REPARATION AND RESTITUTION "The allied and associated governments affirm, and Germany accepts, the respon sibility of herself and her allies for caus ing all the loss and damage to which the allied and associated governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies." The total obligation of Germany to pay as defined in the category of damages is to be determined and notified to her after a fair hearing, and not later than May 1, 1921, by an interallied Reparation Com mission.
At the same time a schedule of pay ments to discharge the obligations within thirty years shall be presented. These payments are subject to postponement in certain contingencies. Germany irrev ocably recognizes the full authority of this commission, agrees to supply it with all the necessary information and to pass legislation to effectuate its findings. She further agrees to restore to the allies cash and certain articles which can be identified.
As an immediate step toward restora tion Germany shall pay within two years one thousand million pounds sterling in either gold, goods, ships, or other specific forms of payment.
This sum being included in, and not additional to, the first thousand million bond issue referred to below, with the understanding that certain expenses, such as those of the armies of occupation and payments for food and raw ma terials, may be deducted at the discretion of the allies.
Germany further binds herself to re pay all sums borrowed by Belgium from her allies as a result of Germany's vio lation of the treaty of 1839 up to Nov. 11, 1918, and for this purpose will issue at once and hand over to the Reparation Commission 5 per cent. gold bonds fall ing due in 1926.
While the allied and associated govern ments recognize that the resources of Germany are not adequate, after taking into account permanent diminution of such resources which will result from other treaty claims, to make complete reparation for all such loss and damage, they require her to make compensation for all damage caused to civilians under seven main categories: (a) Damages by personal injury to civilians caused by acts of war, direetly or indirectly, including bombardments from the air.
(b) Damages caused to civilians, in cluding exposure at sea, resulting from acts of cruelty ordered by the enemy, and to civilians in the occupied territories.
(c) Damages caused by maltreatment of prisoners.
(d) Damages to the allied peoples rep resented by pensions and separation al lowances, capitalized at the signature of this treaty.
(e) Damages to property other than naval or military materials.
(f) Damages to civilians by being forced to labor.
(g) Damages in the form of levies or fines imposed by the enemy.
In periodically estimating Germany's capacity to pay, the Reparation Commis sion shall examine the German system of taxation, first to the end that the sums for reparation which Germany is required to pay shall become a charge upon all her revenues prior to that for the service or discharge of any domestic loan; and, secondly, so as to satisfy itself that in general the German scheme of taxation is fully as heavy proportionately as that of any of the powers represented on the commission.
The measures which the allied and as sociated powers shall have the right to take, in case of voluntary default by Ger many, and which Germany agrees not to regard as acts of war, may include eco nomic and financial prohibitions and re prisals and in general such other meas ures as the respective governments may determine to be necessary in the circum stances.
The commission shall consist of one representative each of the United States, Great Britain, France, Italy, and Bel gium, a representative of Serbia or Japan taking the place of the Belgian repre sentative when the interests of either country are particularly affected, with all other allied powers entitled, when their claims are under consideration, to the right of representation without voting power. It shall permit Germany to give evidence regarding her capacity to pay, and shall assure her a just opportunity to be heard. It shall make its permanent headquarters at Paris, establish its own procedure and personnel; have general control of the whole reparation problem; and become the exclusive agency of the allies for receiving, holding, selling, and distributing reparation payments. Ma jority vote shall prevail, except that unanimity is required on questions in volving the sovereignty of any of the allies, the cancellation of all or part of Germany's obligations, the time and man ner of selling, distributing, and negotiat ing bonds issued by Germany, any post ponement between 1921 and 1926 of an nual payments beyond 1930, and any postponement after 1926 for a period of more than three years Of the application of a different method of measuring dam age than in a similar former case, and the interpretation of provisions. With drawal from representation is permitted on twelve months' notice.
The commission may require Germany to give from time to time, by way of guarantee, issues of bonds or other obli gations to cover such claims as are not otherwise satisfied. In this connection and on account of the total amount of claims bond issues are presently to be required of Germany in acknowledgment of its debt as follows: 20,000,000,000 marks gold, payable not later than May 1, 1921, without interest; 40,000,000,000 marks gold bearing per cent. interest between 1921 and 1926, and thereafter 5 per cent., with a 1 per cent. sinking fund payment beginning 1926; and an undertaking to deliver 40,000,000,000 marks gold bonds bearing interest at 5 per cent., under terms to be fixed by the commission.
Interest on Germany's debt will be 5 per cent. unless otherwise determined by the commission in the future, and pay ments that are not made in gold may "be accepted by the commission in the form of properties, commodities, businesses, rights, concessions, &c." Certificates of beneficial interest, representing either bonds or goods delivered by Germany, may be issued by the commission to the interested powers, no power being en titled, however, to have its certificates divided into more than five pieces. As bonds are distributed and pass from the control of the commission, an amount of Germany's debt equivalent to their par value is to be considered as liquidated.