On 10 May 1921 it replaced the Fehrenbach cabinet, which had resigned as a result of differing opinions among its members over the payment of war reparations to the Allied powers.

The cabinet won the Reichstag's approval for the Allies' reparations demands and began the war crimes trials required by the Treaty of Versailles.

Joseph Wirth was minister of Finance under Chancellor Constantin Fehrenbach, whose cabinet resigned on the evening of 4 May 1921 due to its inability to agree on a new proposal for the payment of war reparations to present to the Allies.

This would be in addition to measures already announced: the occupation of Düsseldorf, Duisburg and Ruhrort as well as financial sanctions in the form of a levy on German exports.

Among those discussed as possible chancellors were Gustav Bauer and Paul Löbe (both SPD), and Konrad Adenauer and Joseph Wirth (both Centre Party).

In the night of 10/11 May, a note signed by Wirth stating the government's acceptance went out to the German embassies at London, Paris, Rome, Brussels and Tokyo.

[6] Under the requirements of Article 88 of the Treaty of Versailles, the population of the ethnically mixed region of Upper Silesia held a referendum on 20 March 1921 to decide whether they wanted to remain in Germany or become part of the newly founded Second Polish Republic.

On 20 October, under a recommendation of the League of Nations, about a third of Upper Silesia's territory, half of the population and around 80% of its heavy industry was awarded to Poland.