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Germon Economy Between The Wars

The Treaty of Versailles gives the terms to which Germany officially surrendered. Part VIII of the Treaty in particular is important, dealing specifically with reparations from WWI Due to the fact that determing the exact amount of reparation was nearly impossible, Article 233 simply set a deadline. The amount was to be determined by an Inter-Allied Commission. Article 231 states that, Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the Allied and Associated Governments have been subjected to because of the war imposed upon them. Article 232 recognizes Germany's lack of resources, after being reduced by other parts of the Treaty. Yet they still required Germany to make compensation for all damage done as stated in Annex I hereto. That annex gives several different categories under which payment from Germany may be claimed. Paragraphs one, two, three, and eight list damages to injured civilians, including prisoners of war, forced labor, injuries effecting capacity to work, and even death. Paragraphs five, seven, and nine required Germany to pay any military incomes of the Allies as a result of the war, as well as the cost of maintaining Allied forces. It seems unreal to think such a great demand could have been made upon the already struggling German economy.
Article 235 would make Germany pay nearly twenty billion marks before the Inter-Allied commission came up with an exact amount for reparations. At the time of the signing of the treaty on June 28th 1919, with exchange rate of about 14 marks per dollar, this was approximately 1.43 billion dollars. In 1921, the Inter-Allied Commission valued the cost of German reparation payments at thirty-three billion dollars. In January of 1921 the average monthly exchange rate was 64 marks per dollar. This meant Germany owed 2.112 trillion marks. Despite the extent of its debt, Germany never increased taxes above 35% of expenditure from 1919 to 1923. Instead, the...