The value of the property so expropriated will be applied, in the first instance, to the satisfaction of private debts due from Germany to the nationals of the Allied Government within whose jurisdiction the liquidation takes place, and, second, to the satisfaction of claims arising out of the acts of Germany's former allies.

Any balance, if the liquidating Government elects to retain it, must be credited in the Reparation account.[22] It is, however, a point of considerable importance that the liquidating Government is not compelled to transfer the balance to the Reparation Commission, but can, if it so decides, return the proceeds direct to Germany.

For this will enable the United States, if they so wish, to utilize the very large balances, in the hands of their enemy-property custodian, to pay for the provisioning of Germany, without regard to the views of the Reparation Commission.
These provisions had their origin in the scheme for the mutual settlement of enemy debts by means of a Clearing House.

Under this proposal it was hoped to avoid much trouble and litigation by making each of the Governments lately at war responsible for the collection of private _debts_ due from its nationals to the nationals of any of the other Governments (the normal process of collection having been suspended by reason of the war), and for the distribution of the funds so collected to those of its nationals who had _claims_ against the nationals of the other Governments, any final balance either way being settled in cash.

Such a scheme could have been completely bilateral and reciprocal And so in part it is, the scheme being mainly reciprocal as regards the collection of commercial debts.