6.  This is not less the case because the Reparation Commission has been given discretionary powers to vary the rate of interest, and to postpone and even to cancel the capital indebtedness.  In the first place, some of these powers can only be exercised if the Commission or the Governments represented on it are unanimous.[116] But also, which is perhaps more important, it will be the duty of the Reparation Commission, until there has been a unanimous and far-reaching change of the policy which the Treaty represents, to extract from Germany year after year the maximum sum obtainable.  There is a great difference between fixing a definite sum, which though large is within Germany’s capacity to pay and yet to retain a little for herself, and fixing a sum far beyond her capacity, which is then to be reduced at the discretion of a foreign Commission acting with the object of obtaining each year the maximum which the circumstances of that year permit.  The first still leaves her with some slight incentive for enterprise, energy, and hope.  The latter skins her alive year by year in perpetuity, and however skilfully and discreetly the operation is performed, with whatever regard for not killing the patient in the process, it would represent a policy which, if it were really entertained and deliberately practised, the judgment of men would soon pronounce to be one of the most outrageous acts of a cruel victor in civilized history.

There are other functions and powers of high significance which the Treaty accords to the Reparation Commission.  But these will be most conveniently dealt with in a separate section.

III. Germany’s Capacity to pay

The forms in which Germany can discharge the sum which she has engaged herself to pay are three in number—­

1.  Immediately transferable wealth in the form of gold, ships, and foreign securities;

2.  The value of property in ceded territory, or surrendered under the Armistice;

3.  Annual payments spread over a term of years, partly in cash and partly in materials such as coal products, potash, and dyes.

There is excluded from the above the actual restitution of property removed from territory occupied by the enemy, as, for example, Russian gold, Belgian and French securities, cattle, machinery, and works of art.  In so far as the actual goods taken can be identified and restored, they must clearly be returned to their rightful owners, and cannot be brought into the general reparation pool.  This is expressly provided for in Article 238 of the Treaty.

1. Immediately Transferable Wealth