World War I reparations
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World War I reparations were a series of payments the German state was forced to make following its defeat during World War I. Article 231 of the Treaty of Versailles assigned blame for the war to Germany; much of the rest of the Treaty set out the ways in which Germany would pay the Allies for this responsibility.
The total sum due was decided by an Inter-Allied Reparations Commission. The war reparations that Entente demanded from Germany was 226 billion Reichsmark in gold (around £11.3 billion), then reduced to 132 billion Reichsmark. In 1921, this number was officially put at £4,990,000,000, or RM 99,800,000,000.
In many ways, the Versailles reparations was a reply to the reparations placed upon France by Germany through the 1871 Treaty of Frankfurt. Signed after the Franco-Prussian War, France took huge loans in order to pay the reparations by 1873, because the Treaty conditions allowed the German Army to occupy France until the war reparations were paid. The Versailles Reparations came in a variety of forms, including coal, steel and agricultural products.
A major historical fallacy is that the reparations were the source of the economic condition in Germany from 1919 to 1939(The Economic Consequences of the Peace, by John Maynard Keynes, available freely at Project Gutenberg). Germany paid very little of the reparations and the hyper-inflation of the early 1920s was a result of the political and economic instability of post-Kaiserreich Germany, widely known as the Weimar Republic. In fact, the occupation of the Ruhr by the French (which began when Germany failed to supply a required delivery of telegraph poles) did more damage to the economy than if the Germans had actually met their committments under the Treaty. Another fallacy is that these reparations caused the economic condition that saw Hitler's rise to power. Germany was in fact doing remarkably well after its hyper-inflation of 1923, and was once more one of the world's largest economies, until the foreign investment funding the economy was suddenly withdrawn with the Stock Market Crash of 1929.
These ideas are countered by AJP Taylor in his book The Origins of the Second World War, in which he claims that the settlement had been too indecisive: it was harsh enough to be seen as punitive, without being crippling enough to prevent Germany regaining its superpower status, and can thus be blamed for the rise of the Reich under Hitler within decades.
