[Sidenote:  Schedule of payments to be presented.]

[Sidenote:  One thousand million pounds in two years.]

As an immediate step toward restoration Germany shall pay within two years one thousand million pounds sterling in either gold, goods, ships, or other specific forms of payment.

This sum being included in, and not additional to, the first thousand million bond issue referred to below, with the understanding that certain expenses, such as those of the armies of occupation and payments for food and raw materials, may be deducted at the discretion of the Allies.

[Sidenote:  Belgium to be repaid.]

Germany further binds herself to repay all sums borrowed by Belgium from her allies as a result of Germany’s violation of the treaty of 1839 up to November 11, 1918, and for this purpose will issue at once and hand over to the Reparation Commission 5 per cent gold bonds falling due in 1926.

While the allied and associated Governments recognize that the resources of Germany are not adequate, after taking into account permanent diminution of such resources which will result from other treaty claims, to make complete reparation for all such loss and damage, they require her to make compensation for all damage caused to civilians under seven main categories: 

[Sidenote:  Damage to civilians to be compensated.]

(a) Damages by personal injury to civilians caused by acts of war, directly or indirectly, including bombardments from the air.

(b) Damages caused to civilians, including exposure at sea, resulting from acts of cruelty ordered by the enemy, and to civilians in the occupied territories.

(c) Damages caused by maltreatment of prisoners.

(d) Damages to the Allied peoples represented by pensions and separation allowances, capitalized at the signature of this treaty.

(e) Damages to property other than naval or military materials.

(f) Damages to civilians by being forced to labor.

(g) Damages in the form of levies or fines imposed by the enemy.

[Sidenote:  Work of Reparation Commission.]

In periodically estimating Germany’s capacity to pay, the Reparation Commission shall examine the German system of taxation, first to the end that the sums for reparation which Germany is required to pay shall become a charge upon all her revenues prior to that for the service or discharge of any domestic loan; and secondly, so as to satisfy itself that in general the German scheme of taxation is fully as heavy proportionately as that of any of the powers represented on the commission.

[Sidenote:  Refusals in case of default.]

The measures which the allied and associated powers shall have the right to take, in case of voluntary default by Germany, and which Germany agrees not to regard as acts of war, may include economic and financial prohibitions and reprisals and in general such other measures as the respective Governments may determine to be necessary in the circumstances.