Financial reparations from Germany to the Reparations Commission, following WWI

Following the First World War, the defeated Central Powers were required to pay reparations to the Allied Powers and the League of Nations, as compensation for the damage caused as a result of the First World War. Due to their economic instability and inability to pay, Austria, Bulgaria, Hungary and Turkey's debts were eventually cancelled, however Germany, who were made to accept the largest responsibility for the damage caused in the war, saw no prospects of their debts being expunged.

Initial reparations

While the Treaty of Versailles failed to define a fixed total for Germany's World War I reparations, it did lay out the need for a Reparations Commission that would later decide these values, as well as outlining some non-monetary reparations that would contribute to Germany's total, such as annexed warships, merchant ships, coal. The value of these commodities would be subtracted from the initial reparation figures in the treaty, which required a value of at least 60 billion gold Marks to be paid by 1926. The London Conference of 1921 then set the total at 132 billion gold Marks (installments were to be paid annually, at a value of two billion Marks plus a sum equal to 26 percent of Germany's annual exports). Germany's inability to meet these demands led to the occupation of the Ruhr in 1923, where French and Belgian troops then collected reparations forcefully.

Hyperinflation and reparation legacy

After losing one of its most prosperous areas, Germany's economy weakened even further, and the attempt to convert Marks into foreign currency caused one of the best-known cases of hyperinflation in world history, rendering Germany's currency virtually worthless. The Dawes Plan of 1924 helped to bring Germany's economy back on track, and the introduction of the Rentenmark made repayments feasible. As it was a short term solution, further revisions were made by the Young Plan in 1928 to bring stability to Germany's repayment schedule, however the Great Depression of 1929 made it impossible for any reparations to be made. When Adolf Hitler came to power in 1933, his government rejected all restrictions imposed by the Treaty of Versailles, including reparations, and the League of Nations failed to step in and re-impose their sanctions on the government. The issue of WWI reparations was not resolved until the second half of the century, while Germany made it's final reparation payment on October 3, 2010, almost 92 years after the end of the First World War. While many in the interwar period claimed that reparations were the greatest contributor to Germany's economic downfall, the modern scholarly consensus is that all repayments were well within Germany's abilities at the time, and that the reparation scheme became a scapegoat for the economic woes caused by the First World War.