v REPARATION 153

kind or by the issue of bonds as above. 1 and "therate of interest shall be 5 per cent unless the Com-mission shall determine at some future time thatcircumstances justify a variation of this rate." Thatis to say, the capital sum of indebtedness is rollingup all the time at compound interest. The effect ofthis provision towards increasing the burden is, onthe assumption that Germany cannot pay very largesums at first, enormous. At 5 per cent compoundinterest a capital sum doubles itself in fifteen years.On the assumption that Germany cannot pay morethan £150,000,000 annually until 1936 (i.e. 5 percent interest on £3,000,000,000) the £5,000,000,000on which interest is deferred will have risen to£10,000,000,000, carrying an annual interest chargeof £500,000,000. That is to say, even if Germany pays £150,000,000 annually up to 1936, she willnevertheless owe us at that date more than half asmuch again as she does now (£13,000,000,000 ascompared with £8,000,000,000). From 1936 on-wards she will have to pay to us £650,000,000annually in order to keep pace with the interestalone. At the end of any year in which she paysless than this sum she will owe more than she did

1 Para. 16 of Annex II. of the Reparation Chapter. There is also anobscure provision by which interest may be charged "on sums arising outof material damage as from November 11, 1918. up to May 1, 1921."This seems to differentiate damage to property from damage to the personin favour of the former. It does not affect pensions and allowances, thecost of which is capitalised as at the date of the coming into force of theTreaty.