Reparations

Carl P. Parrini and

James I. Matray

If popular wisdom holds that prostitution is the oldest profession, and spying only a slightly younger occupation, then surely reparations—a country demanding payment or indemnity from another in land, goods, or money for damage inflicted as a result of war—also dates from a very early point in human history. Modern practice on indemnities or reparations has its origins in the late nineteenth century, when statesmen at Hague conferences in the Netherlands began to rewrite the rules for warfare, to limit armaments, to encourage peaceful settlement of international disputes, and, by such indirect means, to fashion a definition of what constituted "a just cause" for war. Indemnities or reparations as a concept developed from the idea that there were clear "laws of war" arising from treaties, conventions, and other international agreements. When in the course of warfare a nation, including all institutions legally subordinate to it, violated these legal norms and brought about "wrongful injury to life, body, health, liberty, property, and rights," that nation must make pecuniary indemnification to the injured persons. It is important to emphasize that in its origins, reparations was conceived of as indemnification for violations of existing international law, rather than for actions contrary to the current "moral" precepts of society.

Germany's Second Reich under Otto von Bismarck established a modern benchmark for indemnities when it collected nearly $1 billion from France in 1871, at the conclusion of the Franco-Prussian War. That same year, the Treaty of Washington provided for arbitration to settle U.S. claims against Britain for the destruction that Confederate privateers built in British shipyards had inflicted on Union merchant ships during the American Civil War. The United States at first requested not only indemnification for direct damages but also $8 million in "war prolongation claims" for all Union costs after the Battle of Gettysburg in 1863. The settlement provided for British payment of $15.5 million in Alabama claims, while the United States would pay $1.9 million for illegal wartime acts against Britain, such as property seizures and imprisonments. In 1885, France wanted an indemnity from the Qing dynasty to end its war against China, but later dropped the demand. Japan was not so lenient after its victory in the Sino-Japanese War of 1894–1895, extracting 200 million taels of silver from China in the peace treaty.

During 1900, the Boxer Uprising resulted in Chinese rebels killing the German minister and trapping the diplomatic legations of Japan and other Western nations, including the United States; foreign business people; and thousands of their Chinese servants and Christian converts in prolonged sieges at Tianjin and Beijing. After a multinational military force liberated the captives, China signed the Boxer Protocol, which required payment of an indemnity of $333 million to eleven nations. The American share was $25 million, but in 1908 Washington remitted all but $7 million to cover private damages. The U.S. government used the remainder to fund a program that sent Chinese students to schools in the United States. Meanwhile, Japan had won the Russo-Japanese War of 1904–1905 and wanted Russia to pay an indemnity. However, bowing to pressure from President Theodore Roosevelt, Japan dropped its monetary demand and accepted the southern half of Sakhalin Island. In 1907, when another conference convened at The Hague, the statesmen had not contemplated a long war that would result in the partial crippling of the economic life of nations. They had envisaged wars of short duration, in which the civilian economies of the belligerents would hardly be touched. But World War I would cause enormous destruction, shaking the foundations on which the "legal" conception of reparations was based.

THE VERSAILLES SETTLEMENT

The Great War was a total conflict of nation against nation, resulting in differential destruction of national social systems. It therefore changed the reparations question into an issue of apportioning the relative gains or losses from participation in the war. Because of the unexpectedly long duration of World War I, none of the belligerents could impose sufficiently large taxes to pay for their economic needs. Internal tax income proved too small to pay for necessary imports. Consequently, the Allies largely had financed the war in the United States through selling international investments and through first-year borrowing. Until April 1917, the British, and to a lesser extent the French, Russian, Italian, and Belgian governments, had borrowed by floating their bond issues through American bankers. The British loans were secured by the international investments of its citizens that the government had sequestered. As the war dragged on, it became clear to British leaders that the longer the conflict continued, the greater the probability that Britain would emerge from the war minus its international investment empire, the protection of which was one of the reasons it was fighting the war. In the view of Prime Minister David Lloyd George, the burden of war costs had somehow to be shifted to the Central Powers, so that Britain would be able to keep its international investments.

U.S. entry into the war in April 1917 presented the possibility to Allied leaders that the United States somehow could be made to bear some of the burden of the war costs. They accordingly began to shape reparations plans that would redistribute Allied war costs not only to Germany but also to American taxpayers and investors. With this ultimate intention in mind, the Allied efforts to impose war costs on Germany began on 5 April 1919, when Lloyd George asserted that Germany should stipulate in the peace treaty "her obligation for all the costs of the war." The United States opposed, on legal grounds, the inclusion of war costs in the reparations total, although, paradoxically and illogically, President Woodrow Wilson did agree that pensions for Allied soldiers, despite not being part of existing international legal definitions of reparations, and thus in no way "civilian damages," ought to be part of the total. In order to limit the amount that Germany would be required to pay, the United States made two broad proposals concerning the parameters within which reparations totals ought to be determined. First, no matter what the amount, Germany would be required to make payments for no more than thirty-five years. Second, a reparations commission would be set up to fix the amount that Germany would be able to pay.

American leaders assumed that these parameters would limit reparations demands to the surplus the German economy could produce, over and above what was necessary for a restoration of a level approximating the nation's living standards in 1914. On the other hand, the provision that thirty-five years be the longest period of payment allowable would roughly fix the total of reparations to be paid. These limits were intended to encourage Allied interest in restoring German economic life. At the Paris Peace Conference early in 1919, the chief American experts, Norman H. Davis and Thomas W. Lamont, suggested a maximum figure of roughly $28.5 billion, half in gold and the remainder in German marks. But Lloyd George and French Premier Georges Clemenceau pressed for a much higher amount. To prevent this disagreement from dividing the Allies, negotiators agreed to a compromise providing for creation of a reparations commission with responsibility to determine Germany's exact liability by May 1921. Veterans' pensions would be included, as Wilson had agreed, but in fact this would have an impact only on distribution, not on the final reparations amount. This decision to postpone determination of an exact amount and the terms of repayment resulted in the United States failing to gain either of its main objectives.

Superficially, the establishment of a reparations commission would seem to have been a victory for the American position. However, France insisted that the commission have no independent power to modify the length and amount of payment in accord with ability to pay. The French position, which prevailed, allowed the postwar commission simply to total up the claims and required at least fifty years of payment from Germany. Meeting its deadline, the commission in 1921 fixed Germany's total liability at about $33 billion. Of this total, approximately $11 billion was assessed to pay for all damaged Allied property. The rest represented war costs imposed by the victors as punishment for Germany's "war guilt" under article 231 of the Versailles Treaty. Under this provision, Germany accepted responsibility for "all the loss and damage to which the Allied and Associated governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies." By then, the U.S. Senate had rejected the League of Nations Covenant and the Treaty of Versailles to which it was attached. The United States therefore had withdrawn from the reparations commission and only had "observers" at its deliberations.

Close examination of the $33 billion in reparations reveals, however, that the amount was less than it appeared to be. The commission specified that about $11 billion of A and B bonds would be payable at 5 percent interest over thirty-seven years. The remainder, in C bonds, would bear no interest and would come due only when the commission determined that Germany's new Weimar Republic was able to pay. The Allies in fact planned not to collect on these C bonds if Washington canceled the war debts to the United States. The U.S. government resented this attempted coercion and refused to cancel all Allied war debts. Administration officials under Wilson and his successor, Warren G. Harding, also were appalled by both the totals fixed and the procedures designed to collect them. Starting with President Wilson, American leaders tried to use the war debts owed to the United States to coerce the European leaders into easing the German reparations burden, not least because the Allies presumably now would collect on the C bonds. Washington's scheme was essentially the same as the one Wilson proposed at Versailles. German reparations had to be based upon Germany's capacity to pay and the period of payment had to be shortened, so that eventually German economic health could be restored.

During negotiations at Versailles, Wilson, as an inducement to the Allies to change their position, offered to cancel that part of the war debts to the United States that the Allies actually had incurred in fighting the war, in exchange for a reduction in the amount of German payments and in the length of time Germany was expected to pay. From 1921 to 1924, Presidents Warren G. Harding and Calvin Coolidge honored Wilson's offer. But the Allies refused. Instead, they demanded that Washington cancel all the war debts, including that portion of what they had borrowed from the United States after the fighting ceased ($3.3 billion of the total of $10.3 billion) that had been used for reconstruction and for civilian commercial trading. Wilson's Treasury secretaries, Carter Glass and David Houston, refused general cancellation on the ground that the Allies already had distributed among themselves spoils of war, including special concession trading advantages, greater than the postwar commercial debts they had contracted with the United States. At first, their successor, Republican secretary of the Treasury Andrew W. Mellon, followed the same policy.

With hindsight, it became fashionable among west European and U.S. intellectuals to accuse American leaders of ignorance and even selfishness in connection with their stubborn refusal to acknowledge any link between the reparations and the war debts. The majority seemed to accept the French argument that the war against Germany was a common effort, in which the United States had belatedly done its small part by contributing its money. "Some gave their ships, some munitions, some the lives of their sons, some money," a member of the French Chamber of Deputies told his colleagues, "and today those who gave money come saying to us: 'Give back what we loaned.'" If the United States indeed had been in "alliance" by treaty or moral commitment with the west European allies, this would have been a telling argument. But Wilson genuinely had tried to stay out of World War I—as long as he could do so—without facing some sort of settlement changing the balance of power against the Allies. To avoid a German military victory of this sort, he had joined the war, but he did not do so on behalf of Allied war aims. He opposed the division of spoils outlined in the "secret treaties" and rejected every Allied effort to induce the United States to share in the booty of war. Wilson in this specific sense sought a "peace without victory," which would allow the vanquished to reenter the community of industrial-capitalist states without disabling prohibitions.

From Wilson's standpoint, World War I was a civil war within the social system of industrial capitalism. Its basic causes were political and economic rivalries over issues such as access to raw materials, foreign markets, and investment outlets, with the allies attempting to defend the existing apportionment of world market opportunities and the Central Powers challenging it. But in Wilson's view neither side had gained as much as it had lost, because the war aroused forces that challenged the very legitimacy of industrial capitalism as a system. In general terms, the Arabian, Chinese, and Bolshevik revolutions were outgrowths of the war; specifically, they reflected the fact that the people in the Third World were dissatisfied with the pace at which they were achieving self-determination and industrial development under the management of the advanced industrial nations. To Wilson, the political destabilization inherent in national revolution appeared to exacerbate the original problem of economic rivalries among industrial states by effectively withdrawing more resources and people from the world market. He believed that to protect, stabilize, and allow for the expansion of industrial capitalism as a social system in the future, leaders formulating the peace after World War I had to establish a peace that would avoid another world war and possible future national revolutions.

FROM DAWES TO DEFAULT

After World War I, the United States struggled to persuade European leaders to accept its definition of just amounts and terms for reparations payments. Presidents Harding and Coolidge, like their predecessor Wilson, applied a criterion in evaluating the different reparations payment proposals that reflected their view of its potential impact against war among industrial states and revolution in the Third World. They were certain that the high reparations required of Germany would militate against the rapid recovery of its economic and political life. Because they knew Germany was the industrial "power plant" of Europe, its slow recovery would retard that of eastern Europe. Narrowed world markets would reignite the kind of trade wars that had in great part caused World War I. At the same time, a failure to return Germany to equality among nations rather quickly would tend to inflame nationalist tendencies in that country. Far more frightening was the prospect of Bolshevik ideology gaining popularity among the German people, especially after the Soviet Union had established the Comintern in 1919 to promote a global communist revolution.

From the standpoint of the United States, the closed trade doors and special privileges arranged among the Allies would set in motion trends toward stagnation, if not contraction, of world markets. While it was true that closed doors and special-concession organization of world markets would tend to diminish both the share and the volume of world trade enjoyed by the United States, and so were against the immediate as well as the long-run interests of the United States, such policies were also against the long-run interests of industrial capitalism as a social system. It was true that Britain, France, Italy, and Belgium would achieve a larger share of world trade in a slowly growing global market under a regime of closed doors and special concessions, but the total volume of growth would be much smaller than under an open door regime—where each nation had equal opportunities to use its capital, technicians, and technology. However, it was also true that the total volume of goods and services available to satisfy the demands of competing domestic interests in the industrial states and of economic developers in the Third World would be greater in an open door world.

American leaders refused to cancel the war debts entirely in order to try to obtain an "expansionist" direction for the postwar world economy. This meant that the United States rejected a program for priority reconstruction of the victors, and instead pushed for priorities that would give the most economic growth for the whole system. It utilized war debts to press the victors to accept a "business-based" set of criteria providing for maximum efficiency of resource utilization. At any time that Britain and France were willing to accept such a businesslike "composition," the United States was willing to negotiate and make concessions in which it would give equivalent for equivalent. This was shown in 1922, when the U.S. Congress created the World War Foreign Debt Commission to set terms for the Allies to fund their borrowing, requiring an interest rate of at least 4.25 percent and repayment over twenty-five years with no reduction in principal. Britain, in the Balfour Note, stated that it would collect from its debtors only what was necessary to pay Washington. After prolonged haggling, the United States was forced to moderate its stand; the Coolidge administration canceled up to 80 percent of some nations' war debts. Thirteen countries agreed in 1926 to repay the lower amounts over sixty-two years at an average of 3.3 percent interest.

After 1926, U.S. and European leaders continued to disagree about the justice of these payments and the propriety of linking reparations to war debts. Meanwhile, the Allies expected the Weimar Republic to comply with the terms for payment of reparations, thereby financing reconstruction of their economies. But Germany refused to raise the taxes necessary to pay, allowing spiraling inflation to destroy the value of the mark. After a series of partial postponements, the Germans defaulted in January 1923. France and Belgium responded with joint occupation of the Ruhr Valley in an attempt to force Germany to devote its total surplus to reparations payments. German workers organized passive resistance, and the Weimar Republic suspended all payments. These events provided an early indication of how in Germany political problems surrounding payment of reparations dominated economic ones. German refusal to comply with Allied demands, combined with the U.S. government's veto of projected reconstruction loans by the House of Morgan to France, on the ground that the French government had not yet settled its war debts to the United States, forced France and the other European powers to agree to convene a conference of business experts, with the Chicago banker Charles G. Dawes serving as chairman and with the task of settling the reparations according to U.S. standards.

Beginning in January 1924 and ending in September of that year, the conference worked out a system that U.S. delegates believed was based on Germany's ability to pay. In addition to measures for currency stabilization, the Dawes Plan provided for reductions in payments and, under very special circumstances, actual suspension of payments. Certain German revenues, to include taxes on alcohol and tobacco and railroad and budget revenues, were earmarked specifically for reparations payments. Furthermore, Weimar was not made responsible for obtaining the foreign exchange necessary to make the annual payments. Most significant, American and British bankers made a $200 million loan to enable German production to expand and reparations payments to begin. From 1924 to 1929, additional loans to Germany meant that net capital flow ran toward Germany. Foreign lending was responsible for a major transfer of wealth toward Germany that exceeded the amount of reparations and war debts. The total amount of reparations that the Dawes Plan imposed on Germany was not excessive, consuming between 5 and 6 percent of annual national income. Germany in fact maintained a higher standard of living than its production justified for the rest of the decade.

Subsequent to the Dawes agreements, German reparations payments to the Allies rose gradually. Germany's production also expanded. But what troubled the U.S. agent general for reparations payment, Seymour Parker Gilbert, was that most loans initially went for public works, unemployment relief, and investment in sectors with excess capacity, such as agriculture, textiles, and steel. Thus, the loans made no commensurate increase in Germany's ability to earn foreign exchange. While American officials objected to how Weimar was using the money, U.S. private bankers continued to extend loans to Germany, expecting profitable returns. German politicians hoped that increasing loans would work as a lever on the U.S. government, because, they believed, the more money Germany owed to U.S. banks, the more pressure Washington would place on the Allies to reduce reparations. This system could be sustained until German industry was essentially reconstructed, which came late in 1927. But then Germany's needs changed. Its heavy industry required new markets if it was to continue to expand. Germany's inability to find these markets revealed the major flaw in the Dawes Plan conception, which had envisioned a far more rapid development of world markets than actually occurred. Pointing to the necessity to deal with its inability to continue to balance foreign payments, the Weimar Republic requested a revision of the Dawes Plan. But Germany in fact resented paying even its already reduced reparations levy, viewing this as an act of national humiliation.

In recognition of the fact that the world market had not expanded as rapidly as the "Dawes planners" had expected, a new committee of experts on German reparations was formed to meet in Paris on 11 February 1929 to revise the Dawes Plan. General Electric Company executive Owen D. Young, one of the major architects of the Dawes Plan, was designated chair. Out of this meeting emerged the Young Plan, which scaled down the final amount of German payments again, reducing the amount by roughly 20 percent to $8,032,500,000 and making it payable over 58.5 years at an interest rate of 5.5 percent. An additional agreement placed limits on the length of German payments at 36.5 years, but this was dependent upon the organization of the Bank for International Settlements. In addition to functioning as a "trustee" for reparations payments, the new bank was supposed to provide financial facilities for making development loans, which planners thought would contribute to world market expansion. For the last twenty-two years of reparations payments, the profits of the new bank were used to make reparations payments. No nation was fully satisfied with the Young Plan. Reflecting the unhappiness in the United States, Secretary of the Treasury Ogden Mills complained that it "tied debts and reparations together," and thus ratified "the principles of the Balfour Note."

For various reasons, the Bank for International Settlements never functioned as a worldwide development bank. The new investment markets it was to create did not appear. Markets for capital goods and the growing capital surpluses they represented never came into existence. The amount of capital investments going into default became too great for the system to sustain. As world trade contracted, the means of settling payments globally disintegrated. On 16 June 1931, President Herbert Hoover proposed a one-year moratorium on payment of both reparations and war debts. He was still hopeful that some way could be found to reexpand the world economy in order to prevent the development of nationalist autarky. But after 1931, each industrial nation began to erect trade barriers to its domestic markets by means of tariffs and discriminatory administrative procedures, and combined these with export offensives based on government subsidies and currency depreciation. As a result, reparations payments never resumed after Hoover's moratorium ended. At Lausanne, Switzerland, in 1932, the Allies canceled them altogether, subject to a final token payment that the Germans never made. Except for Finland, European nations also defaulted on their war debts to the United States.

Franklin D. Roosevelt, who became president after defeating Hoover's bid for reelection, rejected an international solution to world economic problems then being considered at the London Economic Conference of June–July 1933. The movement toward nationalist autarky that he thereby accelerated prevented any reconsideration of a settlement on war debts or reparations. It later became fashionable to lay responsibility for the world depression, economic nationalism, the rise of Adolf Hitler, and World War II not only on high tariff rates in the United States, but also on the American refusal to equate war debts with reparations, and hence agree to the cancellation of war debts in exchange for a reduction of German reparations payments. These criticisms are without much merit. The key point that such critics make is that the burden of war debts caused the world economic crisis and the rise of "Hitlerism." Their argument ignores the reality that German financial policies and eventual defaults were mainly the product not of U.S. actions but of the political weakness that was a structural component of the political economy of the time. Weimar's fragmented polity, combined with the emotionally charged symbolic issues of war guilt, reparations, and nationalism, meant that following significantly different policies to prevent insolvency would have been highly unlikely, if not impossible.

Nor were Germany's reparations and loans solely responsible for creating the economic crisis that led to the international instability of the 1930s and the eventual outbreak of World War II. There were deeper causes. From 1924 to 1927, when the underlying condition for the economic crisis took shape, Germany had three possible avenues for stabilizing its foreign trade and payments. First, it could export directly to reparations receivers such as France and Belgium. Second, it could export its capital goods to the Third World for development purposes. And third, it could export to the Soviet Union. As a practical matter, all three of these alternatives were not open by 1927. Direct exports to reparations receivers would tend to interfere with employment in those countries, and so were not welcome. Export of capital goods to the Third World was not really possible—except for Latin America, where German industry could not compete very successfully with the United States, and China, where prolonged civil war by and large blocked economic development—because most of the Third World was under the control of the Allied victors, who discouraged the export of German capital goods to their colonies and semicolonies to preserve them as monopoly markets for their home industries. Extensive exports of German heavy industrial goods to the Soviet Union were blocked by the unofficial but effective U.S. government embargo on long-term American financing for developing Soviet socialized industry.

Since new outlets for German heavy industry did not appear in the world market, Germany began to invest American banking loans in an economically wasteful fashion. Bankers lent to German states and municipalities, which used these funds for projects designed to bring about more social consumption, such as municipal beautification, parks, sports stadia, hotels, public bathhouses, and roads of little or no productive utility. Investments of this sort did not provide goods or marketable services that could be used to defray the costs of the borrowed foreign capital. But the irony was that the United States, with the Dawes loans, spent an amount in excess of what the Germans paid in reparations. Germany transferred a total of 16.8 billion marks to the Allies while receiving 44.7 billion in speculative mark purchases and loans that it never repaid after the Great Depression brought down the international monetary system in 1931. President Hoover was not entirely wrong when he claimed that economic forces originating in Europe had shattered the U.S. economy, although his critics at that time ridiculed him for attempting to avoid blame for the economic collapse. While Hoover shares responsibility for the Great Depression, President Roosevelt failed to make any effort to protect the equity of American bondholders. His embrace of the anticreditor mood of the era meant that Germany was able to default on its war debts, resulting in U.S. investors paying "reverse reparations."

COMPLICATIONS OF COLD WAR COMPENSATION

When American, British, and Soviet leaders began to grapple with the problem of war debts and reparations resulting from World War II, they had the benefit of the World War I experience. Instead of granting simple war loans, the U.S. Congress authorized the president in March 1941 to enable any country whose defense he defined as vital to the United States to receive arms, other equipment, and matériel "by sale, transfer, exchange or lease." Lend-lease aid to Britain, China, and the Soviet Union made possible a clear separation of wartime economic aid, reparations, and reconstruction credits. The Allies created a reparations commission at the Yalta Conference of 4–11 February 1945. Under Soviet pressure, the United States and Britain agreed that a figure of $20 billion would be the starting point for discussions about Germany's new reparations obligation. The Soviet Union would receive half of that amount. But at the Potsdam Conference in July 1945, President Harry S. Truman opposed Soviet efforts to collect reparations from current output until Germany exported enough to pay for imports to feed its labor force and fuel its industry. He was following the advice of Secretary of State James F. Byrnes, who was acting in accordance with his understanding of the negative impact of the reparations dispute on European reconstruction and world economic and social stabilization in the 1920s, but was unaware that only U.S. loans had made possible German reparations payments.

By the time of the Potsdam Conference, Germany's unconditional surrender in May 1945 had left the United States, Britain, France, and the Soviet Union with separate zones of occupation in the defeated nation. Even before Potsdam, Soviet occupation forces had begun to dismantle and transport whole German industrial plants to Soviet territory. The Soviets also designated special factories to produce exclusively for them. Moreover, Moscow kept the services of four million German prisoners of war and demanded forced labor from those living in its occupation zone. In general terms, the Soviet Union acted after World War II much as France had after World War I. It wished to reconstruct its own economy and to retard the reconstruction of Germany, both to stabilize itself and to prevent the stabilization of Germany. A destabilized Germany would remain militarily weak and the Soviet Union would become militarily strong. Moscow saw that large reparations taken quickly would facilitate both these objectives. U.S. leaders already had decided that imposition of large-scale reparations on Germany would retard postwar European economic recovery. During 1946, they concluded that without surplus production, the western zones of Germany would become a vast relief camp dependent on U.S. aid.

Concerns about German postwar economic recovery had not stopped the United States from developing plans and organizations late in World War II for conducting industrial espionage and seizing useful patents in chemicals, machine tools, and other technologically advanced industries in Germany. Operation Petticoat and Operation Paperclip sought to acquire German equipment, scientific research, and technical information of both military and industrial value, not only in hopes of shortening the war against Japan, but also for postwar economic advantage. Britain and France conducted similar operations, no doubt justifying exploitation of German industry, science, and technology as legitimate reparations. Subsequently, in the Harmssen Report of 1947–1951, the city of Bremen's economic minister calculated the total value of the information that the Western Allies secured at $5 billion. Citing this report, Soviet Foreign Minister Vyacheslav Molotov set the final amount of German intellectual reparations, including the Soviet portion, at $10 billion. British, French, and U.S. officials disputed these numbers then and thereafter. Also, defenders of the seizures later would point out that Germany looted French companies, practiced slave labor, expropriated possessions of concentration camp victims, and extracted tribute from the countries it occupied.

Discord between the Allies over reparations contributed to starting the postwar Soviet-American Cold War. Devastated by World War II, the Soviet Union insisted upon major reparations payments from Germany to hasten economic recovery. Consequently, Soviet Premier Joseph Stalin proposed that the Ruhr Valley industries be administered jointly by the Soviet Union and the three Western powers to secure reparations from the Western-controlled portions of Germany. The United States and Britain rejected this proposal, revealing the growing differences on matters of priorities to be observed in European reconstruction. Washington increasingly suspected that the Soviet Union's wish to strip Germany, and to slow European reconstruction, meant it wanted to dominate the balance of power in Europe. This negative view of Soviet intentions seemed to be confirmed by Moscow's refusal to accept the U.S. invitation to participate in the Marshall Plan, which was designed to solve the problem of European reconstruction on a joint Europe-wide basis. After considering the matter, Stalin decided to reject the offer, largely because this would have required the Soviet Union to reveal the secrets of its economic capacity. Furthermore, the Marshall Plan would have meant priority for west European reconstruction over that of the Soviet Union, as well as that the east European countries would be linked economically to western Europe, functioning largely as raw material suppliers.

Once the Soviet Union rejected participation in the Marshall Plan, the logic of its situation was to organize East Germany and other areas of Eastern Europe along lines allowing it to seize resources for its own reconstruction. Between 1947 and 1956, Moscow took large reparations from East Germany and much of Eastern Europe, probably far more than the $10 billion it had demanded at Yalta. Based on its experience with France in the controversy over German reparations following World War I, the United States must have expected that the Soviet Union would fail in its effort to achieve unilateral reconstruction based on reparations forcibly taken. Since France had no choice but to withdraw from the Ruhr in 1923 and accept U.S. conditions for European reconstruction, American leaders believed the Soviet Union would ultimately have to give up its domination of Eastern Europe. But what had worked against France in 1922–1923 did not work against the Soviet Union in the Cold War period. The Soviet Union and France were two dissimilar political economies. Because it engaged in state trading and had long been denied supplies for its industry by the Western industrial states, the Soviet Union was in effect isolated from the major impact of the world market. Unlike France after World War I, it had made its unilateral system of reparations collection in East Germany and much of Eastern Europe a sufficient base for its own reconstruction and for its strategic, political, and economic control of Eastern Europe to the Elbe River.

Acting on the same assumptions that guided its policy toward Germany, the United States did not collect reparations from Japan. But the nations victimized by Japanese aggression in World War II demanded compensation immediately after the conflict ended. In Tokyo, the Far Eastern Commission began discussions on how to meet these demands in the fall of 1945. Early in 1946, President Truman named Edwin W. Pauley as special ambassador, with instructions to conduct a fact-finding mission for recommendations on Japanese payment of reparations. Made public in April 1946, Pauley's plan provided for transferring to the devastated nations of Asia all Japanese industrial equipment beyond that needed to maintain Japan's prewar living standard. Japanese leaders criticized the plan as both unduly harsh and impractical. General Douglas MacArthur, the supreme commander of Allied powers and head of the U.S. occupation, agreed that the imposition of reparations would delay, if not prevent, Japan's economic recovery. Many American officials in Tokyo and Washington shared his concern. By the fall of 1946, as Soviet-American relations deteriorated in Europe, serious doubts about Pauley's plan arose in the War and State departments.

Early in 1947, the United States adopted the containment policy. This would lead to implementation of the "reverse course" in U.S. occupation policy toward Japan. Its objective was to create an economically powerful and friendly Japan that would be the cornerstone of a postwar U.S. policy in Asia to block Soviet-inspired communist expansion. While the United States abandoned Pauley's plan, the nations serving on the Far Eastern Commission were deadlocked over the complex question of how best to distribute the required reparations equipment. The War Department first commissioned several reevaluations of the reparations and economic policy that resulted in a two-thirds reduction of the demands. During May 1949, the United States broke the stalemate by unilaterally terminating all demands for reparations payments. The Philippines strenuously objected, compelling Washington to include in the 1951 Japanese Peace Treaty an article providing that Japan negotiate and pay reparations in goods and services to any former victim of its aggression that demanded compensation. Japan's government and its business community would make a virtue of necessity after U.S. occupation ended in May 1952. They pursued a successful strategy for establishing friendly and productive relations with its former imperial conquests that utilized reparations payments to help reopen East Asian markets and regain access to raw material sources in Southeast Asia.

After regaining its sovereignty, Japan negotiated a series of agreements providing consumer goods and industrial equipment, often tied to economic assistance and loan programs, with the Philippines, Burma, Indonesia, and South Vietnam (after the division of Vietnam in 1954). Controversy in Japan surrounding alleged government-business collusion in awarding reparations contracts prolonged the talks, but separate agreements finally were reached with all four countries. In November 1954, Burma gained $200 million over a term of ten years, and in March 1963 supplementary payment of $140 million paid over twelve years. In May 1956, the Philippines accepted $550 million in reparations over a term of twenty years, and the agreement with Indonesia in January 1958 provided for payment of reparations of $223 million over twelve years. South Vietnam in May 1959 accepted $39 million over a term of five years. These four nations received an additional $707.5 million in the form of loans. Cambodia and Laos accepted "free technical aid" rather than formal reparations. Under these agreements, recipient nations agreed to provide Japan with necessary raw materials. In addition, receipt of economic aid often required purchase of Japanese manufactured goods, contributing significantly to Japan's economic recovery and later expansion, especially in its steel, shipbuilding, and electronics industries.

Japan did not pay reparations to China after World War II because of the outcome of the civil war in that country. Under pressure from the United States, the Japanese did not recognize the People's Republic of China. This precluded negotiations regarding reparations with the Chinese communist government, and the Republic of China, in exile on Taiwan, could not make claims because that island had been part of the Japanese empire. South Korea demanded that Japan pay $8 billion in reparations for gold and art objects taken from Korea, forced labor, and lost Korean investments during forty years of Japanese imperial rule and brutal colonial exploitation of the Korean peninsula after 1905. After protracted negotiations beginning in 1952, Tokyo and Seoul finally signed in June 1965 the Treaty of Basic Relations Between Japan and the Republic of Korea, which provided for Japan's commitment to extend to South Korea's government $200 million in long-term, low interest loans, $300 million in goods and services over ten years, and $300 million in commercial loans to promote the development of South Korea's economy. Meanwhile, Japan had established and developed quasi-official contacts with North Korea, resulting in expanded trade that in 1964 reached $30 million. By that year, Japan had paid over $1 billion in reparations and $490 million in economic assistance to Burma, Indonesia, South Korea, Malaysia, Laos, Cambodia, and South Vietnam.

In August 1990, Saddam Hussein launched an invasion of Kuwait. The United Nations then authorized the United States to organize military action to liberate Kuwait if Iraqi forces refused to withdraw. The Gulf War during January and February 1991 resulted in Iraq inflicting tremendous destruction on Kuwait, including its oil wells. After Saddam's surrender, the UN Security Council in April passed Resolution 687 to impose punishment on Iraq. One of its provisions stated that Iraq was liable under international law for all direct loss, damage (including environmental damage), and the depletion of natural resources, or injury to foreign governments, nationals, and corporations, as a result of Iraq's unlawful invasion and occupation of Kuwait. No concrete plan for collection emerged, because the resolution also called for measures to restrict Saddam's ability to produce weapons of mass destruction. Accordingly, Iraq was prohibited from selling oil until it met the cease-fire conditions. But Saddam increasingly engaged in defiance and deceit to avoid full compliance with the resolution. The UN inspectors ultimately left Iraq in protest and new U.S. air strikes failed to alter Iraq's behavior, let alone revive any expectation of reparations payments. The Gulf War showed the supremacy of international power over international law.

REPARATIONS AND GROUP REMEDIATION

There were occasions in the twentieth century when the United States paid reparations or considered doing so. In 1903, President Theodore Roosevelt provided indirect assistance to a group of conspirators who staged a rebellion in Panama that resulted in the secession of this province from Colombia. His motivation was to help create an independent nation in Panama that would then sign a treaty authorizing the United States to build a canal across the Isthmus of Panama. Roosevelt succeeded, but embarrassment over the incident and hopes for oil concessions caused Congress in 1921 to approve payment of a $25 million indemnity to Colombia, satisfying a demand it first had made in 1914. A similar situation existed in Hawaii, where many natives believed that the United States played an unethical role in conspiring with white American businessmen to stage a rebellion during 1893. Although the United States did not annex Hawaii at that time, its actions eventually led to the overthrow of Hawaii's last monarchy. In August 1988, the U.S. House of Representatives held hearings on a proposal for payment of reparations to native Hawaiians. But in the end, native Hawaiians had to be satisfied with only an official apology that Congress extended in November 1993 for U.S. actions in helping end Hawaiian home rule.

Much more controversial was the issue of whether the United States should pay reparations for the destruction that military operations inflicted on Vietnam during the Second Indochina War. In January 1973, as part of the Paris Peace Agreement, the Nixon administration agreed to provide North Vietnam with $4.75 billion in aid for economic reconstruction. This was intended as an inducement to respect the terms of the accord, but Hanoi was determined to reunite the country and achieved success in April 1975. Two years later, when President Jimmy Carter sought the establishment of diplomatic relations, the Socialist Republic of Vietnam made the payment of reparations at least equivalent to the amount of the promised reconstruction aid a condition for normalization. The House of Representatives, in a quick and angry response to perceived blackmail, voted to forbid aid, reparations, or payments of any kind to Vietnam. By contrast, a decade later, the United States paid compensation when it accidentally shot down an Iranian civilian airliner over the Persian Gulf. These differing outcomes revealed how the principle of reparation for damages had not been firmly set in international law. In 2000, the United States chose not to pay reparations to the families of South Korean civilians that U.S. soldiers had killed at No Gun Ri during the first weeks of the Korean War.

During the years after World War II, specific groups of people have made claims to reparations for a variety of transgressions. The Federal Republic of Germany, for example, voluntarily paid reparations to Israel for the policies and actions of the Nazi government that inflicted unspeakable suffering upon individual Jews. During the 1990s, U.S. World War II veterans who had been prisoners of war in Germany filed suit against Daimler-Benz and other firms to gain damages for German industry's ruthless exploitation of them as slave laborers. These demands gained legitimacy from a definition of reparations as an "act or process of making amends," usually by "giving compensation to satisfy one who has suffered injury, loss, or wrong at the hands of another." Consistent with this broader definition, in 1983 the U.S. Congress passed a remediation (remedy) law for Japanese Americans whom the U.S. government had put into internment camps during World War II. It provided for Congress first to pass a joint resolution, signed by the president, "which recognizes that a grave injustice was done and offers the apologies of the nation for the acts of exclusion, removal, and detention." Second, it granted official pardons to Japanese Americans convicted for violating orders to evacuate. Third, it created a foundation for educational and humanitarian purposes. Last, and most important, Congress established a $1.5 billion fund for the payment of reparations to survivors of the internment camps.

Remediation for Japanese Americans revived African-American demands to receive reparations for enslavement. Despite various legislative and legal attempts to redress the legacy of American slavery after 1865, large-scale payment of reparations never had gained widespread support in the United States as a viable option for indemnification. In 1989, Representative John Conyers, an African-American Democrat from Michigan, introduced in the House of Representatives legislation to allow African Americans to achieve remediation. It failed to pass then and again in 1991. But in February 1993, the first National Reparations Awareness Day program in Detroit presented strategies for accomplishing indemnification. Legal action, while not expected to succeed, was endorsed as a powerful symbol of white group responsibility for slavery that would set the stage for passage of remediation legislation once a favorable political context emerged. In 2001, at the National Reparations Conference in Chicago, activists argued that an honest reckoning of American history showed "the difficulty of transcending race without some attempt to repair the damage done by racial slavery and the structures of racism erected to justify it." That demands to indemnify the descendants of American slaves extended into the twenty-first century demonstrated that the principle of reparations for damages had not been firmly established either in U.S. domestic or international law.

BIBLIOGRAPHY

Bower, Tom. The Paperclip Conspiracy: The Hunt for the Nazi Scientists. Boston, 1987. Discusses Operation Paperclip, which brought German scientists to the United States, despite the involvement of many in Nazi war crimes.

DeConde, Alexander. A History of American Foreign Policy. 3d ed. New York, 1978. Provides succinct summaries of the terms of U.S. agreements that involve reparations prior to the Versailles Peace Treaty.

Falkus, M. E. "The German Business Cycle in the 1920's." Economic History Review 27 (1975). Argues that net declines in foreign investment in Germany in 1928 and 1929 contributed to the onset of the Great Depression.

Finn, Richard B. Winners in Peace: MacArthur, Yoshida, and Postwar Japan. Berkeley, Calif., 1992. Provides a well-researched and reflective study of the occupation that covers the deliberations of the Far Eastern Commission and reparations.

Gimbel, John. Science, Technology, and Reparations: Exploitation and Plunder in Postwar Germany. Stanford, Calif., 1990. Documents how after World War II the United States supervised a comprehensive and systematic intellectual reparations program to exploit German scientific and technical know-how.

Kent, Bruce. The Spoils of War: The Politics, Economics, and Diplomacy of Reparations, 1918–1932. Oxford and New York, 1989. Contends that the Allies were fully aware from the start that Germany could not pay the large reparations they demanded, but followed this policy as a way to silence calls for increased taxes to reduce government debt or finance expanded social programs.

Keynes, John Maynard. The Economic Consequences of the Peace. New York and London, 1919. Contains an excellent analysis of why the reparations settlement worked out at Versailles was bound to fail.

Leffler, Melvin C. "The Origins of Republican War Debt Policy, 1921–1923: A Case Study in the Applicability of the Open Door Interpretation." Journal of American History 59 (1972). Explains how domestic public opinion and administration, as well as congressional, views of American fiscal problems, complemented efforts of U.S. leaders to manipulate reparations to create an expansionist world market structure.

Link, Werner. Die Amerikanische Stabilisierungspolitik in Deutschland, 1921–1932. Düsseldorf, 1970. Demonstrates that American, and to a lesser extent British, bankers insisted on reversal of French reparations policy as the major key to U.S. investment in Germany.

Magee, Rhonda V. "The Master's Tools, from the Bottom Up: Responses to African-American Reparations Theory in Mainstream and Outsider Remedies Discourse." Virginia Law Review 79 (1993). Traces failed efforts after 1865 to gain compensation for African Americans, in land or money, for damages resulting from American slavery.

McNeil, William C. American Money and the Weimar Republic: Economics and Politics on the Eve of the Great Depression. New York, 1986. Explains how attracting and allocating foreign loans following the approval of the Dawes Plan became the center of conflict between German political factions and between the Allies and Germany.

Moulton, Harold G., and Leo Pasvolsky. War Debts and World Prosperity. New York, 1932. Although covering events only up to 1932, this is still the most useful account of the complex interrelationships among reparations, war debts, tariff structures, and the requisites of an expanding world economy.

Parrini, Carl P. Heir to Empire: United States Economic Diplomacy, 1916–1923. Pittsburgh, 1969. Shows that reparations were linked to war debts, and that the United States used war debts to force the European powers to modify the reparations settlement, and tried to find a place for Germany in an expanding world market without displacing other industrial states.

Rhodes, B. D. "Reassessing Uncle Shylock: The United States and the French War Debt, 1917–1929." Journal of American History 55 (1969). Asserts that the U.S. government maintained a moderate approach to war debts.

Rix, Alan. Japan's Economic Aid: Policy-Making and Politics. New York, 1980. Examines Japan's postwar foreign aid decision-making process.

Schaller, Michael. The American Occupation of Japan: The Origins of the Cold War in Asia. New York, 1985. Places the occupation within the context of overall postwar U.S. security strategy in East Asia from 1945 to 1950.

Schuker, Stephen A. American "Reparations" to Germany, 1919–33: Implications for the Third-World Debt Crisis. Princeton, N.J., 1988. Asserts, in a revisionist argument reflecting the new international history of the 1920s, that, contrary to the view of John Maynard Keynes, the reparations bill assigned Germany in 1921 was not unreasonable, but in fact reflected a measure of rough political justice.

Temin, Peter. "The Beginning of the Depression in Germany." Economic History Review 24 (1971). Contends that the impact of the reparation payments on investment in Germany had no relationship to the onset of the Great Depression there.

Trachtenberg, Marc. Reparation in World Politics: France and European Economic Diplomacy, 1916-1923. New York, 1980. Examines the reparations dispute after World War I from the French perspective.

U.S. Senate Committee on the Judiciary. Loans to Foreign Governments. Senate Document no. 86. Washington, D.C., 1921. A collection of correspondence on war loans, war debts, and reparations.

U.S. World War Foreign Debts Commission. Combined Annual Reports of the World War Foreign Debt Commission with Additional Information Regarding Foreign Debts Due the United States. Washington, D.C., 1927. Contains much of the correspondence between the U.S. Treasury Department and the British and French governments.

See also Alliances, Coalitions, and Ententes; Cold War Origins; Foreign Aid; International Law; Loans and Debt Resolution; Summit Conferences.

THE TREATY OF VERSAILLES, 28 JUNE 1919

Article 231 of the 400-article Treaty of Versailles placed responsibility for World War I on Germany. Articles 232 and 235 addressed the issue of German reparations.

Article 231 The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her Allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.

Article 232 The Allied and Associated Governments recognize that the resources of Germany are not adequate, after taking into account … other provisions of the present Treaty, to make complete reparation for all such loss and damage.

The Allied and Associated Governments, however, require, and Germany undertakes, that she will make compensation for all damage done to the civilian population of the Allied and Associated Powers and to their property during the period of the belligerency of each….

Germany undertakes … as a consequence of the violation of Treaty of 1839, to make reimbursement of all sums which Belgium has borrowed from the Allied and Associated Governments up to November 11, 1918, together with interest at a rate of five percent…. This amount shall be determined by the Repa ration Commission….

Article 233 The amount of the above damage for which compensations to be made by Germany shall be determined by an Inter-Allied Commission, to be called the Reparation Commission. …

This Commission shall consider the claims and give to the Germany Government a just opportunity to be heard.

The findings of the Commission as to the amount of damage defined as above shall be concluded and notified to the German Government on or before May 1, 1921, as representing the extent of that Government's obligations.

The Commission shall concurrently draw up a schedule of payments prescribing the time and manner for securing and discharging the entire obligations within a period of thirty years from May 1, 1921. If, however, within the period mentioned Germany fails to discharge her obligations, any balance remaining unpaid may, within the discretion of the Commission, be postponed for settlement in subsequent years, or may be handled otherwise in such manner as the Allied and Associated Governments … shall determine.

Article 234 The Reparation Commission shall after May 1, 1921, from time to time, consider the resources and capacity of Germany, and, after giving her representatives a just opportunity to be heard, shall have discretion to extend the date, and to modify the form of payments … in accordance with Article 233; but not to cancel any part, except with the specific authority of the several Governments represented upon the Commission.

Article 235 In order to enable the Allied and Associated Powers to proceed at once with the restoration of their industrial and economic life, pending the full determination of their claims, Germany shall pay in such instalments … as the Reparation Commission may fix … the equivalent of 20,000,000,000 gold marks. Out of this sum the expenses of the armies of occupation subsequent to the Armistice of November 11, 1918, shall first be met…. The balance shall be reckoned towards liquidation of the amounts due for reparation.

Reparations

The term reparations usually refers to the measures that a state must take after it violates a rule of international law. Reparations can also apply more generally to remedying all wrongs, whether committed by a state and its agents or by private parties. Reparations for genocide and crimes against humanity will usually require remedial action by both individual perpetrators and the state involved because such acts are illegal under international and national law. Human rights law and humanitarian law also impose a duty on states to take reasonable measures, or in legal terminology to "exercise due diligence," to prevent violations of human rights by private persons. If the state fails to do so, it will be responsible for providing reparations.

In an early international court case, the Permanent Court of International Justice called the obligation to make reparations for an unlawful act "a general principle of international law" and part of "a general conception of law" (Factory at Chorzów [Germany v. Poland], 1928 P.C.I.J. [ser. A], no. 17 at 29 [September 13]). This reflects the fact that all legal systems require those who cause harm through illegal or wrongful acts to take action to repair the harm they have caused.

In addition, human rights treaties and declarations adopted by the United Nations guarantee individual victims the right to a remedy, that is, access to justice and reparations in national proceedings. The Universal Declaration of Human Rights, Article 8, proclaims that "[e]veryone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or laws." This guarantee would, of course, include remedies for criminal acts that violate guaranteed rights. The International Covenant on Civil and Political Rights contains a similar guarantee in its Article 2(3). The UN Human Rights Committee overseeing compliance with the covenant has stated that when acts of torture occur, for example, a government is

under a duty to . . . conduct an inquiry into the circumstances of [the victim's] torture, to punish those found guilty of torture and to take steps to ensure that similar violations do not occur in the future. The committee also has called for investigation and prosecution in cases involving arbitrary executions and disappearances. All these acts constitute types of reparations for the wrong done.

The aim of reparation is, where possible, to restore the situation that would have existed had there been no wrongful act. This means to wipe out all of the consequences of the act and try to reestablish the situation that in all probability would have existed if the act had not been committed. Restitution means to restore exactly the preinjury status. If this is not possible, full compensation equivalent to restitution may be required. Satisfaction is an additional set of remedies designed for noneconomic losses, such as harm to dignity. Most important, the wrongful act must cease.

One widely accepted purpose of reparations is remedial justice, to undo the wrong done to an injured party. Reparation is thus designed to put the injured party in the same position as if no wrongful act had occurred, without respect to the cost or consequences it may have for the wrongdoer. Reparations may also serve to punish and deter wrongdoing or aim at reconciliation and inducing positive future behavior.

Procedures for Claiming Reparations

The issue of reparations for genocide and crimes against humanity is complex because the acts usually involve simultaneous breaches of national and international law by individuals and states. Reparations may be owed by both the state and the individuals responsible, and claims may be made by survivors at either the national or international level. Taking together the traditional law of state responsibility, human rights law, and international criminal law, claims for reparations can be presented in one of five ways: (1) The state of nationality of the victims could bring a claim on their behalf against the state responsible for the wrong; (2) the victims may be able to bring a claim against the responsible state in an international human rights tribunal; (3) victims may bring claims against the responsible state in national judicial or administrative bodies; (4) victims may present their claims against the individual perpetrators in an international criminal court; and (5) the victims may make a claim against the individual perpetrators in a national civil or criminal proceeding.

In nearly all instances, reparations are first claimed through administrative or judicial procedures within a state. International law requires that such procedures be followed before a case can come to an international body. This is known as the doctrine of exhaustion of local remedies. Those who have been wronged may sue the wrongdoer for civil remedies or seek to have the perpetrator prosecuted according to criminal law. If the wrongdoer is an agent of the state, a special law and/or process may govern or restrict the right to sue. Many government officials have immunity from lawsuit for their official acts. In such instances, the state itself may have an obligation to make reparations to the injured party.

At the international level, reparations may be sought either by one state bringing a claim against another or by individuals filing a petition against the state committing the wrong. There are presently no international courts in which an individual can sue another individual for reparations, although it may be possible for victims of abuse to seek reparations from perpetrators convicted by the International Criminal Court (ICC).

Interstate claims for reparations on behalf of their nationals have a long tradition, especially at the conclusion of a war. Most of the experience with reparations in international law concerns postwar agreements to settle claims, whereby one state may pay large amounts of compensation to another state. The recipient then should use the funds to redress the injuries to its nationals. A provision of the Treaty of Sèvres concluded between the Allies from World War I and Turkey in 1920 provided for the restitution of property of Armenians killed by the Turks. At the conclusion of World War II, Article 14 of the September 8, 1951, peace treaty between the Allies and Japan "recognized that Japan should pay reparations to the Allied Powers for damage and suffering caused by it during the war."

Once local remedies have concluded, individuals who do not obtain redress may be able to bring claims directly against their own governments or another state in a human rights tribunal. It is necessary that the state involved be a party to the human rights treaty establishing the tribunal to which the individual seeks access and in some instances the state must separately accept the jurisdiction of the tribunal. Each human rights treaty usually specifies the rights that are protected and the types of reparations that the tribunal can award the individual whose rights have been violated.

Types of Reparation

Restitution is intended to restore the victim to the situation that existed before the violations occurred. In many cases of international crimes, particularly genocide, this will not be possible. Even if restitution is possible in theory, the individual perpetrator may not be able to provide it and the state will have to take on responsibility for the crime. Restitution may include restoration of liberty, legal rights, social status, family life and citizenship, return to the place of residence, restoration of employment, and return of property. When restitution cannot be provided, compensation and/or satisfaction must substitute to remedy the harm that has been done.

Compensation is often inadequate, and the more serious the harm, the more compensation as a remedy becomes a problem. Criminal conduct harms not only the victim, it also undermines the rule of law and societal norms. For this reason, compensation is inevitably a second-best response when prosecution and restitution prove impossible to achieve. However, for many crime victims, damages are important. Compensation supplies the means for whatever part of the former life and projects remains possible and may allow for new projects. In cases where the perpetrator is made to pay, compensation also reflects a moral judgment of wrongdoing. Clearly, for survivors of genocide and crimes against humanity, large amounts of money may be necessary to place victims in the same position of relative satisfaction that they occupied before certain events took place.

Compensation should be provided for any economically assessable damage resulting from the wrongful acts. Widely acceptable compensable losses include physical or mental harm, including pain, suffering, and emotional distress; lost opportunities, including education; material damages and loss of earnings, including loss of earning potential; harm to reputation or dignity; and costs required for legal or expert assistance, medicines and medical services, and psychological and social services. Rehabilitation costs are also normally provided, including future medical and psychological care as well as legal and social services. Full reparations should include attorneys' fees and costs incurred in bringing a claim. If not, individuals will not be fully restored to their preinjury state.

As part of satisfaction, appropriate mechanisms also are needed to confront and process trauma and abuse, facilitating closure rather than repression. Dealing with grief, anger, and rehabilitation takes time. Victims may harbor deep resentments that if not dealt with could result in vigilante justice and retribution. The long-term mental health of individual victims and society as a whole may be threatened if adequate treatment and rehabilitation are not provided. States and international organizations have introduced a variety of non-monetary measures to respond to these needs in redressing genocide and crimes against humanity.

International and National Claims

Some victims of genocide and crimes against humanity committed during wars have received restitution or compensation negotiated between states. Germany created a system of compensation for Nazi genocide and crimes against humanity. From 1939 onward, those who had escaped from countries overrun by the Germans demanded compensation for property and monies taken from them. Some argued that in addition to individual compensation, a collective claim must be presented for reparations to the Jewish people for the property whose owners were unknown or dead, for institutions and communities that had been destroyed or had vanished, and for damage done to the very fabric of the Jewish people's existence. On September 29, 1945, Chaim Weizmann presented the four Allied powers (France, Great Britain, United States, USSR) with the first postwar Jewish claims, which later became the basis of the claim for the state of Israel (of which Weizmann served as its first president): (1) restitution of property; (2) restoration of heirless property to representatives of the Jewish people to finance the rehabilitation of victims of Nazi persecution; (3) transfer of a percentage of all reparation to be paid by Germany for rehabilitation and resettlement in Palestine; and (4) inclusion of all assets of Germans formerly residing in Palestine as part of the reparations.

The first Allied statement on restitution and reparation (January 5, 1943) announced that the governments reserved all their rights to declare invalid any transfers of property or title of property in territory under German or Italian control, whether the transfers were effected by force or by quasilegal means. The Paris Reparations Conference (November 9–December 21, 1945) accepted the principle that individual and group compensation should be paid to the victims of Nazi persecution in need of rehabilitation and not in a position to secure assistance from governments in receipt of reparations from Germany. Receipt of rehabilitation funds would not prejudice a later claim for compensation. Restitution would apply to identifiable property that had been seized during the period of conquest with or without payment. Indemnification was to be paid for objects of an artistic, educational, or religious value that had been seized by the Germans, but that could no longer be restored to their rightful owners.

The Paris Reparations Conference agreed on several points concerning individual claims, including priority to claims of the elderly and indemnification for damage to vocational and professional training. Claimants who could prove they had been held in concentration camps would receive an overall sum of 3,000 deutsche marks as compensation for deprivation of liberty. The conference set a cap of 25,000 deutsche marks for damage that occurred before June 1, 1945. Another 450 million deutsche marks were paid to the Conference on Jewish Material Claims against Germany, a common holding for twenty-three Jewish organizations, for the settlement of Jewish victims living outside Israel. Finally, a special fund of 50 million deutsche marks was created for nonpracticing Jews.

Successive German compensation laws and agreements were enacted and concluded between 1948 and 1965, including a 1952 treaty between the Federal Republic of Germany (FRG) and Israel. The preamble to the 1952 agreement noted that "unspeakable criminal acts were perpetrated against the Jewish people" and that Germany agreed "within the limits of their capacity to make good the material damage caused by these acts." It also mentioned that Israel had assumed the burden of resettling many destitute Jewish refugees. Article I stated that "the Federal Republic of Germany shall, in view of the considerations herein before recited, pay to the State of Israel the sum of 3,000 million Deutsche Marks."

Between 1959 and 1964 Germany concluded treaties with thirteen European states providing for the payment of 977 million deutsche marks for injury to the life, health, and liberty of their nationals. It also agreed to further contributions: with states in Eastern Europe for the victims of pseudo-medical experiments (122 million deutsche marks) and to the UN High Commissioner for Refugees (57 million deutsche marks). In terms of domestic law, the culmination of German reparations can be found in the Federal Law on Reparation (the Bundesentschaedigungsgesetz). Under this law, various categories of damage are provided for anyone who was oppressed because of political opposition to National Socialism, or because of race, religion, or ideology, or who suffered in consequence loss of life, damage to limb or health, loss of liberty, property, or possessions, or harm to professional or economic prospects.

In 1990 the former East Germany, in a unilateral declaration, offered the World Jewish Congress the sum of $100 million. The total sums paid by Germany in reparations for the actions of the Nazi regime during World War II amount to some 103 billion deutsche marks.

Other persons and groups who have suffered from crimes against humanity, including those used as slave laborers during World War II, have attempted to sue governments or companies to obtain reparations. Japanese Canadians have asked the Canadian government for redress, apology, and the revision of history books with regard to their World War II relocation and detention. Italian Canadians have done the same. Asian women who were forcibly detained as sex slaves by the Japanese military have demanded redress. Former prisoners of war and civilians also seek compensation for the forced labor they performed in Germany and Japan. The lawsuits have generally been unsuccessful, either because they are barred by World War II peace treaties or because the governments involved have immunity from lawsuits. In contrast, banks, museums, art dealers, and governments in several countries have faced claims from victims and their heirs for the restitution of money and works of art stolen during World War II. Problems of proof and conflicting local laws make it difficult to resolve the claims, but many have proven successful or have led to negotiated settlements.

In contrast to the extensive international law and practice on state reparations, there is very little in law or practice on obtaining reparations from individual perpetrators in international proceedings. Before the Rome Statute of the ICC, no international criminal tribunal was expressly authorized to award victims reparations other than restitution. The Security Councilresolution establishing the ad hoc International Criminal Tribunal for Rwanda (ICTR) promised to ensure that violations would be "effectively redressed," but the statute of the ICTR limits redress to restitution as a punishment additional to, but not as a substitute for, imprisonment. Neither it nor the statute for the ad hoc Tribunal for the Former Yugoslavia empowers the courts to award compensation or measures of rehabilitation to victims of the crimes being prosecuted, but both statutes foresee the possibility of compensation to victims by national courts in national proceedings.

In contrast to the limited mandates of the ad hoc tribunals, the statute of the ICC expressly includes the possibility for victims to obtain reparations from convicted criminals (Rome Statute, Article 75). The court has discretion to order the perpetrator to provide the victim "restitution, compensation, rehabilitation and other forms of remedy." Nonmonetary awards such as an apology also could be involved. Recognizing that many of those convicted of international crimes may be poor or without any assets, Article 79 of the Rome Statute establishes a trust fund "for the benefit of the victims of crimes within the jurisdiction of the Court" and "of the families of such victims."

Apart from international criminal courts, international tribunals for the protection of human rights may hear cases, judge violations, and afford reparations. Such human rights cases cannot be brought against individuals, but only against the state responsible for the violations. The European Convention for the Protection of Human Rights and Fundamental Freedoms, which went into effect on September 3, 1953, was the first to create an international court for the protection of human rights and a procedure for individual denunciations of human rights violations. The European Court of Human Rights renders judgments in which it may afford "just satisfaction" to the injured party, including compensation for both monetary losses and nonmonetary (moral) damages. In the European Court of Justice of the European Union, individual claimants may plead for an award of damages or other remedies for the violation of fundamental rights. Such rights form an integral part of the general principles of law the court is required to apply. In the Western Hemisphere, the American Convention on Human Rights adopted by the Organization of American States establishes an Inter-American Court of Human Rights that has broad power to order reparations on behalf of victims of human rights violations.

Satisfaction and guarantees of nonrepetition are the most problematic forms of reparations in the context of international crimes and individual responsibility, although some types of satisfaction are inherent in the criminal process: Cessation normally results from the arrest, trial, and conviction of the perpetrator. Disclosure of the truth should occur during the trial. More difficult is the question of locating killed or missing persons and obtaining an official declaration or judicial decision restoring the dignity, reputation, and legal and social rights of the victim and close associates. These forms of redress may not be possible through the criminal prosecution of individual perpetrators. Commemorations of and tributes to the victims also are matters for state action rather than for individual perpetrators.

The prosecution of those committing international crimes is a form of reparation. The obligation on states to prosecute or extradite those accused of genocide, crimes against humanity, and war crimes exists in several international agreements, including the Genocide Convention, the Geneva Conventions of 1949, and the 1977 Protocol I to the Geneva Conventions. Global and regional conventions against torture impose a similar duty. These agreements require states to cooperate with each other in the investigation, prosecution, and adjudication of those charged with the crimes covered under the agreements and the punishment of those convicted. In 1971 the UN General Assembly affirmed that a state's refusal to cooperate in the arrest, extradition, trial, and punishment of persons accused or convicted of war crimes and crimes against humanity is "contrary to the United Nations Charter and to generally recognized norms of international law." The commentary to the Geneva Conventions also confirms that the obligation to prosecute is "absolute" for grave breaches committed within the context of international armed conflicts.

A key role of prosecution is to establish an authoritative record of abuses that will withstand later revisionist efforts. The emphasis in criminal trials on full and reliable evidence in accordance with due process usually makes the results more credible than those of other, more political proceedings, including truth commissions. The chief prosecutor at Nuremberg said that the documentation of Nazi atrocities was one of the most important legacies of the trials. The Nazi actions were documented "with such authenticity and in such detail that there can be no responsible denial of these crimes in the future and no tradition of martyrdom of the Nazi leaders can arise among informed people."

Right to Reparations

UN human rights bodies have considered the issue of ensuring remedies to victims of atrocities, including genocide and crimes against humanity. In resolution 1988/11 of September 1, 1988, the Sub-Commission on Prevention of Discrimination and Protection of Minorities recognized that all victims of gross violations of human rights and fundamental freedoms should be entitled to restitution, fair and just compensation, and the means for as full a rehabilitation as possible for any damage suffered. In draft principles submitted to the UN, one study proposed that states must act "to prevent violations, to investigate violations, to take appropriate action against the violators, and to afford remedies and reparation to victims. Particular attention must be paid to the prevention of gross violations of human rights and international humanitarian law and to the duty to prosecute and punish perpetrators of crimes under international law" (Van Boven, 1996, p. 1). Principle 4 calls on every state to ensure that adequate legal or other appropriate remedies are available to all persons claiming that their rights have been violated.

In 1985 members of the UN adopted the Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power. The declaration details the types of reparations due to crime victims in national law. Principle 8 states that, when appropriate, restitution should be made to victims, their families, or dependents by offenders or the third parties responsible for their behavior. This includes the return of property and may include compensation for harm or loss suffered. Restitution may be considered as a sentencing option in criminal cases in addition to other sanctions. Because cases often involve state agents or officials acting in an official or quasi-official capacity, paragraph 11 provides that victims should also receive redress from the state. Paragraph 12 requires states to endeavor to provide financial compensation to victims who have sustained significant injury as a result of serious crimes, when compensation is not fully available from the offender or other sources. When persons have died or become incapacitated as a result of such victimization, their families or dependents should be compensated financially. For this purpose, states should establish or strengthen national funds to compensate victims. In addition, victims should receive the necessary material, medical, psychological, and social assistance through governmental, voluntary, community, and indigenous means. Finally, attention must be given to victims who have special needs because of the nature of the harm inflicted or other factors that may disadvantage them in some way.

In practice, reparations may be difficult to obtain. The UN has thus created a voluntary fund for victims of torture and a voluntary fund for victims of slavery and slavelike practices. These funds finance programs that provide medical, psychological, social, or legal assistance to victims and their relatives. Examples of this include the establishment of treatment centers, meetings of experts, aid to child victims, publications, legal assistance, and economical and social rehabilitation. Although these funds do not serve the purpose of making the perpetrators redress the harm they have caused, the money collected is used with the aim of ensuring some relief for those who are victims of the acts specified.

SEE ALSO Compensation; Restitution

BIBLIOGRAPHY

Hayner, Priscilla B. (2001). Unspeakable Truths: Confronting State Terror and Atrocity. New York: Routledge.

Minow, Martha (1998). Between Vengeance and Forgiveness: Facing History after Genocide and Mass Violence. Boston: Beacon Press.

Rosenberg, Tina (1995). The Haunted Land: Facing Europe's Ghosts after Communism. New York: Random House.

Shelton, Dinah (1999). Remedies in International Human Rights Law. New York: Oxford University Press.

Van Boven, Theo (1996). Revised Set of Basic Principles and Guidelines on the Right to Reparation for Victims of [Gross] Violations of Human Rights and International Humanitarian Law. UN Document E/CN.4/1997/104 (month, day, year?), Appendix. Available from http://www.unhchr.ch/huridocda/huridoca.nsf/Documents?OpenFrameset.

Dinah L. Shelton

Reparations

In May 1969, a man interrupted the Sunday service at the Riverside Church in New York City. Reading from a "Black Manifesto," the late African-American civil rights activist James Forman (1928–2005) made several demands. Among them was a call for reparations from whites to African Americans for historical and ongoing repression. In the first phase of the program, white churches and synagogues would be called upon to pay $500 million to be distributed to black community groups and institutions.

The most recent surge of attention to the cause of reparations for African Americans was actually prompted by the actions of a hostile source. In the spring of 2001, David Horowitz, a former 1960s radical activist who underwent a conversion to neoconservatism, placed an advertisement in a number of college newspapers throughout the United States, listing ten arguments why reparations for African Americans for slavery is a bad idea. The advertisement stimulated more attention than the reparations question had received since the early part of the twentieth century. Subsequently, conferences and symposia have been held on the subject at a wide range of college campuses, including a national teleconference in 2003 held jointly by Duke University, Spelman College, and Harvard University.

Horowitz's attack on reparations was directed exclusively at the case for reparations based upon slavery. He had nothing to say, at the time, about a rationale for reparations based upon the harms of the century-long Jim Crow era that followed slavery and Reconstruction. In fact, Boris Bittker, in his book The Case for Black Reparations (1973), argues that the basis for compensation should be anchored exclusively on the costs imposed upon black Americans by the Jim Crow system of American apartheid.

The demand for reparations is hardly a new phenomenon. Even before the Civil War, various groups advocated the redistribution of wealth or property to African Americans, particularly the land that they worked as enslaved laborers. In 1854, the abolitionist Sojourner Truth (1797–1983) warned whites that they "owed the colored race a big debt, and if they paid it all back, they wouldn't have anything left for seed." Although its motives were racist, the nineteenth-century American Colonization Society called for government support of their program to provide free transportation and land in Liberia for any blacks willing to settle there. The champion of the African emigration in the late nineteenth century, Bishop Henry McNeal Turner of the African Methodist Episcopal Church, believed that the government should be financially responsible for the "repatriation" effort.

"Forty Acres and a Mule" became the historic rallying cry for reparations immediately after the Civil War. On January 16, 1865, General William T. Sherman issued Special Field Orders, No. 15, which declared that "not more than forty acres of tillable ground" would be "reserved" for families of four from "[the] islands from Charleston, south, the abandoned rice fields along the rivers from thirty miles back from the sea, and the country bordering the St. John's River, Florida" for "the settlement of the negroes now made free by the acts of war and the Proclamation of the President."

Both the first Freedmen's Bureau Act and the Homestead Act of the late 1860s also contained land allocation provisions of at least forty acres per black family as well. However, opposition to and obstruction of Radical Reconstruction from President Andrew Johnson prevented the massive racial land redistribution from taking place. Such a distribution would have given the ex-slaves a strong economic foundation in the postbellum period. Indeed, by the end of 1865, Johnson had already had blacks removed from the lands they had settled along the South Carolina and Georgia coasts under Sherman's orders, and the property was restored to the white former slave owners.

In 1890, the white Alabaman Walter Vaughan, a lifelong southern Democrat and editor of an Omaha, Nebraska, newspaper, crafted a reparations bill. The bill was introduced in Congress by William Connell, a white Nebraska Republican, who had close connections to Vaughan; the bill would grant government pensions to blacks in partial recompense for the suffering of slavery. African Americans Callie House and Isaiah Dickerson formed the National Ex-Slave Mutual Relief, Bounty, and Pension Association to promote the passage of legislation of this type. House's conviction on mail fraud charges in October 1917 (which were similar to the charges brought against Marcus Garvey in 1922) signaled the end of serious efforts to achieve Congressional approval of pensions for ex-slaves.

Demands for compensation came from other areas as well. In 1892, in the British colony of Natal (part of present-day South Africa), a white missionary named Joseph Booth created an "African Christian Union," whose goal was uplifting Africans. Booth foresaw the formation of a Christian nation of Africans. In order to fund its activities, the organization requested that the United States pay one hundred pounds sterling for every African American who volunteered to emigrate.

Proposals for reparations on behalf of African Americans have surfaced continuously throughout the twentieth century from a wide range of voices. In a somewhat obscure 1913 book, Prophetic Liberator of the Coloured Race of the United States of America: Command to His People, Arthur Anderson proposed the creation of a black state in the South. In 1928 the Communist Party of the United States argued that African Americans, especially in the South, were a distinct people and had a national identity. As such, the party argued, blacks were entitled to a homeland and had the right to carve out an independent African-American polity in the "Black belt" states of the South.

Demands for reparations have frequently combined ideological radicalism with black nationalism. In 1934, the Chicago-based National Movement for the Establishment of a 49th State advanced its own agenda for redistribution, calling for a new state to be created in the American South. Through the creation of a new polity, blacks would "have the opportunity to work out their own destiny, unbridled and unhampered by artificial barriers." This state would provide an "opportunity for the nation to reduce its debt to the Negro for past exploitation."

A more recent manifestation of this perspective has been advanced by the members of the Republic of New Africa (RNA) who have sought territory in the U.S. South for a separate black nation, encompassing the states of Louisiana, Mississippi, Alabama, Georgia, and South Carolina. Although little support remains for the RNA, Imari Obadele (Richard Henry), one of the leaders of the organization, continued to advocate reparations as recently as 1993.

In 1955 black activist "Queen Mother" Audley Moore (1898–1997), a former Garveyite and Communist, began her campaign to press for reparations, especially in the pamphlet "Why Reparations? Money for Negroes." Moore believed that there was an effective one-hundred-year statute of limitations for an oppressed group to press legal claims against former captors. At one point in 1962, she even met with President John F. Kennedy to air her views. On the one hundredth anniversary of the Emancipation Proclamation, Moore formed the Reparations Committee for the Descendants of American Slaves. The primary demand of $500 million was to be partial compensation for historic wrongs. Her organization did file a suit in at least one court in California.

While Moore's calls for reparations seemed to go unheeded, the subject of reparations was a major component of black nationalist rhetoric during the 1950s and 1960s. In the 1950s, the Nation of Islam called for the establishment of a separate black state. In 1962, its leader Elijah Muhammad asserted that "former slave masters are obligated to provide" choice land for the descendants of slaves to create an African-American nation. In addition, under the Nation of Islam's plan, the United States would support and maintain the population of the proposed black state for at least twenty to twenty-five years until it had reached some level of economic and political autonomy.

In a 1966 platform, the Black Panther Party called for economic restitution from the white community. Citing the promises of "forty acres and a mule" and the example of German aid to Jews after the Holocaust, the Panthers desired monetary payments that would be distributed to "our many communities." Other groups also made calls for reparations. One group located in Harlem, the "Provisional Government of the African-American Captive Nation," advocated the creation of a state, supported and aided by the American government, in all areas south of the Mason-Dixon Line where African Americans constituted a majority—a policy similar to that promoted by the RNA.

The most vocal of all those urging reparations during the 1960s was James Forman, best known as the executive secretary of the Student Nonviolent Coordinating Committee (SNCC) from 1961 until 1966. Forman also led the Black Economic Development Conference (BEDC), which was the organization that had assembled the "Black Manifesto." While some response came from the white community, it never approached the demands made by the BEDC. Reparations money received by the BEDC reputedly was used to create Black Star Publications, which distributed black militant writings by Forman and others. One organization that received its start from funds generated in responses to the manifesto was the Black Economic Research Center (BERC). Originally started by donations from the National Council of Churches, the BERC began publishing the Review of Black Political Economy, a journal now published under the auspices of the National Economic Association, the professional organization of black economists. In the early issues of the Review, Robert S. Browne, the director of the BERC, advocated substantial reparations to correct disparities in wealth between blacks and whites. Struck by data from a survey that showed that blacks only held two percent of the nation's wealth, Browne felt that reparations would be an appropriate remedy.

The economist David Swinton, formerly a colleague of Browne's at the BERC and now president of Benedict College in South Carolina, argued in 1991 that the "gap between black and white America never changes because of the impact of slavery and Jim Crow on the accumulation of wealth—both financial material, and in terms of human capital." Swinton endorsed reparations of a magnitude that would have a present-day value of anywhere from $1 trillion to $5 trillion to begin to make a transition to a more economically powerful African-American community. Another group in Maryland, the Black Reparations Commission, placed the recommended payment as high as $4 trillion.

During the 1980s, many black activists insisted that at least some discussion of reparations was required. The Detroit City Council passed a resolution in the late 1980s encouraging some compensation for slavery, and a Massachusetts state senator introduced a reparations bill into the state senate in 1989. Arguing in 1992 that the nation owes a singular debt to African Americans above and beyond normal affirmative action programs, the sociologist Paul Starr called for the establishment of a privately funded National Endowment for Black America, which would foster the economic growth of the black community. The neoconservative journalist Charles Krauthammer actually endorsed a limited reparations program as a substitute for affirmative action.

A body of activists and organizations known as the National Coalition of Blacks for Reparations in America (NCOBRA) began to agitate for reparations in 1989. From the early 1990s, led by Johnita Scott Obadele, Kalonji Olusegun, and Adjoa Aiyetoro, NCOBRA has supported congressional legislation (proposed annually by Congressman John Conyers of Michigan) to explore the question of reparations. However, that legislation has never been reported out of committee to the floor of Congress.

Today, the primary reparations activity involves a growing array of court cases, particularly those brought by the attorney Deadria Farmer-Paellmann against several U.S. corporations—including insurance companies such as Aetna who provided policies for slave owners to protect them from losses of their enslaved human property, and railroad companies such as CSX that used enslaved blacks to lay their railway tracks. The attorney Jerry Leaphart has been developing a case—as has a team of lawyers and scholars led by Charles J. Ogletree of Harvard Law School—to be brought forward against the U.S. government or individual states.

A major difficulty with court cases brought against corporations is their capacity to argue that while their activities might have been immoral during slavery times, they were not illegal. Cases against the government or the state face two problems: (1) the barrier of sovereign immunity, and (2) the nature of implementation of a compensation program if the litigants were to prevail. Arguably, the most effective means of executing reparations would be via legislation, because successful legislation would require significant political support across the population. However, a 2000 survey conducted by the political scientists Michael Dawson and Rovana Popoff shows that ninety percent of white Americans opposed compensation for African Americans for slavery; a majority even opposed a formal apology. Therefore, the task of building national political support for reparations that would translate into legislation is obviously a challenging one.

Logistical issues of concern to advocates of reparations include the following: How should a program of reparations be funded? Should existing assets be transferred from nonblacks to blacks? Should the government undertake additional borrowing to effect such a transfer? Should reparations be distributed to blacks as individuals, to families, to community-based organizations, or to all three? Would eligibility for receipt require genealogical evidence to establish that recipients are descendants of enslaved Africans? How would the distribution ensure that there is a long-term closure of the gap between blacks and whites rather than a renewed transfer of funds back to nonblacks via black consumption expenditure?

There have been historical precedents for both formal apologies and economic reparations by nation-states to various groups. Japanese-Americans subjected to incarceration in American concentration camps during World War II have received an official national apology and payment of $20,000 per victim. Various Native American nations have received settlements in court for prior seizure of their lands and discrimination. Since World War II, the German government has paid about $50 billion to Holocaust survivors and their near relatives. In 1988, Daimler-Benz, the German industrial giant, agreed to pay the equivalent of almost $12 million to victims of Nazi forcedlabor polices and to their families. President Bill Clinton apologized to Hawaiians in 1993 for American involvement in the overthrow of the Hawaiian sovereign at the turn of the twentieth century. And in 2003 the envoy to the United States from Benin apologized to African Americans for Benin's involvement in the slave trade. But neither apology nor compensation has ever been awarded to African Americans for slavery, Jim Crow, or ongoing discrimination.

See also Black Panther Party for Self-Defense; Garvey, Marcus; Jim Crow; Moore, Audley "Queen Mother"; Nation of Islam; Slavery; Student Nonviolent Coordinating Committee (SNCC); Truth, Sojourner; Turner, Henry McNeal

Bibliography

America, Richard F. Paying the Social Debt: What White America Owes Black America. Westport, Conn.: Praeger, 1993.

America, Richard F., ed. The Wealth of Races: The Present Value of Benefits from Past Injustices. New York: Greenwood, 1990.

Benton-Lewis Dorothy. Black Reparations NOW! Rockville, Md.: Black Reparations Press, 1978.

Berry, Mary F. "Reparations for Freedmen, 1890–1916: Fraudulent Practices or Justice Deferred?" Journal of Negro History 57, no. 3 (July 1972): 219–230.

Bittker, Boris I. The Case for Black Reparations. New York: Vintage, 1973. Reprint, Boston, Mass.: Beacon Press, 2003.

Browne, Robert S. "The Economic Basis for Reparations to Black America" Review of Black Political Economy 21, no. 3 (1993): 99–110.

Carson, Clayborne. In Struggle: SNCC and the Black Awakening in the 1960s. Cambridge Mass.: Harvard University Press, 1981. Reprint, 1995.

Corbett, J. Angelo. Race, Racism, and Reparations. Ithaca, N.Y.: Cornell University Press, 2003.

Darity, William, Jr., and Dania Frank. "The Economics of Reparations." American Economic Review 93, no. 2 (May 2003) 326–329.

Dawson, Michael and Rovana Popoff. "Reparations: Justice and Greed in Black and White." DuBois Review 1, no. 1 (March 2004): 47–91.

Forman, James. The Making of Black Revolutionaries. New York: Macmillan, 1972. Reprint, Seattle: University of Washington Press, 1997.

Horowitz, David. Uncivil Wars: The Controversy over Reparations for Slavery. San Francisco, Calif.: Encounter Books, 2002.

Thompson, Janna. Taking Responsibility for the Past: Reparation and Historical Justice. Malden, Mass.: Blackwell, 2002.

Winbush, Raymond A., ed. Should America Pay? Slavery and the Raging Debate on Reparations. New York: Amistad, 2003.

william a. darity jr. (1996)
Updated by author 2005

Reparations

BIBLIOGRAPHY

The term reparations refers to a concept and tool for providing monetary payments to members of aggrieved groups based on past wrongful actions against them or their ancestors. Reparations are used for addressing injuries and damages in relations among nations, ethnic groups, and other victims of sustained economic and sociopolitical injustice or military or police aggression. Examples include reparations paid to victims of the German Holocaust in Europe from 1930 to 1945 and Japanese Americans who were partially compensated for their internment and loss of property in the United States during World War II (1939-1945). Earlier reparations were paid by Germany to the Allies after World War I (1914-1918), but in a manner and intensity that probably contributed to reopened hostilities later in the century. The reparations concept is being thought of by some as a potentially useful tool for helping to resolve chronic ancestral grievances in many situations worldwide, including in Northern Ireland, the Balkans, the Middle East, South Asia, and elsewhere.

In the United States, the idea of reparations has gained strength as a way to remedy injustices against African Americans as a group, as well as Native American Indians and Native Hispanic American Indians. This latter debate over what many call reparations has often been a catchall for discussion of a wider range of concerns in social policy and the expression of other agendas. In that sense, some reparation advocates seek monetary damages for their ancestors’ pain and suffering, for their loss of language and African identity, and for the slave trade itself. The debate has also been characterized by imprecision, and the parties to the argument often mischaracterize, disregard, or distort opponents’ actual positions and beliefs. This was the case, for example, in the article “Ten Reasons Why Reparations for Slavery Is a Bad Idea for Blacks— and Racist Too” (2001) by the conservative activist and media personality David Horowitz.

After Horowitz’s article was published, a sharp encounter ensued between Horowitz and several others involving the definition of “reparations for slavery” and whether it was justified or fair to white Americans currently living and paying taxes. None of the parties to the discussion, on either side, had carefully reviewed the literature or provided any original opposing or clarifying analysis. Thus, the entire episode primarily illustrated the tendency toward carelessness in thought and discussion on racial redistributive justice, even by most proponents. This encounter also underscored the highly emotional quality of much discussion of the subject of reparations, which brings to the surface fundamental, and long-buried and unarticulated, core racial concerns on all sides. The debate also raises questions about the political feasibility of reparations, whatever the term means. Is there broad support for a practical policy and program of explicitly redistributive and compensatory justice in the United States?

There is a growing scholarly analytical literature on the subject of reparations. Among the earliest articles was one by Robert Browne, published in 1972 in a special issue of the Review of Black Political Economy. This issue featured the first attempts to quantify the present value of the stream of benefits to whites from past wrongful takings under slavery, segregation, and discrimination. Much of that analysis was based on work done by the economist Lester Thurow in his 1969 book Poverty and Discrimination. Thurow developed a model, and using census data he established that white Americans gained approximately $15 billion in one year, 1960, from racial discrimination in the labor market.

From 1985 to 1990, the National Economic Association, an organization of African American economists and policy analysts, conducted sessions on reparations at their annual meetings. The papers presented at these sessions were published in The Wealth of Races: The Present Value of the Benefits of Past Injustices (1990), edited by Richard F. America. This volume included the work of William Darity, Roger Ransom and Richard Sutch, Warren Whatley and Gavin Wright, Larry Neal and Robert Browne, and other established economists, and carried quantitative and historically based analysis several steps forward. In a 1993 monograph Richard America continued to refine and develop the concept of reparations, focusing on unjust enrichment and the income and wealth-transfer effects of slavery and discrimination. In 2003 Darity and Dania Frank published a short but comprehensive summary of research to date. This volume refines the analysis and points to a new framework that can produce an even more robust analytical basis.

A common question raised about reparations is that if they are suitable for African Americans, are they not also appropriate for other aggrieved groups? Reponses vary widely. But the emerging approach with the deepest analytical grounding involves an analysis of wrongful taking and unjust enrichment, and findings of magnitudes of compensation based on historical auditing. This approach can be used for other groups with similar historical backgrounds, wherever appropriate.

What about popular opinion and support for or opposition to reparations for African Americans? Michael Dawson and Rovana Popoff (2004) found that 79 percent of blacks and 30 percent of whites in the United States favored an apology for slavery, but 66 percent of blacks and only 4 percent of whites favored monetary reparations to blacks “for slavery.” This finding may or may not reflect actual views on reparations when defined differently as “recapture of unjust enrichment” rather than reparations “for slavery.” That distinction is crucial. The question of reparations, in various forms, has become a serious public policy issue since it first emerged in the late stages of the civil rights movement of the 1960s. Of course, as early as the American Revolution, some advocates of abolition were framing remedies that included some form of compensatory justice for freedmen and freedwomen.

The concept of reparations varies according to the worldview of those in the debate. There are three broad views. For some, reparations primarily mean compensation for the slave trade. A second view is that reparations are owed to current generations for the pain and suffering of their collective ancestors—for crimes against humanity. A third view of reparations is narrower and seeks to recapture, recover, and reclaim unjust enrichment that resulted from wrongful takings under slavery, segregation, and many forms of discrimination from 1619 through the present. The focus in this entry is on this third definition.

The idea of unjust enrichment is key, and functions as a useful framework for understanding chronic poverty, poor educational performance, substandard housing, high unemployment, and low income and wealth accumulation among African Americans, as well as persistent black-white disparities in health care, business investment, and competitiveness. These conditions all derive, significantly, from the processes of wrongful taking and unjust enrichment. In addition, these conditions can be measured because they all include a measurable, historically based component. The processes of slavery, Jim Crow segregation, and discrimination were all mechanisms that transferred or diverted income and wealth from blacks as a class to whites as a class, producing unjust enrichment. Reparations, in this view, constitute the proper basis for a well-founded program for rational compensatory public policy. Unjust enrichment and reparations are ways to understand chronic social distress in a long-term historical context. Slavery and discrimination operated in many forms, in every aspect of American life, for 350 years, and this explains much of the current dysfunction. Social problems derive largely from the extraction or confiscation of black property and income by white decision-makers, for white benefit, in millions of daily microdecisions.

The cumulative effect of those wrongful takings produces current unjust enrichment and a range of conditions referred to as affluence and poverty. This situation helps explain the problems we objectively see on the ground, but this fact has been absent from policy discussions. The reparations concept inserts these ideas into the heart of policy analysis, and changes the way problems are viewed and the way policy and programs are created.

There has been widespread and consistent white discrimination against blacks. This behavior has been outlawed in the United States since 1965, but policy analysts and social scientists have not failed to note the full long-term consequences, especially the unjust enrichment. Explicitly accounting for the ways in which black and white ancestors behaved puts a spotlight on the transferred income and wealth. The concept of reparations, and the associated framework of wrongful taking and unjust enrichment, provides a public policy framework for examining objective reality by quantifying and taking into full account historical context. In this way, it is a new or, at least, improved paradigm—a new or improved way of viewing the world. There has been massive, systematic exploitation and confiscation. And those practices—slavery and discrimination—produced wrongful benefits that have been passed on, transferred intergenerationally, to the present.

This analysis points to redistributive justice—recovering monies wrongfully taken through restitution—as the general remedy. That is what reparations mean in public policy terms. Other analysts emphasize payment for pain and suffering or for crimes against humanity. And still others have focused on a form of reparations as a means of laying the groundwork for atonement and reconciliation; they emphasize healing.

But reparations of the kind described here focus on improved public policy analysis, in which national tax and budget priorities are informed by the concept of unjust enrichment, and, by implication, reparations. Thus, social spending becomes a tool for explicitly making restitution.

The amount of reparations owed would equal the net present value of the sum of the deviations from “fair” standards in prices, wages, rents, employment, interest, and investment in education, plus all other affected transactions between whites and blacks. This is an overly simple but illustrative form of the model that leads to a grasp of the dimensions of the wrongful taking and unjust enrichment that produced the need for reparations. We can audit the actual patterns of labor, trade, and investment relations long after the fact. We can also posit a set of “fair” wages, occupational distributions, employment levels, prices, rents, interest rates, educational expenditures, taxes, profits, and returns on investment. We can then estimate the deviations from those “fair” standards. And we find that those deviations resulted, in part, from force, manipulation, and coercion. Then we aggregate, compound, and adjust for price changes over time. That produces a “bill” that represents the financial basis for redistributive justice. We can then negotiate the bill, and reach rational, feasible, make-whole settlement agreements that will restore African Americans as a class to their rightful place. These actions are reparations. Clarifying that will help clarify policy choices in education, housing, employment, and every other controversial sector. The remedy is income and wealth redistribution in capital injections, or grants, in housing equity, quality education, and business equity, targeted to rectify the injustice.

Reparations are a way of looking at complex policy issues that can be rationally applied to understanding, defining, and solving chronic social problems in housing, health, education, employment, and business and community development. Without this historical framework, public policy cannot effectively address these problems.

BIBLIOGRAPHY

America, Richard F., ed. 1990. The Wealth of Races: The Present Value of Benefits from Past Injustices. New York: Greenwood.

America, Richard F. 1993. Paying the Social Debt: What White America Owes Black America. Westport, CT: Praeger.

Browne, Robert, ed. 1972. Review of Black Political Economy. Special Issue on reparations.

Darity, William A., and Dania Frank. 2003. The Political Economy of Ending Racism and the WCAR: The Economics of Reparations. American Economic Review 93 (2): 326-329.

Dawson, Michael, and Rovana Popoff. 2004. Justice and Greed: Black and White Support for Reparations. Du Bois Review 1 (1).

Horowitz, David. 2001. Ten Reasons Why Reparations for Blacks Is a Bad Idea for Blacks—and Racist Too. Front Page Magazine (January 3). http://www.frontpagemag.com/Articles/ReadArticle.asp?ID=1153.

Thurow, Lester. 1969. Poverty and Discrimination. Washington, DC: Brookings Institution.

Richard F. America

REPARATIONS.

At the end of World War I, there was considerable support both in the French Chamber of Deputies and the British House of Commons in favor of punishing Germany and indemnifying the allies. Led by Woodrow Wilson (1856–1924), the U.S. delegation to the peace conference in Paris opposed the idea of punitive indemnity and favored compensation for actual damages.

THE TREATY OF VERSAILLES

The reparation clauses of the Treaty of Versailles stated Germany's responsibility for "all the loss and damage" to which the allies and the United States had been "subjected as a consequence of the war imposed on them by the aggression of Germany and her allies" (Article 231). Germany's financial responsibility was defined as damage done to civilians and their property (Article 232). To determine the sum of German payment, the treaty provided for a reparation commission composed of representatives of the principal recipients. To it was assigned the task of drawing up a thirty-year schedule of payments, and with doing so within two years (Article 233). Article 231 became known as "the war guilt clause." It reflected the belief of the allies that Germany and its allies were morally responsible for all the damage caused by their armed forces. Germans across the political spectrum were offended by the implication that the war was a result of German aggression and that Germany alone was responsible for it. Article 232 reflected the reality that Germany could not pay the entire costs of the entire war, and that Germany's actual financial obligations were to be defined more narrowly and specifically. The appointment of a reparation commission reflected the fact that it was not possible to total up allied reparation claims or to estimate German capacity to pay with any reasonable accuracy in 1919. There was no definitive reparation settlement in the Versailles treaty.

THE LONDON SCHEDULE

At a conference held in Spa in July 1920, the creditors apportioned prospective reparation receipts among themselves: For France 52 percent; 22 percent for Britain and the empire; 9.3 percent for Italy; 8 percent for Belgium; 5.9 percent for the Kingdom of Serbs, Croats, and Slovenes; 3 percent for the other nations. The reparation commission determined German's total debt to be 132 billion gold marks (33 billion dollars). As it was impossible to verify or reconcile the various national claims and because German capacity to pay was as yet unknown, the figure represented a political compromise among the creditors. The sum was divided into three series of bonds. The "A" and "B" series' totaled 50 billion marks, and Germany was liable for interest and principle over a period of thirty-six years. The annual payment was set at two billion gold marks plus a sum equal to 26 percent of the German exports. The "C" bonds of 82 billion bore no interest and were not to be issued until the "A" and "B" bonds were paid off. The schedule, had it been paid, would have amounted to a transfer of around 7 percent of German national income. Delivered to the Germans in May 1921, it became known as the London schedule.

Some scholars have argued that 7 percent of national income was not an insurmountable burden and that the London schedule was within Germany's economic capacity. What was lacking in Germany was the political determination to cut domestic consumption and raise taxes. Others have argued that the London schedule was not feasible. Transferring the annual payments would have required a significant trade surplus and thus a cut in imports and an increase in exports. They doubt that any of the weak coalition governments of the Weimar Republic could have accomplished the massive government intervention in the economy to have achieved this or that the victors of the war would have been willing to accept a flood of German exports in iron, steel, and textiles, which were already under considerable world pressure. In the payment of the London schedule, two large issues were at stake. How would the costs of the war be distributed? Could reparation be an instrument that France could use to prevent Germany from becoming the most powerful economy in Europe?

Over the next eighteen months German governments such as that of Joseph Wirth, instead of raising taxes to meet the London schedule, aimed to demonstrate that the London schedule was impossible to meet. And as part of that strategy they permitted price-wage inflation and currency depreciation. No French government, such as those of Aristide Briand and Raymond Poincaré, could allow Germany to avoid payment of the London schedule and preferred harsh sanctions—the occupation of the Ruhr Valley—if British cooperation could be won. British governments, such as that of David Lloyd George, regarded reparations as a burden on German, European, and British economic recovery, and they resisted sanctions as something that would damage the German economy without fulfilling the London schedule. American bankers refused to lend money to Germany to stabilize the mark without a long moratorium and a reduction in the London schedule. Moreover none of the principal countries involved conducted policies that were coherent or consistent.

Meeting at Cannes in January 1922, the reparation commission granted Germany a temporary reprieve in exchange for promises to increase taxes and balance the budget. In Berlin this proved to be politically impossible. By January 1923 Germany was in default not only on cash payments but also on payments-in-kind. French and Belgian engineers and troops occupied the Ruhr district to impose sanctions and to seize the coal there as reparation payment. German workers refused to work the mines and the trains, adopting a strategy of passive resistance. They were supported by payment from the government, and inflation now became astronomical. In September the newly appointed chancellor of Germany, Gustav Stresemann, was compelled to end passive resistance unilaterally. The occupation authority (Inter-Allied Control Commission for Factories and Mines, or MICUM) then succeeded in concluding an agreement with Ruhr mine owners to deliver coal and be reimbursed by the government in Berlin, which would receive credit on the reparation account.

THE DAWES PLAN

Led by London, the reparation creditors took up a suggestion made earlier by the American secretary of state, Charles Evans Hughes, that an international commission of experts be convened to resolve the reparation question. It met in Paris in January–April 1924 and was composed of leading banking figures and financial experts from each of the major creditor powers and from the United States. It was chaired by Charles Gates Dawes, a prominent midwestern businessman and banker and director of the Federal Office of the Budget. Subsequently he was awarded the Nobel Peace Prize and served as vice president of the United States in the Coolidge administration. The second American expert was Owen D. Young, a lawyer from upstate New York and chairman of the board of directors of the General Electric Company and the Radio Corporation of America.

The scheme the committee devised was temporary by intention—a way of testing German capacity to pay with a graduated series of annuities beginning at one billion gold marks per year in 1924–1925 (approximately one-half of the London schedule) and increasing to 2.5 billion in 1928–1929. The latter was termed the standard Dawes annuity. These figures amounted to from 1.8 to 3.2 percent of German national income. German transportation, excise, and customs revenues were earmarked for the reparation account. An agent general for reparations was appointed who was to see that payment of the annuities would not weaken the economy and that the transfer abroad of large sums of currency would not threaten the stability of the mark. The post was filled by S. Parker Gilbert, a former undersecretary of the treasury, and future chairman of the board of Morgan Stanley. The technical details of the plan were worked out by Sir Joshua Stamp of Britain and Emile Francqui of Belgium. Winning the agreement of all the experts can be credited to Young's skills as a negotiator. The plan was adopted at a conference in London in July–August 1924 attended by the creditors and Germany with American observers. There Édouard Herriot, the French premier, agreed that France would withdraw all troops from the Ruhr within one year and, at American and British insistence, not again impose sanctions against Germany unilaterally.

THE YOUNG PLAN

In September 1928 Gilbert persuaded the creditors and the Germans to agree to appoint another committee of financial experts to discuss a definitive and final reparation settlement. The French and British agreed among themselves to set the German payments high enough to indemnify France and Belgium and to cover their war debts to each other and to the United States. Germany would be rewarded, the British insisted and the French agreed, with the end of allied military occupation of the Rhineland, which was scheduled to continue until 1935. The Germans believed that because there would be American experts on the committee, annuities would be determined by German capacity to pay without borrowing, resulting in a sharp reduction in payments from the Dawes level.

The committee met in Paris from 11 February to 7 June 1929. It was chaired by Young. The second American expert was John Pierpont Morgan Jr. The Young plan divided German payments into two schedules. Germany would pay annuities averaging 2.05 billion marks for thirty-seven years. These payments were 20 percent below the standard Dawes annuity. Of that, 674 million were to be paid unconditionally and was subject to commercialization. Seventy-five to eighty percent of that portion went to France, offering to France the prospect of advanced receipts of German reparation. The remaining portion was conditional—subject to a two-year moratorium at Germany's request. Following the thirty-seven year period, Germany would pay annuities rising slightly from 1.567 billion to 1.684 billion for a period of twenty-one years—into the 1980s. The thirty-seven-year schedule covered indemnities, interallied war debts, and service on the Dawes loan. The twenty-one-year schedule covered war debts only. Young stated that the plan represented minimum creditor requirements.

The chief German delegate was Hjalmar Schacht, the president of the Reichsbank. He sought to limit the annuities to German capacity to pay without borrowing, which he stated to be 1.65 billion marks for thirty-seven years. His hope that a committee of independent experts with German membership and with American representation would reduce payments to this level proved to be illusory. Instead the plan was shaped by the demands of the creditors that their debts to the United States and to each other be covered by receipts from Germany—a matter of particular importance to France, the chief war-debt debtor and the United States, the chief war-debt creditor. The process by which the plan was formulated was not depoliticized; the committee was dominated by members of the boards of central banks and former officials of ministries of finance. They were experts and they also spoke for the interests of their nations.

At the Young conference Britain's portion of the annuity was diminished in favor of the other creditors. At the conference held to adopt the Young plan, which met at the Hague in August, Philip Snowden, the British chancellor of the exchequer, succeeded in restoring partially Britain's losses and secured for Britain a larger share of the unconditional annuity. The British agreed to end military occupation by December 1929 and the French by April 1930. In Germany the Nazis and nationalists collaborated and launched a campaign against the Young plan and demanded a national plebiscite on the issue. They were not successful in blocking the plan.

THE END OF REPARATIONS

To preserve payment of international commercial debts at the time of the Austro-German banking crisis in 1931, U.S. president Herbert Hoover (1874–1964) called for a one-year moratorium on all intergovernmental debts in June of that year. In the months that followed, the German government of Heinrich Brüning agitated for a complete abolition of reparations. The British also favored abolition. The American Congress strongly opposed any abolition of war debts, and the U.S. government rejected any linkage of war debts and reparations. The French sought political compensation for any concessions they might make. At the Lausanne conference in June 1932, reparations were ended; the Young plan payments were abolished with a final lump sum payment of three billion marks. In all, the Germans paid 19.1 billion marks in reparation, nowhere near the 50 billion of the London schedule "A and B bonds." Less than one-third of it was in cash. The British and French both defaulted on their war-debt payments to the United States in 1933. In January 1934 Congress passed the Johnson Act prohibiting any further government lending to nations in default on their debts to the United States.

See alsoDawes Plan; Depression; Rhineland Occupation; World War I.

BIBLIOGRAPHY

Feldman, Gerald D. The Great Disorder: Politics, Economics, and Society in the German Inflation, 1914–1924. New York, 1993.

Jacobson, Jon. "The Reparation Settlement of 1924." In Konsequenzen der Inflation, edited by Gerald D. Feldman, Carl-Ludwig Holtfrerich, Gerhard A. Ritter, and Peter-Christian Witt, 79–108. Berlin, 1989.

Kent, Bruce. The Spoils of War: The Politics, Economics, and Diplomacy of Reparations, 1918–1932. Oxford, U.K., 1989.

Marks, Sally. "The Myth of Reparations." Central European History 11 (1978): 231–255.

——. "'Smoke and Mirrors': In Smoke-Filled Rooms and the Galerie des Glaces." In The Treaty of Versailles: A Reassessment after 75 Years, edited by Manfred F. Boemeke, Gerald D. Feldman, and Elisabeth Glaser. Cambridge, U.K., 1998.

Steiner, Zara. The Lights That Failed: European International History, 1919–1933. New York, 2005. Chapters 1, 4, and 9.

Trachtenberg, Marc. Reparation in World Politics: France and European Economic Diplomacy, 1916–1923. New York, 1980.

Jon Jacobson