the two commissions. The rules for cooperation should be reserved for a special agreement.

In case the two commissions should come to no agreement regarding the execution of the accepted obligations, or with respect to the interpretation of certain prescriptions of the final peace treaty relating to reparation, the decision thereof shall be conferred upon a court of arbitration with a neutral chairman, each of the parties proposing one member for it who, in their turn, shall elect the neutral third member.

Under these conditions the German Delegation are willing to consent to the demands in Annex IV as a whole, but to the several single paragraphs only so far as they are not in contradiction to the above-mentioned reservations and proposals concerning the rights of the Commission. Considering the extraordinary importance of these stipulations, it seems necessary, however, that they shall be made the object of special and detailed discussion. In particular, it must be pointed out here that there are grave objections to these stipulations, especially those in Section 4 of Annex IV. According to Section 4, the disorganization of Germany's industrial life as a result of the requisition of materials, etc., shall be avoided only to the extent of not affecting adversely Germany's ability to perform the acts of reparation stipulated. That is impossible. The German people cannot accept any stipulations that aim at its disorganization. It does not live only to perform reparation; it wants, rather, to reestablish itself while freeing itself from the burden laid upon it.

The demand of Section 4, Annex IV, according to which Germany shall be bound, on request of the Commission, to deliver for reparation purposes machinery, equipment, tools, and the like articles which are in actual use, up to thirty per cent. of the quantity of such articles, should there be no free stock, cannot be accepted in this general form. The German Delegation ⚫ declare that they are willing, on principle, to undertake expropriation within the limits of the counter-proposals already made or still to be made in further discussions. But, in doing so, it is supposed that these articles are the private property of undertakings not at all or little engaged, and that, therefore, taking all circumstances into consideration, the expropriation seems appropriate. Moreover, if there is no free stock of machinery, etc., available, it must be considered whether it would

not be possible to avoid the removal or seizure of material from plants capable of production by constructing new similar machinery, etc., without serious loss of time.

In this connection the German Delegation declare that they are, on principle, willing to fulfill the demands of Article 238, already accepted in the armistice, and since then performed. As far as restitution of machinery, equipment, tools, and the like articles in actual use are concerned, they must demand that the principle of Section 4, Annex IV be applied, by which restitutions of this kind may be made, first of all, from free stocks of like articles as far as they exist. This principle must be extended so far as to provide that, in case there are no free stocks of like articles, the restitution of such articles shall not be demanded if, by the supply of newly constructed machinery, equipment, tools, and the like, reparation would be neither impaired nor essentially deferred.

The restitution of stallions, as demanded in Section 6, Annex IV, can be performed so far as their identification during the period fixed is possible. On the other hand, the capacity for agricultural production and the state of the food supply make it impossible to fulfill the rest of the demands within the time fixed for the delivery. This is in particular impossible in the case of the delivery of milch cows, which would result in a further increase in infant mortality, which has already grown considerably as a result of the hunger blockade. Already, as the Allied and Associated Governments are aware, the quantity of milk produced in Germany is insufficient to provide the necessary quantity of milk for the sick and the infants. Germany cannot think of delivering cattle, goats, etc., until, by a greater import of fodder, German livestocks have grown better in quantity and quality.

On the other hand, in order to fulfill the stipulated restitution of livestock, the German Delegation are willing to consent to purchases in neutral countries, or in the countries of the Allied and Associated Governments, which shall be charged to the account of the German Government. Representatives of the German Government should take part in these purchases. The German Delegation will submit special proposals for annual supplies of horses and other livestock, which they will undertake to deliver at fixed dates, and which are to be credited to the reparation account.

Re Annex V: Coal

Provided that the regulation of territorial and economic questions and of the question of reparation will permit her, Germany is willing to do everything in her power to produce for export to France the amount of coal needed by that country and corresponding to the difference between the annual pre-war production of the destroyed mines and their occasional production during the next ten years. Germany acknowledges that these quantities may amount, in the first period, to twenty million metric tons, and after five years, to eight million metric tons annually, and declares herself in accord with these maximum estimates.

Germany and France have a common interest in the prompt reconstruction of the French mines. Germany has at her disposal a great number of firms of wide experience in the sinking of pits in difficult mountainous districts and in the construction of surface equipment of all kinds. It is, therefore, to the interest of both countries that Germany should be given an opportunity to cooperate, in a wide measure, in the promptest reconstruction of the mines. She is also willing to undertake the total or partial reconstruction herself.

It is materially impossible to accord the options for coal demanded in Sections 2 to 5. Neither can they be demanded under the term of reparation. Even in 1913, when the German production of coal reached its maximum with 191.5 million metric tons, only 32.8 million metric tons-coke being computed in coal equivalent were exported. But since 1913 the production of coal has considerably diminished. In 1918, it amounted to only 161.5 million metric tons, and in the first quarter of 1919, to about twenty-nine million metric tons, which would mean an annual production of 116 million metric tons. Even if it must be admitted that the production during the first quarter of 1919 was unfavorably influenced by strikes and revolts, the main causes of the decrease in production still continue to exist: the reduction, as a result of the war, of the number of skilled and experienced miners, the shortening of the shifts from eight and one-half to seven hours, the decline in working capacity caused by the hunger blockade, and the present bad condition of the equipment. These causes can be gradually abolished only if it shall be possible to remove the difficulties attending production by the import of the necessary raw materials, to improve slowly

the condition of the German food supply, and, after the construction of the necessary houses, to balance the shortening of the shifts by increasing the amount of work. Nevertheless, the German Delegation feel that they must reckon with a decrease of production for the next few years of about thirty per cent. as against that of 1913, that is, a production of 131 million metric tons. Of course, it is true that Germany's own needs will not be as great as they were in 1913, but will amount to about eighty per cent. of the amount required in 1913, i. e., about 116 million metric tons. These calculations do not include the production and the needs of Alsace-Lorraine, but the production and the needs of the Saar district and of Upper Silesia are included. Without the latter Germany could export no coal at all, but would have to import coal.

In Section 10, Annex V, the Allied and Associated Governments have acknowledged the necessity of taking into account the industrial requirements of Germany. It need hardly be mentioned how difficult it is to state in advance Germany's production and requirements. The numbers given above are the result of most careful calculations on the part of experts, and prove that the delivery of the amounts stated in Sections 2-5 is quite impossible. From these calculations it follows that there will be a surplus of fifteen million metric tons available for export. The German Government is willing, however, by continuing the present rationing, to make available another five million metric tons as long as the decrease in the production of the destroyed mines amounts to twenty million metric tons.

The German Delegation must add to the foregoing declaration the condition that, in exchange for these deliveries of coal and coke, the German smelting works will be supplied with their requirements of minette from Lorraine and France. The 1913 supplies should be accepted as a basis, unless the exchange of minette and coke is independently regulated by special agreements or connections between the works on either side.

In order to meet the requirements of France and Belgium, the German Delegation are also willing to agree to an option for the next ten years on the surplus of the whole German production of coal over the home needs of Germany's requirement. Should this surplus not suffice to cover the requirements of these three countries, the German Delegation propose to ration the consump

tion in Germany, France and Belgium equally. A commission of German, French and Belgian representatives should be constituted in order to supervise the execution of these measures. In these agreements the interests of Italy and Luxemburg should be considered.

As to the price and conditions of delivery, the German Delegation must demand that the general competitive prices be taken into account or paid. The German Delegation are willing to agree that the price, including cost of transport, must not exceed the general export price of British coal of the same quality, including cost of transport. On the other hand, the price must not be less than the price within Germany. Unless the full value brought by her export products abroad is paid or, within the limits of the financial proposals, credited to Germany, Germany could not arrange for the imports necessary for the maintenance of her economic life, and, in consequence, she would not be able to make the payments arising from her reparation obligations.

The details of the above proposals should be regulated by subcommissions of experts, which should be constituted similarly to the above-mentioned commission.

The German Delegation think it their duty to point out that 13.6 million metric tons out of the above-mentioned export of 33.8 million metric tons in 1913 went to countries of the former AustroHungarian Monarchy, and other considerable amounts to countries which have favorable transport conditions to and from the German mining districts. Considering the difficulties of transport existing in Germany and in some countries of the Allied and Associated Governments, and the present lack of tonnage, it would not be in the general interest to deliver only to France the whole surplus available for export. The German Delegation do not make this objection in order to escape their obligations of delivery or to raise difficulties, but they think that they are in agreement with the Allied and Associated Governments in the conception that the economic life of Europe, which has been so severely shaken by the war, requires the most careful distribution of all raw materials and the most economical utilization of means of transport. They suggest, therefore, the constitution of an international commission, which should examine the question of coal distribution and which, by some manner of adjustment, could save many million of transport-kilometres. The German