I propose, therefore, in this chapter to set forth baldly the principal
economic provisions of the Treaty, reserving, however, for the next my
comments on the Reparation Chapter and on Germany's capacity to meet the
payments there demanded from her.

The German economic system as it existed before the war depended on
three main factors: I. Overseas commerce as represented by her
mercantile marine, her colonies, her foreign investments, her exports,
and the overseas connections of her merchants; II. The exploitation of
her coal and iron and the industries built upon them; III. Her transport
and tariff system. Of these the first, while not the least important,
was certainly the most vulnerable. The Treaty aims at the systematic
destruction of all three, but principally of the first two.


I

(1) Germany has ceded to the Allies _all_ the vessels of her mercantile
marine exceeding 1600 tons gross, half the vessels between 1000 tons and
1600 tons, and one quarter of her trawlers and other fishing boats.[9]
The cession is comprehensive, including not only vessels flying the
German flag, but also all vessels owned by Germans but flying other
flags, and all vessels under construction as well as those afloat.[10]
Further, Germany undertakes, if required, to build for the Allies such
types of ships as they may specify up to 200,000 tons[11] annually for
five years, the value of these ships being credited to Germany against
what is due from her for Reparation.[12]

Thus the German mercantile marine is swept from the seas and cannot be