World War I reparations

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World War I reparations refers to the payments and transfers of property and equipment that Germany was forced to make under the Treaty of Versailles (1919) following its defeat during World War I. Article 231 of the Treaty (the so-called 'war guilt' clause) declared Germany and its allies responsible for all 'loss and damage' suffered by the Allies during the war and provided the basis for reparations.

In January 1921, the total sum due was decided by an Inter-Allied Reparations Commission and was set at 269 billion gold marks (the equivalent of around 100,000 tonnes of pure gold), about £13 billion or US$64 billion[Note 1] ($785 billion in 2011),[Note 2] a sum that many economists at the time deemed to be excessive.[1] The yearly amount paid was reduced in 1924 and in 1929 the total sum to be paid was reduced by over 50%. Payments ceased when Adolf Hitler's National Socialist German Workers' Party took power in 1933, with about one-eighth of the initial reparations paid.[1] The final payments were made on 4 October 2010, the twentieth anniversary of German reunification.[1]

Contents

Evolution of Reparations

There was extensive debate about the justice and likely impact of the reparations demands both before and after the publication and signing of the Treaty of Versailles and other Treaties in 1919. Most famously, the principal representative of the British Treasury at the Paris Peace Conference, John Maynard Keynes, resigned from the Treasury in June 1919 in protest at the scale of the reparations demands, and subsequently protested publicly in the best-selling The Economic Consequences of the Peace (1919).[2]

The 1924 Dawes Plan modified Germany's reparation payments. The Americans Owen D. Young and Seymour Parker Gilbert were appointed to implement this plan. In May 1929, the Young Plan reduced further payments to 112 billion Gold Marks, US$26.6 billion over a period of 59 years (1988). In addition, the Young Plan divided the annual payment, set at two billion Gold Marks, US$473 million, into two components, one unconditional part equal to one third of the sum and a postponable part for the remaining two-thirds.

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