Reparations

WW1, distroyed village
Destroyed village

[Germany, 1921] According to the Peace Treaty of Versailles, Germany had to pay large-scale reparations for all the loss and damage caused by the war. However, the exact amount to be paid had not been fixed yet.

226 billion gold marks

In January 1921, the Allied Powers came together in Paris and established the reparation sum at 226 billion gold marks. The Germans were outraged, Chancellor Fehrenbach and his cabinet declared that Germany could neither accept nor pay that amount.

France wanted to punish Germany for all the devastation caused during the war, and so hard that it would not be a treat to France for many years to come. The hardliners like Poincaré still thought that the Versailles Peace Treaty was too lenient on Germany. In case Germany would not pay the reparations required, the Allies could go for sanctions and occupy German territories, and France could occupy the left bank of the Rhine, make the Rhine the border between France and Germany and control the industrial Ruhr area.

Negotiations in London

The Allies and Germany met by the end of March in London. Germany had to either accept the Allies’ demands or make counter-proposals within for days. The German Government offered 30 billions, which together with 20 billion gold marks already paid would make in total 50 billion. It was by far not enough. To put up pressure on Germany, the Allies occupied Düsseldorf, Duisburg and Ruhrort on March 8.

In Germany, a week long government crisis followed. The Communist Party saw a good chance to overthrow the government and incited strikes and unrest, Polish militias invaded German Upper Silesia. The Fehrenbach cabinet resigned on May 4, 1921.

London Schedule of Payments

On May 5, the Allies finally established the amount to be paid at 132 billion gold marks. This “London Schedule of Payments” was a compromise between the minimum that was owed to the damaged countries and within Germany’s capacity to pay. Taking into account the sum already paid between 1919 and 1921, Germany’s immediate obligation was 41 billion gold marks.

It was an ultimatum. Germany had to accept within a few days, otherwise the entire Ruhr area would be occupied. The new chancellor Joseph Wirth of the Centre Party so no other way but accept. On May 11, 1921, the Reichstag passed the London Schedule of Payments.

References
The picture is from the German Wikipedia, public domain section.

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