Skip to main content

History Stories


Even more humiliating were the terms of Germany’s surrender. World War I’s victors blamed Germany for beginning the war, committing horrific atrocities and upending European peace with secretive treaties. But most embarrassing of all was the punitive peace treaty Germany had been forced to sign.


How—and when—could Germany possibly pay its debt?

Germans take war machines apart outside Berlin under the terms of the Treaty of Versailles Germany. This tank is in fact a British tank, captured and put into service by the Germans during World War I.


READ MORE: The Treaty of Versailles Punished Defeated Germany With These Provisions

Nobody could have dreamed that it would take 92 years. That’s how long Germany took to repay World War I reparations, thanks to a financial collapse, another world war and an ongoing debate about how, and even whether, Germany should pay up on its debts.

Allied victors took a punitive approach to Germany at the end of World War I. Intense negotiation resulted in the Treaty of Versailles’ “war guilt clause,” which identified Germany as the sole responsible party for the war and forced it to pay reparations.

Germany had suspended the gold standard and financed the war by borrowing. Reparations further strained the economic system, and the Weimar Republic printed money as the mark’s value tumbled. Hyperinflation soon rocked Germany. By November 1923, 42 billion marks were worth the equivalent of one American cent.

Inflation in Germany

During a period of hyperinflation in 1920s Germany, 100,000 marks was the equivalent one U.S. dollar.

Finally, the world mobilized in an attempt to ensure reparations would be paid. In 1924, the Dawes Plan reduced Germany’s war debt and forced it to adopt a new currency. Reparations continued to be paid through a strange round robin: The U.S. lent Germany money to pay reparations, and the countries that collected reparations payment used that money to pay off United States debts. The plan was heralded as a victory—Charles Dawes, a banker who later became vice president under Calvin Coolidge won a Nobel Prize for his role in the negotiations.

Scroll to Continue

Recommended for you

But the Weimar Republic still struggled to pay its debts, so another plan was hashed out in 1928.

The Young Plan involved a reduction of Germany’s war debt to just 121 billion gold marks. But the dawn of the Great Depression ensured its failure and Germany’s economy began disintegrating again. 

In an attempt to thwart disaster, President Herbert Hoover put a year-long moratorium on reparation payments in 1931. The next year, Allied delegates attempted to write off all Germany’s reparations debt at the Lausanne Conference, but the U.S. Congress refused to sign on to the resolution. Germany was still on the hook for its war debt.

READ MORE: How the Treaty of Versailles and German Guilt Led to World War II

Soon after, Adolf Hitler was elected. He canceled all payments in 1933. “Hitler was committed to not just not paying, but to overturning the whole treaty,” historian Felix Schulz told the BBC’s Olivia Lang. His refusal was seen as an act of patriotism and courage in a nation that saw the reparations as a form of humiliation. Germany made no payments during Hitler’s rule.


New inductees of the Wehrmacht taking oath on August 25, 1936. The growth of Hitler's armies was in violation of the Treaty of Versailles.

But Germany wasn’t destined to win the war, and the Third Reich ended with Hitler’s suicide in April 1945 and Germany’s official surrender a few days later. By then, the country was in chaos. Millions of people had been displaced. Over 5.5 million German combatants, and up to 8.8 million German civilians, were dead. Most of Germany’s institutions had crumbled, and its populace was on the brink of starvation.




