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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 ...
The U.S. government declared war on Germany on April 6, 1917. At the end of the war in November 1918, the German monarchy was overthrown and Germany was established as a republic. In 1919, the victorious Allied Powers held a peace conference in Paris to formulate peace treaties with the defeated Central Powers.
Russians agreed to pay reparations to the Central Powers when Russia exited the war in the Treaty of Brest-Litovsk (which was repudiated by the Bolshevik government eight months later). Bulgaria paid reparations of 2.25 billion gold francs (90 million pounds) to the Entente, according to the Treaty of Neuilly.
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 ...
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.
Dawes, who was the U.S. vice president at the time, received the Nobel Peace Prize of 1925 for "his crucial role in bringing about the Dawes Plan", specifically for the way it reduced the state of tension between France and Germany resulting from Germany's missed reparations payments and France's occupation of the Ruhr.