In the second place, the claims are not to exceed a maximum of $25,000,000,000, of which $5,000,000,000 is to be discharged by May 1, 1926; and no part of this sum is to carry interest pending the payment of it.[141] In the third place, there are to be allowed as credit against it (amongst other things): (_a_) the value of all deliveries under the Armistice, including military material (_e.g._ Germany's navy); (_b_) the value of all railways and State property in ceded territory; (_c_) the _pro rata_ share of all ceded territory in the German public debt (including the war debt) and in the Reparation payments which this territory would have had to bear if it had remained part of Germany; and (_d_) the value of the cession of Germany's claims for sums lent by her to her allies in the war.[142] The credits to be deducted under (_a_), (_b_), (_c_), and (_d_) might be in excess of those allowed in the actual Treaty, according to a rough estimate, by a sum of as much as $10,000,000,000, although the sum to be allowed under (_d_) can hardly be calculated.
If, therefore, we are to estimate the real value of the German offer of $25,000,000,000 on the basis laid down by the Treaty, we must first of all deduct $10,000,000,000 claimed for offsets which the Treaty does not allow, and then halve the remainder in order to obtain the present value of a deferred payment on which interest is not chargeable.

This reduces the offer to $7,500,000,000, as compared with the $40,000,000,000 which, according to my rough estimate, the Treaty demands of her.
This in itself was a very substantial offer--indeed it evoked widespread criticism in Germany--though, in view of the fact that it was conditional on the abandonment of the greater part of the rest of the Treaty, it could hardly be regarded as a serious one.[143] But the German Delegation would have done better if they had stated in less equivocal language how far they felt able to go.
In the final reply of the Allies to this counter-proposal there is one important provision, which I have not attended to hitherto, but which can be conveniently dealt with in this place.

Broadly speaking, no concessions were entertained on the Reparation Chapter as it was originally drafted, but the Allies recognized the inconvenience of the _indeterminacy_ of the burden laid upon Germany and proposed a method by which the final total of claim might be established at an earlier date than May 1, 1921.

They promised, therefore, that at any time within four months of the signature of the Treaty (that is to say, up to the end of October, 1919), Germany should be at liberty to submit an offer of a lump sum in settlement of her whole liability as defined in the Treaty, and within two months thereafter (that is to say, before the end of 1919) the Allies "will, so far as may be possible, return their answers to any proposals that may be made." This offer is subject to three conditions.

"Firstly, the German authorities will be expected, before making such proposals, to confer with the representatives of the Powers directly concerned.