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With its defeat, Germany could not impose reparations and pay off her war debts now, which were now colossal. [ 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 ...
Germany agreed to pay reparations of 132 billion gold marks to the Triple Entente in the Treaty of Versailles. When Germany stopped making payments in 1932 after the agreement reached at the Lausanne Conference failed to be ratified, [ 12 ] Germany had paid only a part of the sum.
Of this figure, Germany was only required to pay 50 billion gold marks ($12.5 billion), a smaller amount than they had previously offered for terms of peace. [65] Reparations were unpopular and strained the German economy but they were payable and from 1919 to 1931, when reparations ended, Germany paid fewer than 21 billion gold marks. [66]
British public opinion wanted to make Germany pay for the War. [53] Public opinion favoured a "just peace", which would force Germany to pay reparations and be unable to repeat the aggression of 1914, although those of a "liberal and advanced opinion" shared Wilson's ideal of a peace of reconciliation. [14]
The reparations levied on Germany by the Treaty of Versailles were, in theory, supposed to restore the damage to the civilian economies, but little of the reparations money went for that. Most of Germany's reparations payments were funded by loans from American banks, and the recipients used them to pay off loans they had from the U.S. Treasury.
The moves restored enough international confidence in Germany so that when Stresemann sought discussions with the Allied Powers which would take into consideration what Germany was financially capable of paying, the Reparations Commission set up the Dawes committee, headed by the American economist Charles Dawes. It recommended that total ...
The proposal was met with mixed reactions. Germany welcomed the relief, but other nations resisted, particularly France, which was heavily reliant on German reparations to service its own war debts, [2] and many American citizens. After much telephone lobbying by Hoover, it had gained support from 15 nations by 6 July.
132 billion gold marks ($31.5 billion, 6.6 billion pounds) were demanded from Germany in reparations, of which only 50 billion had to be paid. In order to finance the purchases of foreign currency required to pay off the reparations, the new German republic printed tremendous amounts of money—to disastrous effect.