[Further issues by way of acknowledgment and security may be required as the Commission subsequently determines from time to time.]

Note to VIII, Annex II (12c)

This paragraph (c) and its subparagraphs were annulled by article 2 of the Schedule of Payments of May 5, 1921. The bonds provided for by the paragraph were superseded by the general bonds of Series A, B, and C, remitted by the German Government to the Reparation Commission in accordance with that article.

(d) In the event of bonds, obligations or other evidence of indebtedness issued by Germany by way of security for or acknowledgment of her reparation debt being disposed of outright, not by way of pledge, to persons other than the several Governments in whose favour Germany's original reparation indebtedness was created, an amount of such reparation indebtedness shall be deemed to be extinguished corresponding to the nominal value of the bonds, etc., so disposed of outright, and the obligation of Germany in respect of such bonds shall be confined to her liabilities to the holders of the bonds, as expressed upon their face.

(e) The damage for repairing, reconstructing and rebuilding property in the invaded and devastated districts, including reinstallation of furniture, machinery and other equipment, will be calculated according 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 statement of its reasons.

12A.

a) Notwithstanding the stipulations of subparagraph (c) of Paragraph 12 of Annex II to Part VIII, the Reparation Commission shall have power to increase the rate of interest from 21/2 per cent. to 5 per cent. for the period from 1st May, 1921, to 1st May, 1926, on bonds issued or to be issued under subparagraphs (1) and (2) of paragraph 12 (c), and to provide for the commencement of the sinking fund payments on such bonds as from 1st May, 1921, provided that any additional sums required for such increase of interest and payment of sinking fund shall be compensated by the reduction below 5 per cent. of the rate of interest to be debited under paragraph 16 of Annex II to Germany as from the 1st May, 1921, in respect of debt not covered by bonds. Power is given to the Reparation Commission to call upon

Germany for the issue of new bonds bearing 5 per cent. interest and 1 per cent. sinking fund from 1st May, 1921, in exchange for the surrender by the Reparation Commission of bonds already issued under paragraph (c) (1) and (2).

Power is given to the Reparation Commission to defer from 1st May to 1st November, 1921, the date of commencement of interest and of sinking fund on the whole or any part of the new bonds to be issued in exchange for bonds issued under paragraph (c) (1) and (2).

Power is given to the Reparation Commission to consolidate with the general bond issue the special issue of bonds in respect of Belgian debt provided for in Article 232 of the Treaty.

Power is given to the Reparation Commission to divide the total amount of the bonds into series having different priorities of charge.

b) Power is given to the Reparation Commission to require Germany to assign certain revenues and assets to be specified to the service of the bonds either as a whole or as to separate series.

c) Power is given to the Reparation Commission to require such assignment of specific revenues and assets to be specified in the terms of the bonds to be issued under paragraph 12 (c); bonds in which such assignment is specified shall, notwithstanding anything contained in paragraph 12 (6), be deemed to remain part of the reparation indebtedness of Germany, even though disposed of outright to persons other than the several Governments in whose favour Germany's original reparation indebtedness was created.

d) Power is given to a Committee of Guarantees to be appointed by the Reparation Commission under paragraph 7 of Annex II to supervise the application of the assigned revenues and to prescribe the dates and manner of payment of sums due for the service of the bonds or other payments in respect of the German debt.

The revenues to be assigned by the German Government shall be:

(1) The proceeds of all German maritime and land customs and duties and in particular the proceeds of all import and export duties;

(2) 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 of any Allied Power;

(3) 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 (1) or (2) above.

The Committee of Guarantees shall not be authorized to interfere in German administration.

Note to VIII, Annex II (12A, d)

The Committee of Guarantees did not exercise its powers during the application of the Experts' (Dawes) Plan from September 1. 1924 to May 17, 1930, from which date the Reparation Commission was in liquidation.

e) Power is given to the Reparation Commission to require the issue of bonds without coupons in respect of any part of the debt not for the time being covered by bonds issued in accord with paragraph 12 (c) as amended. The German Government shall be required to issue coupons in respect of such bonds as from such subsequent date as may be determined by the Reparation Commission as and when the Commission is satisfied that Germany can meet interest and sinking fund obligations; the sinking fund payments shall begin at the same date.

Bonds for which coupons have not been issued shall be deemed to be debt not covered by bonds for the purpose of debiting interest under paragraph 16 of Annex II as amended.

Note to VIII, Annex II (12A in toto)

Paragraph 12A was added by the governments represented on the Reparation Commission, Belgium, France, Great Britain, Italy, and Japan, in application of Part VIII, annex II, paragraph 22, by decision of May 5, 1921.

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 recorded. 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;

(c) Any postponement, total or partial, beyond the end of 1930, of the payment of instalments falling due between May 1, 1921, and the end of 1926 inclusive;

(d) Any postponement, total or partial, of any instalment falling due after 1926 for a period exceeding three years;

(e) Questions of applying in any particular case a method of measuring damages different from that which has been previously applied in a similar case;

(f) Questions of the interpretation of the provisions of this Part of the present Treaty.

In case of differences of opinion between the Delegates on the interpretation of the stipulations of this part of the present Treaty, the question will be submitted by the unanimous agreement of the Delegates to arbitration. The Arbitrator will be selected unanimously by all the Delegates or in default of unanimity will be nominated by the Council of the League of Nations. The finding of the Arbitrator will be binding on all the interested parties.

Note to VIII, Annex II (13f, second par.)

The paragraph is an amendment inserted as the result of a decision of the Supreme Council on August 13, 1921, in virtue of the authority of annex II, paragraph 22, and brought into force by a protocol signed at Paris, November 22, 1924 on behalf of the governments of France, Great Britain, Italy, Japan, Belgium, and the Serb-Croat-Slovene State.

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 accept.

14.

Decisions of the Commission, in accordance with the powers conferred upon it, shall forthwith become binding and may be put into immediate execution without further proceedings.

15.

The Commission will issue to each of the interested Powers, in such form as the Commission 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, being divisible in a number of parts not exceeding five;

(2) From time to time certificates stating the goods delivered by Germany on account 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 negotiation, and when goods are delivered by the Commission, certificates to an equivalent value must be withdrawn.

16.

Interest shall be debited to Germany as from May 1, 1921, in respect of her debt as determined by the Commission, after allowing for sums already covered by cash payments or their equivalent, or by bonds issued to the Commission, or under Article 243. The rate of interest shall be 5 per cent. unless the Commission shall determine at some future time that circumstances justify a variation of this

rate.

Text of May 7:

Interest shall be debited to Germany as from 1st May, 1921, in respect heredo [sic] as determined by the Commission, after allowing for sums already covered by cash payments or their equivalent, by bonds issued to the Commission, or under Article 243.

The Commission, in fixing on May 1, 1921, the total amount of the debt of Germany, may take account of interest due on sums arising out of the reparation of material damage as from November 11, 1918, up to May 1, 1921.

Note to VIII, Annex II (16)

The Reparation Commission in a formal interpretation ruled that it had the power to take account of interest accruing between the dates mentioned on the sums representing material damages under article 232 and annex I in reckoning whether or not the damages had been repaired before May 1, 1921.

16A.

In the event of any application that Germany be declared in default in any of the obligations contained either in this part of the present treaty as put into force on January 10, 1920, and subse