152 THE ECONOMIC CONSEQUENCES OF THE PEACE CH.

3. As soon as the Reparation Commission is satis-fied that Germany can do better than this, 5 percent bearer bonds are to be issued for a further£2,000,000,000, the rate of amortisation being deter-mined by the Commission hereafter. This would bringthe annual payment to £280,000,000 without allow-ing anything for the discharge of the capital of thelast £2,000,000,000.

4. Germany 's liability, however, is not limitedto £5,000,000,000, and the Reparation Commissionis to demand further instalments of bearer bondsuntil the total enemy liability under Annex Lhas been provided for. On the basis of myestimate of £8,000,000,000 for the total liability,which is more likely to be criticised as beingtoo low than as being too high, the amount ofthis balance will be £3,000,000,000. Assuminginterest at 5 per cent, this will raise the annualpayment to £430,000,000 without allowance foramortisation.

5. But even this is not all. There is a furtherprovision of devastating significance. Bonds repre-senting payments in excess of £3,000,000,000 arenot to be issued until the Commission is satisfiedthat Germany can meet the interest on them. Butthis does not mean that interest is remitted in themeantime. As from May 1, 1921, interest is to bedebited to Germany on such part of her outstandingdebt as has not been covered by payment in cash or