XVIII. Penalties

a penalty in the form of fine or imprisonment or both shall be provided for the punishment of any person or persons wilfully giving incorrect information, directly or indirectly, to the Président, the General Board, the Commissioner or his assistants.

Plan des Experts (Rapport Dawes). 7(>5

XIX. Measures to be taken by the 6erman Government for the Execution of the Plan.

Ail the undertakings which the German Government will hâve to enter into in connection with the Bank, for the exécution of this plan, including the assignaient for the witbdrawal of the Rentenmark, of funds to be received from the Rentenbank's mortgages, shall be embodied in a spécial contract between the Bank and the German Government. This contract as well as the Statutes of fhe Bank, shall be duly approved by the German Parliament.

Appendix to Annex 1.

The Liquidation of the Rentenbank.

(Appendix provided for in Section XV of the Plan for the Bank.)

The Deutsche Rentenbank was founded, and its opération regulated, by the Decree of October 15, 1923.

The capital and the initial reserve were fixed by this Decree at 3,200 million Renten marks, to be furnished half by agriculture and half by industry and commerce, including the banks.

The Rentenbank holds a gênerai mortgage, expressed in gold marks, on industrial, agricultural and commercial property, amounting to 4 °/o of the value of this property as assessed for tbe Wehrbeitraggesetz.*)

Thèse mortgages bear 6 % interest for the benefit of the Rentenbank.

The Rentenbank is authorised to issue bank notes expressed in Rentenmarks up to the amount of the capital and initial reserve (3,200 million gold marks).

The Rentenbank must open crédits to the Reich during the two years following its foundation, up to the amount of 1,200 million Rentenmarks, of which 900 millions will bear 6 °/o interest and 300 millions will bear no interest. The Rentenbank is authorised moreover to open crédits to the Reichsbank and to the private Banks up to 1,200 million Rentenmarks, in order to finance private economy.

Up to the présent the Rentenbank has placed in circulation:

1. 700 millions which hâve been deliyered to the Reichsbank in order to provide for the crédits to be granted by the latter to German manufacture» and merchants. This sum is therefore guaranteed by drafts or crédits redeemable in Rentenmarks. If and when the Rentenbank is liquidated, no attention need be paid to them.

2. 1,100 million Rentenmarks which bave been advanced to the Reich without any security but the signature of the latter, 900 millions of which bear 6 °/o interest per annum and 200 millions bear no interest.

so far as concerns this latter sum of 1,100 millions the new Bank (or the Reichsbank, if it is maintained) would assume the obligation

*) The amount of this mortgage alreftdy amounts to 3,700 million gold marks.

796 Commission des Réparations,

vis-a-vis tbe holders of thèse Dotes to redeem them gradually within ten years. To this effect tbe Rentenbank would uudertake to remit to the Bank, as fast as they came in, ail sums received from its debtors whether from the property holders affeeted by the Rentenbank mortgage or from the State, up to the sum of 1,100 millions.

This undertaking of the Rentenbank vis-a-vis the Bank would be covered by ail the mortgages and guarautees which it holds, as well as by the guarantee of the German Government itself.

It should moreover be untlerstood that ail profits accruiug to the Reich in virtue of its participation in the Bauk would be assigned by priority to the amortisation of its debt of 1,100 millions.

As soon as the payments by the Rentenbank or by the Reich itself, as stated above, reach the figure of 1,100 millions, the German Government and the Rentenbank wiil be released from ail liability vis-a-vis the Bank.

Annex No. 2

to the Report of the first Committee of Experts.

Suggested Index of Prosperity.

Basis of Comparison.

1. In addition to the standard contribution referred to in paragraph Ville, there shall be paid for 1929/30 and following years a supplementary sum according to the growth in prosperity of Germany. This increase in prosperity for any year shall be measured by the extent to which the index, as defined below, on the statistics of the completed preceding year, exceeds the average statistics of the base years.

Components of the Index.

2. For the purpose of Computing the index, the following statistics shall be employed:

a) the total of German exports and imports taken together;

b) the total of budget receipts and expenditure taken together, including those of the States of Prussia, Saxony and Bavaria (after deducting from both sides the amount of the Peace Treaty payments included in the year);

c) railroad tralfic as measured by the statistics of the weight carried ;

d) the total money value of the consumption of sugar, tobâcco, béer and alcohol, within Germany (measured by the priées actually paid by the consumer);

e) total population of Germany (computed from the last available census data, vital statistics and émigration records);

f) the comsumption of coal (and lignite reduced to coal équivalent) per capita.

Plan des Experts (Rapport Dawes). 797

The Index Base.

3. In Computing the base, the average statistics for the three years 1927, 1 928 and 1929 shall be taken for b budget receipts and expenditure. for e population and for f coal oousuraption per capita, and for the six years 1912 and 1913, 192C, 1927, 1928 and 1929 for the other catégories (after appropriate adjustraents for tbe différences in population and the altered gold values to make tbe three earlier years comparable with the three later years in this respect). The percentage change for each of thèse six groups, compared witli the base, sball be separateJy coraputed and an arithmetical average of the six percentage results taken as the index.

Payment to which the Index is applied.

4. Tbe index percentage shall be applied to tne amount of the standard payment, viz. 2,500 millions, to give the supplément for the year, except that for the five years 1929-30 to 1933-34 it shall apply to 1,250 millions, or one half of the standard payment oniy.

Minute Adjustments ignored.

5. The supplementary payment is to be reckoned onîy for each completed half per cent of the index, i. e. an index average of 11.35°/o would be reckoned as 1 1 •/••

Computation of Supplément.

G. For the year 1929-30, the computation of the supplément shall be made after the end of that year by comparing the statistics of 1929 itself with the index base.

Deficiencies.

7. In the event of the index in any year producing, as the supplément, a minus quantity, the basis payment should continue to be made, but subséquent supplementary payments shall not accrue due until allowance has been made therefrom for such deficiency or „minusu payment of previous years.

Difficulties in Application.

8. Any disputed points upon the application of the statistics of this index shall be referred to the Finance Section of the League of Nations for arbitration.

Changes in the Value of Gold.

9. The German Government and the Réparation Commission should each hâve the right in any future year, in case of a claim that the gênerai purchasing power of gold as compared with 1928 has altered by not less than 10°/o, to ask for a revision on the sole and single ground of such altered gold value. The altération to be made may apply both to the standard contribution and the supplementary payment. Failing mutual agreement, a décision should be given by an arbitral committee appointed by the League of Nations. After décision, the altered basis should stand

798 Commission des Réparations.

for each succeeding year until a claim be made by either party that there haa again been a change, since the year to which the altération applied, of not les than 10°/o.

The altérations under this paragraph should be made by référence to such generally approved index numbers of priées (Germau or non-German), singly or in combination as the arbitration may décide.

Annex No. 4

to the Report of the first Committee of Experts.

Concession of the Working of the German fiailways to a Company.

Concession of the Working of the Railways.

The working of the German railways shall be legally transferred to a company by a fixed date. The law will ratify the coutract to be entered into between the German Government and the company to which the concession is made. The contract will provide that no change can be made in the conditions of the concession without the consent of the company aod the trustée for the bondholders referred to below.

The law will further provide that the company shall hâve a inonopoly of ail railway extension in Germany.

The charter of the company will be annexed to and approved by this law. Before being submitted to the German Parliament the law will hâve to be approved by the Réparation Commission.

The conditions under which the working of the German railway system will be transferred to the Company by this law, shall be as set forth below.

The Company will be of German nationality.

The Company shall be responsible for the working, upkeep and normal development of the railways, including rolling stock and equipment, and will be entitled, subject to the provisions hereinafter contained as to the powers of the German Government and the Railway Commissioner, to conduct its business in such manner as the company may think proper.

The German Government shall hâve such control over the tariffs and service of the railways as may be necessary to prevent discrimination and to protect the public, but such control shall never be exercised so as to impair the ability of the railroad Company to earn a fair and reasonable return on its capital value, including adéquate provision for its bonds and preferred shares, a return on its ordinary shares and adéquate reserves for ail purposes including amortisation of capital. The plan to accomplish the foregoing shall be worked out by the Organisation Committee hereinafter referred to.

The Company shall as from the commencement of the concession be entitled to charge the tariffs then in force. Thereafter the Company shail be entitled to vary the tariffs or any of them from time to time, subject to the provisions of Articles 365 and 378 of the Treaty of Versailles.

Plan des Experts (Rapport Dawes). 799

It shall be the duty of the OrgaDisation Committee to settle tbe mauuer iD which, subject always to tbe preceding provision, tbe control of tbe Germuu Governuient over tbe service and tbe tariffs sball be exercised.

Tbe term of tbe concession sball be at least of sufficient length to allow of tbe amortisation of tbe bonds according to tbe provisions hereinafter contained. On tbe expiration of tbe concession, tbe company sball return to tbe German Government free from ail cbarge, tbe wbole of tbe railway undertaking, including ail rolling stock and equipment, in thorougbly good and complète working order.

As tbe consent of tbe German States is necessary under tbe German Law of 1920 for aoy aliénation of or cbarge upon tbe German railways, tbe German Government shall make in tbis respect ail necessary arrangements with tbe States concemed. Thèse arrangements sball be ratified by tbe law grantipg tbe concession.

Tbis law sball confer upon tbe Company the right to mortgage any property belonging to the railways.

It sball also contain an ,undertaking that neither tbe Reich nor the States nor any public authority shall impose on the Railway Company any new direct tax. whether upon receipts either gross or net, or upon movable or immovable property or in respect of the employées of the company or otherwise bowsoever.

Tbe Railway Company.

Article I.

Capital of tbe Company.

Tbe total capital which will be created, added to the first mortgage bonds for eleven (11) milliard marks gold referred to below, will correspond to the capital cost of the German railway System (26 milliard marks gold).

Préférence shares will be created to the amount of 2 milliard gold marks, bearing a fixed rate of dividend and entitled to participation in the profits of the railways, after payment of the annual payments mentioned below. This dividend and tbis participation as also the terms on which the German Government raay pay off or re-purchase thèse shares, will be fixed by agreement between the German Governmentv and the Organisation Committee described below.

Thèse préférence sbares will be sold by the Company for the profit of tbe German Government and of the Company itself, one-fourth (l/0 of the su m thus obtained will be the property of the German Government and three-fourtbs (*U) the property of the Company. The sales of shares will be made under such conditions that the German Government will receive the whoîe su m due to it within two years. If the German Government so requires, the proceeds of the first sale of shares may be reserved for its use.

The balance of the capital cost of the German railway System (viz. 13 milliard gold marks) will be represented by ordinary shares, to be owned by the German Government and to be kept or sold by it as it prefers.

800 Commission des Réparations.

Article II.

Administration and Management.

The Company will he administered by a Board of Directors of at hast eighteeu (18) members, who shall ail be business men of expérience or railway experts. Half (?/•) of thèse will be appointed by the German Government and half by the Trustée referred to below.

As soon as préférence shares are issued to the public, the bolders of thèse shares shall be entitled to elect four members of the Board in place of four members appointed by the German Government.

The Organisation Committee will also fix the duration of the tenu of office of the Directors of each class.

Of the nine (9) members of the Board of Directors appointed by the Trustée, five (5) may be German nationals.

The Chairman of the Board will be elected for one year by a threefourtha (:5/4) majority of the members of the Board and will be eligible for re-election as long as he possesses the necessary qualifications.

As soon as the préférence shareholders shall elect directors, the Chairman shall be chosen from the directors so elected.

He will in addition to his vote as a member of the Board. hâve a second or casting vote.

The General Manager of the Company shall be of German nationality.

He will not be eligible for a seat on the Board. He will be appointed by a three-fourths (3/4) majority vote of the Board.

He may be removed by the same majority. If however his removal is requested by the Commissioner (provided for in Article III below) on account of violation of the Charter of the Company or of failure to comply with the instructions of the Board of Directors, he may be removed by a simple majority vote of the Board.

Whatever décisions may be taken with regard to the opération of the railways, it must be understood that any breaking up of the working of the System into local divisions must not in any event affect the financial and tariff unity of the undertaking.

Article III.

Commissioner.

The Railway Commissioner shall be a person accepted in the railway world as being in the front rank.

He shall be appointed by a majority vote of the foreign members of thf» Board of Directors.

He shall not be a member of the Board.

He will hâve an adéquate staff of experts in railway matters and in accountancy.

The Commissioner will hâve a gênerai right of inspection over the whole railway System and ail the railway installations and subdivisions, either in person or by deputy.

Plan des Experts (Rapport Dawes). 801

He shall also be entitled to receive ail reports, statistical and financial returns, proposais for extraroutine expenditure whether on ^capital" or ^revenue" account, for changes in tariffs or for the concession of exceptional rates, and tbe like, which are of such a nature as would normal ly require tbe sanction of tbe General Manager.

Tbe Railway Commissioner wiil furtber be entitled to call for any otber reports, returns, or statistics wbicb be may consider necessary in order to enable bim to form an independent opinion. Ail this information sball be furnisbed promptly, fully, and accurately at bis request. If any measure in connection witb construction, opération, or tariffs tends substantially to menace tbe rigbts or interests of the bondbolders or of the Réparation Commission, as defined below, and in particular to endanger tbe paymeut at tbe due dates, referred to in Article V below, be sball discuss the question with the General Manager. If he cannot persuade the latter to change his line of conduct, be must lay the question before the Menaging Board, in order that it may take any measures it may deem necessary.

If the service of tbe bonds hereinafter mentioned is in jeopardy, tbe Commissioner sball hâve regard to the provisions for the security of the bondbolders hereinafter contained.

Tbe expenses of tbe Railway Commissioner and his staff shall be an operating charge upon tbe receipts of the railways.

Article IV. Bonds.

Tbe Company shall forthwith, after its création, issue without payment and for the purpose of réparation, to a Trustée appointed by the Réparation Commission, first mortgage bonds to a nominal amount of 11 milliard gold marks carrying interest at 3°/0 per annum for the first financial year of the Company, at 4°/0 plus a bonus of 25 millions for tbe second, 5°/0 for tbe third and subséquent years,- and to be amortised r>y a sinking fund as hereinafter provided.

Payment of thèse bonds sball be gùaranteed by the German Government and they sball be signed both on bebalf of tbe Company and by the Finance Minister acting on behalf of the German Government.

Thèse bonds shall be secured by a first registered mortgage or charge on tbe corpus and revenues of ail immovable property used by or belonging to the Company présent or future, and by a first floating charge on ail its fixed and movable plant, rolling stock and ail installations. The Company shall be authorised by the concession to create this mortgage and charge, the duration of which shall not be limited to the period of the concession.

This mortgage and this first floatiug charge shall be expressed to be in favour of the Trustée to be appointed by the Réparation Commission, provided always that the Company and the German Government shall be entitled at any time, with the consent of the Trustée, to sell or dispose of any particular property used by the Railway Company which may be

802 Commission des Réparations,

considered to be no longer needed by the latter, upon such terms as to

the application of the proceeds of the sale as may be agreed upon by

the Trustée.

The service of the bonds shall be assured by the following payments

which shall be made to the Trustée frorn the gross receipts of the Company

and before the ascertainment of any net profits; that is to say: Million

gold marks.

a) for the first financial year of the Company .... 350

b) for the second financial year 465

c) for the third financial year 550

d) for the fourth and subséquent financial years . . . 660

If in any year the German railways fail to realise receipts sufficient to allow of the payments above-raentioned (it being understood that the Company may draw upon whatever réserves may be available for this purpose until such reserves are exhausted), the Railway Commissioner shall hâve the right to take such action as the Trustée for the bondholders may consider it necessary to protect the rights of the bondholders, including the right to operate, to lease, or to sell ail or any of the railways and property subject to the mortgage or charge of the bonds.

From and after the end of the fourth year from the date of the tormation of the Company, the bonds shall be amortised, under the conditions to be determined by the Trustée with the approval of the Réparation Commission, by the application in each year of such part of the annual. payments above mentioned as shall not be required for the interest on the bonds.

The German Government and the Company shall also be entitled at any time to pay to the Trustée sums additional to the above payments with the authorisation of the Réparation Commission which shall ascertain from the Transfer Committee that the transfer of thèse additional funds does not disturb the transfer of the annual payments. Any sums so paid shall be applied first to the discharge of any interest in arrear and next upon six months public notice in redeeming at par ail or any part of the bonds for the time being outstanding.

The Réparation Commission shall be entitled, with a view to the mobilisation of the bonds, to divide the same in any manner which it may think expédient into différent classes with différent rights — as to priority of charge, rate of interest, repayment of capital and otherwise — against the annual payments to be made by the Company, and to issue to the public upon such terms and gênerai ly in such manner as the Commission may think proper, bonds, debentures, debenture stock, certificates of indebtedness or other securities of any nature secured upon the whole or any part of the bonds.

The Company shall not be able to issue other bonds than those reierred to above without the authorisation of a three-fourths majority of the members of the Board, of which majority two must be foreigners.

Plan 'des Experts (Rapport Dawes). 803

AU payments of interest and capital in respect of tbe bonds shall be free from ail German taxation except in so far as tbe persons entitled thereto raay be liable under German law to the payment of German direct taxation.

Subject as berein provided tbe form of tbe said bonds and ail provisions as to the enforcement and repayment tbereof including drawings and giving time for payment sball be settled by tbe Trustée with tbe approval of tbe Réparation Commission.

Article V.

Enforcement of Government Guarantees.

If the Company sball at any time make default in meeting tbe service of the bonds, the Trustée raay in lieu of or in addition to the measures mentioned in the last preceding Article présent the accrued coupons or any bonds due for repayment to the Commissioner of Controlled Revenues who shall pay them at tbeir face value out of the portion of the receipts of the assigned revenues falling to the share of the German Government. The coupons and bonds so paid sball be included at tbeir face value in the repayments made by tbe Commissioner of Controlled Revenues to the German Government. The amounts so paid may only be repaid by the Company to the Government after the necessary provision has been made for the current and the next coupons on the bonds and for tbe fixed dividend for the current year on the préférence shares.

Article VI.

Transportation Tax.

The Company shall on behalf of the Government pay to the Réparation Commission the proceeds of the transportation tax as at présent levied, i. e., a tax of 7 °/o on the gross receipts from ail freight traffic other than coal, and a tax of 10% to 16°/o according to class, on the gross receipts from ail passenger traffic. This payment shall be made during the first and each of the following years of the concession and until the conclusion of any extension, even if in the course of the concession the whole of tbe bonds hâve been paid off.

The rate of the transportation tax shall not be reduced during the whole of the concession. The proceeds of the tax may be employed by the trustée to secure the issue of a spécial séries of bonds for 3 milliard gold marks, or there. abouts.

Article VIL

Financial Arrangements.

The bank account shall be kept at the new Bank. Payments by the Company herein before prescribed sball be paid to tbe account of the Railway Commissioner. The latter shall transfer the*"» sums to the crédit of the agent for Réparation payments.

Nauv. Recueil Gén. 3' S. XIII. 52

804 Commission des Réparations.

Article VIII.

Anticipatury Rédemption of Bonds.

If ail the first niortgage bonds should be redeeuied before the expiration of the terni of the concession by spécial subsidy by the German Government to the Company, the Government shall be entitled to require that tbe functions of the Railway Couiinissioner hereinbefore mentioned shal! come to an end and that the foreign directors shall be replaced by German directors. In default of other arrangements, the transportation tax shall continue to be paid to the Réparation Commission.

The German Government shall in that case also hâve the right to purchase or repurchase the préférence shares at par, plus dividend and arrears of dividend if accrued.

Article IX.

Organisation Committee.

A temporarv Committee with the title of the ..Organisation Committee of the German Railway Company" shall be constituted in order to work out, subject to the foregoing provisions: the détails necessary for the création of the German railway company and the exécution of tins plan. The Committee shall consist of two delegates appointed by the German Minister of Railways, the railway specialists Sir William Acworth and M. Leverve. who are familiar with the discussions which hâve led to the adoption of this scheme, or a nominee or nominees to be appointed by them jointly together with a fifth member of neutral nationality to be chosen by the four thus appointed or, in default of such choice, to be appointed by the Réparation Commission.

This Organisation Committee will come to an end as soon as mar be after the Railway Company has been constituted, the Railway Commissioner appointed and this plan has been put into opération. The expenses of the Committee and of their staff shall be an operating charge upon the receipts of the German railways.

Article X.

Arbitration.

The law to be enacted by the German Parliament shall provide that so long as the functions of the Railway Commissioner hereinbefore mentioned shall not hâve come to au end, if any dispute or différence should arise between the Réparation Commission or any Government represented thereon, on the one side, and the Company and the German Government, or either of them, on the other side, or between the Company and the German Government, as to the interprétation of any provision of the said law, or of the charter of the Company, or of this plan, or as to anything to be done under any of them respectively, whether in respect, of the capital and obligations of the Company or of its external, or internai management, or otherwise howsoever, the same shall be referred to the

Plan des Experts (Rapport Dawes) 805

décision of an arbitrator who, if the German Government so desires, shali be of neutral nationality to be nominated by tbe Président for the time being of tbe Permanent Court of International Justice, and tbe décision of the arbitrator so appointed shall be final.

Annex No. 5

to tbe Report of the first Committee of Experts.

Plan for industrial debentures.

The Amount and Form.

I. The German Government shall provide bonds or debentures of industrial concerns to a total nominal value of five (5) milliards of gold marks, bearing five per cent (5 °/o) interest and one per cent (1 °/o) for sinking fund per annum. Thèse bonds shall be the individual obligations of the several concerns and shall be secured as to principal, interest, and sinking fund payments by a first mortgage on the plant and property of the respective concerns making them.

The term „industrial concerns" shall inciude not only manufacturing concerns, but navigation, mining and any other similar concerns which tbe Organisation Committee may indicate.

Delivery to Trustée.

II. Tbe mortgage bonds or debentures above provided for, with suitable coupons covering the interest payments, shall be delivered by the German Government to the Trustée to be appointed by the Réparation Commission, who will hold them. collect the coupons thereon, paying the proceeds into the account of the Agent for réparation payments, or dispose of them in whole or in part from time to time under the orders of tbe Réparation Commission. The debtor may make proposais to the Trustée for their immédiate or graduai rédemption, and the Committee recommends that the Trustée be empowered to give préférence to such proposais of rédemption and especially those of which the rédemption would be effected by the use of foreign currencies, before offering such bonds in the open market or otherwise. In the event that no proposais of a satisfactory plan of rédemption are made to the Trustée by any individual maker of the bonds witbin six months after such bonds shall bave been delivered to him by the German Government, then the Trustée in his discrétion, but with due regard to the protection of the crédit of the debtor shall be free to dispose of the same in such manner and on such terms as the Réparation Commission may authorise.

Guarantee by German Government.

III. Tbe German Government shall guarantee tbe principal, interest and sinking fund payments on such bonds; in conséquence, in case of default tbe matured coupons can be presented to the Commissioner of

806 Commission des Réparations,

Controlled Revenues, who shall purchase them at their nominal value, by mtans of the fuuds under his control which are destined to be paid over to tli" German Govemiueut. The Couiuiissioner will include the coupons fur tiuir nominal value in the „ reversements" to the German Government, wliich bave reeourse against the defaulting debtor.

The German Government might, by means of subsidies, encourage the re-purchase of the bonds by the mortgagors and thus free itself from

Tax-Exemption Provision.

IV. The said bonds and mortgages until redeemed shall be exempt from taxatiou in Germany, unless they shall be held by German nationals, in which case they shall be taxed like other similar bonds and mortgages so held by German nationals and without discrimination.

Temporary Organisation Committee.

V. A temporary Organisation Committee shall be formed for the purpose of taking ail necessary measures within the scope of the foregoing plan and for fixing the détails of organisation. This Committee shall inciude a représentative of the German Government, a représentative of industry, two members appointed by the Réparation Commission and a fifth uiember of neutral nationality to be chosen by the four thus appointed, or in default of such choice to be appointed by the Réparation Commission.

Powers of the Organisation Committee.

VI. A. The Organisation Committee shall bave ail powers to work out the détails of the plan in such form as may be fair alike to the German Government, to the industrial concerns and to the Réparation Commission, bearing in mind that it is the purpose and intent of the plan te ensure for réparations account the payment of the 5 milliards of gold marks with interest thereon at 5°/o per annum and a sinking fund of not less than 1 ° ■ o thereon, which in and of itself will détermine the maturity of the bonds.

B. The Organisation Committee shall hâve the power to détermine the form and character of the mortgages, and, in case the concerns are too small to make individual mortgage issues practical and désirable, the Committee shail bave power to devise some method of handling them, or may waive them altogether, provided the total sum of 5 milliards is maintained.

Annex No. 6

to the Report of the first Committee of Experts.

The tr ans fer of Réparation payments from German currency into foreign currency and the use of balances not transferred.

Transfer Committee.

I. The plan provides that ail payments for the account of réparations* however derived, are to be first made in the form of deposits in the baok,

Plan des Experts (Rapport Dawes) 807

provided for in the plaD, to the crédit of „The Agent for Réparation Payments". The withdrawals from tbis deposit shall be made by the Agent for Réparation Payments only, under the direction of a Coinmittee composed of five meinbers known as „The Transfer Committee".

Composition and Sélection of Members.

II. The Transfer Committee shal! be composed of six members; the Agent for Réparation Payments shall be a meraber and the Chairman; the other five members shall be persons qualified to deal with foreign exchange questions. They shall consist of au American member, a French member, an English member, an Italian member and a Belgian member. Each of them shall be appointed by the Réparation Commission, after the member of the General Board of the Bank of the same nationality has been consulted.

Co-operation of the Bank.

III. The Committee will be in contact witb the Président and the Commissioner of the Bank.

Powers of the Committee.

IV. The Committee shall hâve power, and it shall be its duty:

a) to apply such bank balances for payments for deliveries in kind and payments under the Réparation Recovery Act, in accordance with the programme established periodically by the Réparation Commission, after consultation with the Transfer Committee as to the character and amount of such deliveries;

b) to couvert thèse bank balances into foreign currencies from time to time and, after conversion, to remit them in accordance with the instructions of the Réparation Commission.

Both the foregoing powers (a) and (b) to be exercised to the extent to which, in the judgment of the Committee, the foreign exchange market will permit, without threatening the stability of the German currency.

c) to invest from time to time in bonds or other loans in Germany such amounts as the Committee may deem wise. The Committee shall proceed to make thèse investments as soon as the amount of the crédits exceeds the sum which the Bank will keep on deposit. On the other hand, the Committee may sell the bonds which it has acquired, or liquidate the loans which it has granted, whenever in its opinion the sums may be converted into foreign exchange, or the Bank can accept additional deposits.

Restriction on Purchase by the Creditors.

V. The goods supplied by Germany to the creditor countries under paragraph IV a above and paid for by the Bank as above provided, shall be for the sole use of the countries receiving them for their internai requirements, including the requirements of their colonies and dependencies. The goods so delivered shall not be exported from the country receiving them, except by agreement between the Committee acting unanimously and the German Government.

808 Commission des Béparations.

VI. In addition to' its powers under paragraph IV, the Committee may on the instructions of the Réparation Commission and at the request of the Creditor States, by debiting their aecounts, transfer marks to private individuals for the purpose of making purchases in Germany, such réinvestirent not to be of a temporary character, and such property beiug of classes contained in a schedule agreed to between the Committee and the German Government, and modiôed froin time to time by similar agreement. In arriving at such agreement, the German Government shall be required to hâve du regard to the necessity for making maximum payments to its creditors, but ît shall also be entitled to hâve regard to maiutaining its control of its own internai economy.

Co-operation by the German Government and the Bank.

VII. The German Government and the Bank shall undertake to faci litate in every reasonable way within their power the work of the Committee in making transfers of funds, includiog such steps as will aid in control of foreign exchange. When the Committee is of the opinion that the Bank's discount rate is not in relation to the necessity of making important transfers, it shall inform the Président of the Bank.

Attempts to Defeat Transfer.

VIII. In the event of concerted financial manœuvres either by the Government or by any group, for the purpose of preventing such transfers, the Committee may take such action as may be necessary to defeat such manœuvres; and in such circumstances it may suspend the opération of paragraph X, may accumulate the funds or employ them in the purchase of any kind of property in Germany

Tax-Exemption Provision.

IX. The German Government shall not tax the deposits in the Bank or goods purchased for the creditor countries pending removal, nor any securities or loans representing investment of funds pending transfer, nor any property purchased under the provisions of the paragraph next preceding. This exemption does not apply to property purchased under paragraph VI, but on the other hand, there should be no tax discrimination against such property.

Provisions for Limitation of Accumulation.

X. a) When the accumulation of funds not transférable under the provisions of subdivisions b and c of paragraph IV shall hâve reached the sum of five (5) milliard gold marks (whether represented by bank deposits or loans), the payment for Treaty charges provided for shall be reduced to such an amount as will cover the transfers and payments provided for under sub-divisions b and c of paragraph IV without additional accumulation. Such partial suspense of Germany's obligations shall be operative only during the period that the conditions of transfer necessitate, and the

Exécution du Plan Dawes.

standards of payinent laid down in tbe plan shall be resumed at any time wben they can operate without tbe limits of accumulation berein laid down being exceeded.

b) Tbe Committee shall hâve power to suspend accumulation before reaching five (.3) milliard gold marks, if two-thirds (2/s) of its members are of tbe opinion tliat such accumulation is a menace to tbe fiscal or économie situation in Germany or to tbe interests of the creditor countries.

c) The Committee shall, by a two-thirds (2/s) majority, bave power to waive the limit accumulations under the conditions provided for in paragraph VIII.