Editing World War I reparations (section)

===Effect on the German economy===

====Overall====
During the period of reparations, Germany received between 27 and 38&nbsp;billion marks in loans.{{sfn|Boemeke|Feldman|Glaser|1998|p=417}}{{sfn|Henig|1995|p=62}}{{sfn|Mantoux|1952|p=155}} By 1931, German foreign debt stood at 21.514&nbsp;billion marks; the main sources of aid were the United States, Britain, the Netherlands, and Switzerland.{{sfn|Tooze|2007|p=7}} [[Detlev Peukert]] argued the financial problems that arose in the early 1920s, were a result of post-war loans and the way Germany funded her war effort, and not the result of reparations.{{sfn|Peukert|1993|p=62}} During the First World War, Germany did not raise taxes or create new ones to pay for war-time expenses. Rather, loans were taken out, placing Germany in an economically precarious position as more money entered circulation, destroying the link between paper money and the gold reserve that had been maintained before the war. With its defeat, Germany could not impose reparations and pay off her war debts now, which were now colossal.{{sfn|Peukert|1993|p=62}}

Historian [[Niall Ferguson]] partially supports this analysis: had reparations not been imposed, Germany would still have had significant problems caused by the need to pay war debts and the demands of voters for more social services.{{sfn|Boemeke|Feldman|Glaser|1998|pp=420–421}} Ferguson argued that these problems were aggravated by a trade deficit and a weak exchange rate for the mark during 1920. Afterwards, as the value of the mark rose, inflation became a problem. None of these were the result of reparations.{{sfn|Boemeke|Feldman|Glaser|1998|p=413}} According to Ferguson, even without reparations total public spending in Germany between 1920 and 1923 was 33 per cent of total net national product.{{sfn|Boemeke|Feldman|Glaser|1998|pp=420–421}} [[A.J.P. Taylor]] wrote "Germany was a net gainer by the financial transactions of the nineteen-twenties: she borrowed far more from private American investors&nbsp;...&nbsp;than she paid in reparations".{{sfn|Taylor|1991|p=44}} P.M.H. Bell stated the creation of a multi-national committee, which resulted in the [[Dawes Plan]], was done to consider ways the German budget could be balanced, the currency stabilized, and the German economy fixed to ease reparation payments.{{sfn|Bell|1997|p=37}} [[Max Winkler]] wrote that from 1924 onward, German officials were "virtually flooded with loan offers by foreigners". Overall, the German economy performed reasonably well until the foreign investments funding the economy and the loans funding reparations payments were suddenly withdrawn after the [[Wall Street Crash 1929|1929 Stock Market Crash]]. This collapse was magnified by the volume of loans provided to German companies by US lenders. Even the reduced payments of the Dawes Plan were mainly financed through a large volume of international loans.{{sfn|Winkler|1933|pp=86–87}}

While Germany initially had a trade deficit, British policy during the early 1920s was to reintegrate Germany into European trade as soon as possible. Likewise, France attempted to secure trade deals with Germany.{{sfn|Martel|1999|p=24}} During the mid-to-late 1920s, trade between France and Germany grew rapidly. French imports of German goods "increased by 60 per cent", highlighting the close links between French industrial growth and German production, and the increase in cooperation between the countries.{{sfn|Bell|1997|pp=38–39}}

Max Hantke and Mark Spoerer provide a different perspective on the effect of reparations on the German economy. They wrote that focusing on the reparations and inflation ignores "the fact that the restriction of the German military to 115,000 men relieved the German central budget considerably".{{sfn|Hantke|Spoerer|2010|p=849}} Hantke and Spoerer argue that their findings show "that even under quite rigorous assumptions the net economic burden of the Treaty of Versailles was much less heavy than has been hitherto thought, in particular if we confine our perspective to the Reich's budget".{{sfn|Hantke|Spoerer|2010|p=851}} They say, "though politically a humiliation", the limitation on the military "was beneficial in fiscal terms" and that their economic models show that "the restriction of the size of the army was clearly beneficial for the Reich budget".{{sfn|Hantke|Spoerer|2010|p=860}} Additionally, their economic scenarios indicate that while the Treaty of Versailles was "overall clearly a burden on the German economy", it "also offered a substantial peace dividend for Weimar's non-revanchist budget politicians." They conclude that, "The fact that [these politicians] did not make sufficient use of this imposed gift supports the hypothesis that the Weimar Republic suffered from home-made political failure".{{sfn|Hantke|Spoerer|2010|p=861}}

====Hyperinflation====
{{further|Hyperinflation in the Weimar Republic}}
[[File:Germany Hyperinflation.svg|thumb|alt=A chart with a black line depicting the rapid increase of hyperinflation.|A logarithmic scale depicting Weimar hyperinflation to 1923. One paper Mark per Gold Mark increased to one trillion paper Marks per Gold Mark.]]

Historians and economists differ on the subject of whether, and to what extent, reparations were a cause of hyper-inflation in the Weimar republic.

Amongst those stating that it was a cause, Erik Goldstein wrote that in 1921, the payment of reparations caused a crisis and that the [[occupation of the Ruhr]] had a disastrous effect on the German economy, resulting in the German Government printing more money as the currency collapsed. Hyperinflation began and printing presses worked overtime to print Reichsbank notes; by November 1923 one US dollar was worth {{nowrap|4,200,000,000,000 marks.}}{{sfn|Martel|2010|p=156}} Ferguson writes that the policy of the Economics Minister [[Robert Schmidt (German politician)|Robert Schmidt]] led Germany to avoid economic collapse from 1919 to 1920, but that reparations accounted for most of Germany's budget deficit in 1921 and 1922 and that reparations were the cause of the hyperinflation.{{sfn|Boemeke|Feldman|Glaser|1998|pp=409–410, 425}}

Several historians counter the argument that reparations caused the inflation and collapse of the mark, particular on the grounds that reparations payments, and particularly hard-cash payments, were in large part not made during the period of hyper-inflation and so could not be the cause of it. Gerhard Weinberg writes that Germany refused to pay, and by doing so destroyed their own currency.{{sfn|Weinberg|1994|p=16}} Anthony Lentin agrees and writes that inflation was "a consequence of the war rather than of the peace" and that hyperinflation was a result of the "German government's reckless issue of paper money" during the Allied occupation of the Ruhr.{{sfn|Lentin|2012|p=26}}

Contemporary British and French experts believed that the Mark was being sabotaged to avoid budgetary and currency reform and to evade reparations, a view supported by Reich Chancellery records. Historian [[Sally Marks]] endorsed that view, writing that historians who say reparations caused hyperinflation have overlooked "that the inflation long predated reparations" and the way "inflation mushroomed" between mid-1921 and the end of 1922 "when Germany was actually paying very little in reparations" and have failed to explain why "the period of least inflation coincided with the period of largest reparation payments&nbsp;...&nbsp;or why Germans claimed after 1930 that reparations were causing deflation". She writes "there is no doubt that British and French suspicions late in 1922 were sound".{{sfn|Marks|1978|p=239}} Marks also writes that the "astronomic inflation which ensued was a result of German policy", whereby the government paid for passive resistance in the Ruhr "from an empty exchequer" and paid off its domestic and war debts with worthless marks.{{sfn|Marks|1978|p=245}}{{sfn|Martel|1999|p=24}} Bell agrees and writes that "inflation had little direct connection with reparation payments themselves, but a great deal to do with the way the German government chose to subsidize industry and to pay the costs of passive resistance to the occupation [of the Ruhr] by extravagant use of the printing press". Bell also writes that hyperinflation was not an inevitable consequence of the Treaty of Versailles, but was among the actual results.{{sfn|Bell|1997|p=25}}