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first percentage payment other than payments in kind or services rendered, received either from Germany, Austria, or Hungary, whichever may be the earliest, by the Power to which the ship is transferred, and adding it to the first percentage payment received by the transferring Power.

(4.) After the final allotment of tonnage by the Reparation Commission, there shall be transferred to Belgium out of the shares of the other Powers sharing in the distribution of tonnage such an amount of tonnage as will make up her ton for ton allotment to a total equivalent to the tonnage of the vessels condemned after the Armistice in the Belgian Prize Court. Such tonnage shall be of approximately the same age, type and value as the condemned ships. The contribution of each of the transferring Powers shall be in proportion to their approved claims for the ton for ton allotment of ex-enemy tonnage.

The value of the vessels allotted to Belgium, and also of those transferred to her as above, will be debited to the transferring Powers in the same proportions as they contribute the transferred ships.

The condemnation of the above vessels in the Belgian Prize Court not being recognised by the Allied Powers, Belgium, while maintaining the validity of these decisions, agrees, in consideration of the tonnage transferred to her under this paragraph (4), not to claim any interest in these vessels by reason of their condemnation.

VII. No sum shall be credited to Germany for the light cruisers, floating docks or the material handed over, or to be handed over, under the Protocol of the 10th January, 1920, as compensation for the warships which were sunk.

As regards sunk German ships which have been, or may be, salved, a Power to which they have been, or may be, allotted, will be chargeable with the cost of the salvage incurred by the Power which has borne them.

VIII. No sum shall be credited to Germany in respect of the proceeds of the sale of warships and naval war material surrendered under the Naval Clauses of the Treaty of Versailles, including the value of the arisings from naval war material which may have been, or may be, sold by the Reparation Commission at the request of the Supreme Council. These sums shall be divided between the Allied Powers in the same proportions as were approved by the Supreme Council for the material surrendered under the Protocol of the 10th January, 1920.

IX. Italy shall, in priority to all other Allied Powers, be entitled to retain and set off against the amounts due to her by Austria, Bulgaria and Hungary in respect of the Armies of Occupation and reparation a sum equal to the amount for which she may be adjudged by the Reparation Commission to be liable to account to the Reparation Commission in respect of the value of property transferred and services rendered up to the 1st May, 1921, under Article 189 and Annexes III, IV and V to Part VIII (Reparation) of the Treaty of Saint-Germain, and of the corresponding provisions of the Treaty of the Trianon, and also of the sum provided for in the Agreement relating to Italy with respect to the reparation contribution signed at Saint-Germain on the 10th September, 1919, as modified at Paris on the 8th December, 1919. Italy will in consequence only be obliged to issue the bonds referred to in Article IV of the said Agreement if and so far as her debt is not covered by the set-off provided for above.

X. The provisions of the present Agreement do not apply to Poland. The right of Poland to reparation for damage suffered by her, as an integral part of the former Empire of Russia, is reserved in accordance with Article 116 of the Treaty of Versailles and Article 87 of the Treaty of Saint-Germain.

The sums to be credited to Germany and Austria under Articles 92 and 243 of the Treaty of Versailles, and Article 189 of the Treaty of Saint-Germain, shall be entered provisionally in suspense accounts carrying interest at 5 per cent. per annum.

XI. The stipulations of the present Agreement shall not affect the operation of the provisions of Article 232, paragraph 3, of the Treaty of Versailles.

The amount of the sums borrowed by Belgium up till the 11th November, 1918, including interest at 5 per cent. per annum up till the date of payment, shall rank immediately after the payment of 22 milliards of gold francs referred to in Article V and be distributed as equally as possible over the sums paid each year by Germany before the 1st May, 1926.

Sums paid in advance by Germany shall not be applied for the purpose of discounting this part of her yearly payments.

XII. Nothing in this Agreement shall prejudice the right of the Allied Powers to repayment of the relief credits afforded by them. to the ex-enemy Powers.

XIII. The question of the reduction of the cost of the Armies of Occupation to a uniform basis for all the Allied and Associated Powers is reserved in order that it may be discussed with the United States of America.

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4a. Informal reservation by the unofficial representative of the United States on the Reparation Commission, presented August 27, 19201

In connection with the inter-Allied agreement signed at Sps (annex 345) which has been presented to the Reparation Commission. the United States Unofficial Delegate desires to place on record & formal reserve with respect to the rights of the United States, id est. which, either in case of ratification or non-ratification of the treaties or any portion of them, may be affected thereby. Subject to the foregoing reserve he states further that certain indications of the agreement constrain him to decline to assent thereto and even to protest against its acceptance by the Commission.

In explanation of the foregoing and without attempting to make a complete statement of objections he expresses opinion that:

1. The agreement is in direct conflict with the provisions of the treaty with Germany. In view of the emphasis, which both at the beginning and since the end of the war, has been placed on Germany failure to respect her treaty obligations, any tendency in this same direction shown by Germany's critics needs no comment.

2. The influence which such an agreement inevitably exercises upe the personal opinion of the members of the Commission is in itself objectionable. If to that influence is added the pressure of dire instructions to the delegates, the status of the Commission under the treaty is threatened. It is no longer a judicial body, it has become mere registering machine controlled by governments in their o interests.

3. Specifically, the provisions with respect to ex-enemy ships pre scribe an arbitrary method of valuation which has no relation

1

1 File 462.00 R 29/334. Cf. Foreign Relations, 1920, 11, 421, 424.

established principles, either of law or equity, which conflicts with the treaty provisions and which is unfair to the ex-enemy powers.

4. The provisions of articles 6, 7 and 8 denying to Germany credit for certain property and for the use of certain ships are attempts to deprive the Commission of jurisdiction in matters of which the treaty makes the Commission the sole judge. The provisions of articles 7 and 8 are in direct conflict with opinions rendered by our legal service.

The specific objections to which I have called attention would no longer exist if the assent of ex-enemy countries interested were obtained or if arrangements were made with ex-enemy countries interested such that future indemnity payments would have no relation to the deliveries in question or if the provisions of the inter-allied agreement were treated as arrangements for inter-allied accounting and not as changes in the treaty provisions. I express the hope that some one of these solutions may be adopted.

To avoid misunderstanding the undersigned will add that there can be no objection in principle to treaty changes which in the light of experience commend themselves to all parties concerned. He is strongly of opinion that experience has shown that important changes are desirable particularly from the point of view of those powers most interested in realizing substantial indemnity from Germany.

4b. Resolution of the Reparation Commission'

The Reparation Commission on September 11, 1920 adopted the following:

"The Reparation Commission takes note of the agreement arrived at between the governments of Belgium, France, Great Britain, Italy, Japan, and Portugal at Spa on the 16th, July 1920 with regard to the distribution of receipts from Germany under the Reparation provisions of the treaty of Versailles, methods of valuation for purposes of the accounts as between those governments and procedure in connection with the settlement of such accounts and it will cause

1 File 462.00 R 29/335 and/336. Cf. Foreign Relations, 1920, 11, 439.

the necessary steps to be taken to give effect thereto, due regard being paid to the rights and interests of other powers signatory to the treaty of Versailles which are not parties to the above mentioned agreement."

5. Schedule of Payments, May 5, 1921, 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.

ARTICLE 1.

Germany will perform in the manner laid down in this Schedule her obligation to pay the total fixed in accordance with Articles 231, 232 and 233 of the Treaty of Versailles by the Commission, viz: 132 milliards of gold marks less:

(a) The amount already paid on account of Reparation, (b) sums which may from time to time be credited to Germany in respect of State properties in ceded territory, etc., and (c) any sums received from other enemy or ex-enemy Powers in respect of which the Commission may decide that credit should be given to Germany, plus the amount of the Belgian debt to the Allies, the amounts of these deductions and addition to be determined later by the Commission.

ARTICLE 2.

Germany shall create and deliver to the Commission in substitu tion for bonds already delivered or deliverable under paragraph 12: (c) of Annex II of Part VIII (Reparation) of the Treaty of Versailles the bonds hereafter described.

1 Reparation Commission, Annex 908.

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