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Rather, loans were taken out, placing Germany in an economically precarious position as more money entered circulation, destroying the link between paper money and the gold reserve that had been maintained before the war. With its defeat, Germany could not impose reparations and pay off her war debts now, which were now colossal. [116]
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]
The treaty stated that "Germany and Austria-Hungary intend to determine the future fate of these territories in agreement with their populations." Most of the territories were in effect ceded to Germany, which intended to have them become economic and political dependencies, where the local German-speaking minority would be the ruling elite.
The British historian of modern Germany Richard J. Evans wrote that during the war the German right was committed to an annexationist program which aimed at Germany annexing most of Europe and Africa. Consequently, any peace treaty that did not leave Germany as the conqueror would be unacceptable to them. [194]
It saw Germany as the martyr of the postwar period and France as vengeful and the principal threat to peace in Europe. The tension between France and the United Kingdom peaked during a conference in Paris in early 1923, by which time the coalition led by Lloyd George had been replaced by the Conservatives .
The government believed that it would be able to pay off the debt by winning the war and imposing war reparations on the defeated Allies. This was to be done by annexing resource-rich industrial territory in the west and east and imposing cash payments to Germany, similar to the French indemnity that followed German victory over France in 1870 ...
The Paris Peace Conference set terms for the defeated Central Powers, created the League of Nations, rewrote the map of Europe, and under the terms of Article 231 of the Treaty of Versailles, imposed financial penalties in which Germany had to pay reparations of 132 billion gold marks (US$33 billion) to the Allied Powers. In addition, Article ...
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.