Most-favored- 
 nal ion treat- 
 ment under 
 pre- War 
 
 I enemy 
 treaties. 
 
 I 
 
 Enemy 
 treaties with 
 Russia and 
 
 15 
 
 signatories to the present Treaty and Ger- 
 many, even if the said Allied and Associated 
 Towers have not been in a state of war with 
 ( termany. 
 
 Article 290. 
 
 Germany recognizes that all the treaties, 
 conventions or agreements which she has 
 concluded with Austria, Hungary, Bulgaria 
 or Turkey since August 1, 1914, until the 
 coming into force of the present Treaty are 
 and remain abrogated by the present Treaty. 
 
 Article 291. 
 
 Germany undertakes to secure to the 
 Allied and Associated Powers, and to the 
 officials and nationals of the said Powers, 
 the enjoyment of all the rights and advan- 
 tages of any kind which she may have 
 granted to Austria, Hungary, Bulgaria or 
 Turkey, or to the officials and nationals of 
 these States by treaties, conventions or ar- 
 rangements concluded before August 1, 1911, 
 so long as those treaties, conventions or ar- 
 rangements remain in force. 
 
 The Allied and Associated Powers reserve 
 the right to accept or not the enjoyment of 
 these rights and advantages. 
 
 Article 292. 
 
 Germany recognizes that all treaties, con- ™es**vT 
 ventions or arrangements which she con- Gennan 
 
 211 
 
Economic Clai 
 
 R Nimania 
 
 Annuls con- 
 
 granted un- 
 der pressure 
 to Gen 
 by Ru 
 
 :es 
 formerly 
 constituting 
 
 • : of 
 Ruse 
 
 Allied and 
 Associated 
 Powers to re- 
 el ne benefits 
 of German 
 treaties eon- 
 eluded with 
 neutrals. 
 
 eluded with Russia, or with any State or 
 Government of which the territory pre- 
 viously formed a part of Russia, or with 
 Roumania, before August 1, 1914. or after 
 that date until coming into force of the pres- 
 ent Treaty, are and remain abrogated. 
 
 Article 293. 
 
 Should an Allied or Associated Power. 
 Russia, or a State or Government of which 
 the territory formerly const it uted a part of 
 Russia, have been forced since August 1, 
 1914, by reason o( military occupation or by 
 any other means or for any other cause, to 
 giant or to allow to be granted by the act of 
 any public authority, concessions, privileges 
 and favours of any kind it) Germany or to a 
 German national, such concessions, privi- 
 leges and favours are ipso facto annulled by 
 the present Treaty. 
 
 No claims or indemnities which may re- 
 sult from this annulment shall be charged 
 
 ainst the Allied or Associated Powers or 
 the Powers, States, Governments or public 
 authorities which are released from their en- 
 gagements by the present Article. 
 
 Article 294 
 
 From the coming into force of the present 
 Treat v Germany undertakes to nive the Al- 
 lied and Associated Powers and their na- 
 tionals the benelit ip<o facto of the rights 
 
 212 
 
 treaties with 
 Kinl.r. 
 well as 
 the Ikraiue. 
 
Economic Clauses 
 
 and advantages of any kind which she lias 
 granted by treaties, conventions, or arrange- 
 ments to non-belligerent States or their na- 
 tionals since August 1, 1914, until the com- 
 ing into force of the present Treaty, so long 
 as those treaties, conventions or arrange- 
 ments remain in force. 
 
 Article 295. 
 SStk&a* Those of the High Contracting Parties ggj^, 
 
 of contnu'tini; -. <■ . . . -. ■, ■, .1 not ratified 
 
 parties in who have not yet signed, or who have signed by c , PI , ll . ltiyi 
 ofi9i2. ' but not yet ratified, the Opium Convent ion 
 signed at The Hague on January 23, 1912, 
 agree to bring the said Convention into 
 tone, and for this purpose to enact the nec- 
 essary legislation without delay and in any 
 ease within a period of twelve months from 
 the coming into force of the present Treaty. 
 Furthermore, they agree that ratification 
 of the present Treaty should in the case of 
 Powers which have not yet ratified the 
 Opium Convention he deemed in all respects 
 equivalent to the ratification of that Conven- 
 tion and to the signature of the Special 
 Protocol which was opened at The Hague in 
 accordance with the resolutions adopted by 
 the Third Opium Conference in 1914 for 
 bringing the said Convention into force. 
 
 For this purpose the Government of the 
 French Republic will communicate to the 
 Government of the Netherlands a certified 
 copy of the protocol of the deposit of rati- 
 
 213 
 
Economic Clauses 
 
 fications of the present Treaty, and will in- 
 vite the Government of the Netherlands to 
 accept and deposit the said certified copy as 
 if it were a deposit of ratifications of the 
 Opium Convention and a signature of the 
 Additional Protocol of 1914. 
 
 Section III. 
 
 DEBTS. 
 
 Article 206. 
 
 Provides for 
 clearing- 
 house system 
 for the col- 
 lection of 
 debts, and 
 the use of 
 proceeds of 
 enemy prop- 
 erty. 
 
 There shall be settled through the inter- 
 vention of clearing offices to be established 
 by each of the High Contracting Parties 
 within three months of the notification re- 
 ferred to in paragraph (e) hereafter the 
 following classes of pecuniary obligations : 
 
 (1) Debts payable before the war and Jjjfj.™ 1 ^* 
 due by a national of one of the Contracting Syg^g* 
 Powers, residing within its territory, to a i^t&» 
 national of an Opposing Power, residing artlcle) 
 within its territory; 
 
 (2) Debts which became payable during 
 the war to nationals of one Contracting 
 Power residing within its territory and 
 arose out of the transactions or contracts 
 with the nationals of an Opposing Tower, 
 resident within its territory, of which the 
 total or partial execution was suspended on 
 account of the declaration of war ; 
 
 2U 
 
Economic Clauses 
 
 Prohibits 
 Allied and 
 enemy na- 
 tionals from 
 settling their 
 debts with 
 each other, 
 or even from 
 
 (3) Interest which has accrued due be- 
 fore and during the war to a national of 
 one of the Contracting Powers in respect of 
 securities issued by an. Opposing Power, 
 provided that the payment of interest on 
 such securities to the nationals of that 
 Tower or to neutrals has not been suspended 
 during the war; 
 
 (-4) Capital sums which have become 
 payable before and during the war to na- 
 tionals of one of the Contracting Powers in 
 respect of securities issued by one of the 
 Opposing Powers, provided that the pay- 
 ment of such capital sums to nationals of 
 that Power or to neutrals has not been sus- 
 pended during the war. 
 
 The proceeds of liquidation of enemy 
 property, rights and interests mentioned in 
 Section IV and in the Annex thereto will be 
 accounted for through the Clearing Offices, 
 in the currency and at the rate of exchange 
 hereinafter provided in paragraph (d), and 
 disposed of by them under the conditions 
 provided by the said Section and Annex. 
 
 The settlements provided for in this Ar- 
 ticle shall be effected according to the fol- 
 lowing principles and in accordance with 
 the Annex to this Section : 
 
 (a) Each of the High Contracting Par- 
 ties shall prohibit, as from the coming into 
 force of the present Treaty, both the pay- 
 ment and the acceptance of payment of such 
 
 215 
 
Economic Clauses 
 
 debts, and also all communications between 
 • : the interested parties with regard to the 
 settlement of the said debts otherwise than 
 through the Clearing Offices; 
 
 (6) Each of the High Contracting- Par- 
 yment ties shall be respectively responsible for 
 owel by its the payment of such debts due by its na- 
 formerenemy clonals, except in the cases where before the 
 war The debtor was in a state of bankruptcy 
 or failure, or had given formal indication 
 of insolvency or where the debt was due by 
 a company whose business has been liqui- 
 dated under emergency legislation during 
 the war. Nevertheless, debts due by the in- 
 habitants of territory invaded or occupied 
 by the enemy before the Armistice will not 
 be guaranteed by the States of which, those 
 territories form part; 
 
 (c) The sums due to the nationals of 
 one of the High Contracting Parties by the 
 nationals of an Opposing State will be 
 debited to the Clearing- Office of the coun- 
 try of the debtor, and paid to the creditor 
 by the Clearing Office of the country of the 
 creditor; 
 
 R:1 V of . (d) Debts shall be paid or credited in the 
 
 exchange in v r 
 
 rfdebt.™* currency of such one of the Allied and As- 
 sociated Powers, their colonies or protec- 
 torates, or the British Dominions or India, 
 as may be concerned. If the debts are pay- 
 able in some other currency they shall be 
 
 216 
 
Economic Clauses 
 
 paid or credited in the currency of the coun- 
 try concerned, whether an Allied or Asso- 
 ciated Power, Colony, Protectorate, British 
 Dominion or India, at the pre-war rate of 
 exchange. 
 
 For the purpose of this provision the 
 pre-war rate of exchange shall be defined 
 as the average cable transfer rate prevail- 
 ing' in the Allied or Associated country con- 
 cerned during the month immediately pre- 
 ceding the outbreak of war between the said 
 country concerned and Germany. 
 
 If a contract provides for a fixed rate of 
 exchange governing the conversion of the 
 currency in which the debt is stated into 
 the currency of the Allied or Associated 
 country concerned, then the above provi- 
 sions concerning the rate of exchange shall 
 not apply. 
 
 Tn the case of new States the currency 
 in which and the rate of exchange at which 
 debts shall be paid or credited shall be de- 
 termined by the Reparation Commission 
 provided for in Tart VIII (Reparation) ; 
 
 Does not (f ) The provisions of this Article and of »wun- 
 
 apply to any v ' l pictcd i hat 
 
 Allied state f]i Annex hereto shall not apply as between thq y- s - ., 
 
 unless adopted rr * would avail 
 
 Snemonttf" Germany on the one hand and any one of Ke°and ia 
 gg ratine* the Allied and Associated Powers, their S?5k2fir. 
 colonies or protectorates, or any one of the 
 British Dominions or India on the other 
 hand, unless within a period of one month 
 from the deposit of the ratification of the 
 
 217 
 
 housa system. 
 
Economic Clauses 
 
 present Treaty by the Power m ques- 
 tion, or of the ratification on behalf 
 of stub Dominion or of India, notice 
 to that effect is given to Germany by 
 the Government of sueh Allied or Associ- 
 ated Power e:- of snch Domini of India 
 as the ease may be J 
 
 (/) The Allied ami Associated Powers 
 who have adopted this Article and the An- 
 
 x hereto may agree between themselves 
 to apply them to their respective nationals 
 established in their territory so far as re- 
 cards matters between their nationals and 
 Gorman nationals. Tn this ease the pay- 
 ments made by the application of this pro- 
 vision will be subject to arrangements be- 
 tween the Allied ami Associated Clearing 
 Offices concerned. 
 
 ANNEX 
 1. 
 Eaeli of the Rich Contracting Parties ■ R »**? tt ' 
 
 \n UUS UM9I 
 
 will, within three months from the notifica- 
 tion provided for in Article 296, paragraph .;*. 
 (e), establish a Clearing Office for the eel & 
 
 lection and payment of enemy debts. rtopttha 
 
 -*- -1--.T • -\v> t t-i'ii system. 
 
 Local Clearing Offices may be established 
 for any particular portion o( the territories 
 of the High Contracting Parties. Snch 
 
 218 
 
Economic Clauses 
 
 local Clearing Offices may perform, all the 
 functions of a central Clearing Office in 
 their respective districts, except that all 
 transactions with the Clearing Office in the 
 Opposing State must be effected through 
 I lie central Clearing Office. 
 
 2. 
 
 In this Annex the pecuniary obligations 
 referred to in the first paragraph of Ar- 
 ticle 29G are described as "enemy debts," 
 the persons from whom the same are dne 
 as "enemy debtors," the persons to whom 
 they ore dne as "enemy creditors," the 
 Clearing Office in the country of the credi- 
 tor is called the "Creditor Clearing Office," 
 and the Clearing Office in the country of the 
 debtor is called the "Debtor Clearing 
 Office." 
 
 3. 
 
 The High Contracting Parties will sub- 
 ject contraventions of paragraph (a) of 
 Article 296 to the same penalties as are at 
 present provided by their legislation for 
 trading with the enemy. They will simi- 
 larly prohibit within their territory all 
 legal process relating to payment of enemy 
 debts, except in accordance with the pro- 
 visions of this Annex. 
 
 219 
 
Economic Clauses 
 
 The Government guarantee specified in 
 paragraph (b) of Article 296 shall take 
 
 effect whenever, for any reason, a debt shall 
 not he recoverable, except in a case where at 
 the date of the outbreak of war the debt 
 was barred by the laws of prescription in 
 force in the country of the debtor, or where 
 the debtor was at that time iu a state of 
 bankruptcy or failure or had given formal 
 indication of insolvency, or where the debt 
 was due by a company whose business has 
 been liquidated under emergency legisla- 
 tion during the war. In such case the pro- 
 cedure specified by this Annex shall apply 
 to payment of the dividends. 
 
 The terms "bankruptcy" and " failure" 
 refer to the application of legislation pro- 
 viding for such juridical conditions. The 
 expression ''formal indication of insol- 
 vency" bears the same meaning as it has in 
 English law. 
 
 Creditors shall give notice to the Creditor 
 Clearing Office within six months of its es- 
 tablishment of debts due to them, and shall 
 furnish the Clearing Office with any docu- 
 ments and information required of them. 
 
 The nidi Contracting Farties will take 
 all suitable measures to trace and punish 
 
 220 
 
Economic Clauses 
 
 collusion between enemy creditors and debt- 
 ors. The Clearing Office will communi- 
 cate to one another any evidence and infor- 
 mation which might help the discovery and 
 punishment of such collusion. 
 
 The High Contracting Parties will fa- 
 cilitate as much as possible postal and tele- 
 graphic communication at the expense of 
 the parties concerned and through the in- 
 tervention of the Clearing Offices between 
 debtors and creditors desirous of coming to 
 an agreement as to the amount of their debt. 
 
 The Creditor Clearing Office will notify 
 the Debtor Clearing Office of all debts de- 
 clared to it. The Debtor Clearing Office 
 will, in due course, inform the Creditor 
 Clearing Office which debts are admitted 
 and which debts are contested. In the lat- 
 ter case, the Debtor Clearing Office will give 
 the grounds for the non-admission of debt. 
 
 6. 
 
 When a debt has been admitted, in whole 
 or in part, the Debtor Clearing Office will 
 at once credit the Creditor Clearing Office 
 with the amount admitted, and at the same 
 time notify it of such credit. 
 
 7. 
 
 The debt shall be deemed to be admitted 
 in full and shall be credited forthwith to 
 
 221 
 
Economic Claust s 
 
 the Creditor Clearing- Office unless within 
 three mom lis from the receipt of the notifi- 
 cation or soch longer time as may be agreed 
 to bv the Creditor Clearing Office notice 
 
 has been given by the Debtor Clearing Of- 
 fice that it is not admitted. 
 
 8. 
 
 When the whole or part of a debt is not 
 admitted the two Clearing Offices will ex- 
 amine into the matter jointly and will en- 
 deavour to bring the parties to an agree- 
 ment. 
 
 9. 
 
 The Creditor Clearing Office will pay to 
 the individual creditor the sum credited to 
 it out of the funds placed at its disposal by 
 
 the Government of its country and in ac- 
 cordance with the conditions fixed by the 
 said Government, retaining any sums con- 
 sidered necessary to cover risks, expenses 
 or commissions. 
 
 10. 
 
 Any person having claimed payment of 
 an enemv debt which is not admitted in 
 
 « 
 
 whole or in part shall pay to the clearing 
 office, by way of fine, interest at 5 per cent, 
 on the part not admitted. Any person hav- 
 ing unduly refused to admit the whole or 
 
 999 
 
Economic Clauses 
 
 part of a debt claimed from him shall pay, 
 by way of fine, interest at 5 per cent, on the 
 amount with regard to which his refusal 
 shall be disallowed. 
 
 Such interest shall run from the date of 
 expiration of the period provided for in 
 paragraph 7 until the date on which the 
 claim shall have been disallowed or the debt 
 paid. 
 
 Each Clearing Office shall in so far as it 
 is concerned take steps to collect the fines 
 above provided for, and will be responsible 
 if such fines cannot be collected. 
 
 The fines will be credited to the other 
 Clearing Office, which shall retain them as 
 a contribution towards the cost of carrying 
 out the present provisions. 
 
 11. 
 
 The balance between the Clearing Offices 
 shall be struck monthly and the credit bal- 
 ance paid in cash by the debtor State within 
 a week. 
 
 Nevertheless, any credit balances which 
 may be due by one or more of the Allied 
 and Associated Towers shall be retained 
 until complete payment shall have been ef- 
 fected of the sums due to the Allied or Asso- 
 ciated Powers or their nationals on account 
 of the war. 
 
 223 
 
Bcomomit Claun s 
 
 12. 
 
 To facilitate dis^;>> ; ween the Clear* 
 
 ing Offices each of them 5] all have a repre- 
 - • itive a: the place 1 other is es- 
 
 tablished. 
 
 13. 
 
 Except for special reasons all discussj 
 in regard to claims will, so far as ] ssi 
 take place at the Debtor Clearing Office, 
 
 14. 
 
 Tn conformity -with Article 296, para- 
 
 . ph (6), the High Contracting Parties 
 
 responsible for the payment of the enemy 
 
 bts owing bv their nationals. 
 
 The Debtor Clearing Office Avill therefore 
 credit the Creditor Clearing Office with all 
 debts admitted, even in rase of inability to 
 collect them from the individual debtor. T 
 Governments concerned will, nevertheless, 
 invest their respective Clearing Offices with 
 all necessary powers for the recovery of 
 debts which have been admitted. 
 
 As an exception, the admitted debts ow- 
 ing bv persons having suffered injury from 
 acts of war shall only be credited to the 
 Creditor Clearing Office when the compensa- 
 tion dne to the person concerned in respect 
 of such injury shall have been paid. 
 
 224 
 
Economic Clauses 
 
 15. 
 
 Eacli Government will defray the expenses 
 of the Clearing Office set up in its territory, 
 including the salaries of the staff. 
 
 16. 
 
 Where (he two Clearing Offices arc unable 
 to agree whether a debt claimed is due, or 
 in case of a difference between an enemy 
 debtor and an enemy creditor or between the 
 Clearing Offices, the dispute shall either be 
 referred to arbitration if the parties so 
 agree under conditions fixed by agreement 
 between them, or referred to the Mixed 
 Arbitral Tribunal provided for in Section 
 VI hereafter. 
 
 At the request of the Creditor Clearing 
 Office the dispute may, however, be sub- 
 mitted to the jurisdiction of the Courts of 
 the place of domicile of the debtor. 
 
 17. 
 
 Recovery of sums found by the Mixed 
 Arbitral Tribunal, the Court, or the Arbi- 
 tration Tribunal to be due shall be effected 
 through the Clearing Offices as if these sums 
 were debts admitted by the Debtor Clear- 
 ing Office. 
 
 18. 
 
 Each of the Governments concerned shall 
 appoint an agent who will be responsible for 
 
 oorr 
 
Economic Clause s 
 
 the presentation to the Mixed Arbitral Tri- 
 bunal of the cases conducted ou behalf of its 
 Clearing Office. This agent will exercise a 
 
 general control over the representatives or 
 counsel employed by its? nationals. 
 
 Decisions will be arrived at on docu- 
 mentary evidence, but it will be open to the 
 Tribunal to hear the parties in person, or 
 according to their preference by their rep 
 seutatives approved by the two Governments 
 or by the agent referred to above, who shall 
 bo competent to intervene along with the 
 party or to reopen and maintain a claim 
 abandoned by the same. 
 
 19. 
 
 The Clearing Offiees concerned will lay 
 before the Mixed Arbitral Tribunal all the 
 information and documents in their posses- 
 sion, so as 10 enable the Tribunal to decide 
 rapidly on the eases which are brought be- 
 fore it. 
 
 20. 
 
 Where one of the parties concerned ap- 
 peals against the joint decision of the two 
 Clearing Offices he shall make a deposit 
 against the eosts. which deposit shall only 
 be refunded when the first judgment is modi- 
 fied in favour of the appellant and in 
 proportion to the success he may attain, his 
 opponent in case of such a refund being re- 
 
Economic, Chi uses 
 
 quired l<> pay an equivalent proportion of 
 the costs and expenses. Security accepted 
 by the Tribunal may be substituted for a de- 
 posit. 
 
 A fee of 5 per cent of the amount in dis- 
 pute shall be charged in respect of all cases 
 brought before the Tribunal. This fee shall, 
 unless the Tribunal directs otherwise, be 
 borne by the unsuccessful party. Such fee 
 shall be added to iho deposit referred to. It 
 is also independent of the security. 
 
 The Tribunal may award to one of the 
 parties a sum in respect of the expenses of 
 the proceedings. 
 
 Any sum payable under this paragraph 
 shall be credited to the < Hearing Office of the 
 successful party as a. separate item. 
 
 21 
 
 M 1 • 
 
 With a view to the rapid settlement of 
 claims, due regard shall be paid in the ap- 
 pointment of all persons connected with the 
 Clearing Offices or with the Mixed Arbitral 
 Tribunal to their knowledge of the language 
 of the other country concerned. 
 
 Each of the Clearing Offices will be at 
 liberty to correspond with the other and to 
 forward documents in its own language. 
 
 Subject to any special agreement to the 
 contrary between the Governments con- 
 
 16 227 
 
Economic Clauses 
 
 cerned, debts shall carry interest in accord- 
 ance with the following- provisions: 
 
 Intel est shall not be payable on sums of 
 money due by way of dividend, interest or 
 other periodical payments which themselves 
 represent interest in capital. 
 
 The rate of interest shall be 5 per cent. 
 per annum except in eases where, by con- 
 tract, law or custom, the creditor is entitled 
 to payment of interest at a different rate. 
 In such eases the rate to which he is entitled 
 shall prevail. 
 
 Interest shall run from the date of com- 
 mencement of hostilities (or, if the sum of 
 money to be recovered fell due during the 
 war, from the date at which it fell due) 
 until the sum is credited to the Clearing 
 Office of the creditor. 
 
 Sums dm 1 by way of interest shall be 
 ireated as debts admitted by the Clearing 
 Office and shall be credited to the Creditor 
 Cleariug Office iu the same way as such 
 debts. 
 
 _o. 
 
 Where by decision of the Clearing Offices 
 or the Mixed Arbitral Tribunal a claim is 
 held not to fall within Article 29(5, the 
 creditor shall be at liberty to prosecute the 
 claim before the Courts or to take such other 
 proceedings as may be opeu to him. 
 
 The presentation of a claim to the Clear- 
 
 228 
 
Economic Clauses 
 
 ing Office suspends the operation of any 
 period of prescription. 
 
 24. . 
 
 The High Contracting Parties agree to 
 regard the decisions of the Mixed Arbitral 
 Tribunal as final and conclusive, and to ren- 
 der them binding upon their nationals. 
 
 or-; 
 
 In any case where a Creditor Clearing 
 Office declines to notify a claim to the 
 Debtor Clearing Office, or to take any step 
 provided for in this Annex, intended to make 
 effective in whole or in part a request of 
 which it has received due notice, the enemy 
 creditor shall be ent Ltled to receive from the 
 Clearing Office a certificate setting out the 
 amount of the claim, and shall then be en- 
 titled to prosecute the claim before the 
 courts or to take such other proceedings as 
 may be open to him. 
 
 Section IV. 
 property, rights and interests. 
 
 Article 297. 
 
 The question of private property, rights 
 and interests in an enemy country shall be 
 
 229 
 
Economic Clauses 
 
 Requires the 
 restoration 
 of Allied 
 property in 
 Ciermany not 
 already sold. 
 
 Authorizes 
 the Allies to 
 Bell in future 
 German prop- 
 erty in their 
 territory, at 
 their option. 
 
 German owner 
 shall not dis- 
 pose of such 
 property with- 
 out consent 
 of State 
 interested. 
 
 settled according to the principles laid 
 down in this Section and to the provisions 
 of the Annex hereto. 
 
 (a) The exceptional war measures and 
 measures of transfer (defined in paragraph 
 3 of the Annex hereto) taken by Germany 
 with respect to the property, rights and in- 
 terests of nationals of Allied or Associated 
 Powers, including companies and associa- 
 tions in which they are interested, when 
 liquidation has not been completed, shall 
 be immediately discontinued or stayed and 
 the property, rights and interests concerned 
 restored to their owners, who shall enjoy 
 full rights therein in accordance with the 
 provisions of Article 29S. 
 
 (b) Subject to any contrary stipulations 
 which may be provided for in the present 
 Treat}', the Allied and Associated Powers re- 
 serve the right to retain and liquidate all 
 property, rights and interests belonging at 
 the date of the coming into force of the pres- 
 ent Treaty to German nationals, or com- 
 panies controlled by them, within their terri- 
 tories, colonies, possessions and protector- 
 ates, including territory ceded to them by 
 the present Treaty. 
 
 The liquidation shall be carried out in ac- 
 cordance with the laws of the Allied or Asso- 
 ciated State concerned, and the German 
 owner shall not be able to dispose of such 
 
 230 
 
Economic Clauses 
 
 The 
 
 prices and 
 valuations 
 for future 
 gales in 
 Allied coun- 
 tries will bo 
 fixed by tli" 
 laws of sixli 
 countries. 
 
 As between 
 Allies and 
 Germany 
 all sales 
 and actions 
 heretofore 
 taken under 
 exceptional 
 war measures 
 are confirmed. 
 
 Claims 
 of Allied 
 citizens for 
 injuries to 
 their prop- 
 erty in Ger- 
 many to bo 
 passed upon 
 
 property, rights or interests nor to subject 
 them to any charge without the consent of 
 that State. 
 
 German nationals who acquire ipso facto 
 the nationality of an Allied or Associated 
 Power in accordance with the provisions of 
 the present Treaty will not be considered as 
 German nationals within the meaning of this 
 paragraph. 
 
 (c) The price or the amount of compensa- 
 tion in respect of the exercise of the right 
 referred to in the preceding paragraph (ft) 
 will be fixed in accordance with the method« 
 of sale or valuation adopted by the laws of 
 the country in which the property has been 
 retained or liquidated. 
 
 (d) As between the Allied and Associated 
 Powers or their nationals on the one hand 
 and Germany or her nationals on the other 
 hand, all the exceptional war measures, or 
 measures of transfer, or acts done or to be 
 done in execution of such measures as de- 
 fined in paragraphs 1 and 3 of the Annex 
 hereto shall be considered as final and bind- 
 ing upon all persons except as regards the 
 reservations laid down in the present 
 Treaty. 
 
 (e) The nationals of Allied and Asso- 
 ciated Powers shall be entitled to compensa- 
 tion in respect of damage or injury inflicted 
 upon their property, rights or interests, in- 
 
 231 
 
s • 
 
 association in t 
 - ed, in German g 
 
 it exist* on August 1. 191 i. V 
 ca a either of the excei \ ■■.,:.<■ 
 
 asores of trans 
 . - rt7 paj si \ • : v 
 
 h * adi chums made iii this respect by such 
 
 tionals shall be investigated, and the total 
 of the c< - i shall detei mined by 
 
 the Mixed A: tral aal provided foi 
 
 s VI or by an Arbitrator appointed 
 
 by that Tribunal. This < pensa i shall 
 be borne by G and may arged 
 
 upon the property of German nationals 
 within the territory or under t; i 1 of 
 
 the claimant's State. This property may be 
 constituted as a pledge for enemy liabili. s 
 under the conditions fixed by paragraph I of 
 the Annex hereto. The payment of this com- 
 pensation may be made by the Allied or As- 
 sociated State, and the amount will be 
 debited to Germany. 
 
 RtV . , (/) Whenever a national o( an Allied or ;,, J . § 
 
 Associated Power is entitled to property 
 \ which has been subjected to a measure o( 
 
 : >.vun- . > • i 
 
 transfer in German territory and express - 
 
 no* . . . . . , .' , . 
 
 u a desire tor us restitution, his elaun tor com- 
 
 proper: v, 
 
 pensation in accordance with paragraph (e) 
 shall be satisfied by the restitution of the 
 said property if it still exists in speeie. 
 
 In sueh ease Germany shall take all uee- 
 
Economic Clauses 
 
 essary slops to restore the evicted owner to 
 the possession of his property, free from all 
 encumbrances or burdens willi which it may 
 have been charged after the liquidation, and 
 to indemnify all third parlies injured by the 
 restitution. 
 
 If (lie restitution provided for in this par- 
 agraph cannot bo effected, private agree- 
 ments arranged by the intermediation of the 
 Powers concerned or the Clearing Offices 
 provided for in the Annex to Section 1IT 
 may bo made, in order lo secure 1 that the na- 
 tional of the Allied or Associated Power may 
 secure compensation for the injury referred 
 to in paragraph (e) by Hie granl of ad- 
 vantages or equivalents which he agrees to 
 accepl in place of the property, rights or 
 interests of which he was deprived. 
 
 Through restitution in accordance with 
 this Article, (he price or (in 4 amount of com- 
 pensation fixed by the application of para- 
 graph (r) will he reduced by the actual 
 value of the property restored, account be- 
 ing taken of compensation in respect of loss 
 of use or deterioration. 
 
 (g) The rights conferred by paragraph 
 (/) are reserved to owners who are nationals 
 of Allied ov Associated Towers within whose 
 territory legislative measures prescribing 
 the general liquidation of enemy property, 
 
 233 
 
jnomic Clamcs 
 
 General 
 rules 
 dispc > 
 
 -'eevls 
 
 rights or interests were nor applied before 
 the signature of the Armistice. 
 
 {Ji ) Except in cases where, by application 
 of paragraph (J ... stitutions in specie have 
 boon made, the net proceeds of sales of 
 enemy property, rights or interests wherever 
 
 situated carried car either by virtue of war 
 
 legislation, or by application of this Article, 
 
 and in general all cash assets of enemies, 
 
 shall be dealt with as follows : 
 
 Tiu> r. s. 
 (1) As regards Towers adopting Sett '.on .v.-.vt 
 
 * to adopt 
 
 III and the Annex thereto, the said proceeds sbc«« m 
 and cash assets shall be credited to the 
 Power of which the owner is a national, 
 through the Clearing Office established 
 thereunder; any credit balance in favour of 
 Germany resulting therefrom shall be dealt 
 with as provided in Article 243, 
 
 proceed ot (2) As regards Powers not adopting Sec- 
 
 odiassc - i non III and the Annex thereto, t lie proceeds 
 
 Allied nationals 
 
 heidbyoer- f the pi'opertv. rights and interests, and the 
 
 many to be r r * 
 
 atexvtoaid" caSQ ^sets, ot ' ^ u " nationals of Allied or As- 
 Go™out! lis sociated Powers held by Germany shall be 
 paid immediately to the person entitled 
 thereto or to his Government; the proceeds 
 o*GeE of the property, rights and interests, and the 
 
 beatdisposai cash assets, of German nationals received by 
 powersami an Allied or Associated Power shall be snb- 
 
 may be applied 
 
 to payment j^t to disposal bv such Power in accordance 
 
 claims ana " l 
 
 bvthittnieie. W ^ n ^ S * awa ano< regulations and may be 
 applied in payment of the claims and debts 
 
 234 
 
 Concerns S. 
 it" Section 1 11 
 is not adopted. 
 
Economic (Utilises 
 
 defined by this Article or paragraph 4 of 
 the Annex hereto. Any property, rights 
 and interests or proceeds thereof or cash as- 
 sets not vised as above provided may be re- 
 tained by the said Allied or Associated 
 Power and if retained the cash value thereof 
 sliall be dealt with as provided in Article 
 243. 
 
 Exceptional y n (], e caK0 f liquidations effected in new 
 ?rop!rty in States, which are signatories of the present 
 newstetes. Treaty as Allied and Associated Powers, or 
 in Slates which are not entitled to share in 
 the reparation payments to be made by Ger- 
 many, the proceeds of liquidations effected 
 by such States shall, subject to the rights of 
 the Reparation Commission under the pres- 
 ent Treaty, particularly under Articles 235 
 and 2(J0, be paid direct to the owner. If on 
 application of that owner, the Mixed Arbi- 
 tral Tribunal, provided for by Section VI 
 of this Part, or an arbitrator appointed by 
 that Tribunal, is satisfied that the conditions 
 of the sale or measures taken by the Govern- 
 ment of the State in question outside its 
 general legislation were unfairly prejudicial 
 to the price obtained, they shall have discre- 
 tion to award to the owner equitable com- 
 pensation to be paid by that State. 
 
 Smanv to (*) Germany undertakes to compensate 
 nu'uonVisfor her nationals in respect of the sale or re- 
 
 235 
 
Economic Clause* 
 
 myUu^en tOUtioll of tlioil' property, rights 01' iutOl'OStS 
 
 in Allied or Associated States. 
 
 Taxes .md (j) The amount of all taxes and imposts 
 
 by Germany upon capital levied or to be levied by Ger- 
 
 from Nov. 11, r J 
 
 3, and up many on tlie property, rights and interests 
 
 to three L ■ ' ° 
 
 mouths after f r ] ie nationals of the Allied or Associated 
 
 coming into 
 
 |;^2' Towers from November 11, 1918, until three 
 fecfTSected' months from the coming into force of the 
 
 present Treaty, or, in the ease o( property, 
 period. '' rights or interests which have been subjected 
 to exceptional measures of war, until resti- 
 tution in accordance with the present Treaty 
 shall be restored to the owners. 
 
 Article 298. 
 
 Germany undertakes, with regard to the 
 property, rights and interests, including 
 companies and associations in which they 
 were interested, restored to nationals of 
 Allied and Associated Powers in accord- 
 ance with the provisions of Article 
 207, paragraph (a) or (/) : 
 
 property. ice, i,/) to restore and maintain, except as ex- 
 
 restored by 
 
 Germanyto pressly provided in the present Treaty, the 
 
 have same r • i i « 
 
 property, rights and interests of the na- 
 m, tionals oi Allied or Associated Towers in 
 
 the legal position obtaining in respect of the 
 property, rights and interests of German na- 
 tionals under the laws in force before the 
 
 fore the war. 
 
 war ; 
 
 23G 
 
Economic Clauses 
 
 Germany (6) not to subject the property, rights or 
 
 discriminate interests of the nationals of the xVllied or 
 
 against Allied 
 
 nationals in Associated Powers to any measures in dcro- 
 
 troatment of " 
 
 t 1 1 ni! |1 r!v rty ' gation of property rights which are not ap- 
 SSm * plied equally to the property, rights and in- 
 
 Sw£tion Q terests of German nationals, and to pay ade- 
 quate compensation in the event of the appli- 
 cation of these measures. 
 
 ANNEX. 
 
 Merely ampli- 
 flea Art. 297 
 ('/) ; applies 
 to all coun- 
 tries alike, 
 Including 
 Qermainy. 
 
 1. 
 
 In accordance with the provisions of Ar- 
 ticle 297, paragraph (tZ), the validity of 
 vesting orders and of orders for the wind- 
 ing up of businesses or companies, and of 
 any other orders, directions, decisions or 
 instructions of any court or any department 
 of the Government of any of the High Con- 
 tracting Parties made or given, or purport- 
 ing to be made or given, in pursuance of 
 Avar legislation with regard to enemy prop- 
 erty, rights and interests is confirmed. The 
 interests of all persons shall be regarded 
 as having been effectively dealt with by any 
 order, direction, decision or instruction 
 dealing with property in which, they may 
 be interested, whether or not such interests 
 are specifically mentioned in the order, di- 
 rection, decision, or instruction. No ques- 
 tion shall be raised as to the regularity of 
 
 Important 
 for U. S., as 
 it validates 
 action of 
 Alien Prop- 
 erty Custo- 
 dian, so far 
 as German 
 Government 
 is concerned. 
 
 237 
 
Economic Clausi 
 
 a transfer of any property, rights or inter- 
 ests dealt with in pursuance of any such 
 order, direction, decision or instruction, 
 lively action taken with regard to any 
 property, business, or company, whether as 
 regards its investigation, sequestration, 
 compulsory administration, use, requisition, 
 supervision, or winding up, the sale or 
 management of property, rights or inter- 
 ests, the collection or discharge of debts, 
 the payment of costs, charges or expenses, 
 or any other matter whatsoever, in pursu- 
 ance of orders, directions, decisions, or in- 
 structions of any court or of any depart- 
 ment of the < rovernment of any of the High 
 Contracting Parties, made or given, or par- 
 porting to be made or given, in pursuance 
 of war legislation with regard to enemy 
 property, rights or interests, is confirmed. 
 Provided that the provisions of this para- This proviso 
 
 - 1 - * preserves 
 
 graph shall not be held to prejudice the rfchtsof«u 
 
 1 i •> citizens who 
 
 titles to property heretofore acquired in ^;^ tr /; p " 
 good faith and for value and in accordance S^«od 
 with the laws of the country in which the ^ e '^ ed 
 property is situated by nationals of the Al- 
 lied and Associated Towel's. 
 
 The provisions of this paragraph do not 
 apply to such of the above-mentioned meas- 
 ures as have been taken by the German au- 
 thorities in invaded or occupied territory, 
 nor to such of the above mentioned meas- 
 ures as have been taken by Germany or the 
 
 23S 
 
Economic Clauses 
 
 German authorities since November 11, 
 1918, all of which shall be void. 
 
 Prevents^ 
 claims being 
 brought by 
 Germany or 
 its nationals 
 on account 
 of War 
 measures. 
 
 No claim or action shall be made or 
 brought against any Allied or Associated 
 Power or against any person acting on be- 
 half of or under the direction of any legal 
 authority or Department of the Govern- 
 ment of such a Tower by Germany or by 
 any German national wherever resident in 
 respect of any act or omission with regard 
 to his property, rights or interests during 
 the war or in preparation for the war. 
 Similarly no claim or action shall be made 
 or brought against any person in respect 
 Of any act or omission under or in accord- 
 ance with the exceptional war measures, 
 laws or regulations of any Allied or Asso- 
 ciated Power. 
 
 Intended to 
 prevent 
 claims on 
 account of 
 operation of 
 our War 
 legislation, 
 e. g., black 
 list of War 
 Trade Board. 
 
 Merely 
 defines the 
 terms used. 
 
 In Article 297 and this Annex the expres- 
 sion "exceptional war measures" includes 
 measures of all kinds, legislative, adminis- 
 trative, judicial or others, that have been 
 taken or will be taken hereafter with regard 
 to enemy property, and which have had or 
 will have the effect of removing from the 
 proprietors the power of disposition over 
 their property, though without affecting the 
 ownership, such as measures of supervision, 
 
 239 
 
Economic Clauses 
 
 of compulsory administration, and of se- 
 questration: or measures which have had or 
 will have as an object the seizure of, the 
 use of, or the interference with enemy as- 
 sets, for whatsoever motive, under whatso- 
 ever form or in whatsoever place. Acts in 
 the execution of these measures include all 
 detentions, instructions, orders or decrees 
 of Government departments or courts ap- 
 plying these measures to enemy property, 
 as well as acts performed by any person 
 connected with the administration or the 
 supervision of enemy property, such as the 
 payment of debts, the collecting of credits, 
 the payment of any costs, charges or ex- 
 penses, or the collecting of fees. 
 
 Measures of transfer are those which have 
 affected or will affect the ownership of 
 enemy property by transferring it in whole 
 or in part to a person other than the enemy 
 owner, and without his consent, such as 
 measures directing the sale, liquidation, or 
 devolution of ownership in enemy prop- 
 erty, or the cancelling of titles or securities. 
 
 classes of All property, rights and interests of Ger- 
 
 claims for * * " ' c 
 
 payment of mail nationals within the territory of any 
 
 which Get- * 
 
 mwKe? Allied or Associated Power aud the net pro- 
 A«oci i a e t d ed nd ceeds of their sale, liquidation or other deal- 
 pow ings therewith may be charged by that Al- 
 
 lied or Associated Power in the first place 
 
 240 
 
Economic Clauses 
 
 with payment of amounts due in respect of 
 claims by the nationals of that Allied or 
 Associated Power with regard to their prop- 
 erty, rights and interests, including com- 
 panies and associations in which they are 
 interested, in German territory, or debts 
 owing to them by German nationals, and 
 with payment of claims growing out of acts 
 committed by the German Government or 
 by any German authorities since July 31, 
 1914, and before that Allied or Associated 
 Power entered into the war. The amount 
 of such claims may be assessed by an arbi- 
 trator appointed by M. Gustave Ador, if 
 he is willing, or if no such appointment is 
 made by him, by an arbitrator appointed 
 by the Mixed Arbitral Tribunal provided 
 for in Section VI. They may be charged in 
 the second place with payment of the 
 amounts due in respect of claims by the 
 nationals of such Allied or Associated 
 Power with regard to their property, rights 
 and interests in the territory of other enemy 
 Powers, in so far as those claims are other- 
 wise unsatisfied. 
 
 provides pro- Notwithstanding the provisions of Ar- very special 
 
 tection for » i. cage u s 
 
 coloration ^' IC ^ Q ~^~> where immediately before the out- ^^ d not 
 
 us°e™f u ite air break of war a company incorporated in an 
 
 neuSai c n oun- Allied or Associated State had rights in 
 
 eekurYofSe common with a company controlled by it 
 
 241 
 
* ^ . ■ t 
 
 - - 
 
 ..- .-. -.- a..-.- 
 
 F. : :." ■:..■ '.'.' : >\ < 
 
 s - ' 
 
 5 
 
 ...... 
 
 g \ 
 
 . . . > 
 
 Up s s 
 
 . witli a 
 (.ix is respons - N ■■ 
 
 ests < 
 
 s and ass in 
 
 ,.\ e b 
 SUl I bj I - • U) 65 
 
 9, 
 
 i. 
 
 ^^ ' :\ o&6 jMtr faun the coming into 
 force . esent Allied or As 
 
17 
 
 Economic Clauses 
 
 sociated rowers will specify the property, 
 rights and Interest* over which they Intend 
 i<> exercise the rights provided In Article 
 ii!)7, paragraph (/). 
 
 8. 
 
 The restitution provided In Article 297 
 will be carried out by order of the German 
 Government or of the authorities which 
 have been substituted Cor It. Detailed ac- 
 counts of the action of administrators shall 
 be furnished to the Interested persons by 
 the German authorities upon request, which 
 limy be made at any Mine after the coming 
 info force of the present Treaty. 
 
 0. 
 
 Hniil completion of the Liquidation pro- onimo 
 
 ■ ■ effect in IT. 
 
 vided for l»y Article -!)7, paragraph (b), B y.$ th0, j t 
 
 •' 7 I " I / / nf | ( |,| long] 
 
 the properly, rights and interests of Ger- ^JL^ 
 man nationals will continue to be subject 
 
 to exceptional War incisures that have been 
 
 or will be taken with regard to them. 
 
 10. 
 
 Germany will, within six months from important 
 
 olauie ( ai wb 
 
 the coming Into force of the present Treaty, cannot adjuat 
 
 o i " ' lerloui com- 
 
 deliver tO each Allied or Associated Power pBcaflonj 
 
 regarding 
 
 all securities, certificates, deeds, or other Jgg^^* 
 documents of title held by its nationals and f^,'"',!'!!,,, 
 relating to property, rights or Interests sit- SS^S?. 
 uated in the territory of that Allied or As- 
 
 243 
 
- 
 sts I 
 
 - 
 - 
 
 I 
 
 5 to the 1V\\. - 
 
 i 
 ! 
 
 12. 
 
 ies 
 
 wore into - :. by perst s res] 
 
 Ml 
 
WCOtlOffUC Chin:,, 
 
 Hi'- administration of enemy properties op 
 Ing - ontro] over uuch administration, or 
 b order of such persona or of any authority 
 whatsoever shall be annulled. These cash 
 b ( shall be accounted for Irrespective of 
 any such Inv istment. 
 
 I Mm I In 
 rctiii ii '.r a i 
 
 within one month from the coming into 
 ;;;;,";;,;;';;;.. force of i lie present Treaty, or on demand at 
 '""•""""" any time, Germany will deliver to the A I 
 lied and Associated Powers nil accounts, 
 vouchers, records, documents and informa- 
 tion of any kind which may be within Ger- 
 man territory, and which concern the prop- 
 erty, rights and Inti rests of the nationals 
 of i iio.se row err, Including companies and 
 
 ociations In which they are Interested, 
 that have been subjected to an exceptional 
 war measure, or to a measure of transfer 
 either In German territory or In territory 
 occupied by Germany or her allies. 
 
 The controllers, supervisors, managers, 
 adminisi rators, sequesl rators, liquidators 
 and receivers shall be personally responsible 
 \in<i(-r guarantee of the German Govern- 
 ment for the Immediate delivery in full of 
 these accounts and documents, and for their 
 accuracy. 
 
 M. 
 
 "['[•'■ l The provisions <>r Article 2'M nn<l this foes., 
 
 \ . . . Alien i'rr,p- 
 
 '""'•" " Annex relating to property, rights and in- wtyouitc 
 
 245 
 
Economic Clauses 
 
 terests in an enemy country, and the pro- J ^ 
 
 coeds of (he liquidation thereof, apply to i thu 
 debts, credits and accounts, Section III 
 regulating only the method of payment. 
 
 In the settlement of matters provided for 
 in Article 297 between Germany and tlie 
 Allied or Associated States, their colonies 
 protectorates, or any one of the British 
 Dominions or India, in respect Of any of 
 which a declaration shall not have been 
 made that they adopt Section III. and be- 
 tween their respective nationals, the pro- 
 visions of Section 111 respecting the eur- 
 rency in which payment is to bo made and 
 the rate of exchange and of interest shall 
 apply unless the Government of the Allied 
 or Associated rower concerned shall within 
 six months of the coming- into force of the 
 present Treaty notify Germany that the 
 said provisions are not to be applied. 
 
 15. 
 
 The provisions of Article 297 and this 
 Annex, apply to industrial, literary and ar- 
 tistic property which has been or will be 
 dealt with in the liquidation of property, 
 rights, interests, companies or businesses 
 under war legislation by the Allied or Asso- 
 dated Powers, or in accordance with the 
 stipulations of Article 297, paragraph (b). 
 
 ?4G 
 
Economic Clauses 
 
 Section V. 
 
 CONTRACTS, PRESCRIPTIONS, JUDGMENTS. 
 
 Article 290. 
 
 Onrrnl dis- 
 nolution "f 
 nil pre \\;ir 
 contracts, 
 with certain 
 exceptions. 
 
 (a) Any contracts concluded between Art. 299 does 
 enemies shall be regarded as having been u. s. (Se« 
 
 paragraph 
 
 dissolved as from the time when any two of (t)) 
 the parlies became enemies, except in re- 
 spect of any debt or other pecuniary obliga 
 lion arising out of any act done or money 
 paid thereunder, and subject to the excep- 
 tions and special rules with regard to par- 
 ticular contracts or classes of contracts 
 contained herein or in the Annex hereto. 
 
 ( b ) Any contract of which the execution 
 shall be required in the general interest, 
 within six months from the dale of the com- 
 ing into force of the present Treaty, by the 
 Allied or Associated Governments of which 
 one of the parties is a national, shall be ex- 
 cepted from dissolution under this Article. 
 
 When the execution of the contract thus 
 kept alive would, owing to the alteration 
 of trade conditions, cause one of the parties 
 substantial prejudice the Mixed Arbitral 
 Tribunal provided for by Section VI shall 
 •be empowered to grant to the prejudiced 
 party equitable compensation. 
 
 247 
 
Economic Clauses 
 
 (c) Having regard to the provisions of 
 the constitution and law of the United 
 States of America, of Brazil, and of Japan, 
 neither the present Article, nor Article 300, 
 nor the Annex hereto shall apply to con- 
 tracts made between nationals of these 
 States and German nationals; nor shall Ar- 
 ticle 305 apply to the United States of 
 America or its nationals. 
 
 (d) The present Article and the Annex 
 hereto shall not apply to contracts the 
 parties to which became enemies by reason 
 of one of them being an inhabitant of terri- 
 tory of which the sovereignty has been 
 transferred, if such party shall acquire un- 
 der the present Treaty the nationality of 
 an Allied or Associated Power, nor shall 
 they apply to contracts between nationals 
 of the Allied and Associated Powers be- 
 tween whom trading has been prohibited by 
 reason of one of the parties being in Allied 
 or Associated territory in the occupation 
 of the enemy. 
 
 (e) Nothing in the present Article or the 
 Annex hereto shall be deemed to invalidate 
 a transaction lawfully carried out in ac- 
 cordance with a contract between enemies 
 if it has been carried out with the authority 
 of one of the belligerent Powers. 
 
 248 
 
Economic Clauses 
 Article 300. 
 
 2225* ( ft ) A11 Periods of prescription, or limi- ^oo,doe S 
 Art. 299. tation of right of action, whether they be- £ J cla (See 
 gan to rim before or after the outbreak of 299(c)) 
 war, shall be treated in the territory of the 
 High Contracting Parties, so far as regards 
 relations between enemies, as having been 
 suspended for the duration of the Avar. 
 They shall begin to run again at earliest 
 three months after the coming into force 
 of the present Treaty. This provision shall 
 apply to the period prescribed for the pres- 
 entation of interest or dividend coupons 
 or for the presentation for repayment of 
 securities drawn for repayment or repay- 
 able on any other ground. 
 
 (b) Where, on account of failure to per- 
 form any act or comply with any formality 
 during the war, measures of execution have 
 been taken in German territory to the prej- 
 udice of a national of an Allied or Asso- 
 ciated Power, the claim of such national 
 shall, if the matter does not fall within the 
 competence of the Courts of an Allied or As- 
 sociated Power, be heard by the Mixed Ar- 
 bitral Tribunal provided for by Section VI. 
 
 '(c) Upon the application of any inter- 
 ested person who is a national of an Allied 
 or Associated Power the Mixed Arbitral 
 Tribunal shall order the restoration of the 
 
 249 
 
Economic Clauses 
 
 rights which have been prejudiced by the 
 measures of execution referred to in para- 
 graph ! . wherever, having regard to the 
 
 particular circumstances of the ease, such, 
 restoration is equitable and possible. 
 
 If such restoration is inequitable or im- 
 possible the Mixed Arbitral Tribunal mar 
 grant compensation to the prejudiced party 
 to be paid by the German Government. 
 
 ((7) Where a contract between enemies 
 has been dissolved by reason either of fail- 
 ure on the part of either party to carry out 
 its provisions or of The exercise of a right 
 stipulated in the contract itself the party 
 prejudiced may apply to the Mixed Arbitral 
 Tribunal for relief. The Tribunal will have 
 the powers provided for in paragraph (c). 
 
 The provisions of the preceding para- 
 graphs of this Article shall apply to the na- 
 tionals of Allied and Associated Powers 
 who have been prejudiced by reason of 
 measures referred to above taken by Ger- 
 many in invaded or occupied territory, if 
 they have not been otherwise compensated. 
 
 (/) Germany shall compensate any third 
 party who may be prejudiced by any resti- 
 tution or restoration ordered bv the Mixed 
 Arbitral Tribunal under the provisions of 
 the preceding paragraphs of this Article. 
 
 (g) As regard** negotiable instruments, 
 the period of three months provided under 
 
 250 
 
Economic Clauses 
 
 paragraph (a) shall commence as from the 
 date on which any exceptional regulations 
 applied in the territories of the interested 
 Power with regard to negotiable instru- 
 ments shall have definitely ceased to have 
 force. 
 
 Article 301. 
 
 legotinble 
 istrumenta 
 ot rendered 
 nalid for 
 lilnre to 
 resent them 
 uring the 
 *ur. 
 
 Extension of 
 ime provided 
 or presenta- 
 ion, ic. 
 
 As between enemies no negotiable instru- Applies to 
 incut made before the Avar shall be deemed 
 to have "become invalid by reason only of 
 failure within the required time to present 
 the instrument for acceptance or payment 
 or to give notice of non-acceptance or non- 
 payment to drawers or indorscrs or to pro- 
 test the instrument, nor by reason of failure 
 to complete any formality during the war. 
 
 Where tha period within which a negoti- 
 able instrument should have been presented 
 for acceptance or for payment, or within 
 which notice of non-acceptance or non-pay- 
 ment should have been given to the drawer 
 or indorser, or within which the instrument 
 should have been protested, has elapsed dur- 
 ing the Avar, and the party AA r ho should have 
 presented or protested the instrument or 
 have given notice of non-acceptance or non- 
 payment has failed to do so during the war, 
 a period of not less than three months from 
 the coming into force of the present Treaty 
 shall be allowed within which presentation, 
 
 251 
 
Economic Clauses 
 
 notice of non-acceptance or non-payment or 
 protest may be made. 
 
 Article 302. 
 
 SSo n f tscf Judgments given by the Courts of an Al- Applied 
 provk3ed C for es lied or Associated Power in all cases which, 
 shaii be Treaty under the present Treaty, they are conine- 
 
 recognized i 
 
 a S final. tent to decide, shall be recognised in Ger- 
 
 many as final, and shall be enforced without 
 it being necessary to have them declared 
 executory. 
 
 Remedy t/? -, . . 
 
 against it a judgment in respect to any dispute 
 
 judgments . . , _ »> r 
 
 coSrtTXn lcn ma y nave ari »en has been given dur- 
 
 a A nf Hfni" d ' ing tke war h J a Germ *n Court against a 
 
 def 1 e e n t s°e make Dational of aa Allied or Associated State 
 
 SSiSutai in a case in which ]ie was not able to make 
 
 Tribunal^ his defence, the Allied and Associated na- 
 
 suchcase. tional who hag suffered pre judice thereby 
 
 shall be entitled to recover compensation, 
 
 to be fixed by the Mixed Arbitral Tribunal 
 
 provided for in Section VI. 
 
 At the instance of the national of the 
 Allied or Associated Power the compensa- 
 tion above mentioned may, upon order to 
 that effect of the Mixed Arbitral Tribunal, 
 be effected where it is possible by replacing 
 the parties in the situation which they oc- 
 cupied before the judgment was given by 
 the German Court. 
 
 The above compensation may likewise be 
 obtained before the Mixed Arbitral Tri- 
 
 252 
 
Economic Glauses 
 
 •bunal by the nationals of Allied or Associ- 
 ated Powers who have suffered prejudice 
 by judicial measures taken in invaded or 
 occupied territories, if they have not been 
 otherwise compensated. 
 
 Article 303. 
 
 Meaning of 
 "during the 
 war." 
 
 For the purpose of Sections III, IV, V 
 and VII, the expression "during the war" 
 means for each Allied or Associated Power 
 the period between the commencement of 
 the state of war between that Power and 
 Germany and the coming into force of the 
 present Treaty. 
 
 ANNEX. 
 
 I. General Provisions. 
 
 1. 
 
 Details 
 regarding 
 contracts 
 annulled by 
 this treaty. 
 
 Within the meaning of Articles 299, 300 dom not a P - 
 
 ° ' ply to U. S. 
 
 and 301, the parties to a contract shall be 
 regarded as enemies when trading between 
 them shall have been prohibited by or other- 
 wise become unlawful under laws, orders 
 or regulations to which one of those parties 
 was subject. They shall be deemed to have 
 become enemies from the date when such 
 trading was prohibited or otherwise became 
 unlawful. 
 
 253 
 
Economic Clauses 
 
 2. 
 
 The following classes of contracts arc ex- noes not ap - 
 
 c ph to U. S. 
 
 ecpted from dissolution by Article 299, and, 
 without prejudice to the rights contained 
 in Article 297 (b) of Section IV, remain in 
 force subject to the application of domestic 
 laws, orders or regulations made during the 
 war by the Allied and Associated ToAvers 
 and subject to the terms of the contracts : 
 
 (a) Contracts having for their object the 
 transfer of estates or of real or personal 
 property where the property therein had 
 passed or the object had been delivered be- 
 fore the parties became enemies; 
 
 (b) Leases and agreements for leases of 
 land and houses; 
 
 (c) Contracts of mortgage, pledge or 
 lien; 
 
 (d) Concessions concerning mines, quar- 
 ries or deposits; 
 
 (r) Contracts between individuals or 
 companies and States, provinces, munici- 
 palities, or other similar juridical persons 
 charged with administrative functions, and 
 concessions granted by States, provinces, 
 municipalities, or other similar juridical 
 persons charged with administrative func- 
 tions. 
 
 254 
 
Economic Clauses 
 
 3. 
 
 If the provisions of a contract are in part jjj^.s!" 
 dissolved under Article 299, the remaining 
 provisions of that contract shall, subject to 
 the same application of domestic laws as is 
 provided for in paragraph 2, continue in 
 force if they are severable, but where they 
 are not severable the contract shall be 
 deemed to have been dissolved in its en- 
 tirety. 
 
 II. Provisions relating to certain classes of 
 
 Contracts. 
 
 Stock Exchange and Commercial Exchange "f^j^ 
 
 Contracts. 
 
 A. 
 
 (a) Rules made during the war by any 
 recognised Exchange or Commercial Asso- 
 ciation providing for the closure of con- 
 tracts entered into before the war by an 
 enemy are confirmed by the High Contract- 
 ing Parties, as also any action taken there- 
 under, provided: 
 
 (1) That the contract was expressed to 
 be made subject to the rules of the Ex- 
 change or Association in question; 
 
 (2) That the rules applied to all persons 
 concerned; 
 
 255 
 
Economic Clauses 
 
 (3) That the conditions attaching to the 
 closure were fair and reasonable. 
 
 (6) The preceding paragraph shall not 
 apply to rules made during the occupation 
 1>t Exchanges or Commercial Associations 
 in the districts occupied by the enemy. 
 
 (c) The closure of contracts relating to 
 cotton "futures." which were closed as on 
 July 31, 1914. tinder the decision of the 
 Liverpool Cotton Assoc ia lion, is also con- 
 firmed. 
 
 Security. 
 
 5. 
 
 The sale of a security held for an unpaid Doesnotap. 
 
 1 ply to I . S. 
 
 debt owing bv an enemv shall he deemed to 
 have been valid irrespective of notice to the 
 owner if the creditor acted in good faith and 
 with reasonable rare and prudence, and no 
 claim by the debtor on the ground of such 
 sale •shall be admitted. 
 
 This stipulation shall not apply to any 
 sale of securities effected bv an enemy dur- 
 ing the occupation in regions invaded or 
 occupied by the enemy. 
 
 Negotiable Instruments. 
 
 6. 
 
 As regards Powers which adopt Section r>oeanota P - 
 
 ° r plv to L T . S. 
 
 Ill and the Annex thereto the pecuniary 
 
 256 
 
Economic Clauses 
 
 obligations existing between enemies and re- 
 sulting from the issue of negotiable instru- 
 ments shall be adjusted in conformity with. 
 the said Annex by the instrumentality of 
 the Clearing- Offices, which shall assume the 
 rights of the holder as regards the various 
 remedies open to him. 
 
 If a person has either before or during pfy 9 t ou. a s." 
 the war become liable upon a negotiable in- 
 strument in accordance with an undertaking 
 given to him by a person who has subse- 
 quently become an enemy, the latter shall 
 remain liable to indemnify the former in 
 respect of his liability notwithstanding the 
 outbreak of war. 
 
 III. Contracts of Insurance. 
 
 8. 
 
 Contracts of insurance entered into by J^u.!?* 
 any person with another person who subse- 
 quently became an enemy will be dealt with 
 in accordance with the following para- 
 graphs. 
 
 Fire Insurance. 
 
 9. 
 
 Contracts for the insurance of property p iy S to°u a s. 
 against fire entered into by a person inter- 
 
 257 
 
Economic Clauses 
 
 ested in such property with another person 
 who subsequently became an enemy shall not 
 be deemed to have been dissolved by the 
 outbreak of war, or by the fact of the person 
 becoming an enemy, or on account of the 
 failure during the war and for a period of 
 three months thereafter to perform his obli- 
 gations under the contract, but they shall 
 be dissolved at the date when the annual 
 premium becomes- payable for the first time 
 after the expiration of a period of three 
 months after the coming into force of the 
 present Treaty. 
 
 A settlement shall be effected of unpaid 
 premiums which became due during the 
 war, or of claims for losses which occurred 
 during the war. 
 
 10. 
 
 Where by administrative or legislative ac- p^tor.s! 
 tion an insurance against tire effected before 
 the war has been transferred during the war 
 from the original to another insurer, the 
 transfer will be recognised and the liability 
 of the original insurer will be deemed to 
 have ceased as from the date of the transfer. 
 The original insurer will, however, be en- 
 titled to receive on demand full information 
 as to the terms of the transfer, and if it 
 should appear that these terms were not 
 
 258 
 
18 
 
 Economic Clauses 
 
 equitable they shall be amended so far as 
 may be necessary to render them equitable. 
 Furthermore, the insured shall, subject to 
 the concurrence of the original insurer, be 
 entitled to retransfer the contract to the 
 original insurer as from the date of the 
 demand. 
 
 Life Insurance. 
 
 11. 
 
 Contracts of life insurance entered into _ a , 
 
 Does not ap- 
 
 between an insurer and a person who subse- p^^u. s. 
 quently became an enemy shall not be 
 deemed to have been dissolved by the out- 
 break of war, or by the fact of the person 
 becoming an enemy. 
 
 Any sum which during the war became 
 due upon a contract deemed not to have 
 been dissolved under the preceding pro- 
 vision shall be recoverable after the war 
 with the addition of interest at five per 
 cent, per annum from the date of its becom- 
 ing due up to the day of payment. 
 
 Where, the contract has lapsed during the 
 war owing to non-payment of premiums, or 
 has become void from breach of the condi- 
 tions of the contract, the assured or his 
 representatives or the person entitled shall 
 have the right at anv time within twelve 
 months of the coming into force of the pres- 
 ent Treaty to claim from the insurer the 
 
 259 
 
Economic Clauses 
 
 surrender value of the policy at the date of 
 its lapse or avoidance. 
 
 Where the contract has lapsed during the 
 war owing to non-payment of premiums the 
 payment of which has been prevented by the 
 enforcement of measures of war, the assured 
 or his representative or the persons entitled 
 shall have the right to restore the contract 
 on payment of the premiums with interest 
 at five per cent, per annum within three 
 months from the coming into force of the 
 present Treaty. 
 
 12. 
 
 ply to U. S. 
 
 
 Any Allied or Associated Power may D , oe ! n ?* a ,p- 
 
 * * nlv to II- S. 
 
 within three months of the coining into force 
 of the present Treaty cancel all the con- 
 tracts of insurance running between a Ger- 
 man insurance company and its nationals 
 under conditions which shall protect its na- 
 tionals from any prejudice. 
 
 To this end the German insurance com- 
 pany will hand over to the Allied or Asso- 
 ciated Government concerned the proportion 
 of its assets attributable to the policies so 
 cancelled and will be relieved from all lia- 
 bility in respect of such policies. The assets 
 to be handed over shall be determined by an 
 actuary appointed by the Mixed Arbitral 
 Tribunal. 
 
 260 
 
Economic Clauses 
 13. 
 
 Where contracts of life insurance have j^to'u.T 
 been entered into by a local branch of an 
 insurance company established in a country 
 which subsequently became an enemy coun- 
 try, the contract shall, in the absence of 
 any stipulation to the contrary in the con- 
 tract itself, be governed by the local law, 
 but the insurer shall be entitled to demand 
 from the insured or his representatives the 
 refund of sums paid on claims made or en- 
 forced under measures taken during the 
 war, if the making or enforcement of such 
 claims was not in accordance with the 
 terms of the contract itself or was not con- 
 sistent with the laws or treaties existing at 
 the time when it was entered into. 
 
 14. 
 
 In any case where by the law applicable [£? s to n u. a <r 
 to the contract the insurer remains bound 
 by the contract notwithstanding the non- 
 payment of premiums until notice is given 
 to the insured of the termination of the 
 contract, he shall be entitled where the giv- 
 ing of such notice was prevented by the war 
 to recover the unpaid premiums with inter- 
 est at five per cent, per annum from the 
 insured. 
 
 15. 
 
 Insurance contracts shall be considered J^Ju.sT 
 as contracts of life assurance for the pur- 
 
 261 
 
Economic Clauses 
 
 pose of paragraphs 11 to 11 when they de- 
 pend on the probabilities of human life com- 
 bined with the rate of interest for the cal- 
 culation of the reciprocal engagements be- 
 tween the two parties. 
 
 Marine Insurance. 
 
 16. 
 Contracts of marine insurance including Does not «J 
 
 ' i>lv to U. S. 
 
 time policies and voyage policies entered 
 into between an insurer and a person who 
 subsequently became an enemy, shall be 
 
 deemed to have been dissolved on his becom- 
 ing- an enemy, except in cases where the risk 
 undertaken in the contract had attached be- 
 fore he became an enemy. 
 
 Where the risk had not attached, money 
 paid by way of premium or otherwise shall 
 be recoverable from the insurer. 
 
 Where the risk had attached effect shall 
 be given to the contract notwithstanding 
 the party becoming an enemy, and sums due 
 under the contract either by way of pre- 
 miums or in respect of losses shall be re- 
 coverable after the coming into force of the 
 present Treaty. 
 
 In the event of any agreement being come 
 to for the payment of interest on •sums due 
 before the war to or bv the nationals of 
 States which have been at war and recov- 
 ered after the war, such interest shall in 
 
 262 
 
Economic Clauses 
 
 the case of losses recoverable under con- 
 tracts of marine insurance run from the ex- 
 piration of a period of one year from the 
 date of the loss. 
 
 17. 
 
 No contract of marine insurance with an P°esnota P . 
 
 ply to U. S. 
 
 insured person who subsequently became an 
 enemy shall be deemed to cover losses due 
 to belligerent action by the Tower of which 
 the insurer was a national or by the allies 
 or associates of such Power. 
 
 18. 
 
 Where it is shown that a person who had docs not ap - 
 
 1 ply to U. S. 
 
 before the war entered into a contract of 
 marine insurance with an insurer who sub- 
 sequently became an enemy entered after 
 the outbreak of war into a new contract 
 covering the same risk with an insurer who 
 was not an enemy, the new contract shall 
 be deemed to be substituted for the original 
 contract as from the date when it was en- 
 tered into, and the premiums payable shall 
 be adjusted on the basis of the original in- 
 surer having remained liable on the con- 
 tract only up till the time when the new 
 contract was entered into. 
 
 263 
 
I " . . - s 
 
 Insurm «, 
 
 19. 
 of insurance entered into be- ■ »■ 
 
 a 
 
 b :' e war between an insurer and a per- 
 son who subsequently became an enemy, 
 
 er than conti s dealt with in pai 
 
 phs 9 to IS. shall be treated in all i 
 spe< - a the same : g as contracts of 
 
 • insurance the same persons 
 
 would bo dealt with under the said para- 
 graphs. 
 
 AY ' v 
 
 20. 
 
 All treaties of re-insurance with a person r ■'•"' .. 
 who became an enemy shall be regarded as 
 having boon abrogated by the person becom- 
 ing an enemy, bar without prejudice In the 
 
 se of life or marine risks which had at- 
 tached before the war to the right to recover 
 payment after the war for sums due in re- 
 spect of such risks. 
 
 Nevertheless if, owing to invasion, it has 
 been impossible for the re-insured to find 
 another re-insnrer, the treaty shall remain 
 in force until three months after the com- 
 ing into force of the present Treaty. 
 
 Where a re-insurance treaty becomes void 
 under this paragraph, there shall bo an ad* 
 
 264 
 
Economic Clauses 
 
 justment of accounts between the parties in 
 respect both of premiums paid and payable 
 and of liabilities for losses In respect of 
 life or marine risks which had attached be- 
 fore the war. In the case Of risks other 
 than those mentioned in paragraphs ll to 
 is I in- adjustment of accounts shall be made 
 as at the date of the parties becoming 
 enemies without regard to claims for losses 
 which may have occurred since that date. 
 
 21. 
 
 The provisions of the preceding para- ^7" "a. IT 
 graph will extend equally to re-insurances 
 existing at the date of the parties becoming 
 enemies of particular risks undertaken by 
 the insurer in a contract of insurance 
 against any risks other than life or marine 
 risks. 
 
 22. 
 Re-insurance of life risks effected l>v par- ,) 1 * ,p ? n ?J " p_ 
 
 *> k ply to U. 8. 
 
 ticular contracts ami not under any general 
 treaty remain in force. 
 
 The provisions of paragraph 12 apply to 
 treaties of re-insurance of life insurance 
 contracts in which enemy companies are 
 the re-insurers. 
 
 23. 
 
 In ease of a re-insurance effected before D 1 00 !! n ? T t T 
 
 ply to U. 8. 
 
 the war of a contract of marine insurance, 
 
 265 
 
Bctmo ' - s 
 
 the 96 risk which had boon ceded 
 
 shall, if it had attached bo- 
 war, ivr. alid and 
 
 stand- 
 u g the on; k of war; sums due under 
 the contract of re-insurance in resp< 
 
 or of premiums or of losses shall 
 coverable after the war, 
 
 24. 
 
 _• apha 17 and 18 fg* 
 he last part of paragraph 16 shall 
 apply to - . re-insurance of 
 
 marine risks, 
 
 Sbohon VT, 
 
 MIXK RIBUNAL. 
 
 A . 4, 
 
 («) Within throe months from the date J \ 
 of the coming into e of the present 
 
 .'■ ..:y. a Mixed Arbitral Tribunal shall be 
 es ablished between each Allied and 
 
 Associated Powers on the one hand and 
 Germany on the other hand. ich such 
 Tribunal shall cons ' three members. 
 Each of the Governments concerned shall 
 appoint one of those members. The Presi- 
 dent shall be chosen by agreement between 
 the two Governments concerned. 
 
 266 
 
Economic Clauses 
 
 in case of failure to reach agreement, the 
 President of Mm-. Tribunal and two other 
 persons either of whom may Ln case of need 
 take his place, siuill be chosen by the Coun- 
 cil of the League of Nations, or, until dim 
 is set up, by M. Gustave Ador if he is will- ffc*j£Jt 
 in--. These persons shall he aationals of 228 S?* 
 Powers that have remained ueutral during public, 
 the war. 
 
 I r any ( l-overnment does not proceed with- 
 in a period of one month in case there is a 
 vacancy to appoinl a member of lh<* Tri- 
 bunal, such member shall be chosen by the 
 other Governmenl from the two persons 
 mentioned above other than the President. 
 
 The decision of the majority of the mem- 
 bers of the Tribunal shall be the decision 
 
 Of ( lie Tribunal. 
 
 juHidirtion (/> ) T | 1( , Mixed Arbitral Tribunals es- 
 wbunii. tablished pursuant to paragraph (a), shall 
 decide all questions within their compe- 
 tence under Sections III, [V, V and VII. 
 
 In addition, all questions, whatsoever 
 their nature, relating to contracts con- 
 cluded before the coming into force of 
 the present Treaty between nationals 
 Of the Allied and Associated Powers and 
 German nationals shall be decided by 
 the Mixed Arbitral Tribunal, always ex- 
 cepting questions which, under the laws of 
 the Allied, Associated or Neutral Powers, 
 are within the jurisdiction of the National 
 
 2G7 
 
Economic Clauses 
 
 Courts of those Powers. Such questions 
 shall Ik- decided by the National Courts in 
 question, to the exclusion of the Mixed Ar- 
 bitral Tribunal. The party who is a na- 
 tional of an Allied or Associated Power 
 may nevertheless bring the case before the 
 Mixed Arbitral Tribunal if this is not pro- 
 hibited by the laws of his country. 
 
 (c) If the number of cases justifies it, ad- 
 ditional members shall be appointed and 
 each Mixed Arbitral Tribunal shall sit in 
 divisions. Each of these divisions will be 
 constituted as above. 
 
 (d) Each Mixed Arbitral Tribunal will 
 settle its own procedure except in so far as 
 it is provided in the following Annex, and 
 is empowered to award the sums to be paid 
 by the loser in respect of the costs and ex- 
 penses of the proceedings. 
 
 (e) Each Government will pay the re- 
 muneration of the member of the Mixed 
 Arbitral Tribunal appointed by it and of 
 any agent whom it may appoint to represent 
 it before the Tribunal. The remuneration 
 of the President will be determined by spe- 
 cial agreement between the Governments 
 concerned; and this remuneration and the 
 joint expenses of each Tribunal will be 
 paid by the two Governments in equal 
 moieties. 
 
 2G8 
 
Economic Clauses 
 
 (/) The High Contracting Parties agree 
 that their courts and authorities shall ren- 
 der to the Mixed Arbitral Tribunals direct 
 all the assistance in their power, particu- 
 larly as regards transmitting notices and 
 collecting evidence. 
 
 ((/) Tlie High Contracting Parties agree 
 to regard the decisions of the Mixed Arbi- 
 tral Tribunal as final and conclusive, and 
 to render them binding upon their nationals. 
 
 ANNEX. 
 
 1. 
 
 Should one of the members of the Tri- 
 bunal either die, retire, or be unable for any 
 reason whatever to discharge his function, 
 the same procedure will be followed for fill- 
 ing the vacancy as was followed for ap- 
 pointing him. 
 
 2. 
 
 The Tribunal may adopt such rules of 
 X»rocedure as shall be in accordance with 
 justice and equity and decide the order and 
 time at which each party must conclude its 
 arguments, and may arrange all formalities 
 required for dealing with the evidence. 
 
 3. 
 
 The agent and counsel of the parties on 
 each side are authorised to present orally 
 
 2G9 
 
Economic Clauses 
 
 and in writing to the Tribunal arguments 
 in support or in defence of each case. 
 
 4. 
 
 The Tribunal shall keep record of the 
 questions and cases submitted and the pro- 
 ceedings thereon, with the dates of such 
 proceedings. 
 
 5. 
 
 Each of the Powers concerned may ap- 
 point a secretary. These secretaries shall 
 act together as joint secretaries of the Tri- 
 bunal and shall be subject to its direction. 
 The Tribunal may appoint and employ any 
 other necessary officer or officers to assist in 
 the performance of its duties. 
 
 6. 
 
 The Tribunal shall decide all questions 
 and matters submitted upon such evidence 
 and information as may be furnished by the 
 parties concerned. 
 
 7. 
 
 German}' agrees to give the Tribunal all 
 facilities and information required by it for 
 carrying out its investigations. 
 
 8. 
 
 The language in which the proceedings 
 shall be conducted shall, unless otherwise 
 
 07 
 
 
 
Economic Clauses 
 
 agreed, be English, French, Italian or 
 Japanese, as may be determined by the Al- 
 lied or Associated Power concerned. 
 
 9. 
 
 The place and time for the meetings of 
 each Tribunal shall be determined by the 
 President of the Tribunal. 
 
 Article 305. 
 
 Whenever a competent court has given [g«°»"£- 
 or gives a decision in a case covered by Sec- gox^?*" 
 tions III, IV, V or VII, and such decision 
 is inconsistent with the provisions of such 
 Sections, the party who is prejudiced by 
 the decision shall be entitled to obtain re- 
 dress which shall be fixed by the Mixed Ar- 
 bitral Tribunal. At the request of the na- 
 tional of an Allied or Associated Power, the 
 redress may, whenever possible, be effected 
 by the Mixed Arbitral Tribunal directing 
 the replacement of the parties in the posi- 
 tion occupied by them before the judgment 
 w r as given by the German court. 
 
 Section VII. 
 
 INDUSTRIAL PROPERTY. 
 
 Article 30G. 
 
 Restoration 
 
 Re-^tab- Subject to the stipulations of the present j^S? 
 
 lishes indus- 
 
 trial property Treaty, rights of industrial, literary and ar- ^^ 
 
 rights in " ' ° 6 i.iauo«. 
 
 271 
 
Economic Clauses 
 
 favor of per- 
 sona entitled 
 thereto when 
 War com- 
 menced. 
 
 Provides for 
 recognition 
 
 of rights 
 which, ex 
 
 for the War, 
 would have 
 been acquired, 
 in consequence 
 of an applica- 
 tion for pro- 
 toot ion of 
 industrial 
 property. 
 
 Acta of Allies 
 under special 
 War Meas- 
 ures to 
 remain valid 
 and effective. 
 
 tistic property, as such property is defined 
 by the International Conventions of Faris 
 and of Berne, mentioned in Article 286, 
 shall be re-established or restored, as from 
 the coming into forte of the present Treaty, 
 in the territories of the High Contracting 
 Parties, in favour of the persons entitled to 
 the benefit of them at the moment when 
 the state of Avar commenced or their legal 
 representatives. Equally, rights which, 
 except tor the war, would have been ac- 
 quired during the war in consequence of 
 an application made for the protection of 
 industrial property, or the publication of 
 a literary or artistic work, shall be recog- 
 nised and established in favour of those per- 
 sons who would have been entitled thereto, 
 from the coming into force of the present 
 Treaty. 
 
 Nevertheless, all acts done by virtue of 
 the special measures taken during the war 
 under legislative, executive or administra- 
 tive authoritv of any Allied or Associated 
 Tower in regard to the rights of German 
 nationals in industrial, literary or artistic 
 property shall remain in force and shall 
 continue to maintain their full effect. 
 
 Xo claim shall be made or action brought 
 
 Allied Gov- 
 ernments and 
 
 SeTr^eTau by Germany or German nationals in re- 
 ciaimafornse spect of the use during the war by the Gov- 
 industri'a" emmeiit of any Allied or Associated Power, 
 during the or by any persons acting on behalf or with 
 
 272 
 
Economic Clauses 
 
 Sums duo or 
 paid under 
 (Special War 
 Measures of 
 Alliesto be 
 treated in 
 same manner 
 as other sums 
 
 war; also ^he assen t, of such Government, of any 
 
 from claims ' * 
 
 use thereafter rights in industrial, literary or artistic 
 
 products!" 3 property, nor in respect of the sale, offering 
 
 for sale, or use of any products, articles or 
 
 apparatus whatsoever to which such rights 
 
 applied. 
 
 Unless the legislation of any one of the 
 Allied or Associated Powers in force at the 
 moment of the signature of the present 
 Treaty otherwise directs, sums due or paid 
 
 due to German 
 
 nationals j n virtue of anv act or operation resulting 
 
 Sums produced " L 
 
 by special war f r0 m the executiou of the special measures 
 
 Measures of r 
 
 {JSSSdta mentioned in paragraph I of this Article 
 other debtf shall be dealt with in the same way as other 
 national sums due to German nationals are directed 
 to be dealt with by the present Treaty ; and 
 sums produced by any special measures 1 
 taken by the German Government in respect 
 of rights in industrial, literary or artistic 
 property belonging to the nationals of the 
 Allied or Associated Powers shall be con- 
 sidered and treated in the same way as 
 other debts due from German nationals. 
 
 Allies reserve 
 right after 
 War to impose 
 restrictions 
 on German 
 Industrial 
 Property in 
 publio 
 interest, or 
 for national 
 defense. 
 
 Each of the Allied and Associated Powers 
 reserves to itself the right to impose such, 
 limitations, conditions or restrictions on 
 rights of industrial, literary or artistic 
 property (with the exception of trade- 
 marks) acquired before or during the war, 
 or which may be subsequently acquired in 
 accordance with its legislation, by German 
 nationals, whether by granting licenses, or 
 
 273 
 
/' onomic Ctous - 
 
 In thp event 
 I 
 
 reasonable 
 indemnities 
 
 will be paid. 
 
 "by the working, or by preserving control 
 over their exploitation, or in any other way. 
 as may be considered necessary for national 
 defence, or in the pnblic interest, or for 
 assuring the fair treatment by Germany of 
 the rights of industrial, literary and artist ie 
 property held in German territory by its 
 nationals, or for securing the due fulfilment 
 of all the obligations undertaken by Ger- 
 
 « 
 
 many in the present Treaty. As regards 
 rights of industrial, literary and artistic 
 property acquired after the coming into 
 force of the present Treaty, the right so re- 
 served by the Allied ami Associated Powers 
 shall only be exercised in eases where these 
 limitations, conditions or restrictions may 
 be considered neeessarv for national defence 
 or in the public interest. 
 
 Iu the event of the application of the pro- 
 visions of the preceding paragraph by any 
 
 Allied or Associated Power, there shall bo 
 paid reasonable indemnities or royalties, 
 which shall be dealt with in the same way 
 as other sums due to German nationals are 
 directed io be dealt with by the present 
 Treat v. 
 
 Each of the Allied or Associated Powers JJ5UJS 
 
 v .ir or there* 
 - m.iy be 
 treated by 
 Allies .is void 
 if th 
 
 result in de- 
 feating 
 
 of this Article. $p tV f of industrial, literary or artistic prop 
 
 reserves the right to treat as void and of 
 no effect any transfer in whole or in part o( 
 ov other dealing with rights of or in re- 
 
 fraudulent 
 
 transfers- to 
 neutrals. 
 
 crty effeeted after August 1. 1014, or in the 
 
 271 
 
Economic Clauses 
 
 future, which would have the result of de- 
 feating the objects of the provisions of this 
 Article. 
 pn!porty a lhich r - rne provisions of this Article shall not 
 In'V'uMirait apply to rights in industrial, literary or 
 War legislation art ts1 i<* property which have been dealt with 
 liquidation of in the liquidation of business or companies 
 ■ubjectto under war legislation bv the Allied or As- 
 
 provisions of 
 
 this Article, sociated Powers, or which may be so dealt 
 with by virtue of Article 297, para- 
 graph (&). 
 
 Article 307. 
 
 Jne'^pro. A minimum of one year after the coming jgJSjJ/ 11 
 
 iuu*:i!! hm into force of the present Treaty shall be ac- gjg^ 
 
 obVfitf.mpro- corded to the nationals of the Iligh Con- jUSSfngs. 
 orreguktiona tracting Parties, without extension fees or 
 
 relating to in- 
 dustrial prop- other penalty, in order to enable such per- 
 
 erty acquired 
 
 before Aug. i, sons to accomplish any act, fulfil any 
 
 1014, or which x* i7 «/ 
 
 SSacqufred formality, pay any fees, and generally satis- 
 w! 1 r r i 'fmrn e an f.v any obligation prescribed by the laws or 
 Sade'before regulations of the respective States relating 
 
 or during j , i i i • ' • » 
 
 thowar. to the obtaining, preserving, or opposing 
 rights to, or in respect of, industrial prop- 
 erty either acquired before August 1, 1914, 
 or which, except for the war, might have 
 been acquired since that date as a result of 
 an application made before the war or dur- 
 ing its continuance, but nothing in this Ar- 
 ticle shall give any right to reopen inter- 
 ference proceedings in the United States of 
 
 19 275 
 
Economic Clauses 
 
 All lapsed 
 - 
 
 rtjr rights 
 revi\ 
 
 I tents 
 and i 
 
 D of 
 
 Allies to pro- 
 tect interi 
 nannfac- 
 
 ture ana . 
 
 No rights 
 
 lost tor 
 failure to 
 
 : d-.ir- 
 ir\£r the War, 
 nor for two 
 - there- 
 after. 
 
 America where a liual hearing lias taken 
 place. 
 
 All rights in. or in respect of. such prop- 
 erty which may have lapsed by reason of anv 
 failure to accomplish any act> fulfil any for- 
 mality, or make any payment, shall revive, 
 but subject in the case of patents ami de- 
 signs to the imposition of such conditions 
 as each Allied or Associated Power may 
 deem reasonably necessary i'ov the protec- 
 tion of persons who have manufactured or 
 made use of the subject matter of such prop- 
 erty while the rights had lapsed. Further, 
 where rights to patents or designs belonging 
 to German nationals are revived under this 
 Article, they shall be subject in respect of 
 the grant of licenses to the same provisions 
 as would have been applicable to them dur- 
 ing- the war. as well as to all the provisions 
 of the present Treaty. 
 
 The period from August 1. 1014. until the 
 coming into force of the present Treaty shall 
 be excluded in considering the time within 
 which a patent should be worked or a trade- 
 mark or design used, and it is further agreed 
 that no patent, registered trade-mark or de- 
 sign in force on August 1, 1914, shall be sub- 
 ject to revocation or cancellation by reason 
 only of the failure to work such patent ov 
 use such trade-mark or design for two years 
 after the coming into force of the present 
 Treaty. 
 
 276 
 
 When tVrman 
 patent r.chts 
 re\ '.% a th< y 
 are subje< . 
 Mm* lk\ 
 proris 
 appli< 
 
 .: the 
 Wax, and 
 all the pro- 
 visions of 
 this l're.nv. 
 
 Applies 
 equally to all 
 tries. 
 
Economic Clauses 
 Article 308. 
 
 SEES*. T,,,> ri S htfl ° r Priority, provided by Arti- jg%2£* 
 
 ; i :;;; i ;; l l l l ;,; l , ,;i1 cle4 of the International Convention for the i " tcrsc - 
 
 Sjw d a ?and r ' Protection of [ndustrial Property of Paris, 
 
 «,x m<.nti, s (>f -\ j - , , - 4 - 1 , 20, 1883, revised at Washington in 
 
 L93 1 or by any oilier Convention or Statute, 
 for the filing or registration of applications 
 for patents or models of utility, and for the 
 registration of trade-marks, designs and 
 models which liad not expired on August 1, 
 L914, and those which have arisen during 
 the war, or would have arisen but for the 
 Avar, shall be extended by each of the High 
 Contracting Parlies in favour of all na- 
 tionals of the other High Contracting Par- 
 lies for a pei'iod of six months after the com* 
 ing into force of the present Treaty. 
 •nbraSflda 1 Nevertheless, such extension shall in no 
 S5JIK-' way a ffect the right of any of I he 1 1 Lgh Con- 
 tracting Parties or of any person who be- 
 fore the coming into force of the present 
 Treaty was bona fide in possession of any 
 rights of industrial property conflicting 
 with rights applied for by another who 
 claims rights of priority in respect of them, 
 to exercise such rights by itself or himself 
 personally, or by such agents or licensees as 
 derived their rights from it or him before 
 the coming into force of the present Treaty; 
 and such persons shall not be amenable to 
 any act ion or other process of law in respect 
 of infringement. 
 
 277 
 
 vening rights. 
 
Economic- Clauses 
 
 Article 309. 
 cancels an Xo action sliall be brought and no claim 5J!?2?S? 
 
 rights to sue ° aoea not ap- 
 
 men^com- 6 ' made b 3 r persons residing or carrying on g^g^ 
 thewar during business within the territories of Germany P" aBraph -> 
 on the one part and of the Allied or Associ- 
 ated Powers on the other, or persons who are 
 nationals of such Powers respectively, or by 
 any one deriving title during the war from 
 such persons, by reason of any action which 
 has taken place within the territory of the 
 other party between the date of the declara- 
 tion of war and that of the coming into 
 force of the present Treaty, which might con- 
 stitute an infringement of the rights of in- 
 dustrial property or rights of literary and 
 artistic property, either existing at any time 
 during the war or revived under the provi- 
 sions of Articles 307 and 308. 
 StoS Equally, no action for infringement of in- 
 
 articS"? 8 dustrial, literary or artistic property rights 
 afte/fhewarf'by such persons sliall at any time be permis- 
 sible in respect of the sale or offering for 
 sale for a period of one year after the signa- 
 ture of the present Treaty in the territories 
 of the Allied or Associated Powers on the 
 one hand or Germany on the other, of prod- 
 ucts or articles manufactured, or of literary 
 or artistic works published, during the 
 period between the declaration of war and 
 the signature of the present Treaty, or 
 against those who have acquired and con- 
 
 278 
 
Economic Clauses 
 
 tinue to use them. It is understood, never- 
 SeTndtappiy theless, that this provision shall not apply 
 oSwfwar" when the possessor of the rights was domi- 
 inZ^inesTin ciled or had an industrial or commercial es- 
 
 districts occu~ 
 
 i»i e ,i by Ger- tablishment in the districts occupied by Ger- 
 
 raany during 
 
 the war. many during the war. 
 
 This Article shall not apply as between 
 the United States of America on the one 
 hand and Germany on the other. 
 
 Article 310. 
 
 P C rt n wa1 a11 Licenses in respect of industrial, literary TolsnotV- 
 
 Licenfea may or artistic property concluded before the war a/aii° ('see 
 
 be renewed , ,. , - ,, A11 . -i A _• closing pars- 
 
 on conditions between nationals of the Allied or Associ- graph.) 
 
 tiibunai of ated Powers or persons residing in their ter- 
 
 country where 
 
 the rights ritory or carrying on business therein, on 
 
 licensed orig- " " ° ' 
 
 whenVights ept the one P art > ail( * German nationals, on the 
 SSSSfto other part, shall be considered as cancelled 
 mS Arbitral as f rom the date of the declaration of war 
 renewal between Germany and the Allied or Associ- 
 ated Powers. But, in any case, the former 
 beneficiary of a contract of this kind shall 
 have the right, within a period of six months 
 after the coming into force of the present 
 Treaty, to demand from the proprietor of 
 the rights the grant of a new license, the 
 conditions of which, in default of agreement 
 between the parties, shall be fixed by the 
 duly qualified tribunal in the country under 
 whose legislation the rights had been ac- 
 quired, except in the case of licenses held 
 
 279 
 
ghts aired under Gern 
 l.-.- s ses s shall 
 \ '. s I . \ nal re- 
 nted to in & Yin hfe P 
 
 , ' . :viVv. •.•..-.' ■ •■..-. v. if necessary, .'.\ also Che 
 
 . '. " amount just shooJ 
 
 son use s dur* 
 
 ■ 
 
 .... * :..-.. 
 
 : 
 
 No Be nse •■ • sped of industrial, Liter* 
 
 .-.• - property, granted under the 
 
 ... 
 
 s] ecial war lejjis \ " 
 
 Associated Powt r, s pd by the 
 
 nued exis license outr 
 
 into befc shall remain valid 
 
 and of fall se so gran 
 to the former 1 
 
 int re the w • shall inside] 
 
 eul - toil for such license. 
 
 Where sums hare boon paid di the 
 
 ~ ■" war bv virtueof alicens ment con- 
 
 * 
 
 ef ore the war in respect of rights 
 in lustrial property or for tho roprodnotion 
 or the representation o rarv. dramatic 
 
 or .:: tistic woi fas, ' - sums si be dealt 
 with in the same manner as other debts or 
 credits of German nai '.<. as provided 
 by the present Tret 
 
 This Article shall nor apply as between 
 the United States of America on ww 
 hand and Germany on the o 
 
 2S0 
 
Eoonomio Clauses 
 Abtiold ."»i i. 
 
 pM-man The in h;i Ml ;i n is of territories separated 
 
 >' ;'/ "i' hl ' from German? by virhic of lh< 1 present, 
 
 owned i >.v • ' 
 
 ::;';:';;!;;;,'" Treaty shall, notwithstanding this separa- 
 
 fromOennanj ''°" :IIH ' ""* Change <>l" n;i I ioiin I il,y COUSe- 
 
 ylxuiln " quent I hereon, conl inue lo enjoy in < Germany 
 
 Germany. ■ ■ , ■ . . , . , , . • , • , • 
 
 nil the rights in Industrial, literary and ar- 
 tistic property l<> which they were entitled 
 under German Legislation at the time of tliu 
 separal Ion. 
 Buofa induitriaj Rights of Industrial, literary and artistic 
 ;!' ;',!!,;;! ;',;;„. property which are In force In the territor- 
 
 Mini i .111:1 in in . - .. , 1 i 1 
 
 roroeintha les separated Prom Germany underthe pros- 
 
 Hinin in which , ... , ... , ,• j 1 i • 
 
 thottrritory ent Treaty at the iiioincn i, (»i the separation 
 
 in IiiuiiiIci nil. 
 
 oi these territories from Germany, or which 
 will be re-established <n- restored in accord- 
 ance with the provisions of Article •'!<><> of 
 the present Treaty, shall be recognised by 
 the State <«> which the said territory is trans- 
 ferred and shall remain in lone in that 
 territory for the same period of time given 
 them under the German law. 
 
 281 
 
Economic Clauses 
 
 [Note — The following articles wore among 
 the Economic Clauses originally drafted, 
 but they were transferred.] 
 
 PORTS, WATERWAYS AND 
 RAILWAYS, 
 
 Section I. 
 
 general provisions, 
 
 Article 323. 
 
 Germany undertakes to make no discrimi- 
 nation or preference, direct or indirect, in 
 the duties, charges and prohibitions relating 
 to importations into or exportations from 
 her territories, or, subject to the special en- 
 gagements contained in the present Treaty, 
 in the charges and conditions of transport 
 of goods or persons entering or leaving her 
 territories, based on the frontier crossed; 
 or on the kind, ownership or flag of the 
 means of transport (including aircraft ) em- 
 ployed; or on the original or immediate 
 place of departure of the vessel, wagon or 
 aircraft or other means o\' transport em- 
 ployed, or its ultimate or intermediate desti- 
 nation; or on the route of or places of trans- 
 shipment on the journey: or on whether 
 any port through which the goods are im- 
 ported or exported is a German port or a 
 port belonging to any foreign country or on 
 whether the goods arc imported or exported 
 by sea. by land or by air, 
 
 009 
 
 MM 
 
Economic Glauses 
 
 Germany particularly undertakes not to 
 establish against the ports and vessels of 
 any of the Allied and Associated Powers 
 any surtax or any direct or indirect bounty 
 for export or import by German ports or 
 vessels, or by those of another Power, for 
 example by means of combined tariffs. She 
 further undertakes that persons or goods 
 passing through a port or using a vessel of 
 any of the Allied and Associated Powers 
 shall not be subjected to any formality or 
 delay whatever to which such persons or 
 goods would not be subjected if they passed 
 through a German port or a port of any 
 other Power, or used a German vessel or a 
 vessel of any other Power. 
 
 Section II. 
 
 NAVIGATION. 
 
 Chapter I. 
 
 freedom op navigation. 
 
 Article 327. 
 
 ffiS w The nationals of any of the Allied and As- ™^r j:,f 
 tvelZL in sociated Powers as well as their vessels and SJSSS 
 Germany. proper tj shall enjoy iii all German ports S*S&? 
 and on the inland navigation routes of Ger- Aiiies°as U< 
 
 11 i • n i grant reci- 
 
 many the same treatment in all respects as procity; sub- 
 ject, however , 
 
 German nationals, vessels and property. to revision 
 
 by League 
 
 In particular the vessels of any one of Sjjjgljgj, 
 the Allied or Associated Powers shall be 378.) 
 
 283 
 
Economic Clauses 
 
 entitled to transport goods of any descrip- 
 tion, and passengers, to or from any ports 
 or places in German territory to which Ger- 
 man vessels may have access, under condi- 
 tions which shall not be more onerous than 
 those applied In the case of national ves- 
 sels; they shall be treated on a footing of 
 equality with national vessels as regards 
 port and harbour facilities and charges of 
 every description, including facilities for 
 stationing, loading and unloading, and du- 
 ties and charges of tonnage, harbour, pilot- 
 age, lighthouse, quarantine, and all analo- 
 gous duties and charges o( whatsoever na- 
 ture, levied in the name of or for the profit 
 of the Government, public functionaries, 
 private individuals, corporations or estab- 
 lishments of any kind. 
 
 Tn the event of Germany granting a pref- 
 erential regime to any of the Allied or Asso- 
 ciated Powers or to any other foreign 
 Tower, this regime shall In 1 extended imme- 
 diately and unconditionally to all the Allied 
 and Associated Powers. 
 
 There shall be no impediment to the move- 
 ment of persons or vessels other than those 
 arising from prescriptions concerning cus- 
 toms, police, sanitation, emigration and im- 
 migration, and those relating- to the im- 
 port and export of prohibited goods. Such 
 regulations must be reasonable and uniform 
 and must not impede traffic unnecessarily. 
 
 2Si 
 
Economic Clauses 
 
 Chapter II. 
 
 free zones in torts. 
 
 Article 328. 
 
 The free zones* existing in German ports 
 on August 1, 1914, shall be maintained. 
 These tree zones, and any oilier free zones 
 which may be established in German terri- 
 tory by the present Treaty, shall be sub- 
 ject to the regime provided for in the fol- 
 lowing Articles. 
 
 Goods entering or leaving a free zone 
 shall not be subjected to any import or ex- 
 port duty, other than those provided for in 
 Article 330. 
 
 Vessels and goods entering a free zone 
 may be subjected to the charges established 
 to cover expenses of administration, upkeep 
 and improvement of the port, as well as to 
 the charges for the use of various installa- 
 tions, provided that these charges shall be 
 reasonable having regard to the expendi- 
 ture incurred, and shall be levied in the 
 conditions of equality provided for in Ar- 
 ticle 327. 
 
ADDENDA 
 

ADDENDA. 
 
 TTTE PRINCIPLE'S OF REPARATION. 
 
 Address on Behalf of the American Delegates 
 
 By John Foster Dulles, Esq., on 
 
 February 13, 1919. 
 
 Mr. President: 
 
 It was a matter of considerable chagrin to the 
 American members of this commission when it 
 developed, upon an analysis of the various memo- 
 randa on principles of reparation, that the memo- 
 randum of the United States appeared to be the 
 least drastic in its terms. It was a matter of 
 chagrin because a lack of severity in such an ex- 
 pression of principles is liable to be misconstrued 
 as indicative of a lack of severity in judgment and 
 in purpose. In fact, the American members asso- 
 ciate themselves in the most complete and uncon- 
 ditional way with all that has been said in the 
 various memoranda on file relative to the enormity 
 of the crime which Germany has committed, and 
 they adhere to the bitter denunciation of this crime 
 which was so eloquently expressed on Monday in 
 the powerful address of the Ron. Mr. ITnghes. 
 
 And if the character of our proposals is not at- 
 tributable to a lack of severity in our condemna- 
 tion of Germany, no more does it indicate that the 
 Government and people of the United States are 
 
 289 
 
The Malting of the Reparation 
 
 indifferent to the war costs with which they them- 
 selves are burdened. For we too have our war 
 debt. In magnitude it is comparable to that of 
 any other nation, and it constitutes a fearful bur- 
 den, which is absorbing, and for many years will 
 absorb, the greater part of the nation's income, and 
 it seriously threatens the vitality of our economic 
 life. 
 
 If then it is in accordance with our sentiment 
 that the principles of reparation be severe, and in 
 accord with our material interest that these prin- 
 ciples be all inclusive, why, in defiance of these 
 motives, have we proposed reparation in certain 
 limited ways only? It is because, gentlemen, we 
 do not regard ourselves as free. We are not here 
 to consider as a novel proposal what reparation 
 the enemy should in justice pay; we have not be- 
 fore us a blank page upon which we are free to 
 write what we will. We have before us a page, it 
 is true; but one which is already filled with writ- 
 ing, and at the bottom are the signatures of Mr. 
 Wilson, of Mr. Orlando, of Mr. Clemenceau, and 
 of Mr. Lloyd George. 
 
 You are all aware, I am sure, of the writing to 
 which I refer : It is the agreed basis of peace with 
 Germany. It consists, so far as is relevant to our 
 discussion here, of the Fourteen Points contained 
 in an address of President Wilson of January 8, 
 1918, which, with certain qualifications, were ac- 
 cepted by the Allies, by the United States, and by 
 Germany as the agreed basis of peace. On these 
 terms, says the Allied memorandum, "they declare 
 
 290 
 
And Economic Sections of the Treaty 
 
 their willingness to make peace with the Govern- 
 ment of Germany." This offer was accepted by the 
 Government of Germany, and in reliance on the 
 agreement resulting from such acceptance the 
 enemy laid down his arms. 
 
 Among the terms of peace which were accepted 
 by both sides we find provisions relative to repara- 
 tion. What are these provisions? 
 
 The address of January 8th says: 
 
 Belgium, the whole world will agree, must be evacuated 
 and restored. * * * All French territory should be freed 
 and the invaded portions restored. * * * Rumania, 
 Serbia, and Montenegro should be evacuated; occupied terri- 
 tory restored. 
 
 The Allied qualification or enlargement of these 
 provisions is contained in the following language : 
 
 The President declared that invaded territories must be 
 restored as well as evacuated and freed. The Allied Gov- 
 ernments feel that no doubt ought to be allowed to exist as 
 to what this provision implies. By it they understand that 
 compensation will be made by Germany for all damage done 
 to the civilian population of the Allies and their property 
 by the aggression of Germany by land, by sea, and from 
 the air. 
 
 The foregoing language thus constitutes, in so far 
 as reparation is concerned, the terms upon which 
 the United States and the Allies agreed to make 
 peace with Germany and the terms upon which 
 Germany accepted the armistice of November 11, 
 1918. 
 
 20 291 
 
The Making of the Reputation 
 
 Gentlemen, we have here an agreement. It is on 
 agreement which cannot be ignored, and I am con- 
 fident that no one here would propose to ignore it. 
 I know that I hare the full concurrence of all in the 
 proposition that if this agreement constitutes a 
 limitation upon our right to demand reparation of 
 the enemy, that limitation will be respected. 
 
 And can there be any question that this agree- 
 ment does constitute a limitation? 
 
 It is perfectly obvious that it was recognized at 
 the time of the negotiations in October and Novem- 
 ber, 1918, that the reparation then specified for 
 would limit the Associated Governments as to the 
 reparation Avhich they could demand of the enemy 
 as a condition of peace. The whole purpose of Ger- 
 many was to ascertain the maximum which would 
 be demanded of her in the terms of peace, and the 
 action of the Allies in especially stipulating at that 
 time for an enlargement of the original proposal re- 
 specting reparation is explicable only on the theory 
 that it was understood that once an agreement was 
 concluded they would no longer be free to specify 
 the reparation which Germany must make. 
 
 We have thus agreed that we would give Ger- 
 many peace if she would do certain specified things. 
 Is it now open to us to say, <k Yes; but before you 
 get peace you must do other and further things"'? 
 We have said to Germany, "You may have peace if 
 among other things you perform certain acts of 
 reparation which will cost you, say, ten billion dol- 
 lars." Are we not now clearly precluded from say- 
 
 292 
 
And Economic Sections of the Treaty 
 
 ing, "You can have peace provided you perform 
 other acts of reparation which will bring your total 
 liability to many times that which was originally 
 stipulated." No; irrespective of the justice of the 
 enemy making the latter reparation, it is now too 
 late. Our bargain has been struck for better or for 
 worse ; it remains only to give it a fair construction 
 and practical application. 
 
 The fundamental proposition, therefore, put 
 forth by the American members of this commis- 
 sion is that we demand of Germany, as a condition 
 of peace, all of that reparation, but only that, stipu- 
 lated for by a fair construction of the agreement 
 with Germany as to what the terms of peace should 
 be. 
 
 This is a proposition from which, frankly, I do 
 not see how any one of us can dissent. It is, per- 
 haps, unnecessary for me to have pressed and em- 
 phasized this point as I have done, and I would not 
 have done so except that I have been struck by the 
 fact that in none of the memoranda of principles 
 which have been filed save that of the United States 
 and of Serbia, is there any reference to the agree- 
 ment as to what should be the terms of peace. The 
 American delegation have, therefore, felt the ad- 
 visability of drawing this matter to the attention of 
 the commission, and of proposing, as the starting 
 point in our deliberations, the language relative to 
 reparation contained in the agreement with Ger- 
 many as to the terms upon which she could have 
 peace. 
 
 293 
 
The Making of the Reparation 
 
 If this proposition is sound, our task bcomes one 
 of construction rather than of original thought. 
 We may have, and I have no doubt that we all do 
 have, very definite views as to the reparation which 
 could in justice be required of Germany. But the 
 occasion for the presentation of such original views 
 was in the early days of ^November, 1918, and not 
 today. Today we find the question prejudged, and 
 however strongly we may feel that the reparation 
 stipulated for at that time falls short of what the 
 enemy ought to pay, we must accept the decision 
 of those who then had the power of decision in their 
 hands. Is it not fair to assume that they judged 
 that to prolong the war for the purpose of securing 
 a theoretical right to full reparation would have 
 been to sacrifice substance to form, since it would 
 have meant balancing the jn'oblematic ability of the 
 enemy to pay against the real and vital expenditure 
 in life and in money which every day of war en- 
 tailed? 
 
 We pass then to the construction and application 
 of the agreed terms of peace. The construction pro- 
 posed by the American members is set forth rather 
 fully in the memorandum which has been filed and 
 a copy of which is in the hands of each of you. 
 Briefly, we take the view that the terms of peace 
 proposed and accepted are not to be construed as 
 waiving any clear right of reparation due under ac- 
 cepted principles of international law. We thus 
 recognize that our agreement with Germany is not 
 in derogation of those principles of jurisprudence 
 
 2d± 
 
And Economic Sections of the Treaty 
 
 upon which the French memorandum and upon 
 which Mr. Hughes' address purport to base 
 themselves. But we are also compelled to recog- 
 nize that in so far as we base our claims, not upon 
 contractional law but on the law of torts, we are 
 restricted to damage arising from illegal acts. It 
 is not enough that an act be immoral, that it be 
 cruel, that it be unjust, unless at the same time it 
 be illegal. It is the quality of illegality alone which 
 in law gives rise to a right of reparation. Interna- 
 tional law and the municipal jurisprudence of all 
 civilized nations are in accord in this respect. 
 
 Accordingly it is the American proposition that 
 where the enemy has committed an act clearly vio- 
 lative of international law as existing at the time 
 of the commission of the act, he is liable to make 
 reparation for the damage caused thereby. This 
 involves the complete repayment to Belgium of the 
 damage to her resulting from Germany's violation 
 of her covenant not to make war upon Belgium. 
 The illegality of this act and the duty of making 
 reparation have already been formally admitted 
 by Germany. It further means that the enemy is 
 liable for damage resulting from such miscellaneous 
 illegal acts as the deportation of civilians, attacks 
 on undefended towns, sinkings of merchant ves- 
 sels without warning, and other illegal acts too 
 numerous to mention here. 
 
 In addition to this reparation clue in accordance 
 with recognized international law, there is the 
 reparation which it was expressly agreed should be- 
 
 295 
 
The Making of the Reparation 
 
 come a part of the Treaty of Peace, and which rep- 
 aration, to some extent, includes that due in ac- 
 cordance with international law, but which to a con- 
 siderable extent goes beyond. This reparation ex- 
 pressly stipulated for involves a restoration of the 
 invaded areas of Belgium, France, Rumania, Serbia, 
 and Montenegro, and compensation for all damage 
 done to the civilian population of the Allies and 
 their property by the aggression of Germany by 
 land, by sea, and from the air. The American mem- 
 bers have given in their memorandum a statement 
 of Avhat reparation they believe to be due in accord- 
 ance with the foregoing stipulation. The construc- 
 tion there given is one which we believe to be fair, 
 but which we also recognize is open to question in 
 some respects and can advantageously be made the 
 subject of an interchange of ideas. I know I may 
 safely say that nothing is further from the inten- 
 tion and desire of the American members than that 
 any construction should be given those words which 
 will save the enemy from making reparation which 
 he can fairly be said to have agreed to when he ac- 
 cepted the proposition of the Associated Govern- 
 ments relative to the terms of peace. It is our 
 desire to see reparation made to the uttermost 
 limit; the limit being a fair construction of the 
 agreed terms of peace. 
 
 I accordingly have the honor to propose, on be- 
 half of the American members of this commission, 
 that the commission accept as a fundamental prin- 
 ciple that the reparation to be exacted from the 
 
 296 
 
And Economic Sections of the Treaty 
 
 enemy is that which is due in. accordance with a 
 fair construction of the written agreement of the 
 Associated Governments with Germany as the 
 terms of peace. 
 
 I further suggest, on behalf of the American 
 members, that the commission next consider the 
 most expeditious method of reaching an agreement 
 as to the construction and application of the lan- 
 guage of the agreement relative to reparation. 
 
Bpbbqh by the Rt. Hon*. W, M, Hughes, r. 
 Minister of a- stjra] i v. B sf Commission 
 
 on Reparation, on F: . . I i. 1919. 
 
 Prin 
 
 Id random filed by the British delega- 
 
 tion, to - ommiss . and r - l made by 
 
 at th sitting comn ssion on Febru- 
 
 ary 10th, j is - blisl ed that the principle of 
 reparation justified a claim by the Allies for reim- 
 bnrs | ige and cost to the 
 
 Allii - the l .1 conseqnence of the 
 
 i ggr war '.. st the Allies by the 
 
 eueniv Pow« - 
 
 The memorandum filed by the American delega- 
 tiou, and the able add] ss s in support by Mr.' 
 
 lies, suggest that the right to general reparat 
 lias been to soi stent limited by the acceptai 
 A" - D rose: as — of Pi S 
 
 i Points : though it is ad- 
 mitted that ti j much beyond the par- 
 ticular items specified in the Points. 
 
 This n issue of fundamental importas 
 
 Ks discussion inv< - further consideration of the 
 principl fuller reference to the correspond- 
 
 d the Governnn the United States 
 
 and of Germany prior to the armistice, than is made 
 in the American memorandum 
 
 goo 
 
And Economic tied ions of the Treaty 
 
 I think 1 m1»;i II best serve the purpose we all have 
 in view if I deal first with the points raised by Mr. 
 Dulles and by the American memorandum regard- 
 ing the effects of International law upon claims for 
 reparation; secondly with (lie position alleged to 
 have been created by the acceptance by Allies of 
 President Wilson's terms of peace, and lastly refer 
 very briefly to the parts of Mr. Dulles' argument 
 especially that part which seemed to iuiply that 
 reparation was a right arising out of contract be- 
 tween the victors and the vanquished. 
 
 1. International Law. 
 
 First, then, as to the effect of international law 
 upon the right of reparation. 
 
 The principle is accepted by the American dele- 
 gation that, outside of the Fourteen Points and un- 
 affected by lliein : 
 
 * 
 
 Reparation is due for all damage directly consequent upon 
 acts of the enemy clearly in violation of international law 
 as recognized at the time of the commission of the acts in 
 question. 
 
 This is an admission that coes to the very root of 
 the whole question. It means, in the first place, 
 that there are basic rights of reparation, which we 
 have not by any implication bargained away. But 
 in the statement of the principle upon which these 
 rights are founded, the American memorandum 
 takes a too narrow view restricting it to acts of the 
 enemy in violation of international law. 
 
 200 
 
The Making of the Reparation 
 
 Lord Sumner lias already pointed out that there 
 is no rule of international law which so limits our 
 rights. Nor indeed is there anything in the Ameri- 
 can memorandum to establish this limitation ex- 
 cept a mere declaration wholly unsupported by 
 reasons. A belligerent is entitled to demand from a 
 defeated enemy compensation for all the loss and 
 damage due to the enemy's aggression, independ- 
 ently of the question whether the war waged by the 
 enemy, or anything done by the enemy in the course 
 of the war, was in violation of international law. 
 
 Neutralisation of Belgium. 
 
 But, even taking the American proposition as it 
 •stands, let us see how far it leads us in relation to 
 the outstanding fact of the neutralization of Bel- 
 gium. 
 
 Thai neutralization, of course, Hows from a treaty 
 — from an agreement between certain nations. In- 
 ternational law knows nothing of neutralization 
 except as arising out of treaty, and therefore we" are 
 to look only to that branch of international law 
 which deals with the observance of treaties. 
 
 Rights of Signatories. 
 
 The American memorandum admits that Bel- 
 gium's whole war costs are a direct consequence of 
 Germany's violation of Belgium's right of neutral- 
 ity. That is indisputable; hut we cannot stop there. 
 The neutralization of Belgium was not an isolated 
 fact; it was not a matter between Belgium and Ger- 
 
 300 
 
And Economic Sections of the Treaty 
 
 many alone. Belgium's neutrality was the result 
 of an agreement between certain nations. It was 
 guaranteed by all the signatory powers to the 
 Treaty of London — among them being Great 
 Britain and France. Great Britain and France 
 were bound by their treaty obligation to defend 
 Belgium's neutrality; and consequently Germany's 
 violation of that neutrality involved, as a direct 
 and necessary consequence, the whole war costs, 
 not only of Belgium, but of Great Britain and 
 France as well. 
 
 It is self-evident that if Germany's breach of in- 
 ternational law by the invasion of Belgium involves 
 the payment by Germany of Belgium's war costs, it 
 equally involves the payment of the war costs of 
 those signatories to the Treaty of London who guar- 
 anteed Belgium's neutrality. 
 
 Bights of Non-Signatories. 
 
 But more is involved than even this. The Treaty 
 of London was much more than a contract between 
 the signatories. It was a public international 
 pledge relating, not to a matter which concerned 
 the signatory parties only, but to a matter which 
 concerned the whole world — namely, the preserva- 
 tion of the world's peace. The signatory parties 
 bound themselves to guarantee the observance of 
 the treaty; but the whole w r orld had a right to its 
 observance and if the need arose to assist in its en- 
 forcement. When Germany violated the treaty, 
 Great Britain and France were "bound to defend it; 
 
 301 
 
The Making of the Reparation 
 
 the United States and Italy were entitled to defend 
 it. Germany was the criminal, Belgium the victim. 
 Great Britain and France may be compared to the 
 policemen whose sworn task is to prevent a breach 
 of the law; the United States and Italy and other 
 nations may be compared to civilians whose right 
 it is — and also whose duty in case of need — to 
 come to the rescue. 
 
 Germany's violation of her international pledge 
 was an act which the whole world had a right 
 to resist; and it follows beyond the possibility of 
 dispute that the whole war costs of the Associated 
 Powers, being a direct consequence of that vio- 
 lation, can also be claimed, and that — even on the 
 narrow basis of the American memorandum — rep- 
 aration for all those war costs is clearly due from 
 Germany. 
 
 Rights Independent of International Law. 
 
 But I have already said that we do not accept 
 that narrow basis. We submit that the obligation 
 to make reparation is not limited to cases where a 
 breach of international law is proved. We submit 
 that the reparation, which we are justly entitled to 
 claim, is that reparation which the principle of jus- 
 tice requires to be paid — the principle that the cost 
 of a wrong should be borne by the wrong-doer — the 
 cost of an unjust war by the aggressors. This too, 
 as clearly shown by Lord Sumner yesterday, is in 
 accordance with international law. 
 
 302 
 
And Economic Sections of the Treaty 
 2. The Terms and Principles of Peace. 
 
 The American delegate contended, however, that 
 this right had been lost by the acceptance of Presi- 
 dent Wilson's Fourteen Points. Lord Sumner has 
 already dealt with this argument effectively; but I 
 will add some further considerations. 
 
 President Wilson's Addresses. 
 
 Examination of President Wilson's addresses, 
 which are referred to in the correspondence be- 
 tween President Wilson and Germany, and between 
 President Wilson and the Allies, shows that this 
 principle of justice has been explicitly accepted 
 by the Associated Powers and by Germany. Apart 
 altogether from any rules of international law, we 
 are able to reply on the definite principles laid 
 down by President Wilson himself, in the corre- 
 spondence referred to in the note of November 5th, 
 and accepted by the Allies and by Germany as the 
 basis of a peace of justice. 
 
 In other words, the "terms" and "principles" of 
 peace, which, in the American note of November 
 5th, the Allies declared their readiness to accept, 
 not only do not limit the right to claim full repara- 
 tion, but affirm that right in the most ample and 
 unqualified terms. 
 
 The American memorandum rightly admits that, 
 "The reparation specified for in the Fourteen Points 
 is not designed to be comprehensive." 
 
 It adds that such reparation is not in derogation 
 of reparation due in accordance with accepted prin- 
 
 303 
 
77. king of the Reparation 
 
 ciplea of internationa] law. "Kather the Four: 
 
 Points proceed from the basis of existing interna- 
 tional law, and specify the further and special acts 
 of justice necessary for a proper settlement of the 
 war." 
 
 It is undoubtedly true that the Fourteen Points 
 are not exhaustive, or exclusive of other reparation 
 than that specified in them. The reparation speci- 
 fied in them is. as stated, limited to certain special 
 aets of justice to Belgium, Frame. Serbia, and 
 Montenegro. 
 
 The note of November 5th informed the German 
 Government that, subject to certain qualifications, 
 the Allied Governments "declare their willingness 
 to make peace with the Government of Germany on 
 the terms of peaee laid down in the President's 
 address to Congress o\' January S. L918, and the 
 principles of settlement enunciated in his subse- 
 quent addresses. We must look for our principles, 
 therefore, in the subsequent addresses as well as 
 in the Fourteen Points. 
 
 It is necessary briefly to refer to the correspond- 
 once which preceded this note. 
 
 German and American Notes. 
 
 In a note of October 4th, the German Govern- 
 ment asked President Wilson to take in hand the 
 restoration of peace, and invito the belligerents 
 to send plenipotentiaries for the purpose of open- 
 ing negotiations. The German Government M ac- 
 cepts the programme put forth by the President of 
 
 no t 
 
And Economic Sections of the Treaty 
 
 the United States in his message fco Congress of 
 January 8, 191S, and in his latest pronouncements — 
 especially his speech of September 27th — as a basis 
 for peace negotiations." Meanwhile an immediate 
 armistice was asked for. 
 
 President Wilson replied in a note of October 
 8th. Be asked for an explanation: "Does the Im- 
 perial Chancellor mean that the Imperial German 
 Government accepts the terms laid down by the 
 President in his address to the Congress of the 
 United States on January 8th last, and in subse- 
 quent addresses, and i hat its object in entering into 
 discussions would be only to agree upon the prac- 
 tical details of their application?" 
 
 Eerr Solf | Foreign Secretary] replied in a note 
 of October 19th: "The German Government has 
 accepted the terms laid down by President Wilson 
 in his address of January 8th, and in his subsequent 
 addresses as the foundation for a permanent peace 
 of justice. Consequently, the object of the pro- 
 posed discussion would be only to come to an under- 
 standing upon practical details of the application 
 of those terms." 
 
 After some further correspondence, President 
 Wilson, in his note of October 23d ? refers to tin 1 
 unreserved acceptance by Iho German Government 
 of u Thc terms of peace" laid down in his address to 
 the Congress of the United Slates on January 8, 
 191S, and the principles of settlement enunciated 
 in his subsequent addresses, particularly the ad- 
 dress of September 27th. lie cannot now refuse 
 to take up with the Allied Governments the ques- 
 
 305 
 
The Making of tJie Reparation 
 
 tion of an armistice. He has, therefore, transmitted 
 
 the correspondence to the Allies with the suggest ion 
 that, "// those Governments are disposed to effect 
 peace upon the terms and principles indicated their 
 military advisers should be asked to suggest terms 
 of armistice," 
 
 The correspondence concludes with President 
 Wilson's note of November 5th, already referred 
 to, and was followed on November 11th by the arm- 
 istice. 
 
 Fourteen Points and Subsequent Addresses. 
 
 President Wilson's address to Congress on Jan- 
 uary S, 101S. was that in which he set out what 
 are known as the "Fourteen Points." 
 
 The following: is believed to be a complete list of 
 
 the "subsequent addresses" referred to: 
 
 1. An address to Congress on February 11, 
 191S, in which President Wilson stated four 
 
 principles to 'be applied in the peace settle- 
 ment. 
 
 2. A Fourth-of-July address (1918) de- 
 livered at Mount Vernon, in which President 
 Wilson stated four "cuds" for which the Asso- 
 ciated peoples of the world were lighting. And 
 
 3. An address delivered in New York on Feb- 
 ruary 27, 1918, in connection with the inaugu- 
 ration of the Liberty Loan in which Pres- 
 ident Wilson declared certain essential prin- 
 ciples and formulated five "particulars." 
 
 30G 
 
And Economic Sections of the Treaty 
 
 It must be observed, that throughout the corre- 
 spondence with Germany, the address of January 
 8th and the subsequent addresses were bracketed 
 together. The subsequent addresses are not 
 subordinate pronouncements; they are independent 
 speeches, addressed to different audiences, and of 
 equal authority with the speech of January 8th. 
 The fact that the Fourteen Points are sometimes 
 loosely spoken of as the whole of President Wilson's 
 peace terms must not mislead us into forgetting 
 that the subject matter of all the negotiations was 
 the Fourteen Points of January 8th, and the four 
 points of the second address to Congress, and the 
 four points of the Mount Vernon address of July 
 4th, and the declaration and the five points of the 
 New York address of September 27th. All these 
 have equal weight and equal authority; and all were 
 explicitly referred to in the note of November 5th 
 to German v. 
 
 President Wilson's Principles. 
 
 Let us look first at the general principles laid 
 down by the President in those pronouncements. 
 
 The first principle stated in the address to Con- 
 gress of February 11th is essential justice: 
 
 That each part of the final settlement must be based upon 
 the essential justice of that particular case, and upon such 
 adjustments as are most likely to bring a peace that will be 
 permanent. 
 
 In the Mount Vernon address of July 4th, the 
 .11 
 
 21 307 
 
 following is formulated as one of the "ends for 
 
The Making of the Reparation 
 
 which the Associated peoples of the world are fight- 
 ing and which must be conceded them before there 
 is peace." 
 
 Honor and It expect for Law. 
 
 The consent of all nations to be governed in their conduct 
 toward each other by the same principles of honor and of 
 respect for the common law of civilized society that govern 
 the individual citizens of all modern states in their rela- 
 tions with one another; to the end that all promises and 
 covenants may be sacredly observed, no private plots or 
 conspiracies hatched, no selfish injuries wrought Avith im- 
 punity, and a mutual trust established upon a mutual respect 
 for right. 
 
 The Reign of Lair. 
 
 President Wilson added: "These great objects 
 can be put into a single sentence: What ire seek is 
 the reign of law, based upon the consent of the 
 governed, and sustained by the organized opinion 
 of mankind." 
 
 Lastly in the New York address of September 
 27th, President Wilson emphasized and elaborated 
 tliis principle. He first declared that there coald 
 lie no peace obtained by airy kind of compromise 
 with the Central Empires, because they were with- 
 out honor and did not intend justice. 
 
 No Compromise of Principles. 
 
 He further declared: 
 
 It is of capital importance that we should also be ex- 
 plicitly agreed that no peace shall be obtained by any kind 
 of compromise or abatement of the principles we have 
 
 308 
 
And Economic Sections of the Treaty 
 
 avowed as the principles for which we are fighting. There 
 should exist no doubt about that. I am therefore going to 
 take the liberty of speaking with the utmost frankness 
 about the practical implications that are involved in it. 
 
 Th c Price to be Paid. 
 
 If it be, in deed and in truth, the common object of the 
 Governments associated against Germany and of the na- 
 tions whom they govern, as I believe it to be, to achieve by 
 the coming settlements a secure and lasting peace, it will 
 be necessary that all who sit down at the peace table shall 
 come ready and willing to pay the price, the only price, that 
 will procure it; and ready and willing also to create in some 
 virile fashion the only instrumentality by which it can be 
 made certain that the agreements of the peace will be 
 honored and fulfilled. That price is impartial justice in 
 every item of the settlement, no matter whose interest is 
 crossed; and not only impartial justice, but also the satis- 
 faction of the several peoples whose fortunes are dealt with. 
 
 * * * But these general terms do not disclose the 
 whole matter. Some details are needed to make them sound 
 less like a thesis and more like a practical programme. 
 These then are some of the particulars and I state them 
 authoritatively as representing this Government's interpre- 
 tation of its own duty with regard to peace. 
 
 The first of these particulars is that — "the im- 
 partial justice meted out must involve no discrimi- 
 nation between those to whom we wish to be just 
 and those to whom w T e do not wish to be just. It 
 must be a justice which plays no favorites and 
 knows no standard but the equal rights of the 
 several peoples concerned." 
 
 309 
 
The Making of the Reparation 
 
 Acceptance of these Principles, 
 
 The principles thus enunciated by President 
 Wilson are identical with the principles of justice 
 which my colleagues and I have laid before this 
 commission. 
 
 Take the first clause of the second address to 
 Congress: "Each part of the final settlement must 
 be based upon the essential justice of that particu- 
 lar case and upon such adjustments as are most 
 likely to bring peace that is permanent." 
 
 Take the third point of the Mount Vernon 
 speech: The same principles of honor and respect 
 for law between states as between individuals — 
 "to the end that all promises and covenants may 
 be sacredly observed, no private plots or conspira- 
 cies hatched, no selfish injuries wrought with im- 
 punity." The summing up — "what tee seek is the 
 reign of laic" 
 
 (Significance of Renin of Law. 
 
 Most significant is the phrase into which Presi- 
 dent Wilson declares that all his principles can be 
 crystallized: "What we seek is the reign of law." 
 The application of these words is not partial. 
 There are no exceptions, no limitations, no qualifi- 
 cations. They extend to the remedying of past as 
 well as future wrongs. President Wilson is speak- 
 ing of a just peace settlement, and he does not say: 
 "we shall seek justice in the reign of law tomor- 
 row; let us wipe the slate as to yesterday." On 
 the contrary, he makes it plain, both as to particu- 
 
 •> 
 
 10 
 
And Economic Sections of the Treaty 
 
 lars .and as to gpnor.il principles, that all wrongs 
 arc to be righted, all outstanding accounts setl 1<< 1 
 on the basis of justice. 
 
 Essential justice, and a permanent peace. No 
 selfish injury wrought with impunity. What words 
 could more aptly express the right of reparation 
 against the aggressor for the cost of the war to the 
 full limit of his capacity to pay? 
 
 The reign of law — and the same respect for law 
 between nations as between individuals. To realize 
 the significance of these words, let us turn to the 
 civil codes of all nations — Germany included. 
 What do they say? No wrong without a remedy. 
 Whatever the nature of llie wrong — whether to life, 
 limb, health, property, liberty, or any other right, 
 the wrong-doer must, as far as he can, make repara- 
 tion for the wrong. As it is between individuals, 
 so it must be between slates. That is the reign 
 of law; that is the principle of justice. 
 
 To saddle the defenders of the world's liberties 
 with the burden is not just; it is a monstrous in- 
 justice 1 . To compensate only some of the sufferers 
 and leave others to bear the burden of their losses 
 is not just. To let the wrong-doer escape payment 
 for the damage he has wrought does not tend to a 
 permanent peace; it encourages him to break the 
 peace again at the first opportunity, in the sure and 
 certain hope that even if he fails again he will not 
 have to pay the bill. 
 
 The same great principle is emphasized even 
 more strongly in the New York address. There can 
 be no bargaining or compromise of principles; to 
 
 311 
 
The Making of the Reparation 
 
 achieve a secure and lasting peace, "it will be neces- 
 sary that all who sit clown at the peace table shall 
 come ready and willing to pay the price, the only 
 price, that will secure it. * * * That price is 
 impartial justice in every item of the settlement." 
 Impartial justice "must involve no discrimination 
 between those to whom we wish to be just and those 
 to whom we do not wish to be just. It must be a 
 justice which plays no favorites and knows no stan- 
 dard but the equal rights of the several peoples con- 
 cerned/' 
 
 "We have agreed to those principles. We invoke 
 those principles. They cover full reparation for 
 the costs of the war. 
 
 3. The American Argument. 
 
 Lastly I come to the observations which I fore- 
 shadowed on Mr. Dulles' arguments in his address 
 today. 
 
 Reparation not Based on Con tract. 
 
 Mr. Dulles speaks of the right to reparation from 
 a defeated belligerent as resting upon "contract," 
 because the terms imposed are set out in the treaty 
 of peace. But to speak of contract in such a case 
 is a. misuse of terms. Contract means agreement, 
 and implies equality of status between the parties, 
 and a free consent. There is no question of agree- 
 ment in the terms of reparation which a victorious 
 belligerent imposes upon the enemy. 
 
 312 
 
And Economic Sections of the Treaty 
 
 Amount Irrelevant to Principle. 
 
 Again, Mr. Dulles is concerned at the huge 
 amount of the total war costs, and suggests that to 
 insist on the full claim for all the Allies will preju- 
 dice the satisfaction of those states which have 
 suffered material damage. But these considera- 
 tions have nothing to do with this discussion which 
 relates to the principles on which the reparation 
 due by Germany is to be assessed. Presentment of 
 the full bill for all war costs by the United States 
 and other powers need not necessarily mean any 
 deferment of the more urgent claims for reparation. 
 Certain claims could always be preferred. 
 
 Distinction Between Penal Indemnity and Repara<- 
 tion. 
 
 Mr. Dulles also referred to a speech by Mr. Lloyd 
 George, on January 5, 1918, in which he disclaimed 
 the intention of demanding from Germany such an 
 indemnity as Germany wrung from France in 1871. 
 
 Now, in the first place, that speech was made at 
 a very dark hour for the Allies, when they might 
 well have been prepared, for the sake of peace, to 
 take something less than their due. But Germany 
 did not accept those terms; she went on fighting. 
 And in any case, what did Mr. Lloyd George say? 
 That we would not claim such an indemnity as 
 Germany imposed upon France — namely, an in- 
 demnity of twice the cost of the war — an indemnity 
 of which one-half was not reparation, but penalty. 
 We claim no penalty, but reparation only. We 
 ask for justice, not revenge. 
 
 313 
 
The Making of the Reparation 
 The following is a summary of the position: 
 
 (1) The Fourteen Points are not exhaustive as 
 to reparation. 
 
 (2) It is admitted by the American memoran- 
 dum that Belgium's full war costs must be paid, 
 as Germany's attack on Belgium, whose neutrality 
 she had guaranteed, was a violation of interna- 
 tional law. 
 
 (3) Whatever rights Belgium has under inter- 
 national law, by reason of her neutralization, are 
 clearly shared by those Powers who guaranteed her 
 neutrality, and incurred fearful losses in enforcing 
 it. 
 
 (4) The other Associated Powers (e. g., United 
 States and Italy), who helped to defend Belgian 
 neutrality, can also claim their war costs. 
 
 (5) Therefore, even on the narrow basis of the 
 American memorandum, reparation can be claimed 
 for the whole war cost of the Associated Powers. 
 
 (6) But independently altogether of any ques- 
 tion of violations of international law, full repa- 
 ration is demanded by the principle of justice. 
 
 (7) The principle of justice, and the reign of 
 law between states as between individuals, have 
 been affirmed by President Wilson and incorpor- 
 ated in the terms and principles of peace accepted 
 by the Associated Powers and by Germany, which 
 clearly cover the demand of full reparation. 
 
 o 
 
 14 
 
And Economic Sections of the Treaty 
 
 (8) Therefore 1 , whether we apply the principles 
 of the American memorandum, or whether we inde- 
 pendently apply the principles formulated by 
 President Wilson and accepted, of "the reign of 
 law" and a just peace in either case we reach the 
 same conclusion, that we are entitled, to reparation 
 for the full costs of the war. 
 
Translation of Address of Mr. Klotz, French 
 Minister of Finance, February 15, 1919. 
 
 I do not care at the moment to express a detailed 
 opinion upon the English thesis or that of the 
 American. The French delegation at an appro- 
 priate time will express its reasoned judgment. At 
 the moment the debate is on a higher level. 
 
 The American delegation declines to take up the 
 discussion on the basis accepted by the memoranda 
 of all the other delegations. They refuse to dis- 
 cuss whether the principles which we have form- 
 ulated, that Germany shall repair in its entirety 
 all the damage which she has caused, is or is not in 
 conformity with justice and with right. 
 
 Perhaps, if I may be permitted to interpret cer- 
 tain words, certain silences of Mr. Dulles, the 
 American delegation would be disposed to admit 
 the justice of our argument concerning reimburse- 
 ment of the cost of the war. But in their view it is 
 too late for such claims. The case has been tried 
 and decided. We are in the presence of a formal 
 contract which becomes binding on the parties and 
 from which they are not permitted to depart. 
 
 The American argument rests upon this asser- 
 tion, that there exists a contract between the Allied 
 and Associated Towers on the one hand, and 
 Germany on the other hand, and that the terms of 
 this contract are such as to deny to the Allied 
 Powers the right to claim reimbursement for their 
 war costs. If the American delegation cannot 
 
 n 
 
 16 
 
And Economic Sections of the Treaty 
 
 definitely support this assertion, its argument falls, 
 and we find ourselves guided no longer by con- 
 tractua] law but by justiee alone. 
 
 Where, then, is the contract? In what document 
 does it find expression? 
 
 Every contract implies reciprocal obligations and 
 engagements. "Where do we find these elements 
 in the Allied contract? Have we, the Associated 
 Powers, taken — impliedly let it not be forgotten — 
 the undertaking not to demand from Germany reim- 
 bursement for the cost of the war? And what did 
 Germany grant us in exchange? The engagement 
 not to continue the war, to lay down their arms? 
 It is thus in his argument that Mr. Dulles has 
 defined the Allied contract. 
 
 We however assert, and assert in the most formal 
 manner, that between the exchange of notes to 
 which (he American delegation refers, and where 
 the American delegation would find the elements 
 of a contract, and the surrender of Germany there 
 is no relation of cause and effect. Germany sur- 
 rendered on November 11th because she was con- 
 quered, and not because she found acceptable and 
 equitable the conditions of President Wilson and 
 of the Associated Powers. Germany, who today is 
 trying again to raise her head, was no longer mate- 
 rially and morally able to reject the conditions of 
 peace, whatever they might have been. She has 
 indeed admitted this but recently. If the American 
 delegation had any doubts in this respect I am 
 certain that the opinion of General Pershing would 
 suffice to dispel them. 
 
 317 
 
The Making of the Reparation 
 
 Between the German Government and the Asso- 
 ciated Powers there exists but one document which 
 has the form and the spirit of an agreement. — to 
 employ the English phrase — and which could rea- 
 sonably be called such, that is the Armistice 
 Convention of November 11, 1918. 
 
 If the acceptance of the Fourteen Points of Pres- 
 ident Wilson, as modified by the note of November 
 5, 1918, as denning the future Treaty of Peace, had 
 in the eyes of the Germans been the determining 
 cause, the essential condition of the signature of 
 the armistice, they would not have failed expressly 
 so to state. If Germany had been in a position to 
 make demands, if among other things she had been 
 able to condition the signature of the armistice 
 upon a declaration of the Allied Powers binding 
 them in advance concerning the future terms of 
 peace, Germany would not have failed to have done 
 so. She has not done so, and this silence is alone 
 a rebuttal of the argument presented by the Amer- 
 ican delegation. 
 
 If, then, on that date Germany had not consented 
 at least to the minimum program of the Fourteen 
 Points, if she had not agreed to deliver us as guar- 
 antees of safety considerable areas of territory and 
 substantial quantities of material, the Associated 
 Towers would without doubt have continued the 
 war. But in the one, as in the other case, it was a 
 question of minimum guarantees warranting the 
 cessation of hostilities that Germany sought, that 
 had become for her an imperative necessity. 
 
 318 
 
And Economic Sections of the Treaty 
 
 As we were led in the course of the negotiations 
 to formulate new demands, concerning;, for instance, 
 the occupation of the right bank of the Rhine — 
 the armistice having been concluded for a short 
 period only, which necessarily implies the possi- 
 bility of modifying its terms, as was brilliantly 
 argued the other day by Baron Sonnino — so, too, we 
 have not for an instant considered that from several 
 points of view we were no longer bound by the 
 armistice contract of November 11th. As in the 
 case of the Rhineland, we are justified in formulat- 
 ing demands which are not perhaps expressly in- 
 cluded in the Fourteen Points of President Wilson, 
 but which are based, as we are ready to show, on 
 justice and on right. And we will not have to 
 support these claims on the basis of public interna- 
 tional law as appealed to by the American delega- 
 tion, which law unfortunately is derived but too 
 often from precedents of force and violence, but on 
 the "common law" of civilized nations, to which in 
 three points of his address of July 4th, which ad- 
 dress is also included by reference in the note of 
 November 5th, President Wilson referred in the 
 following terms : 
 
 The things for which the Associated peoples of the world 
 are fighting, and which must be conceded them before there 
 is peace, are the following: * * * 
 
 The consent of all nations to be governed in their conduct 
 toward each other by the same principles of honor and of 
 respect for the common law of civilized society that govern 
 the individual citizens of all modern states in their rela- 
 tions with one another; to the end that all promises and 
 covenants may be sacredly observed, no private plots or con- 
 
 319 
 
The Making of the Reparation 
 
 spiracies hatched, no selfish injuries wrought with impunity, 
 and a mutual trust established upon a mutual respect for 
 right. 
 
 Today what would the American delegation have 
 us admit — that we have impliedly renounced re- 
 course to this common law : that by our silence we 
 have agreed that our nation, ravaged in 1871, 
 assaulted, invaded, systematically sacked today, 
 should accept, and that the nation responsible for 
 all of these wrongs should be freed from, the most 
 terrible financial burden that any European nation 
 has ever known? And that our statesmen and 
 generals meeting at Versailles have conceded \sith- 
 out discussion and without debate that victorious 
 Prance should he 1 a ruined Prance, crushed for a 
 century, perhaps forever? I cannot accept that 
 unless it is proved. 
 
 I am in a position to give evidence on another 
 point, having taken pan in the work at Versailles 
 on the 2d and 4th oi last November. 
 
 If, in my opinion, there is no contract in accord- 
 ance witli which 1 have waived my rights to re- 
 imbursement tor certain categories of expenses re- 
 sulting from the war, on the other hand there does 
 exist a contract by the terms of which I have ex- 
 pressly reserved these rights. 
 
 I have said that between the Allies and Germany 
 there is but one written document which has up till 
 now been signed, having the form and giving rise 
 to the legal relations of a contract. This is tin 1 
 armistice convention of November 11, 1918, be- 
 tween the Allied and Associated Towers represented 
 
 QO 
 
 20 
 
And Economic Sections of the Treaty 
 
 by Marshal Foch and Admiral Wemyss and the 
 German delegation. 
 
 Now, as to the question which we are discussing, 
 does this document contain any express reservation 
 of our rights? Is il there specified that as con- 
 cerns reparation of damage we have in advance tied 
 our hands? 
 
 Let us open this agreement to the chapter entitled 
 "Financial Clauses," the terms of which were by 
 us carefully considered, weighed, and formulated. 
 They were not hastily written. What are the first 
 words? How is the first phrase drafted? 
 
 XIX. Reserving all subsequent claims and demands on the 
 part of the Allies and of the United States, reparation of 
 damage. 
 
 Here is something clear. 
 
 Our rights are reserved as to all "subsequent 
 claims and demands." 
 
 We have before us an express clause, which im- 
 plies no limitation of our rights, which stipulates 
 a full reservation of all our rights, particularly as 
 concerns "reparation of damage." 
 
 Let it not be argued that this is a phrase which 
 has regard exclusively to the armistice and the ob- 
 ligation of which was to be limited to the armistice. 
 At that time an armistice of a month only was 
 anticipated. It could not then have been thought 
 that complete reparation of the damage caused by 
 the war could have been brought about even during 
 successive renewals of the armistice. The reserva- 
 
 321 
 
The Making of the Reparation 
 
 tion clearly contemplated the future treaty and the 
 negotiations which would result in its signature. 
 
 Nor can it be said that this reservation contem- 
 plates exclusively such claims and demands as are 
 contained in the Fourteen Points of President Wil- 
 son modified in accordance with the declaration of 
 the Allies of November 5th. If this declaration 
 of November 5th had in fact constituted a contract 
 binding the Associated Powers and Germany, what 
 occasion, what necessity would there have been to 
 refer to it in the Armistice Convention? 
 
 That which exists, that to which I hold, that to 
 which I have a right to hold, is the fact that in a 
 contract between the Allied Powers and Germany 
 we have reserved our rights in reference to the Jinan 
 cial clauses and the reparation of damage <v as to 
 all future claims and demands." 
 
 Therefore I have the honor to call on you to pro- 
 claim our right to integral reparation. You will 
 see later how by agreement this right shall be ap- 
 plied. We will consider whether it is wise to exert 
 our right to the full. We will settle the question 
 of the priority of certain claims, a priority recog- 
 nized I trust by all of the states represented here. 
 We will then have settled the principles which will 
 permit our sub-commissions to undertake a useful 
 work. 
 
Address on Behalf of tub American Delegates. 
 
 By John Foster Dulles, Esq., on 
 
 February 19, 1019. 
 
 Mr. President: 
 
 The very illuminating and instructive debate of 
 recent days has brought forward certain arguments, 
 which, unless they can be disposed of, seriously af- 
 fect the validity of the principles proposed by the 
 American delegation. Mr. Loucheur frankly ex- 
 presses the view that the structure of our case had 
 been demolished, and, with remarkable penetration 
 of thought and clarity of expression, he has ana- 
 lyzed our discussions to date and had laid before 
 you three considerations which in his mind, disturb 
 considerably the American principles. These are : 
 
 The argument of the Hon. Mr. Hughes, based on 
 the violation of the neutrality of Belgium. 
 
 The argument of the Hon. Mr. Klotz, based on 
 Article XIX of the armistice of November 11. 
 
 The argument of the Hon. Mr. Protchiteh, rela- 
 tive to the difference in the situation as regards 
 Germany on the one hand and Austria-Hungary, 
 Bulgaria, and Turkey on the other hand. 
 
 It was the opinion of Mr. Loucheur, and I confess 
 it is my own, that these constitute the three serious 
 arguments which have been directed against the 
 American case as originally presented. I would 
 
 22 323 
 
The Making of the Reparation 
 
 have desired in any evenl to reply to these argu- 
 ments, and I welcome the clear analysis made by 
 M p. Loncheur which, sweeping away irrelevanl mat- 
 ter, lias crystallized the situation and presented it 
 in concise and lucid form. 
 
 Let me first, in a word or two, restate the Ameri- 
 can proposition, in order that tin 4 full force and 
 relevancy of the objections thereto may be (dear 
 in one minds. 
 
 The American statement of principles is based 
 on Ilio fundamental proposition thai wo are not 
 
 here to create new rights; thai we are here, to nse 
 (lie words which have received authoritative sanc- 
 tion, "to consider the details of the application" 
 of existing fights. To determine what these rights 
 are, we turn first to what we regard as an agreement 
 between the Associated Governments and Germany 
 as to the terms of peace. We give what we believe 
 to be a fair const met ion of this agreement. We also 
 
 note that this agreement does net waive rights 
 Which may have come into being previously in ac- 
 cordance with accepted principles of international 
 law. We accordingly regard these rights as exist- 
 ing and to be enforced. The 1 practical result of our 
 conclusion is that by agreement Germany is Liable 
 io make compensation for all damage done to (he 
 civilian population of the Allies and (heir property 
 
 by (lie aggression of Germany by land, by sen, and 
 
 from (he air; (hat by <>/>< nil ion of !<tir those who 
 have been the victim of admittedly illegal acts, such 
 
 as the violation of Belgium, (ho torpedoing of mer* 
 
 32 1 
 
Ami Econoniio Sections of the Treaty 
 
 chant vessels without warning, the Inhumane treat- 
 ment <>f prisoners of war, etc., etc., arc entitled <<> 
 reparation. 
 
 Having thus attempted hastily to reconstruct 
 the American case before your eyes, let us now con- 
 sider the effect thereon <>l* the argument which Mr. 
 Loucheur has so ably epitomized. 
 
 Let me first deal with the argument of the honor- 
 able delegate for Serbia. He says that not having 
 reached any agreement with Austria-Hungary, Bul- 
 garia, or Turkey, as to what the terms of peace 
 with these countries shall be, we are free to en- 
 deavor l<> impose any such terms ;<s we decide !<> 
 be just. In a technical sense this may be correct. 
 I am unable l<> point f<> any signed document 
 whereby the nations al war with Austria Hungary, 
 Bulgaria, and Turkey agreed with these nations 
 as to what the reparation terms of peace should 
 be. I do maintain, however, that ii was under- 
 stood that lli«' settlement with these countries was 
 to be in the spirit of the terms specifically agreed 
 to as to Germany and which were originally enun- 
 ciated as the terms of a general peace. I doubt 
 that Serbia herself is prepared l<> renounce the 
 right to appeal to those terms as embodying the 
 principles which should govern the settlement 
 of her war with Austria-Hungary, But if we 
 accept the argument of the honorable delegate <»f 
 Serbia, what is its implication? H is said that the 
 agreement as to the terms of peace relates only 
 to Germany; therefore, as 1<> others we are free. 
 By the same token, however, as to Germany we are 
 
 325 
 
The Moling of the Reparation 
 
 not free. We are not free because we have spe- 
 cifically agreed among 1 ourselves and with Ger- 
 many what the terms of peace shall be. 
 
 This assertion leads me to a discussion of the 
 point which Mr. Klotz developed and which, if I 
 understand right, Avas to the effect that we have no 
 agreement with Germany as to the terms of peace. 
 To quote his words : "There exists only one docu- 
 ment which has the form and the spirit of a con- 
 tract, of an agreement, and which can legitimately 
 be described as such. That document is the Armis- 
 tice Covenant of November 11, 1918.'' 
 
 Gentlemen, this is a serious assertion, the conse- 
 quences of which, if it be accepted, are momentous 
 It means that where we thought we had a chart, we 
 have none. 
 
 I have taken the liberty of circulating among you 
 a fairly complete abstract of the correspondence 
 with Germany leading up to the armistice of No- 
 vember 11, 1918. [f you will refresh your recollec- 
 tion as to this correspondence, you will see that 
 Germany initiated the discussion by a request for 
 an armistice, which request the German Govern- 
 ment asked the President of the United States to 
 transmit to his associates. The President of the 
 United States refused to transmit such a request 
 until all of the interested parties should be in com- 
 plete agreement as to the basic terms of peace. The 
 President even went so far as to refuse to consider 
 j?n armistice on the understanding that a certain 
 program should be "the basis for peace discussion." 
 The President insisted on the withdrawal of this 
 
 32Q 
 
And Economic Sections of the Treaty 
 
 phrase and the substitution in lieu thereof of the 
 phrase "terms of peace," as to which discussion 
 would be limited to "the practical details of their 
 application." The President transmitted this cor- 
 respondence to the Allies, 'who replied that they 
 were willing to make peace on the terms specified, 
 with two qualifications, one of which was a clarifi- 
 cation of the term specifying the compensation 
 which should be made by Germany. This under- 
 standing was accepted by the President and com- 
 municated to Germany. Then — and then only — 
 was the German Government advised that an 
 armistice would be considered. You will thus see, 
 gentlemen, that there were two series of negotia- 
 tions — one as to the terms of peace, the other as to 
 the terms of armistice — and that until there was 
 agreement as to the terms of peace, consideration 
 of an armistice was postponed. I cannot believe 
 that Mr. Klotz now seriously contends that no 
 agreement came into being when the Allies, after 
 carefully considering this correspondence which 
 had passed between the United States and Ger- 
 many, stated : "They declare their willingness to 
 make peace with the German Government on the 
 terms of peace laid down by the President's address 
 to Congress of January, 1918, and the principles 
 of settlement enunciated in his subsequent ad- 
 dress." I assert that there is in that declaration 
 the spirit — nay, more, the form and substance of 
 an agreement. We find every element legally nec- 
 essary to constitute a binding contract. We have 
 a proposal by one party, a negotiation leading to 
 
 327 
 
The Malting of the Reparation 
 
 a change of terms, and a final acceptance by all, 
 in reliance on which all of the parties, not only Ger- 
 many, but the United States and others, have 
 changed their position. 
 
 But I do not, I am sure, have to resort to a text- 
 book of law and prove the existence of a legal agree- 
 ment. This is not a. transaction between petty mer- 
 chants. When great France, in that critical hour 
 and with issues of world-wide importance at stake, 
 solemnly and in conjunction with her Allies, said 
 to the United States for its guidance and for trans- 
 mission to Germany: "We will make peace on spe- 
 cific terms," I know that the United Slates, that 
 the world, can count upon France making peace 
 on these terms. 
 
 So I cannot believe that I have understood Mr. 
 Klotz aright in this matter and that France re- 
 gards itself as free to propose terms other than 
 those adopted by her on November 4, 1918. I feel 
 that it must rather be the thought of Mr. Klotz that 
 the armistice agreement, occurring after the agree- 
 ment as to the terms of peace, in some way modified 
 this binding engagement which she had assumed. 
 
 Let us consider this possibility. In the first 
 place, as I have pointed out, the negotiations rela- 
 tive to the terms of peace, and the negotiations rela- 
 tive to an armistice, constituted two distinct 
 series of negotiations. The Associated Powers 
 were one in a determination not to consider an 
 armistice until there should be complete agreement 
 as to the terms of peace. Accordingly, although it 
 
 328 
 
And Economic Sections of the Treaty 
 
 was on October G, 1918, that the German Govern- 
 ment asked for an armistice, it was only on Novem- 
 ber 5th, after complete agreement had been reached 
 as to the terms of peace, that the German Govern- 
 ment was notified that armistice commissioners 
 would be received. Is it, therefore, conceivable 
 that the armistice could control and govern the 
 terms of peace? Is it conceivable that the Associ- 
 ated Governments would have prolonged the war 
 for a month to secure an agreement as to terms of 
 peace, which agreement six days later was to be 
 nullified by an armistice formulated by military 
 advisers ? 
 
 It appears clearly throughout the correspondence, 
 copies of which are before you, that it was under- 
 stood that the armistice was peculiarly a matter 
 for military advisers. The terms of peace were first 
 settled by the highest political authorities of the 
 Associated Governments. Had Marshal Foch and 
 Admiral Wemyss, great as were their positions, 
 power to amend and overrule by the armistice 
 which they signed terms of peace which had previ- 
 ously been agreed to by President Wilson, Mr. 
 Orlando, Mr. Lloyd George and Mr. Clemenceau? 
 Obviously not. The armistice was, as the diplo- 
 matic correspondence shows it was to be, a military 
 instrument framed by military advisers. But did 
 Marshal Foch and Admiral Wemyss misconstrue 
 their authority ; did they purport to introduce into 
 the armistice provisions which would modify the 
 terms of peace to which their superiors had previ- 
 ously agreed? Such action, if they took it, could 
 
 329 
 
The Making of the Reparation 
 
 not be binding. But it is clear that they did not 
 take it. 
 
 The armistice says that, reserving all rights as 
 to future claims and demands, certain gold and 
 securities are to be delivered up. Why was this 
 reservation made? Obviously not to modify or affect 
 the terms of peace, but to insure that, as a military 
 and interim measure, further deliveries could be de- 
 manded. The right so reserved has been exercised 
 subsequently in renewals of the armistice which 
 require additional surrenders of property by Ger- 
 many. If, therefore, we are here sitting as an 
 armistice commission, I fully agree that we could 
 consider the desirability of requiring further de- 
 liveries of goods by Germany, and exercise the 
 rights reserved in the armistice of November 11th ; 
 but we are not the armistice commission. We are 
 the peace commission. It is not our duty to con- 
 strue and to apply the terms of the military 
 armistice, but the peace terms. Accordingly, for 
 the purpose of our discussion here, the armistice 
 is irrelevant. Our duty here is to determine the 
 practical details of the application of the agreed 
 terms of peace. We accordingly turn back to those 
 terms of peace, and I appeal to Mr. Klotz to re- 
 affirm the solemn declaration of his Government, 
 made on November 4, 1918, that France is willing 
 to make peace witli Germany on the terms then 
 specilied. If he does reaffirm that declaration, he 
 must then be prepared to consider with me, not the 
 terms of armistice, but the "terms of peace." 
 
 330 
 
And Economic Sections of the Treaty 
 
 So much, gentlemen, for the argument based on 
 the terms of armistice. There is left now for con- 
 sideration the third proposition, that enunciated by 
 the Hon. Mr. Hughes, to the effect that independent- 
 ly of any agreement as to the terms of peace, the 
 Associated Governments are entitled to recover war 
 costs through the operation of the principle that 
 rights which arose by operation of law, upon the 
 doing of an illegal act, are not waived and can be 
 enforced. 
 
 The discussion so far has been on a judicial basis, 
 and I am sure I shall not be subject to criticism if 
 I keep it on that basis. Accordingly, I propose to 
 consider for a moment where Mr. Hughes' argument 
 logically leads us. To this end I apply the univers- 
 ally accepted principle that to warrant reparation 
 of damage for an illegal act, there must be a causol 
 relationship between the illegal act and the alleged 
 damage. In the case of what countries can there be 
 claimed to be a causal relationship between the vio- 
 lation of Belgium and general war costs? Great 
 Britain based its declaration of war on the 
 violation of Belgian neutrality, and I accordingly 
 concede that it is arguable that the war costs 
 of the British Empire are attributable to 
 this act. But this cannot be said of the 
 war costs of France. War came to France as a re- 
 sult of the declaration of war against her by Ger- 
 many. The invasion of Belgium was but an inci- 
 dent to the prosecution of this war against France 
 which had previously been determined upon. The 
 war costs of Italy cannot be alleged to bear any re- 
 
 331 
 
The Making of the Reparation 
 
 lationship to the invasion of Belgium. The same is 
 true of Serbia, of Greece, of Rumania, of Czecho- 
 slovakia, of Poland, of Russia, of Japan, of the 
 United States. Only in the rase of Belgium and of 
 Great Britain is it even arguable that there is a 
 causal relationship between war costs as a whole 
 and the invasion of Belgium. Having; thus clarified 
 the scope and application of the doctrine enunciated 
 by Mr. Hughes, let us consider its validity even in 
 this limited sphere. 
 
 Now, gentlemen, the question of the proper con- 
 struction and the legal effect of the Treaty of Lon- 
 don of 1839 is one which we could discuss for 
 many months and then possibly not find ourselves 
 in agreement. I do not wish to involve the com- 
 mission in these difficult qnestions of construction. 
 I \\ill merely suggest to you one of several reasons 
 why, in my opinion, the argument of Mr. Hughes 
 is not sound. The Treaty of 1839 is in form a 
 treaty for the benefit of Belgium. Mr. Hughes 
 treats it as such. Historically, it had its birth 
 
 «/ 7 
 
 in that understanding. Belgium desired to secure 
 certain frontiers which would be strategically 
 sound. The then five great Powers were unwill- 
 ing to grant her those frontiers, but in exchange 
 for the acceptance by Belgium of restricted fron- 
 tiers, agreed to insure Belgian neutrality. The 
 treaty thus constitutes what, in the common law, 
 is known as a beneficiary contract, or contract for 
 
 i/ 7 
 
 the benefit of a third party. This means then that 
 when Great Britain, France, Russia, Austria, and 
 Prussia agreed to disenable themselves from mak- 
 
 332 
 
And Economic Sections of the Treaty 
 
 ing war on Belgium, the benefit of that agreement 
 ran in favor of Belgium alone. Accordingly, when 
 Germany made war upon Belgium that was an il- 
 legal act — illegal, that is, in respect to Belgium, 
 who was the beneficiary of the contract that war 
 would not be made. Any special position, there- 
 fore, that results from a violation by Germany of 
 its covenant made to the benefit of Belgium re- 
 dounds to the benefit of Belgium, and not to the 
 benefit of the other contracting powers. 
 
 That Great Britain may have been under a duty, 
 moral or legal, to come to the aid of Belgium does 
 not modify in any degree our conclusion that the 
 benefits of the treaty ran in favor of Belgium. If 
 Great Britain, in 1839, assumed an obligation, she 
 did so in pursuance of what she then regarded as 
 adequate consideration, and the performance of 
 that duty could, not give rise to a special right. 
 Mr. Hughes stated, "Great Britain .and France may 
 be compared to the policeman whose sworn task 
 is to prevent a. breach of the law." Precisely — hut 
 does the policeman receive his hire from the wrong- 
 doer when he arrests? No; in making the arrest 
 the policeman has but performed his duty — nobly, 
 gallantly, at great sacrifice, if you will, but still 
 his duty. And the reparation made by the wrong- 
 doer is made to the victim — not to the guardian of 
 the law. 
 
 Gentlemen, I will not weary you with a further 
 discussion of the legal technicalities of beneficiary 
 contracts. Nor will I develop the rule as to indi- 
 rect damage which, if applied as it has uniformly 
 
 333 
 
The Making of the Reparation 
 
 been applied in international decisions, notably in 
 the Alabama case, would nullify Mr. Hughes' eon- 
 elusion, even if I am wrong as to the construction 
 of the treaty of 1839. I pass to apply the test of the 
 relative reasonableness of our conclusions. If the 
 argument which I make is sound, it leads to the con- 
 elusion that Belgium stands in a special position 
 bv reason of Germany's breach of her covenant not 
 to make war on Belgium. That is a conclusion 
 which has been accepted by the whole world, even 
 including Germany, which formally admitted the 
 illegality of its action in respect of Belgium and the 
 duty of making full reparation therefor. If the 
 argument of Mr. Hughes is sound, it leads to the 
 conclusion that Great Britain, and Great Britain 
 alone, shares the special position of Belgium, This 
 is a conclusion so extraordinary that the Hon. Mr, 
 Hughes, with that common sense and bigness of 
 heart for which he is noted, was compelled to repu- 
 diate it. What form did his repudiation take? Did 
 he say : My conclusion is unsound. Therefore I must 
 have reached it by unsound processes of thought? 
 No; he said: My conclusion is absurd: therefore, I 
 will multiply it by ten and the absurdity will dis- 
 appear. After adopting reasoning which if sound 
 led to the establishment of a. special privilege for 
 Great Britain in respect of war costs, he illogieally 
 but with a generosity which we can but admire in- 
 vited us all to come and share it. 
 
 Gentlemen, if we hold to the domain of reason, 
 we cannot adopt such methods. It is clear that 
 under no principle of international law has Ger- 
 
 }1 
 
 00- 
 
And Economic Sections of the Treaty 
 
 many become our debtor for the general easts of the 
 Avar. Any such right, if it is to exist, can be created 
 only by agreement. So we are forced back again, in- 
 evitably, irresistibly, to the proceedings of Novem- 
 ber 4th, and the statement of the Associated Gov- 
 ernments that they were willing to make peace with 
 Germany on certain terms. There is our agreement. 
 It provides, and the Allies took special steps to 
 specify it: "Compensation will be made by Germany 
 for all damage done to all civilian population of the 
 Allies and their property by the aggression of Ger- 
 many by land, by sea, and from the air." That is 
 
 • t 7 « 7 
 
 our agreement. It is not a basis of discussion — it 
 is a term of peace. It does not provide for the ex- 
 pense to Governments of maintaining military es- 
 tablishments. 
 
 There, gentlemen, are my answers to what Mr. 
 Loucheur stated to be the only serious attack on 
 the American position. I have given these answers 
 sincerely, frankly, as I see the right. 
 
 It is not agreeable for me to stand here as pro- 
 ponent of an argument which seems, even in prin- 
 ciple, to be in the interest of Germany. I say "even 
 in principle" because I believe that the propositions 
 enunciated by the American delegation are, prac- 
 tically, those which will secure the maximum of 
 reparation and its most equitable distribution. 
 To demand the gigantic total of war costs would, 
 I agree with Mr. Van Den Heuvel, be to jeopardize 
 securing that specific reparation as to which Ger- 
 many must clearly recognize her liability, and the 
 satisfaction of which will tax her resources to the 
 
 335 
 
The Moling of the Reparation 
 
 limit. But even so, the American delegation would 
 not be participating actively in this debate did we 
 not feel that vital principles were involved. In a 
 material sense we stand to gain, gain greatly, by 
 the defeat of our proposition. But we did not make 
 war for material interests. We do not make peace 
 for material interests. We have sacrificed, and to- 
 day again stand ready to sacrifice, our material in- 
 terests for principles which we have espoused. I 
 stand here today — honestly convinced that we are 
 bound by an agreement and that no other course 
 is honorably open to us than that which I have 
 proposed. 
 
 In saying this, I do not mean to suggest for a 
 moment that there is any delegation here actuated 
 by different motives. I recognize the existence of 
 an honest disagreement. The American delegation 
 has listened open-mindedly to the discussion ready 
 to be convinced of the errors of their ways. We 
 have not been convinced. Accordingly I have tried 
 to convince you. I hope I have succeeded. If not, 
 may I submit this suggestion: Our debate has re- 
 volved around the meaning of the declaration of 
 ^November 4, 1918. The gentlemen who drafted 
 that declaration, who discussed it, who adopted it, 
 are here with us. I propose, gentlemen, that we 
 ask them their understanding as to the meaning 
 and legal effect of that document. 
 
 Whatever we do here is, in any event, subject to 
 review and I seriously question whether a decision 
 on such important questions of principle as have 
 been discussed here is within the comx^etence of this 
 
 O 
 
 36 
 
And Economic Sections of the Treaty 
 
 commission. If you will refer to the resolution 
 creating this commission, you will find nothing em- 
 powering us to determine basic principles. This 
 commission was created "to examine and report on 
 the question of the amount for reparation which 
 the enemy countries should pay, and are capable 
 of paying, as well as the form in which payment 
 should be made." And I think it was added, "to 
 recommend measures to guarantee payment." It 
 was thus evidently assumed by the commission, as, 
 in fact, they had reason to assume, that the terms 
 of peace were settled and that all we had to do was 
 to "determine the practical details of their appli- 
 cation." It appears that this is not the case, but 
 that there are important, indeed, fundamental dif- 
 ferences of opinion relative to principle. I there- 
 fore propose that we should cease discussion here 
 and refer back to the Supreme War Council the 
 question of whether, in their opinion, war costs are 
 properly to be included in the bill for reparation 
 to be presented to the enemy. Pending their reply 
 W T e can proceed w r ith the other pressing work which 
 is before us, and which the world demands should 
 be expeditiously dealt with. 
 
Treatment of Private Property. 
 
 The question of the treatment of private rights 
 is dealt with in the German delegation's notes of 
 the 22d and 29th of May and in the Annex No. 1 
 to their Eemarks on the Conditions of Peace. In 
 addition, the general objections set out in these 
 documents are reproduced under different forms in 
 various parts of the Remarks. 
 
 Questions of Principle. 
 
 The objections of principle to the Conditions of 
 Peace put forward by the German delegation oil 
 this subject may be summed up as follows : 
 
 (a) It is not legitimate to use the private prop- 
 erty of German nationals to meet the obligations of 
 Germany. 
 
 (b) The settlement of private rights is not made 
 on the principle of reciprocity. 
 
 (c) German property should not be used as a 
 guarantee for the liabilities of the states allied to 
 Germany. 
 
 (d) The liquidations to be made by the Allied 
 and Associated Powers, in depriving the owner of 
 the free disposition of his property, are of a con- 
 fiscatorv character. 
 
 338 
 
And Economic Sections of the Treaty 
 
 The answers of the Allied and Associated Powers 
 to these objections are as follows: 
 
 (a) As regards the first objection, they would 
 call attention to the clear acknowledgment by Ger- 
 many of a pecuniary obligation to the Allied and 
 Associated Powers, and to the further circumstance 
 that the immediate resources of Germany are not 
 adequate to meet that obligation. It is the clear 
 dnty of Germany to meet the admitted obligation as 
 fully and as promptly as possible and to that end 
 to make use of all available means. The foreign in- 
 vestments of German nationals constitute a class of 
 assets which are readily available. To these invest- 
 ments the treaty simply requires Germany to make 
 prompt resort. 
 
 It is true that, as a general principle, a country 
 should endeavour to avoid making use of the prop- 
 erty of a part of its nationals to meet state obliga- 
 tions ; but conditions may arise when such a course 
 becomes necessary. In the present war Allied 
 Powers themselves have found it necessary to take 
 over foreign investments of their nationals to meet 
 foreign obligations, and have given their own do- 
 mestic obligations to the nationals who have been 
 thus called upon to take a share, by this use of 
 their private property, in meeting the obligations 
 of the state. 
 
 The time has arrived when Germany must do 
 what she has forced her opponents to do. The 
 necessity for the adoption of this course by Ger- 
 many is clearly understood by the German peace 
 
 23 339 
 
The Making of the Repartition 
 
 delegates, and Is accepted by them in the following 
 passage, quoted textually Prom their note of the 22d 
 of May : 
 
 The German peace delegation is conscious 
 of the fad thai under the pressure »>r the bur- 
 den arising from the peace treaty on the whole 
 future ci* German economic life, German prop- 
 erty in foreign countries cannot be maintained 
 <o its previous extent. On the contrary, Ger- 
 many, in order (o meet her pecuniary obliga- 
 tions, \\ ill have (o sacrifice this property abroad 
 
 in wide measure. She is prepared Id do so. 
 
 The fundamental objection mentioned above is 
 
 completely answered by the note itself. 
 
 (10 The German delegation maintains in its note 
 o\' the 22d of May thai there is onl\ the appearance 
 o\' reciprocity in regard to the settlement o( enemy 
 
 • 
 
 propel ty, and this objection [s developed in the An 
 ne\ to the Remarks. 'The objection, however, arises 
 from a confusion between two entirely different 
 matters. As regards exceptional war measures 
 taken in the different countries in resort of enemy 
 property, there Is a reciprocal provision, these ex- 
 ceptional war measures being confirmed on both 
 sides. Quite a different matter is that of the mode 
 in which enemy property shall be dealt with there- 
 after. German property, as is admitted in the Ger- 
 man note, must serve towards meeting Germany's 
 obligations io the Allies. The compensation to the 
 
 840 
 
And Economic Sections of the Treaty 
 
 German property owner must be made by Germany 
 Itself. In this respect there can be no question of 
 reciprocity, 
 
 (c) On the question whether German property 
 should serve as a guarantee for the Liabilities of the 
 states allied with Germany, it is to be observed, on 
 the one hand, that t bo actions of Germany and her 
 allies during the war have given rise to complete 
 solidarity between these Towers from (lie economic 
 standpoint. For Instance, negotiations undertaken 
 withoul scruple between Germany and her allies 
 have resulted in Hie division between these coun- 
 tries of (lie proceeds Of Hie Allied and Associated 
 
 property liquidated contrary to all right in (lie ter- 
 ritories occupied by the German troops. Further, 
 Hie German authorities have in several ways treat- 
 ed Hie Allied and Associated Powers as being joint- 
 ly concerned. For Instance, they have seized French 
 credit balances in Belgian banks as a measure of re- 
 prisal against acts done in other Allied states. They 
 have .similarly jusiiiicd (he liquidation o\' French 
 properly in Germany on the ground that similar 
 measures have been taken against German property 
 
 in Other Allied countries. Tims, the principle o\' 
 
 joinf liability to which Germany now objects has 
 been initiated by herself, and she has created a sit- 
 uation which docs not permit iho Allied and Asso 
 ciated Powers in practice to separate the obliga- 
 tions o\' her allies from her own. Nevertheless (he 
 Allied and Associated Powers are prepared to omit 
 from (he charge on (he property of German uation- 
 
 •A 1 1 
 
The Making of the Reparation 
 
 ale the liability to satisfy the unpaid debts of na- 
 tionals of Powers allied with. Germany. 
 
 (d) The method of using this property laid down 
 by the treaty cannot be considered, either in prin- 
 ciple or in the method of its application, as a meas- 
 ure of confiscation. Private German interests will 
 only be injured by the measures contemplated so 
 far as Germany may decide that they shall be, since 
 all the proceeds of German property will be car- 
 ried to the credit of Germany, who is required to 
 compensate her own nationals, and will &-o to re- 
 duce her debt to the Allied and Associated Powers. 
 
Contracts. 
 
 "Most of the other countries have insisted upon 
 a general plan by which contracts existing before 
 the war, between their nationals and nationals of 
 Germany, shall be generally canceled. There are 
 some exceptions like pecuniary liabilities; and some 
 special kinds of contracts like insurance are other- 
 wise treated. The United States, Brazil, and Japan, 
 however, have not adhered to this plan, and are 
 expressly excepted from its operation. 
 
 "In the United States many contracts were dis- 
 solved, under our laws, by the state of war. Ex- 
 amples are: partnerships; contracts requiring com- 
 munication with the enemy; and, under decisions 
 of our courts, contracts the performance of which 
 was rendered unjust or inequitable on account of 
 the changed conditions produced by the state of 
 war. Other contracts were merely suspended. 
 These last would be revived automatically under 
 our laws, at the end of the war, and, so far as the 
 United States is concerned, are treated as revived 
 in this draft. 
 
 "The dissolution of all contracts, which are now 
 merely suspended, would entail great confusion 
 land hardship upon many persons and businesses, 
 including both those of the United States and of 
 Germany; it would not seem just to cancel such 
 contracts without the consent of the owners. 
 
 ''The other countries represented on the Economic 
 Commission have appreciated the position of the 
 
 343 
 
The Making of the Reparation 
 
 Unite*! States in this respect and have consented 
 that this country, as well as Brazil and Japan, 
 should leave unchanged the legal status of con- 
 tracts to which their nationals are parties. 
 
 "Provision is made, however, in Article I, where- 
 by nationals of all the Allied and Associated 
 countries, the United States included, shall have 
 access to a new tribunal with a neutral president, 
 so that they need not be compelled to resort to 
 German courts for the adjudication of their con- 
 tractual rights after the war.'' 
 
INDEX 
 
 Ador, M. Gustave, 113, 267 
 
 Agricultural material, de- 
 livery of, by Germany, 162 
 
 Allies' rights to reparation, 
 20 
 
 Allocation, control of, Si 
 
 Allowances, separation, 2 7, 
 28, 31, 32, 33 
 
 Alsace-Lorraine, exempt 
 from customs duties, 91, 
 193, 194, 195; and pre- 
 war debt, 179; credits to 
 Germany on public prop- 
 erty, ISO 
 
 American citizens', etc., right 
 to do business in Germany, 
 98 
 
 Ammonia, sulphate of, de- 
 livery of, 165 
 
 Animals: domestic, appro- 
 priated, 4, 43, 44; to be 
 replaced, 157; immediate 
 delivery of, 161, 162 
 
 Aoki, M. N., 17 
 
 Arbitral Tribunal, Mixed, 
 112, 113, 225-229, 232, 
 235, 266-271 
 
 Armies of occupation, ex- 
 penses of, 56. 62, 174, 175 
 
 Armistice Convention of Nov. 
 11, 191S, 317, 31S, 320, 
 321, 323, 326 
 
 Artistic works, protection 
 of, 208 
 
 Austria and reparation pay- 
 ments, 35; treaties with 
 Germany abrogated, 98, 
 211 ; financial adjust- 
 ments, 1S2, 1S3, 1S4 
 
 Austria-Hungary, financial 
 adjustments with Ger- 
 many, 182, 183, 1S4 
 
 Azores: Xew York cable, 170 
 
 Banks, waiver of special 
 rights in, 182 
 
 Baruch, Bernard M., 15, 81 
 
 Belgium: invaded, 2, 3; 
 members of Commission 
 on Reparation, 16; special 
 compensation for war ex- 
 penses, 34, 35, 36; pri- 
 ority in time of payments, 
 35; issue of German bonds 
 to cover war costs, 62, 63; 
 violation of neutrality, 
 12S; delivery of livestock 
 to, 161, 162; delivery of 
 coal to, 163; special arti- 
 cles to be restored to, 17 2, 
 173; credits to Germany 
 on public property, 181; 
 neutralization of, 300, 301 
 
 Benes, M., 17 
 
 Benzol, delivery to France, 
 165 
 
 Bianchi, M. Joas de, 17 
 
 Big Four. The. 15;;, 29 
 
 Birds, protection of, 206 
 
 Bond issues, 61, 62, 63, 64, 
 65, 71, 72, 143, 144, 145, 
 14S 
 
 Bourquin, M., 16 
 
 Bouts, Dierick, "Last Sup- 
 per," 173 
 
 Brazil, special reparation to, 
 187 
 
 Erest-Litovsk treaty abro- 
 gated. 99;;. 1S4 
 
 Brown, J. Bailey, 88 
 
 Bucharest treaty abrogated, 
 99, 184 
 
 Eulgaria and reparation pay- 
 ments, 36;;; treaties with 
 Germany abrogated, 9S, 
 211 
 
 Cables, submarine, transfer 
 of, 135; ceded, 169, 170, 
 171; protection of, 203 
 
 Categories of damages, 2 6, 
 32-34. 45, 135-138 
 
 Cattle: consumed or driven 
 away, 4, 43, 44; for sale 
 
 345 
 
INDEX. 
 
 In Germany, 44; repara- 
 tion in kind, -14, 4 5, 157, 
 161, 162 
 
 Cattle-feed, shortage. 4 4 
 
 Chamiec, M„ 17 
 
 Chemical drugs, deliveries 
 of, 167, 16S 
 
 Chemical drugs, reparation 
 in. 167, 16 S; price for, 
 168. 169 
 
 Cheysson. M„ 16 
 
 Chlesa, Eugenio, 16 
 
 Cinchona bark, delivery of, 
 169 
 
 Civil procedure, convention 
 relating to, 20 9 
 
 Civilian population, compen- 
 sation for damages to. 28, 
 SO, 31, 3 3 . 3 4 
 
 Civilian population, defined. 
 30, 31 
 
 Claims. German, against for- 
 mer allies, 1 S o 
 
 Clearing-house system for 
 collection of debts, 99-102, 
 214-229 
 
 Clemenceau, 25, 26, 3S. 290. 
 
 329 
 
 Clementel, Georges, SI 
 
 Coal: shortage. 39-42: mines 
 destroyed. 39, 40, 85, 163; 
 demands upon Germany 
 for, 4 0. 41. 42; produc- 
 tion insufficient, 4 2. 43: 
 options, 58 : deliveries 
 modified. 73: deposits. 85; 
 reparation in. 162, 163, 
 164, 165: price for. 164, 
 165; supervision by Rep- 
 aration Commission. 165 
 
 Coal tar. delivery to France. 
 165 
 
 Coke: reparation in, 165; 
 price for, 165, 166 
 
 Collisions and salvage at 
 sea. 204 
 
 Command, single, on land 
 and sea. S4 
 
 Commercial exchange con- 
 tracts. 2 55 
 
 Commercial relations. 90-95 
 
 Commercial statistics, unifi- 
 cation of, 2 04 
 
 Commission on Reparation, 
 members of, 15, 16, 17 
 
 Competition, unfair, 94. 198, 
 199 
 
 Concert pitch, establishment 
 of. 205 
 
 Const an tinople-Constanza ca- 
 ble, 170 
 
 Consular officers, right to 
 send to German v. 95, 98 
 
 Contracts. 10S-112, 247-206, 
 343, 344 
 
 Conventions, 203-210 
 
 Copyrights. 114 
 
 Costa. Alfonso, 17« 
 
 Cotton: supply, 41; 
 ■•futures," 256 
 
 Council of Ten, The. 15 
 
 Credit, new basis of. 6S 
 
 Credits to Gennanv. 134, 
 135. 17S, 179. ISO 
 
 Crespl, Mr.. 82 
 
 Cunlifle, Kt. Hon. Lord, 16 
 
 Customs duties, German, 90; 
 exemptions, 91, 92; equal- 
 ity of treatment in. 98; 
 r e g u 1 a t i o n s. 191-1 9 : 
 tariffs, publication of, 204 
 
 Czechoslovak Republic: Rep- 
 aration Commissioners, 17 
 
 d'Amelio, M., 16 
 
 d'Andrade, M. Freire, 17 
 
 Damages, categories of. for 
 which Gennanv is liable, 
 26. 32-34. 45. 135-13S 
 
 Danielopol, M., 17 
 
 Davis, Norman II., 15. IS 
 
 Debt, interest on. 148, 149; 
 pre-war. 17S 
 
 Debts. 99-102. 214-229 
 
 Defaults, wilful, 59. 00; in 
 ease of, 14 9; remedies in 
 event of. 149 
 
 Despret, M., 16 
 
 Dillon, Colonel. IS 
 
 Documents of title, 153 
 
 Drag-Doutschitch, M., 17 
 
 Dulles. John Foster. IS. 24: 
 address bv. 289-297, 298. 
 312. 313. 315, 310. 323- 
 
 o o 7 
 
 Duties, equality in, 191, 192; 
 
 rate of, in force, 195, 196; 
 
 346 
 
INDEX. 
 
 reservations as to occu- 
 pied regions, 196 
 Dyestuff, reparation in, 167, 
 L68; price for, 16S, 169 
 
 Economic clauses of the 
 Treaty, 89; subdivisions, 
 90 
 Economic Drafting Commit- 
 tee, members, 81, 88; or- 
 ganized! 87; representa- 
 tion on, 88, 89; worth of, 
 89, 90 
 Emden-Azores cable, 170 
 Emden-Brest cable. 170 
 Emden Teneriffe cable, 170 
 Emden-Vigo cable, 170 
 Estates, transfer of, 254 
 Europe, llnancial and eco- 
 nomic situation of, 67 
 Exports: French, 85; ques- 
 tions relating to, 90-93; 
 no discrimination as re- 
 gards, 192, 193 
 Factories destroyed, 3 
 Field examinations, 18, 19 
 Financial clauses, 17 3-187 
 Fisheries, North Sea, 197, 
 
 208 
 Flume situation, 73 
 Foberti, M., 16 
 Foch, Marshal, 320, 329 
 Food relief, measures for, 83 
 Foreigners, naturalization 
 
 of, 95 
 Fourteen Points, The, 4, 19, 
 20, 23, 89, 290, 298, 299, 
 303, 304, 306, 307, 814, 
 317, 318, 321 
 France: Soldier dead, 2; 
 German invasion, 2, 3, 4, 
 7; devastated, 2, 3, 4, 85; 
 wounded soldiers, 3; atti- 
 tude as to reparation, 4, 
 5, 2 2, 24, 27; members of 
 Commission on Repara- 
 tion, 16; favors inclusion 
 of war costs, 21, 22, 23, 
 24, 25; on pensions and 
 separation allowances, 26, 
 27; proposal as to alloca- 
 tion of German ships, 37, 
 38; delivery of German 
 coal to, 39, 40, 41, 163; 
 
 no estimate of losses, 47; 
 payment to Germany in 
 1S70, 48; seeks Immediate 
 r eli e i. 50; Germany's 
 recognition of obligation 
 
 to make good the devasta- 
 tion in, 65; on transitory 
 measures. S2, 83; position 
 With regard to necessity 
 of economic relief and co- 
 operation, S5; representa- 
 tion on Economic Com- 
 mission, SS, 89; free ad- 
 mission of products from 
 Alsace-Lorraine, 91»; 
 Germany enjoined from 
 employing discriminatory 
 methods against, 93; guar- 
 antee of private obliga 
 tions, 101; delivery of 
 live stock to, 161; coal 
 mines destroyed, 1G3; de- 
 livery to of COal products. 
 165; special articles to be 
 restored to, 171; exempt 
 from Alsace Lorraine pre 
 war debt, 17 9. ISO; ad- 
 dress of Minister of 
 Finance, 316-322 
 
 Frye, sinking of, 104 
 
 Germany: Invasion of France 
 and Belgium, 2, 3, 300, 
 301; merciless aggression, 
 
 2, 4, 6; capacity to pay, 
 
 3. 68, 69, 74; responsi- 
 bility for all war costs, 
 20, 21; calculation of in- 
 debtedness, 27. 28, 29; 
 categories of damage for 
 which held responsible, 
 32-34, 135, 136; surren- 
 der of merchant marine, 
 3 7; delivery of coal. 39- 
 41, 162-164; delivery of 
 construction material. 43; 
 economic warfare prose- 
 cuted by, 44, 45; repara- 
 tion payments, 4 5, 4 6, 4 9, 
 50, 52, 55, 56; reparation 
 limited to one generation, 
 59; bond issues, 62, 63, 
 64, 71, 72, 113. 144, 145, 
 14S; attitude toward rep- 
 
 Ul 
 
INDEX. 
 
 aration, 64. 65; counter- 
 proposal offering, 66, 07. 
 
 OS. 69; unfair trade prac- 
 tices, 7 9. 82, 94; com- 
 mercial relation.-. 90-95: 
 treaty arrangements, 96- 
 99; and seized property, 
 103-108; responsibility. 
 12 7: inability to make 
 complete reparation. 127: 
 reimbursement to Bel- 
 gium. 128; initial pay- 
 
 ts, 130, 131; repara- 
 tion in kind. 131, 
 lei. 157. 158, 15.'. 100: 
 restitution of stolen arti- 
 cles. 13 2; credits in favor 
 of. 134. 135: interest on 
 debt. 14S. 149: in case of 
 default. 149: ships ceded 
 by. 151. 15:\ 153. 155; 
 ships to be built for A'.- 
 1 account by. 153, 151: 
 waiver of shipping claims, 
 delivery of live stock, 
 101. 10 2: delivery of agri- 
 cultural material. 102: 
 delivery of coal products. 
 105: delivery of dye-stuff 
 and chemicals, 10 7. 10S. 
 109: submarine c. 
 
 '.. 109. 170. 171: 
 special articles to be re- 
 stored by. 171. 172, 
 reparation and T: 
 I first charge on pub- 
 
 lic assets. 173: gold ex- 
 port. 174: armies of occu- 
 pation, 174. 175: surren- 
 der of non-military prop- 
 erty. 17 5. 170: T. 
 charges, 17 0. 177: credit 
 to. on account of pre-war 
 debt. 17S. 17 9. ISO: 
 credits to, on public prop- 
 erty in ceded territory, 
 ISO. 181; waive: 
 rights in banks of foi 
 allies. 182; fix 
 justments. 182, 183, 184; 
 cede rights in public util- 
 ities in certain states. 
 IS 4, IS 3; transfers 
 
 claims of former allies, 
 186; guarantee to Brazil- 
 ian Government, 1S7; 
 equality of duties. 191 : 
 regulation of import s. 
 191: no discrimination as 
 regards exports, 192: 
 favor granted equally, 
 193: products free into, 
 193, 194, 195; shipping, 
 19 7. 1 9 S : and unfair com- 
 petition, 19S. 19 9: treat- 
 ment of nationals of Al- 
 lied and A ssociated 
 Powers. 200-202; to 
 consuls. 201, 202; time 
 limit for obligations. 202; 
 treaties. 2 3-214: settle- 
 ment of debts. 211-229: 
 restoration of Allied prop- 
 erty in, 22 9-2 40: dissolu- 
 tion of all pre-war con- 
 tracts. 247-200: violation 
 of international pledge, 
 302: full reparation de- 
 manded of, 314. 32 4 
 Cold exports, control of, 174 
 Id Marks," definition of, 
 
 1 8 
 
 .t Britain: and repara- 
 tion. 4. 0: members of 
 Commission on Repara- 
 tion, 10: in favor of inclu- 
 D of war costs, 2 0. 21. 
 
 2 2. 2 3. 2 4. 25: on pen- 
 sions and separation al- 
 lowances. 20: and pooling 
 of ships. 38; estimate of 
 lessos. 47; apprehension 
 of German e c o n o m i c 
 supremacy, 51: skull of 
 
 tan Mkwawa to be re- 
 stored to. 172 
 
 ce: members of Commis- 
 sion on Reparation. 10; 
 reparation payments 
 Greene, Jerome P.. 16, IS 
 Hedjaz. King of the, orig- 
 inal Koran of the Caliph 
 Othman to be restored to. 
 1 7 2 
 Ileuvel. M. Van den, 16, IS, 
 
 O ( □ 
 
INDEX. 
 
 Homes destroyed, compensa- 
 tion tor, 28 
 
 Horses, French and Belgian, 
 for sale in Germany. I I ! 
 to be replaced. 157, 161 
 
 Hospital ships, exempt from 
 dues and charges In port, 
 205 
 
 Hughes, Premier W. H., 6, 
 16, IS. 20, 23, 24. 25. 289, 
 828, 331, 332, 334; speech 
 by, 2 9 8-315 
 
 Hungary and reparation 
 payments, 36; treaties 
 with Germany abrogated, 
 98, 211; financial adjust- 
 ments. 182, 183, L8 i 
 
 Immigration, alien, 95 
 
 Imports, regulation of, 85, 
 90. 91. 92, 93. 191, 192 
 
 Industrial co-operation, 8 1 
 
 Industrial property, 114-124, 
 20S, 271-2S1 
 
 Industries in Germany, Na- 
 tional treatment as re- 
 gards. 2 00 
 
 Insurance: Contracts of, 
 257; lire, 257, 25S, 259; 
 life. 259, 260. 261, 262; 
 marine, 262, 263; other, 
 264 
 
 International Agricultural 
 Institute at Rome, creation 
 of. 206 
 
 International co-operation, 
 84 
 
 International Harvested 
 Company, SS 
 
 International law. effect of, 
 upon right of reparation, 
 299. 300: rights independ- 
 ent of, 302 
 
 Invaded territories, resto- 
 ration of, 30 
 
 Iron deposits, 85 
 
 Italy: devastated, 2, 87; 
 members of Commission 
 on Reparation, 16; repar- 
 ation payments, 35; de- 
 livery of coal to, 41, 163, 
 164; necessity of economic 
 relief. 85; debt, 86, 87; 
 wealth, 86; taxation, 86, 
 
 87; imports and exports, 
 87 
 
 Japan: members of Commis- 
 sion on Reparation, 17 
 
 Judgments, 108, 247, 252, 
 253 
 
 Klotz, L. L., 16, 18, 24, 323, 
 326, 327, 32S, 330; ad- 
 dress- of. 316-3 2 2 
 
 Lamont, Thomas "W., 18, S7, 
 88 
 
 "Last Supper," The, painted 
 by Dierick Bouts, 173 
 
 Law. the reign of, 308, 310, 
 311, 314, 315 
 
 Leases. 254 
 
 Lebrun, Albert, 16 
 
 Leelanaw, sinking of, 104 
 
 ! . gge, Alex. SS 
 
 Lens coal fields destroyed, 
 39, 40 
 
 Licenses, 116, 122, 273, 276, 
 279. 280 
 
 l lens, 25 4 
 
 Liquor traffic, North Sea, 
 197, 208 
 
 Literary works, protection 
 of, 208 
 
 Liverpool Cotton Association, 
 256 
 
 Live stock, delivery of, by 
 Germany, 161, 162 
 
 Lloyd George, 4, 6, 21, 25, 
 26, 38, 290, 313, 329 
 
 Lome-Duala cable, 170 
 
 Loucheur, M., 16, 323, 32 4, 
 325, 335 
 
 Louvain, Library of, burning 
 of, 172, 173 
 
 Lusitania, sinking of, 10 1 
 
 Luxemburg, tariff conces- 
 sions, 90, 92, 195; delivery 
 of coal to, 164 
 
 McCormick, Vance C, 16 
 
 McKinistry, General, 18 
 
 MacDowell, Charles H., 88 
 
 Machinery, removed, 3, 157 
 
 Maritime coasting trade, 197 
 
 Matches, white phosphorous 
 in manufacture of. 205 
 
 Material, construction, de- 
 livery of, 43, 157 
 
 Meat, production of, 44 
 
 349 
 
INDEX. 
 
 Metric system, unification 
 and improvement of, 205 
 
 Michalacopoulos, M., 16 
 
 Milk, production of, 44 
 
 Mines 2 destroyed, 35, 163; 
 concessions concerning, 
 254 
 
 Minors, protection of, 206 
 
 Misu, M,, 17 
 
 Mixed Arbitral Tribunal, 
 112-114, 266-271 
 
 Mobilization of industrial 
 resources, 84 
 
 Moniz, M. Egas, 17 
 
 Monrovia-Lome cable, 170 
 
 Monrovia-Pernambuco cable, 
 170 
 
 Mori, M. Kengo, 17 
 
 Mortgages, 17 7, 2 54 
 
 Motor-cars, international cir- 
 culation of, 203 
 
 "Mystic Lamb," painted by 
 Van Eyck brothers, 173 
 
 Nagaska, M. H., 17 
 
 Nationalities, new, recogni- 
 tion of, 201 
 
 Nationality, duel, question 
 of, 95 
 
 Nationals of Allied and As- 
 sociated Powers, treatment 
 of, 200-202 
 
 Navigation, freedom of, 283- 
 285 
 
 Negotiable instruments, 251, 
 256, 257 
 
 Negotiations, pre-armistice, 
 19, 20, 24, 28 
 
 Nielsen, Fred K., 88 
 
 Nord coal mines, 163 
 
 Non-military property sur- 
 rendered, 175, 176 
 
 Non-signatories, rights of, 
 301 
 
 North Sea: fisheries, 208; 
 liquor traffic, 208 
 
 Notes, German and Amer- 
 ican, 304, 305, 306 
 
 Obligations upon Germany, 
 time limit for, 20*2 
 
 Occupations in Germany, 
 national treatment as re- 
 gards, 200 
 
 Olchowski, M., 17 
 
 Opium treaty, 213, 214 
 Optional payments, 18 6 
 Orlando, Mr., 25, 26, 290, 
 
 329 
 Osuski, M., 17 
 Ottoman Public Debt, 182, 
 
 183 
 Palmer, Bradley W., 88 
 Paris Economic Conference, 
 
 82 
 Participation Certificates, is- 
 sue of, 148 
 Pas de Calais coal mines, 
 
 163 
 Patents, 114-123, 276, 277 
 Patent drugs, unification of 
 pharmacopceial formulae 
 for, 205 
 Payments, in gold or its 
 
 equivalent, 150 
 Payments, interest, 59 
 Peace, conditions of future, 
 
 agreed upon, 74 
 Penal Indemnity and Repar- 
 ation, distinction between, 
 313 
 Pennie, John C, 88 
 Pensions, 27, 28, 31, 32 : 33 
 Pershing, General, 317 
 Phylloxera, precautionary 
 
 measures against, 206 
 Poland: and German aggres- 
 sion, 2; members of Com- 
 mission on Reparation, 
 17; tariff concessions, 90; 
 free from German dis- 
 crimination, 93; German 
 colonization of, 179; 
 products free from cus- 
 toms duties, 194, 195 
 Political situation among the 
 
 Allies, 67 
 Ports, Waterways and Rail- 
 ways, 282, 283 
 Portugal: members of Com- 
 mission on Reparation, 17 
 Postal Union, Universal, 206, 
 
 207 
 Prescriptions, 108, 247, 249 
 Prices, control of, 84, 85 
 Private owners, dispossessed, 
 to be indemnified by Ger- 
 man Government, 185, 186 
 
 S50 
 
INDEX. 
 
 Production, control of, 84, 
 85 
 
 Products from Alsace-Lor- 
 raine and Polish territory 
 free from customs duties, 
 193, 194 
 
 Property: private, of enemy 
 nationals, disposition of, 
 102-108, 229-246, 338- 
 342; industrial, 114-124, 
 271-281 
 
 Protchitch, Hon. Mr., 323 
 
 Publications, obscene, sup- 
 pression of, 2 05 
 
 Public utilities, ceded rights 
 in, 184, 185, 186 
 
 Quinine, salts of, delivery of, 
 169 
 
 Radio-telegraphic communi- 
 cations, international, 207 
 
 Railway trucks, sealing of, 
 subject to customs inspec- 
 tion, 203 
 
 Railways, technical stand- 
 ardization of, 204 
 
 Raw material, allocation of, 
 82; limiting amount to 
 go into Germany, 83 
 
 Registrations, 114 
 
 Registry of ships of coun- 
 tries having no sea coast, 
 198 
 
 Re-insurance, 264, 265, 266 
 
 Reparation: American plan 
 of, 21, 22, 25; English 
 scheme, 22, 23; Germany's 
 capacity to pay, 22; set- 
 tlement of principles of, 
 36, 37; in kind, 45, 131, 
 132, 151, 157, 158, 159, 
 160; in money payments, 
 46; how much, should 
 Germany pay? 46-57; its 
 officers, 140; its employees, 
 140; procedure, 141; au- 
 thority, 142; voting, 146, 
 147; issue of Participa- 
 tion Certificates, 148; dis- 
 solution, 151 
 
 Reparation Commission, 
 The: established, 15; its 
 membership, 15, 16, 17, 
 138, 139; first meeting of, 
 
 18; its character, power, 
 and duties, 56, 57, 129, 
 130, 142; decisions of, 57; 
 instructions for the guid- 
 ance of, 57, 59, 142-145; 
 facilities accorded, 133, 
 134; salaries and ex- 
 penses, 134; right of with- 
 drawal from, 139; its 
 Bureau, 140 
 
 Restitution of stolen arti- 
 cles, 132, 133 
 
 Rhine, occupation of right 
 bank, 318 
 
 Romanos, M., 16 
 
 Royalties, 117, 274 
 
 Ruher, Mr., 171 
 
 Rumania: and German ag- 
 gression, 2; members of 
 Commission on Repara- 
 tion, 17; reparation pay- 
 ments, 35; treaties with 
 Germany abrogated, 99, 
 212; financial adjustments 
 with Germany, 182, 184 
 
 Russia: treaties with Ger- 
 many abrogated, 9 8, 99, 
 211, 212; financial adjust- 
 ments, 182, 184; conces- 
 sions granted to Germany 
 annulled, 212, 213 
 
 Salandra, M., 16 
 
 Samoa, national treatment 
 of German trade in, 209 
 
 Sao Paolo, state of, coffee 
 sale, 187 
 
 Savtchitch, M. Miloch, 17 
 
 Seavick, M., 17 
 
 Securities, sale of, 256 
 
 Serbia: and German aggres- 
 sion, 2; Reparation Com- 
 missioners, 17; reparation 
 payments, 35 
 
 Shipping: charges, equality 
 of treatment in, 98; 
 claims, waiver of, 156; 
 most-f a v o u r e d-nation- 
 treatment, 197, 198 
 
 Ships, surrender of, 37; allo- 
 cation of, 37-39; tempo- 
 rary retention of, 59; 
 ceded by Germany, 151, 
 152, 153, 155; documents 
 
 351 
 
INDEX. 
 
 of title to, 153; to be built 
 
 for Allied account, 153, 
 
 154; certificates, 197, 19S 
 
 Siemens, Herr Karl F. Von, 
 
 on industrial situation in 
 
 Germany, 42, 43 
 
 Signatories, rights of, 300 
 
 Smith, Sir Hubert Llewellyn, 
 
 81 
 Smuts, General J. C, memo- 
 randum on reparation, 2 9- 
 32 
 Soldier: dead, 1, 2; wounded, 
 
 3 
 Solf. Herr, note to Wilson, 
 
 305 
 Sonnino, Baron, 318 
 Sovereignty, rights of, 203 
 Spa. conference at, 74 
 Special provisions, 171-173 
 Bperanza, M., 16 
 State toll on the Elbe, re- 
 demption of, 2 04 
 Stock Exchange contracts, 
 
 255 
 Stolen articles, restitution 
 
 of, 132 
 Stoyanowitch, M., 17 
 Submarine activity, losses 
 
 caused by, 37 
 Suez Canal, free use of. 204 
 Summers, Leland L., 18, 88 
 Sumner, Rt. Hon. Lord, 16, 
 
 21, 23, 300, 302, 303 
 Supreme Council, The, 25, 34 
 Sussex, sinking of, 104 
 Tariff: German discrimina- 
 tory, 80; concessions, 90- 
 92 
 Tatsumi, Kenejo, 17, 82 
 Taussig, Dr. Frank, "W., 88 
 
 Taxes, burdensome, 3, 5; for 
 war costs, 28; in Italy, 86; 
 national treatment as re- 
 gards, 200 
 
 Telegraphic Union, Interna- 
 tional, 207 
 
 Teneriffe-Monrovia cable, 
 170 
 
 Territories invaded, evacua- 
 tion of, 30, 291 
 
 Textiles from Alsace-Lor- 
 raine free from customs 
 duties, 194 
 
 Toll dues, redemption of, 204 
 
 Tonnage measurement of 
 vessels for inland naviga- 
 tion, 205 
 
 Trade-marks, 114, 276, 277 
 
 Trading with the Enemy 
 Act, 102, 105 
 
 Transitory measures, adop- 
 tion of, 82, 83 
 
 Treaties, 73, 96-99, 203-214 
 
 Treaty: of Versailles, 7, 8; 
 of Neutrality, 19, 2 3, 34; 
 charges, priority of, 176, 
 177; of London, 301, 332 
 
 Turkey, treaties with Ger- 
 many abrogated, 98, 211; 
 financial adjustments with 
 Germany, 182, 183; rais- 
 ing of customs tariff, 204 
 
 United States of America: 
 members of Commission 
 on Reparation, 15, 16, 18; 
 scheme of reparation, 19, 
 2 0. 21, 22; opposed to in- 
 clusion of war costs, 24, 
 25, 26; on pensions and 
 separation allowances, 28; 
 secure special compensa- 
 tion for Belgium, 34, 36; 
 on pooling of ships, 3 8, 
 39; estimates of Allies' 
 losses, 46, 47; and Ger- 
 man reparation payments, 
 51, 52, 54; Allies' indebt- 
 edness to, 53; consent to 
 present reparation ar- 
 rangement, 55; and Ger- 
 man counter-proposal, 6 5- 
 69; on questions of prin- 
 ciple, 70; urges fixing 
 Germany's liability, 71; 
 to guarantee bond issue, 
 71, 72; members of Eco- 
 nomic Commission, 87, 
 88; treaty arrangements 
 with Germany. 97, 98; at- 
 titude toward clearing- 
 house plan, 101; on dispo- 
 sition of seized enemy 
 property, 103; on cancel- 
 
 352 
 
index:. 
 
 lation of 
 
 111; and 
 
 115-121 
 Van Eyck brothers, 
 
 Lamb," 173 
 Versailles, 
 Voting by 
 
 mission, 
 
 147 
 Wage earner, financial 
 
 from absence of, 28 
 War costs, 21, 22, 23, 
 
 26, 290 
 Ward, Dudley, 16 
 
 contracts, 109, 
 foreign patents, 
 
 Mystic 
 
 Treaty of, 7, 8 
 Reparation Corn- 
 rules for, 146, 
 
 loss 
 
 25, 
 
 Wemyss, Admiral, 320, 32 
 
 White Slave Traffic, supprcs 
 sion of, 2 05 .•-- 
 
 Wilson, .President, 25, 
 38, 70, 290, 303, 301, 
 306, 307, 308, 309, 
 311, 312, 317, 318, 
 
 Women, suppression of night 
 work for, 205 
 
 Yap-Shanghai cable, 170 
 
 Young, Prof. Allyn, 18, 88 
 
 Zahariade, M., 17 
 
 Zalewski, M., 17 
 
 Zones, free, in ports, 285 
 
 THE END 
 

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