Above all, we recommend our proposal for these reasons: It adjusts itself automatically to realities. The burden which should rest upon the German taxpayer should in justice so obviously be commensurate with that borne by the allied taxpayer that in our view nothing but the most compelling and proved necessity should operate to make it lighter.
[ . . . ]
With these principles in mind we recommend Germany should make payment from the following sources: (a) from her ordinary budget, (b) from railway bonds and transport tax, (c) from industrial debentures.
[ . . . ]
The committee has been impressed with the fairness and desirability of requiring as a contribution to reparation payments from German industry a sum of not less than 5,000,000,000 gold marks to be represented by first mortgage bonds bearing 5 per cent interest and 1 per cent sinking fund per annum. This amount of bonds is less than the total debt of industrial undertakings in Germany before the war. Such indebtedness has for the most part been discharged by nominal payments in depreciated currency or practically extinguished. In addition, the industrial concerns have profited in many ways through the depreciated currency, such as the long-delayed payment of taxes by subsidies granted and advances made by the German Government and by depreciation of emergency money which they have issued. On the other hand, it is incontestably true that there have also in many instances resulted losses through the depreciation of currency from the sale of output at fixed prices and in other ways.
[ . . . ]
Realizing the depletion of the liquid capital supply in Germany and that a period should be provided for its recuperation we recommend that the interest on the 5,000,000,000 of debentures above referred to be waived entirely during the first year, that the interest during the second year be 2½ per cent, during the third year 5 per cent, and thereafter 5 per cent, plus 1 per cent sinking fund. [ . . . ]
Source: The Dawes Report, World Peace Foundation, Boston, Vol .VI, no. 5, 1923.