  I. Summary of Spa Agreement, July 1920 (A) Summary Article 1 provides that in pursuance of the Treaty of Versailles the sums received from Germany for reparations shall be divided in the following proportions:
The remaining 6½ per cent is reserved for the Serbo–Croat–Slovene State and for Greece, Rumania, and other Powers not signatories of the Agreement. Article 2 provides that the aggregate amount received for reparation from Austria–Hungary and Bulgaria, together with amounts that may be received in respect of the liberation of territories belonging to the former Austro–Hungarian Monarchy, shall be divided: (a) As to half in the proportions mentioned in Article 1. (b) As to the other half, Italy shall receive 40 per cent, while 60 per cent is reserved for Greece, Rumania, and the Serbo–Croat–Slovene State and other Powers entitled to reparations but not signatories of the Agreement. Article 3 provides that the Allied Governments shall Article 4 deals in detail with the keeping of accounts by the Reparation Commission. Article 5 secures to Belgium her priority of £100,000,000 gold and enumerates the securities affected by such priority. Article 6 deals with the valuation of ships surrendered under the various Peace Treaties, and provides for the allocation of sums received for the hire of such ships. It deals also with questions outstanding as to the decisions taken by the Belgian Prize Courts. Belgium receives compensation out of the shares of other Allied Powers. Article 7 refers to the Allied cruisers, floating docks, and material handed over under the Protocol of January 10, 1920, as compensation for the German warships which were sunk. Article 8 declares that the same Protocol shall apply to the proceeds of the sale of ships and war material surrendered under the naval clauses of the Treaty, virtually including the proceeds of naval war material sold by the Reparation Commission. Article 9 gives Italy an absolutely prior claim to certain specified sums as a set–off to amounts due to her by Austria–Hungary and Bulgaria. Article 10 reserves the rights of Poland and declares that this Agreement shall not apply to her. Article 11 maintains the rights of countries who lent money to Belgium before November 11, 1918, and makes provision for repayment immediately after satisfaction of the Belgian claim to priority in respect of £100,000,000. Article 12 maintains the rights of the Allied Powers to the repayment of credits granted to ex–enemy Powers for the purposes of relief. Article 13 reserves the question of fixing the cost of the armies of occupation in Germany on a uniform basis for discussion with the United States of America. (B) The Allied Note to Germany on the Subject of Coal Deliveries 1. The German Government undertakes to place at the disposal of the Allies, from August 1, 1920, for the ensuing six months, 2,000,000 tons of coal per month, this figure having been approved by the Reparation Commission. 2. The Allied Governments will credit the Reparation accounts with the value of this coal, as far as it is delivered by rail or inland navigation, and it will be valued at the German internal price in accordance with Paragraph 6 (A), Annex V., Part VIII., of the Treaty of Versailles. In addition, in consideration of the admission of the right of the Allies to have coal of specified kind and quality delivered to them, a premium of five gold marks, payable in cash by the party taking delivery, shall be applied to the acquisition of foodstuffs for the German miners. 3. During the period of the coal deliveries provided for above, the stipulations of Paragraphs 2, 3, and 4 of the draft Control Protocol of July 11, 1920, shall be 4. An agreement shall be made forthwith between the Allies for distribution of the Upper Silesian coal output by a Commission on which Germany will be represented. This agreement shall be submitted for the approval of the Reparation Commission. 5. The Commission, on which the Germans shall be represented, shall meet forthwith at Essen. Its purpose shall be to seek means by which the conditions of life among the miners with regard to food and clothing can be improved, with a view to the better working of the mines. 6. The Allied Governments declare their readiness to make advances to Germany equal in amount to the difference between the price paid under Paragraph 2 above, and the export price of German coal, f.o.b. in German ports, or the English export price, f.o.b. in English ports, whichever may be the lowest, as laid down in Paragraph VI. (B) of Annex V., Part VIII., of the Treaty of Versailles. These advances shall be made in accordance with Articles 235 and 251 of the Treaty of Versailles. They shall enjoy an absolute priority over all other Allied claims on Germany. The advances shall be made at the end of each month, in accordance with the number of tons delivered and the average f.o.b. price of coal during the period. Advances on account shall be made by the Allies at the end of the first month, without waiting for exact figures. 7. If by November 15, 1920, it is ascertained that the total deliveries for August, September, and October 1920 have not reached 6,000,000 tons, the Allies will proceed to the occupation of a further portion of German territory, either the region of the Ruhr or some other. Annex 1. A permanent delegation of the Reparation Commission will be set up at Berlin, whose mission will be to satisfy itself by the following means that the deliveries of coal to the Allies provided for under the Agreement of July 15, 1920, shall be carried out: The programmes for the general distribution of output, with details of origin and kind, on the one hand, and the orders given to ensure deliveries to the Allied Powers on the other hand, shall be drawn up by the responsible German authorities and submitted by them for the approval of the said delegation a reasonable time before their despatch to the executive bodies responsible for their execution. 2. No modification in the said programme which may involve a reduction in the amount of the deliveries to the Allies shall be put into effect without prior approval of the Delegation of the Reparation Commission in Berlin. 3. The Reparation Commission, to which the German Government must periodically report the execution by the competent bodies of the orders for deliveries to the Allies, will notify to the interested Powers any infraction of the principles adopted herein. II. The Paris Decisions, 1. In satisfaction of the obligations laid on her by Articles 231 and 232 of the Treaty of Versailles, Germany shall pay, apart from the restitutions which she must effect in conformity with Article 238 and all obligations under the Treaty: (1) Fixed annuities, payable in equal instalments at the end of each six months, as follows:
(2) Forty–two annuities, reckoning from May 1, 1921, equivalent to 12 per cent of the value of Germany's exports, levied on the receipts from them and payable in gold two months after the conclusion of each six–monthly period. To ensure that (2) above shall be completely carried out, Germany will accord to the Reparation Commission every facility for verifying the amount of the exports and for establishing the necessary supervision. 2. The German Government shall deliver forthwith to the Reparation Commission Bearer Bonds payable at the due dates laid down in Article 1 (1) of the present scheme, and of an amount equal to each of the six–monthly instalments payable thereunder. Instructions will be given with the object of facilitating, on the part of such Powers as may require it, the mobilisation of the portion accruing to them under the Agreements which they have established amongst themselves. 3. Germany shall be entitled at any time to anticipate the fixed portion of her obligation. Payments made by her in anticipation shall be applied in reduction of the fixed annuities prescribed in Article 1 (1), discounted at a rate of 8 per cent up to May 1, 1923, 6 per cent from May 1, 1923, to May 1, 1925, and 5 per cent after May 1, 1925. 4. Germany shall not embark on any credit operation 5. In pursuance of Article 248 of the Treaty of Versailles all the assets and revenues of the German Empire and its constituent States are held in guarantee of the complete execution by Germany of the provisions of this scheme. The receipts of the German Customs, by land and sea, in particular the receipts of all import and export duties and all supplementary taxes, constitute a special pledge for the execution of the present Agreement. No modification shall be introduced, liable to diminish the yield of the Customs, without the Reparation Commission approving the Customs Legislation and Regulations of Germany. The whole of the receipts of the German Customs shall be credited to the account of the German Government, by a Receiver–General of the German Customs, nominated by the German Government with the assent of the Reparation Commission. In the event of Germany failing to meet one of the payments laid down in the present scheme: (1) The whole or part of the receipts of the German Customs shall be taken over from the Receiver–General of the German Customs by the Reparation Commission and applied by it to the obligations in which Germany has defaulted. In this event the Reparation Commissions shall, if it deems necessary, itself assume the administration and collection of the Customs receipts. (2) The Reparation Commission shall be entitled, in (3) If this injunction is without effect, the Commission shall be entitled to declare the German Government in default and to notify this state of affairs to the Governments of the Allied and Associated Powers who shall take such measures as they think justified.
Paris, January 29, 1921. III. Claims Submitted to the Reparation Commission by the Various Allied Nations, as Published by the Commission, France I.—Damage to Property (Reconstitution Values)
II.—Injuries to Persons
Great Britain
Italy
Belgium
The other claims may be summarised as follows:
IV. The First Ultimatum of London, March 3, 1921 The following declaration was delivered to Dr. Simons by Mr. Lloyd George, speaking on behalf of the British and Allied Governments, by word of mouth: “The Allies have been conferring upon the whole position and I am now authorised to make this declaration on their behalf: “The Treaty of Versailles was signed less than two years ago. The German Government have already defaulted in respect of some of its most important provisions: the delivery for trial of the criminals, who have offended against the laws of war, disarmament, the payment in cash or in kind of 20,000,000,000 of gold marks (£1,000,000,000). These are some of the provisions. The Allies have displayed no harsh insistence upon the letter of their bond. They have extended time, they have even modified the character of their demands; but each time the German Government failed them. “In spite of the Treaty and of the honourable undertaking given at Spa, the criminals have not yet been tried, let alone punished, although the evidence has been in the hands of the German Government for months. Military organisations, some of them open, some clandestine, have been allowed to spring up all over the country, equipped with arms that ought to have been surrendered. If the German Government had shown in respect of reparations a sincere desire to help the Allies to repair the terrible losses inflicted upon them by the act of aggression of which the German Imperialist Government was guilty, we should still have been ready as before to make all allowances for the legitimate difficulties of Germany. But the proposals put forward have reluctantly convinced the Allies either that the German “If that is due to the fact that German opinion will not permit it, that makes the situation still more serious, and renders it all the more necessary that the Allies should bring the leaders of public opinion once more face to face with facts. The first essential fact for them to realise is this—that the Allies, whilst prepared to listen to every reasonable plea arising out of Germany's difficulties, cannot allow any further paltering with the Treaty. The Ultimatum “We have therefore decided—having regard to the infractions already committed, to the determination indicated in these proposals that Germany means still further to defy and explain away the Treaty, and to the challenge issued not merely in these proposals but in official statements made in Germany by the German Government—that we must act upon the assumption that the German Government are not merely in default, but deliberately in default; and unless we hear by Monday that Germany is either prepared to accept the Paris decisions or to submit proposals which will in other ways be an equally satisfactory discharge of her obligations under the Treaty of Versailles (subject to the concessions made in the Paris proposals), we shall, as from that date, take the following course under the Treaty of Versailles. “The Allies are agreed: (1) To occupy the towns of Duisburg, Ruhrort, and DÜsseldorf, on the right bank of the Rhine. (2) To obtain powers from their respective Parliaments requiring their nationals to pay a certain proportion of all payments due to Germany on German goods to their several Governments, such proportion to be retained on account of reparations. (This is in respect of goods purchased either in this country or in any other Allied country from Germany.) (3) (a) The amount of the duties collected by the German Customs houses on the external frontiers of the occupied territories to be paid to the Reparation Commission. (b) These duties to continue to be levied in accordance with the German tariff. (c) A line of Customs houses to be temporarily established on the Rhine and at the boundary of the tÊtes des ponts occupied by the Allied troops; the tariff to be levied on this line, both on the entry and export of goods, to be determined by the Allied High Commission of the Rhine territory in conformity with the instructions of the Allied Governments”. V. The German Counter–proposal, as Transmitted to the United States Government, April 24, 1921 The United States Government have, by their Note of April 22, opened the possibility, in a way which is thankfully acknowledged, of solving the reparations problem once more by negotiations ere a solution is effected by coercive measures. The German Government appreciates this step in its full importance. They have in the following proposals endeavoured to offer that which according 1. Germany expresses her readiness to acknowledge for reparation purposes a total liability of 50 milliard gold marks (present value). Germany is also prepared to pay the equivalent of this sum in annuities, adapted to her economic capacity up to an aggregate of 200 milliard gold marks. Germany proposes to mobilise her liability in the following way: 2. Germany to raise at once an international loan, of which amount, rate of interest, and amortisation quota are to be agreed on. Germany will participate in this loan, and its terms, in order to secure the greatest possible success, will contain special concessions, and generally be made as favourable as possible. Proceeds of this loan to be placed at the disposal of the Allies. 3. On the amount of her liability not covered by the international loan Germany is prepared to pay interest and amortisation quota in accordance with her economic capacity. In present circumstances she considers the rate of 4 per cent the highest possible. 4. Germany is prepared to let the Powers concerned have the benefit of improvements in her economic and financial situation. For this purpose the amortisation quota should be made variable. In case an improvement should take place, the quota would rise, whilst it would correspondingly fall if developments should be in the other direction. To regulate such variations an index scheme would have to be prepared. 5. To accelerate the redemption of the balance, Germany is ready to assist with all her resources in the reconstruction of the devastated territories. She considers reconstruction the most pressing part of reparation, 6. Apart from any reconstruction work Germany is prepared to supply for the same purpose, to States concerned, any other materials, and to render them any other services as far as possible on a purely commercial basis. 7. To prove the sincerity of her intention to make reparation at once, and in an unmistakable way, Germany is prepared to place immediately at the disposal of the Reparation Commission the amount of one milliard gold marks in the following manner: First, 150,000,000 gold marks in gold, silver, and foreign bills; secondly, 850,000,000 gold marks in Treasury bills, to be redeemed within a period not exceeding three months by foreign bills and other foreign values. 8. Germany is further prepared, if the United States and the Allies should so desire, to assume part of the indebtedness of the Allies to the United States as far as her economic capacity will allow her. 9. In respect of the method by which the German expenditures for reparation purposes should be credited against her total liability, Germany proposes that prices and values should be fixed by a commission of experts. 10. Germany is prepared to secure subscribers for the loan in every possible way by assigning to them public 11. By the acceptance of these proposals all other German liabilities on reparation account are cancelled, and German private property abroad released. 12. Germany considers that her proposals can only be realised if the system of sanctions is done away with at once; if the present basis of German production is not further diminished; and if the German nation is again admitted to the world's commerce and freed of all unproductive expenditure. These proposals testify to the German firm will to make good damage caused by the war up to the limit of her economic capacity. The amounts offered, as well as mode of payment, depend on this capacity. As far as differences of opinion as to this capacity exist, the German Government recommend that they be examined by a commission of recognised experts acceptable to all the interested Governments. She declares herself ready in advance to accept as binding any decision come to by it. Should the United States Government consider negotiations could be facilitated by giving the proposals another form, the German Government would be thankful if their attention were drawn to points in which the United States Government consider an alteration desirable. The German Government would also readily receive any other proposals the United States Government might feel inclined to make. The German Government is too firmly convinced that the peace and welfare of the world depend on a prompt, just, and fair solution of the reparation problem not to do everything in their power to put the United States in a position which enables them to bring the matter to the attention of the Allied Governments.—Berlin, April 24, 1921. VI. The Assessment Announced by the Reparation Commission, April 30, 1921 The Reparation Commission, in discharge of the provisions of Article 233 of the Treaty of Versailles, has reached a unanimous decision to fix at 132 milliard gold marks the total of the damages for which reparation is due by Germany under Article 232 (2) and Part VIII., Annex I. of the said Treaty. In fixing this figure the Commission have made the necessary deductions from the total of damages to cover restitutions effected or to be effected in discharge of Article 238, so that no credit will be due to Germany from the fact of these restitutions. The Commission have not included in the above figure the sum corresponding to the obligation, which falls on Germany as an addition in virtue of Article 232 (3), “to make reimbursement of all sums which Belgium has borrowed from the Allied and Associated Governments up to November 11, 1918, together with interest at the rate of 5 per cent per annum on such sums.” VII. The Second Ultimatum of London, May 5, 1921 The Allied Powers, taking note of the fact that, in spite of the successive concessions made by the Allies since the signature of the Treaty of Versailles, and in spite of the warnings and sanctions agreed upon at Spa and at Paris, as well as of the sanctions announced in London and since applied, the German Government is still in default in the fulfilment of the obligations incumbent upon it under the terms of the Treaty of Versailles as regards (1) disarmament; (2) the payment due on May 1, 1921, under Article 235 of the Treaty, (a) To proceed forthwith with such preliminary measures as may be required for the occupation of the Ruhr Valley by the Allied Forces on the Rhine in the contingency provided for in Paragraph (d) of this Note. (b) In accordance with Article 233 of the Treaty to invite the Reparation Commission to prescribe to the German Government without delay the time and manner for securing and discharging the entire obligation incumbent upon that Government, and to announce their decision on this point to the German Government at latest on May 6. (c) To call upon the German Government categorically to declare within a period of six days from the receipt of the above decision its resolve (1) to carry out without reserve or condition their obligations as defined by the Reparation Commission; (2) to accept without reserve or condition the guarantees in respect of those obligations prescribed by the Reparation Commission; (3) to carry out without reserve or delay the measures of military, naval, and aerial disarmament notified to the German Government by the Allied Powers in their Note of January 29, 1921, those overdue being completed at once, (d) Failing fulfilment by the German Government of the above conditions by May 12, to proceed to the occupation of the Valley of the Ruhr and to take all other military and naval measures that may be required. Such occupation will continue so long as Germany fails to comply with the conditions summarised in Paragraph (c).
Schedule of Payments Prescribing the Time and Manner for Securing and Discharging the Entire Obligation of Germany for Reparation under Articles 231, 232, and 233 of the Treaty of Versailles. The Reparation Commission has, in accordance with Article 233 of the Treaty of Versailles, fixed the time and manner for securing and discharging the entire obligation of Germany for Reparation under Articles 231, 232, and 233 of the Treaty as follows:— This determination is without prejudice to the duty of Germany to make restitution under Article 238, or to other obligations under the Treaty. 1. Germany will perform in the manner laid down in this Schedule her obligations to pay the total fixed in accordance with Articles 231, 232, and 233 of the Treaty 2. Germany shall create and deliver to the Commission in substitution for bonds already delivered or deliverable under Paragraph 12 (c) of Annex 2 of Part VIII. (Reparation) of the Treaty of Versailles the bonds hereinafter described. (A) Bonds for an amount of 12 milliard gold marks (£600,000,000). These bonds shall be created and delivered at latest on July 1, 1921. There shall be an annual payment from funds to be provided by Germany as prescribed in this agreement, in each year from May 1, 1921, equal in amount to 6 per cent of the nominal value of the issued bonds, out of which there shall be paid interest at 5 per cent per annum, payable half–yearly on the bonds outstanding at any time, and the balance to sinking fund for the redemption of the bonds by annual drawings at par. These bonds are hereinafter referred to as bonds of Series (A). (B) Bonds for a further amount of 38 milliard gold marks (£1,900,000,000). These bonds shall be created and delivered at the latest on November 1, 1921. There shall be an annual payment from funds to be provided by Germany as prescribed in this agreement in each year from November 1, 1921, equal in amount to 6 per cent of the nominal value of the issued bonds, out of which (C) Bonds for 82 milliards of gold marks (£4,100,000,000), subject to such subsequent adjustment by creation or cancellation of bonds as may be required under Paragraph (1). These bonds shall be created and delivered to the Reparation Commission, without coupons attached, at latest on November 1, 1921; they shall be issued by the Commission as and when it is satisfied that the payments which Germany undertakes to make in pursuance of this agreement are sufficient to provide for the payment of interest and sinking fund on such bonds. There shall be an annual payment from funds to be provided by Germany as prescribed in this agreement in each year from the date of issue by the Reparation Commission equal in amount to 6 per cent of the nominal value of the issued bonds, out of which shall be paid interest at 5 per cent per annum, payable half–yearly on the bonds outstanding at any time, and the balance to sinking fund for the redemption of the bonds by annual drawings at par. The German Government shall supply to the Commission coupons for such bonds as and when issued by the Commission. These bonds are hereinafter referred to as bonds of Series (C). 3. The bonds provided for in Article 2 shall be signed German Government bearer bonds, in such form and in such denominations as the Reparation Commission shall prescribe for the purpose of making them marketable, and shall be free of all German taxes and charges of every description present or future. Subject to the provisions of Articles 248 and 251 of 4. Germany shall pay in each year until the redemption of the bonds provided for in Article 2 by means of the sinking funds attached thereto— (1) A sum of two milliard gold marks (£100,000,000). (2) (a) A sum equivalent to 25 per cent of the value of her exports in each period of 12 months starting from May 1, 1921, as determined by the Commission; or (b) Alternatively an equivalent amount as fixed in accordance with any other index proposed by Germany and accepted by the Commission. (3) A further sum equivalent to 1 per cent of the value of her exports as above defined, or alternatively an equivalent amount fixed as provided in (b) above. Provided always that when Germany shall have discharged all her obligations under this Schedule, other than her liability in respect of outstanding bonds, the amount to be paid in each year under this paragraph shall be reduced to the amount required in that year to meet the interest and sinking fund on the bonds then outstanding. Subject to the provisions of Article 5, the payments 5. Germany will pay within 25 days from this notification one milliard gold marks (£50,000,000) in gold or approved foreign bills or in drafts at three months on the German Treasury, endorsed by approved German banks and payable in London, Paris, New York, or any other place designated by the Reparation Commission. These payments will be treated as the first two quarterly instalments of the payments provided for in compliance with Article 4 (1). 6. The Commission will within 25 days from this notification, in accordance with Paragraph 12 (d), Annex II. of the Treaty as amended, establish the special Sub–Commission, to be called the Committee of Guarantees. The Committee of Guarantees will consist of representatives of the Allied Powers now represented on the Reparation Commission, including a representative of the United States of America, in the event of that Government desiring to make the appointment. The Committee shall co–opt not more than three representatives of nationals of other Powers whenever it shall appear to the Commission that a sufficient portion of the bonds to be issued under this agreement is held by nationals of such Powers to justify their representation on the Committee of Guarantees. 7. The Committee of Guarantees is charged with the It shall supervise the application to the service of the bonds provided for in Article 2 of the funds assigned as security for the payments to be made by Germany under Paragraph 4. The funds to be so assigned shall be— (a) The proceeds of all German maritime and land customs and duties, and in particular the proceeds of all import and export duties. (b) The proceeds of the levy of 25 per cent on the value of all exports from Germany, except those exports upon which a levy of not less than 25 per cent is applied under the legislation referred to in Article 9. (c) The proceeds of such direct or indirect taxes or any other funds as may be proposed by the German Government and accepted by the Committee of Guarantees in addition to or in substitution for the funds specified in (a) or (b) above. The assigned funds shall be paid to accounts to be opened in the name of the Committee and supervised by it, in gold or in foreign currency approved by the Committee. The equivalent of the 25 per cent levy referred to in Paragraph (b) shall be paid in German currency by the German Government to the exporter. The German Government shall notify to the Committee of Guarantees any proposed action which may tend to diminish the proceeds of any of the assigned funds, and shall, if the Committee demand it, substitute some other approved funds. The Committee of Guarantees shall be charged further with the duty of conducting on behalf of the Commission the examination provided for in Paragraph 12 (b) of Annex 2 to Part VIII. of the Treaty of Versailles, and of verifying on behalf of the said Commission, and if necessary of correcting, the amount declared by the German Government as the value of German exports for the purpose of the calculation of the sum payable in each year under Article 4 (2) and the amounts of the funds assigned under this Article to the service of the bonds. The Committee shall be entitled to take such measures as it may deem necessary for the proper discharge of its duties. The Committee of Guarantees is not authorised to interfere in German administration. 8. Germany shall on demand, subject to the prior approval of the Commission, provide such material and labour as any of the Allied Powers may require towards the restoration of the devastated areas of that Power, or to enable any Allied Power to proceed with the restoration or development of its industrial or economic life. The value of such material and labour shall be determined by a valuer appointed by Germany and a valuer appointed by the Power concerned, and, in default of agreement, by a referee nominated by the Commission. This provision as to valuation does not apply to deliveries under Annexes III., IV., V., and VI. to Part VIII. of the Treaty. 9. Germany shall take every necessary measure of legislative and administrative action to facilitate the operation of the German Reparation (Recovery) Act, 1921, in force in the United Kingdom, and of any similar legislation enacted by any Allied Power, so long as such legislation remains in force. Payments effected by the 10. Payment for all services rendered, all deliveries in kind, and all receipts under Article 9 shall be made to the Reparation Commission by the Allied Power receiving the same in cash or current coupons within one month of the receipt thereof, and shall be credited to Germany on account of the payments to be made by her under Article 4. 11. The sum payable under Article 4 (3) and the surplus receipts by the Commission under Article 4 (1) and (2) in each year, not required for the payment of interest and sinking fund on bonds outstanding in that year, shall be accumulated and applied so far as they will extend, at such times as the Commission may think fit, by the Commission in paying simple interest not exceeding 2½ per cent per annum from May 1, 1921, to May 1, 1926, and thereafter at a rate not exceeding 5 per cent on the balance of the debt not covered by the bonds then issued. No interest thereon shall be payable otherwise. 12. The present Schedule does not modify the provisions securing the execution of the Treaty of Versailles, which are applicable to the stipulations of the present Schedule. VIII. The Wiesbaden Agreement, October 6, 1921 This Agreement, signed by M. Loucheur and Herr Rathenau at Wiesbaden on October 6, 1921, is a lengthy document, consisting of a Protocol, Memorandum, and Annex. The effective clauses are to be found mainly in 1. Explanatory Memorandum In order to understand the arrangements proposed by the Wiesbaden Agreement, it is necessary to bear in mind certain provisions of the Treaty of Versailles, the application of which is affected by it. The Treaty itself provides in the Reparation Chapter, Part VIII., and in some of its Annexes, for the partial liquidation of Germany's reparation indebtedness by deliveries in kind. The important passages in this connection are Paragraph 19 of Annex II. and Annex IV., which together make extensive provision for the delivery, through the Reparation Commission, to the Allied and Associated Powers of machinery, equipment, tools, reconstruction material, and, in general, all such material and labour as is necessary to enable any Allied Power to proceed with the restoration or development of its industrial or economic life. Germany's obligation being stated in terms of gold and not in terms of commodities, provision has necessarily been made in all cases for crediting Germany, from time to time, with the fair value, as assessed by the Reparation Commission, of such deliveries. Moreover, since the proportions received by the respective Powers in kind need not necessarily correspond exactly with their respective shares in Germany's reparation payments, as determined by Inter–Allied agreement, Further, the Treaty imposes upon the Reparation Commission not only the duty of fixing prices, but also of determining the capacity of Germany to deliver goods demanded by any of the Allies, and, by implication, of deciding between the competing demands which are made upon that capacity by the Allies themselves. The Wiesbaden Agreement provides for the delivery by a German company Any question as to the capacity of Germany to satisfy the requirement of France, and all questions of price, are to be settled by a Commission of three members, one French and one German, and a third selected by common agreement or nominated by the Swiss President. The aggregate value of the deliveries to be made under the Agreement, and of the deliveries to be made under Annexes III., V. and VI. (hereafter, for the sake of brevity, called the “Annex deliveries”) in the period expiring on the 1st May 1926, is fixed at a maximum of 7 milliard gold marks. In regard to the Annex deliveries the Agreement in no way modifies the Treaty provisions under which Germany is credited and France debited forthwith with the value, but special provisions, which are financially the essential part of the Agreement, are made for bringing to reparation account the value of the Agreement deliveries. These special provisions are designed to secure that Germany shall only be credited on reparation account at the time of delivery with a certain proportion of them, and that deliveries not thus accounted for, which may be called “excess deliveries,” shall be liquidated over a period of years beginning at the earliest on 1st May 1926. The provisions themselves are somewhat (1) In no case is credit to be given to Germany in any one year for Annex and Agreement deliveries together to an amount exceeding one milliard gold marks. (2) In no case is credit to be given to Germany in any one year for more than 45 per cent of the value of the Agreement deliveries or for more than 35 per cent if the value of the Agreement deliveries exceeds one milliard gold marks. The effect of the above is to prescribe that 55 per cent (or, if the Agreement operates successfully, 65 per cent) of the value of the Agreement deliveries as a minimum will be the object of deferred payment by instalments. If the Agreement deliveries reached really high figures, the operation of the milliard limitation would make the carry forward much more than 65 per cent. The excess deliveries are to be liquidated with interest at 5 per cent per annum in 10 equal annual instalments as from 1st May 1926, subject to certain conditions:— (1) France shall in no case be debited in one year for Agreement deliveries with an amount which, when added to the value of her Annex deliveries in that year, would make her responsible for more than her share (52 per cent) of the total reparation payments made by Germany in that year. (2) Agreement deliveries continue after 1st May 1926, with the same provisions for deferred payment. If in any year between May 1926 and May 1936 the amount (not exceeding 35 (3) Any balance with which Germany has not been credited on 1st May 1936 is to be credited to her with compound interest at 5 per cent in four half–yearly payments on 30th June and 31st December 1936 and 30th June and 31st December 1937. But, again, these half–yearly payments shall not be made if the effect of making them would be to exceed the limit laid down in Condition 1 above. (4) Agreement deliveries continue indefinitely after 1st May 1936, with power, however, to Germany to arrest them whenever the execution of them would result in France owing more than 52 per cent of Germany's annual reparation payment in respect of Annex deliveries, deferred payments already matured, and the 35 or 45 per cent of current deliveries. From the above it is to be noted that, while there is a limitation for the first five years of the amount of Agreement deliveries which can be demanded, there is— (1) No point at which the right of France to demand (2) No final limitation upon the value of the deliveries which can be demanded by France during the lifetime of the Agreement. (3) No definitely prescribed period within which France's debt to Germany and to the other partners in reparation shall be liquidated. ••••••• It remains necessary to draw attention to one subsidiary point of a financial character under the Schedule of Payments. Part of Germany's annual reparation liability consists of the payment of 26 per cent of the value of German exports in each period of twelve months, and part of the security for the payment consists of the proceeds of a levy of 25 per cent on the value of all German exports. The French Government has undertaken to support a request, to be submitted by the German Government to the Reparation Commission, for the inclusion in the exports which form the basis of these calculations of that part only of the value of the deliveries made under the Agreement which is credited to Germany and debited to France during any particular year. If it can be assumed that any part of the special deliveries to be made under the Agreement would, in the absence of the Agreement, have been diverted to Germany's ordinary external trade, then the concession desired will have the effect of diminishing the annual payments made by Germany for the benefit of the Allies as a whole. 2. Decision of the Reparation Commission on October 20, 1921, after considering the Franco–German Agreement of October 6, 1921 The French Government, having submitted to the Reparation Commission in accordance with Paragraph 3 of the Memorandum thereto attached the Agreement between the representatives of the French and German Governments signed at Wiesbaden on the 6th instant, the Commission has come to the following decision:— (1) It entirely approves the general principles underlying the Agreement whereby special arrangements are proposed for enabling Germany to liquidate the largest possible proportion of her reparation obligations in the form of goods and services, more especially with a view to the speedier restoration of the Devastated Regions. (2) At the same time, it considers that the Agreement involves certain departures from the provisions of Part VIII. of the Treaty of Versailles, notably Article 237, Paragraphs 12 and 19 of Annex II. and Paragraph 5 of Annex IV. (3) As the Commission has no power to authorise such departures, it decides to refer the question to the Governments represented on the Commission, with a copy of the Memorandum and its Annex, recommending a favourable examination of them. (4) The Commission recommends that reasonable facilities for deferred payment in respect of the exceptional volume which, if the arrangements are successful, the deliveries in kind to France are likely to assume during the next few years, should be accorded to France, subject to any 3. Concluding Recommendations of Sir John Bradbury's Report to the British Government (October 26, 1921) The safeguards which are envisaged as necessary by my Italian and Belgian colleagues on the Reparation Commission and myself, and for which we presume that our respective Governments will desire to stipulate are— (1) That a limit of time should be laid down after the expiration of which no new deferment of debit should be permitted and the liquidation of the existing deferred debits should commence to be made by regular annual instalments. The precise length of this period should be determined upon an estimate of the time necessary to carry out the main work of reconstruction, regard being had to the time required by Germany to effect the necessary supplies. In view of the delays which are inevitable in regard to operations of the magnitude of those contemplated, the prescribed period might be reasonably somewhat longer than the four and a half years' initial period under the agreement, but it should not exceed seven years. (2) That in no circumstances should the aggregate amount for which debit against France for the time being stands deferred be allowed to exceed a prescribed amount, say, 4 milliard gold marks. (3) That a provision should be inserted for the payment by France to the general reparation account Subject to the introduction of these safeguards, to which it would not appear that legitimate exception could be taken, the arrangements contemplated by the agreement may be expected to accelerate the solution of the Reparation problem on practical lines in a manner advantageous to France without prejudicing the interests of other Powers, and it is upon this ground that the Reparation Commission has unanimously recommended them for favourable examination by the Allied Governments. If the Allied Governments approve the general scheme, subject to whatever safeguards they may decide to be necessary, there will remain certain subsidiary points for the Reparation Commission to consider—amongst other:— (1) The proposed omission of the excess deliveries from the index figure determining the annual liability under the Schedule of Payments, until such time as these deliveries are finally brought to account for reparation purposes. (2) The special arrangements for substitution in respect of articles of which France is entitled to restitution by identity, involving in certain cases money payments; and (3) The special arrangements in regard to the delivery of coal and the prices to be credited and debited, which in several particulars affect the interest of other Powers. IX. Tables of Inter–Governmental Indebtedness (A) Advances by the United States Government to other Governments (as in July 1921)
(B) Advances by the British Government to Other Governments (as on March 31, 1921) Allied Governments
Loans for Relief—
Other Loans (Stores, etc.)—
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