ard 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 whic