Note to VIII, 233—Continued

allied governments clear, definite, and adequate proposals which would in all respects meet its just obligations.

The Supreme Council of the Allies, which had been in session in London since March 1, was also engaged in considering various questions connected with the treaty of peace. Its members, not having themselves reached a conclusion as to the amount of reparation which they should receive from Germany, allowed the Reparation Commission to proceed with that task. Germany had failed to make a satisfactory offer, but the Reparation Commission, in accordance with the duty assigned to it by article 233, had on April 27 established its findings "representing the extent" of Germany's obligations at 132,000,000,000 gold marks. On May 1, however, Germany was obligated by article 235 to have completed payments to the amount of 20,000,000,000 gold marks. No such sum showed to Germany's credit on the books of the Reparation Commission (see art. 235); in effect, there was a technical German default.

The Reparation Commission on April 27, 1921 arrived at the following decision:

"The Reparation Commission, in pursuance of the stipulations of Article 233 of the Treaty of Versailles decided unanimously to fix at 132 milliard marks gold the amount of the damage for which reparation was due from Germany under Article 232, paragraph 2, and Annex I of Part VIII of the said Treaty.

"In fixing this figure the Commission had left out of account that amount of damages in respect of which restitution had been or was to be made in execution of Article 238, and no credit would consequently be due to Germany on account of such restitutions.

"The Commission did not include in the above figure the sum representing the further obligation incumbent on Germany in terms of the third paragraph of Article 232, 'to make reimbursement of all sums which Belgium had borrowed from the Allied and Associated Governments up to 11th November, 1918, together with interest at the rate of 5 per cent. per annum of such sums' ".

On May 1, 1921 no notification of the amount of damages or the payments to be made by Germany was ready. The schedule was, however, not far from being ready. By May 3 the Reparation Commission had definitely been entrusted with drawing up the schedule of payments and had produced a draft calling for three series of bonds totaling 135,000,000,000 gold marks, which envisaged the amendment finally enacted as paragraph 12A of annex II. In

Note to VIII, 233—Continued

the revised Schedule of Payments of May 5 Series C bonds were reduced from 85 to 82 milliard gold marks. The inclusion of Series A bonds at 12 milliard gave the Supreme Council a basis for maintaining the existence of a default under article 235.

The Supreme Council decided to make its scheduled settlement with Germany as complete and definite as possible. Its deliberations over two months had revealed several defaults in German obligations and the sanctions in force since March 7 afforded a background for insisting upon their correction. An ultimatum in which satisfaction of the reparation debt was only one of the demands was presented to the German delegation on May 5 (Foreign Relations, 1921, II, 57). In this note the Supreme Council found defaults in Germany's fulfilment of the treaty with respect to (1) disarmament; (2) the trial of war criminals as provided for by the notes of February 13 and May 7, 1920 (art. 227); and (3) questions arising under articles 264-7, 269, 273, 321, 322, and 327. The note informed Germany that the Allies had decided:

"(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 within a period of six days from the receipt of the above decision categorically to declare its resolve:

(1) To carry out without reserve or condition their obligations as defined by the Reparation Commission.

(2) To accept and provide without reserve or condition the guarantees in respect of those obligations demanded 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, and the remainder by prescribed dates.

Note to VIII, 233—Continued

(4) To carry out without reserve or delay the trial of war criminals and other unfulfilled portions of the treaty referred to in the first paragraph of this note.

"(d) Failing fulfilment by the German Government of the above conditions by May 12, to proceed to occupy the Valley of 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 summarized in paragraph (c)."

To this note the German Government replied on May 11:

E "The German Government is resolved

"(1) To carry out without reserve or condition their obligations as defined by the Reparation Commission,

"(2) To accept and to carry out without reserve or condition the guarantees in respect of these 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 Governement by the Allied Powers in their note of January 29, 1921, those overdue being completed at once and the remainder by the prescribed dates,

"(4) To carry out without reserve or delay the trial of the war criminals and to execute the other unfulfilled portions of the treaty referred to in the first paragraph of the note of the Allied Governments of May 5."

The German Government which sent this note received in the Reichstag on June 4, 1921 a vote of confidence of 213 to 77.

The creditor states accepted the determination of the German obligation by the Reparation Commission only indirectly by means of the invitation, referred to in paragraph (b) of the note of May 5, to the Commission to proceed with prescribing how the German Government should execute its obligation. The Reparation Commission proceeded to establish the Schedule of Payments by which Germany delivered bonds to the Reparation Commission as follows:

A. On July 1, 1921 coupon bonds for 12,000,000,000 gold marks, against which 6 percent annually (720,000,000 gold marks) "shall be paid", of which amount 5 percent interest on outstanding bonds is payable, "and the balance to sinking fund for the redemption of the bonds by annual drawings at par." (Amortization would require some 37 years.)

695852 0-47-29

Note to VIII, 233—Continued

B. On November 1, 1921, coupon bonds for 38,000,000,000 gold marks, against which 6 percent annually (2,280,000,000 gold marks) "shall be paid," of which amount 5 percent interest on outstanding bonds is payable, "and the balance to sinking fund for the redemption of the bonds by annual drawings at par." (Amortization would require some 37 years.)

C. On November 1, 1921, bonds, without coupons attached, "for 82,000,000,000 gold marks, subject to such subsequent adjustment by creation or cancellation of bonds as may be required under Art. 1," which specifies the additions and deductions noted above. These bonds "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", which would presumably amount to 4,920,000,000 gold marks.

Note to VIII, 233, par. 2

The Reparation Commission did not receive any claims for reparation from the United States, Ecuador, Guatemala, Hedjaz, Honduras, Nicaragua, Panama, and Uruguay, and for sundry reasons did not admit the claims to reparation by Bolivia, China, Haiti, Peru, and Poland.

On May 19, 1921 the commission notified the following states that they were entitled to receive reparation and to appoint delegates or delegate assessors to the Reparation Commission: the British Empire, France, Italy, Japan, Belgium, Brazil (not awarded a given percentage), Cuba, Greece, Liberia, Portugal, Rumania, Serb-CroatSlovene State, Siam, and Czechoslovakia.

Dates of the commencement of belligerency for certain states were determined by the Reparation Commission as follows:

Poland-none (see art. 87)

Czechoslovakia-October 28, 1918
Italy-May 24, 1915

Greece June 27, 1917

Portugal-March 9, 1916

Bolivia-None

Haiti-None

Peru-None

Note to VIII, 233, par. 4

The Schedule of Payments of May 5, 1921 fixed a total amount of reparation payable by Germany at:

Note to VIII, 233 (3)—Continued

1. 132,000,000,000 gold marks less

a. Amount already paid on account of reparation;

b. Sums to be credited to Germany in respect of state properties, ceded territories, etc.; and,

c. Sums received from other enemy or ex-enemy states; and, 2. The amount of the Belgian debt to the Allies (5,612,385,422.54 gold marks).

Payments and deliveries effected by Germany were credited to reparation account as follows:

A. Deliveries on capital or annuity account made before or after May 1, 1921:

a. Deliveries in kind in virtue of part VIII, annex II, paragraph 9;

b. Deliveries in kind (art. 235);

1. Annex III;

2. Annex IV;

3. Annex V;
4. Annex VI;

5. Annex VII;

6. Article 247 (Louvain);

7. Various receipts of Allied origin, including Reparation Recovery Acts;

8. Articles 339-357;

9. Material of non-military character delivered in execution of the armistice;

B. Deliveries credited to reparation capital debt:

1. Share capital of State Bank of Morocco (art. 145); 2. Shantung (art. 156);

3. German credits on Austria, etc.;

4. Saar mines;

5. Cessions in China (art. 134);

6. Balances due under art. 297;

7. Sums to be credited to Germany in virtue of articles 254 and 256, including rolling stock, article 371;

8. All sums paid over by the Bureau for Liquidation of German War Material (B.L.M.G.) ;

C. Recovery of all sums taken over by the German Government and its agents between March 1 and November 5, 1920, except those turned over to B.L.M.G.;

D. The value of deliveries in virtue of article 260;