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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]
As a result, the sum was split into different categories, of which Germany was only required to pay 50 billion gold marks (US$12.5 billion); this being the genuine assessment of the commission on what Germany could pay, and allowed the Allied powers to save face with the public by presenting a higher figure. Furthermore, payments made between ...
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.
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 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 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.
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.
On 11 January 1923, French and Belgian troops occupied the industrial Ruhr district east of the Rhine after Germany fell behind in the reparations payments required of it under the Treaty of Versailles. Military law was imposed, local governments were placed under French control, and the Inter-allied Control Mission for Factories and Mines ...