The payment by Germany of 5 per cent interest and 1 per cent sinking fund on this total sum is not, in my judgment, theoretically impossible. But it could only be done by stimulating her export industries in a manner injurious and irritating to Great Britain, and by imposing on her Treasury a financial problem of such difficulty that it would tend to unsound finance and to weak, unstable Governments. Even though this payment is theoretically possible, I do not think that it is practically obtainable over a period of thirty years. ────────────────┬───────┬─────────────┬────── │Damage.│Belgian Debt.│Total. ────────────────┼───────┼─────────────┼────── British Empire │ 9 │ 2 │ 11 France │ 16 │ 2 │ 18 Belgium │ 3 │ .. │ 3 Italy │ 1 │ .. │ 1 United States │ .. │ 2 │ 2 Others │ 1 │ .. │ 1 ├───────┼─────────────┼────── │ 30 │ 6 │ 36 ────────────────┴───────┴─────────────┴────── I recommend, therefore, that, as a separate arrangement from the Revision of the Treaty as above, the British Empire should waive the whole of their claims, with the exception of 1 milliard gold marks reserved for a special purpose explained below, and should undertake to square the claims of Italy and the minor claimants by cancelation of debt owing from them; thus leaving Germany to pay 18 milliards to France and 3 milliards to Belgium (on the assumption that the United States also would forego the trifle due to her). This sum should be discharged by an annual payment of 6 per cent of the sum due (being 5 per cent interest and 1 per cent sinking fund) over a period of thirty years. With the assistance of minor measures to ease the opening period, it is reasonable to suppose that this amount could be paid without serious injury to any one. In so far as it proves convenient to discharge this liability in goods, and not in cash, so much the better. But I see no advantage in laying stress on this. It would be wiser to leave Germany to find the money as best she can, any payment in goods being by mutual agreement, as in the Wiesbaden plan. It may lead, however, to great anomalies to fix the annual payments in terms of _gold_ over so long a period as thirty years. If gold prices fall, the burden may become intolerable. If gold prices rise, the claimants may be cheated of their expectations. The annual payment should be adjusted, therefore, by some impartial authority, with reference to an index number of the commodity–value of gold.