World War I reparations

Historians have recognized the German requirement to pay reparations as the "chief battleground of the post-war era" and "the focus of the power struggle between France and Germany over whether the Versailles Treaty was to be enforced or revised.

He argued for a smaller sum, which would be less damaging to the German economy with a long-term goal of ensuring Germany would remain a viable economic power and trading partner.

[30] The objective of both the politicians and historians was to prove that Germany was not solely guilty for causing the war; this was with the idea that, if that guilt could be disproved, the legal requirement to pay reparations would disappear.

[44] In addition, the German Government stated that "to accelerate the redemption of the balance" and "to combat misery and hatred created by the war", Germany was willing to provide the resources needed and "to undertake herself the rebuilding of townships, villages, and hamlets".

Commodities paid in kind included coal, timber, chemical dyes, pharmaceuticals, livestock, agricultural machines, construction materials, and factory machinery.

[32] In the London ultimatum of 5 May, Germany was given six days to recognize the Schedule of Payments and to comply with the Treaty of Versailles' demands for disarmament and the extradition of German "war criminals".

[54] The government of the new chancellor, Joseph Wirth, accepted the ultimatum on 11 May and began the "policy of fulfillment" – by attempting to meet the demands, it tried to show the impossibility of complying with the scheduled payments.

French and Belgian delegates urged the seizure of the Ruhr to encourage the Germans to make more effort to pay, while the British supported postponing payments to facilitate the financial reconstruction of Germany.

[68] Exasperated with Britain's failure to act, he wrote to the French ambassador in London: Judging others by themselves, the English, who are blinded by their loyalty, have always thought that the Germans did not abide by their pledges inscribed in the Versailles Treaty because they had not frankly agreed to them ... We, on the contrary, believe that if Germany, far from making the slightest effort to carry out the treaty of peace, has always tried to escape her obligations, it is because until now she has not been convinced of her defeat ... We are also certain that Germany, as a nation, resigns herself to keep her pledged word only under the impact of necessity.

However, the real issue behind the occupation was not German defaults on coal and timber deliveries, but the forcing of Germany "to acknowledge her defeat in World War I and to accept the Versailles Treaty".

[76] German Foreign Minister Gustav Stresemann called for a final reparation plan to be established alongside an early withdrawal of Allied troops from the Rhineland.

Hugenberg's proposed law called for the end of the Ruhr occupation, the official renouncement of Article 231 (the "war guilt" clause) and the rejection of the Young Plan.

[106] Hans Mommsen wrote "Germany financed its reparation payments to Western creditor nations with American loans", which the British and French then used to "cover their long-term interest obligations and to retire their wartime debts with the United States.

[116] Historian Niall Ferguson partially supports this analysis: had reparations not been imposed, Germany would still have had significant problems caused by the need to pay war debts and the demands of voters for more social services.

[124] Hantke and Spoerer argue that their findings show "that even under quite rigorous assumptions the net economic burden of the Treaty of Versailles was much less heavy than has been hitherto thought, in particular if we confine our perspective to the Reich's budget".

[126] Additionally, their economic scenarios indicate that while the Treaty of Versailles was "overall clearly a burden on the German economy", it "also offered a substantial peace dividend for Weimar's non-revanchist budget politicians."

They conclude that, "The fact that [these politicians] did not make sufficient use of this imposed gift supports the hypothesis that the Weimar Republic suffered from home-made political failure".

[106] Anthony Lentin agrees and writes that inflation was "a consequence of the war rather than of the peace" and that hyperinflation was a result of the "German government's reckless issue of paper money" during the Allied occupation of the Ruhr.

[129] Contemporary British and French experts believed that the Mark was being sabotaged to avoid budgetary and currency reform and to evade reparations, a view supported by Reich Chancellery records.

[70][122] Bell agrees and writes that "inflation had little direct connection with reparation payments themselves, but a great deal to do with the way the German government chose to subsidize industry and to pay the costs of passive resistance to the occupation [of the Ruhr] by extravagant use of the printing press".

He later resigned "when it became evident that hope could no longer be entertained of substantial modifications in the draft Terms of Peace" due to the "policy of the Conference towards the economic problems of Europe".

[133] He wrote that he believed "that the campaign for securing out of Germany the general costs of the war was one of the most serious acts of political unwisdom for which our statesmen have ever been responsible",[134] and called the treaty a "Carthaginian peace" that would economically affect all of Europe.

[137] Writing of his proposed US$10 billion figure, fixing reparations "well within Germany's capacity to pay" would "make possible the renewal of hope and enterprise within her territory" and "avoid the perpetual friction and opportunity of improper pressure arising out of the Treaty clauses".

Taylor writes that in 1919 "many people believed that the payment of reparations would reduce Germany to a state of Asiatic poverty", and that Keynes "held this view, as did all Germans; and probably many Frenchmen".

[124] Gerald Feldman writes, "there can be no question that the entire London schedule could be viewed as a way of reducing the reparations bill without the Allied publics being fully informed of what was going on.

Bell writes that while reparations were unwelcome in Germany and caused a "strain on the German balance of payments", they could be paid and were "compatible with a general recovery in European commerce and industry".

[164] William R. Keylor agrees with Boyce, and says, "an increase in taxation and reduction in consumption in the Weimar Republic would have yielded the requisite export surplus to generate the foreign exchange needed to service the reparation debt".

[165] However, Charles Feinstein writes that these kind of arguments overlook the extreme reluctance of the Germans "to accept even a modest increase in taxation to meet what was universally regarded as an unjustified and oppressive imposition by hostile adversaries".

[174] Keylor says that literature on reparations has "long suffered from gross misrepresentation, exaggeration, and outright falsification" and that it "should finally succumb to the archive-based discoveries of scholars".

[177] Ruth Henig writes, "most historians of the Paris peace conference now take the view that, in economic terms, the treaty was not unduly harsh on Germany and that, while obligations and damages were inevitably much stressed in the debates at Paris to satisfy electors reading the daily newspapers, the intention was quietly to give Germany substantial help towards paying her bills, and to meet many of the German objections by amendments to the way the reparations schedule was in practice carried out".