The Treaty of Versailles

The Treaty of Versailles marked the official end of WWI. It was the peace treaty between

the Allied Powers and Germany. The treaty was very harsh on Germany, causing Germanys

economic upheaval in the years that followed. It stripped Germany of resource-rich land,

severely cut the militia, and required Germany to pay for the war, which inevitably caused

Germany to go into an economic depression.

The Treaty of Versailles started in January 1919 and ended on June 28, 1919. The Palace

was chosen due to the size. Hundreds of delegates from the Allied Nations were all present for

the drafting of the treaty and creation of the League of Nations. The main members were the

leaders of the Allied Forces: Woodrow Wilson of U.S., David L. George of Great Britain, and

George Clemenceau of France. Others were involved such as Vittorio Orlando of Italy however,

the Big Three, as they were known, were the big negotiators of the Treaty. Woodrow Wilson

was not in favor of inflicting a strong punishment on Germany, while Clemenceau took a more

revengeful position. Germany and the Axis powers had little participation in the matter. The

amount of casualties and destruction was a big price of the war. So resentment, anger, frustration,

and revenge was the general feelings of the members at the meeting. Germany was given the full

blame of the war. In order to make sure Germany couldnt do anymore harm and as a way of

punishment Germany was stripped of many of its resources, militia, and was held responsible to

pay the war reparations. All this led to the depression and downfall of Germany.

Germany was forced to sign the treaty or risk the Allied Forces invading and imposing a

stricter treaty. According to the treaty, Germany was forced to give up about 13% of its land and

in so doing, lost valuable resources and close to seven million Germans citizens. This caused a

huge economic blow to Germany. Alsace-Lorraine, which was taken by Germany around 40
years previous, was given back to France, Eupen and Malmedy was given to Belgium, Northern

Schleswig was given to Denmark, Hultchin was given to Czechoslovakia. West Persia, Posen and

Upper Silesia was given to Poland. Land was also given to Russia that was taken by Germany

during the treaty between Russia and Germany in 1918. All German colonies were surrendered

and the large city of Danzig was put under the League of Nations as a free city. The Saar region

was also placed under the League of Nations. Finally, Rhineland was demilitarized and occupied

by Allied Forces.1 Germany already was facing the repercussions of war but the loss of resource-

rich and industrial territories, such as in the Saar Region and the Ruhr Valley, came as a bigger

burden to Germany.

John Keynes was a British Delegate who wrote a book describing the Treaty of Versailles

and its consequences, noting that the German economic rise before WWI was due to the

resources and the big immigrant population, In the years immediately preceding the war the

annual increase was about 850,000 of whom a significant proportion emigrated. This great

increase was only rendered possible by a far-reaching transformation of the economic structures

of the country. From being agricultural and mainly self-supporting, Germany transformed herself

into a vast and complicated industrial machine, dependent for its working on the equipoise of

many factors outside Germany as well as within. Only by operating this machine, continuously

and at full blast, could she find occupation at home for her increasing population and the means

of purchasing their subsistence from abroad.2 Germany quickly grew to become a big capitalist

nation because of their resources, especially coal and iron, as well as its industries such as

railroads and producing steel and weapons for the world markets. With the Treaty of Versailles

1 Ushmm.org, 2017

2 Keynes, 1919
taking much of the industrial land, it subsequently took with it the jobs that went towards

Germanys economy. Germany needed to fix its war-torn nation, but then also had to create new

jobs within its smaller nation. Along with all this, Germany had to pay the reparations.

On top of having to give up territories and their resources, Germany also had to make

severe Militia cuts. During WWI Germany had one of the top powerful armies. In August 1916,

Germany had about 2.85 soldiers serving in the West and about 1.7 million in the East3. By the

end of the war they had lost millions of lives but with the Treaty of Versailles the Allies wanted

to weaken Germanys militia strength further and make sure it stayed that way. This was another

blow to Germany as it not only meant that Germany was vulnerable to future attacks, but was a

loss of more jobs. As mentioned before, Rhineland was demilitarized and vacated by Allied

troops. Land on the West and the East were now occupied and/or under control of other

countries, making Germans worry about the future. The loss of militia jobs on top of the jobs that

went with the taken territories created a bigger economic defeat. Germany wasnt allowed to

unite with Austria, per the treaty, so they could not strengthen their military by making an

alliance. Germany had to reduce their military to 100,000 men and could not use air fare. The

loss of jobs wasnt just the cuts to the militiamen, but also to the production and sales of

weaponry and war machines like the submarines and tanks. Germany was restricted to six

battleships and could not possess any submarines. Germany was hurt both morally and

economically by these restrictions put on their military.

The biggest hit on Germany was the Treaty of Versailles Article 231 also known as the War

Guilt Clause. This clause gave blame to Germany for the war, forcing Germany to have to pay

war reparations or compensation. This was also justification for why Germany lost so much land

3 Simkin, 2015
to the Allied Powers and their allies. The Treaty of Versailles not only took resource-rich,

industry-heavy land that negatively affected Germanys economy and job market, but also put on

Germany all the civilian financial debt of the war, including the cost to rebuilt infrastructure in

countries like France that had cities demolished during the war. Also included was the cost it

took to feed the military and the pensions of the militiamen.4 Germany as a whole didnt see

themselves to be responsible for the war. However, the Allied Forces and the Big Three agreed

that the Central Power premediated the war, making it unavoidable and Germany being the big

militia power.5 Germany being on the side that lost and being in a position of agreeing to their

terms or risk more repercussions, they couldnt do anything but sign the treaty. The reparation

amount was put at 6,600 billion.

Germanys economy was on a downhill path because of the fact that Germany had to pay the

reparations and fix their own country with the loss of jobs and resources, effects of the Treat of

Versailles. Without the reparations Germany would have had more to go towards their businesses

and towards helping their country rebuilt and grow after the consequences of war. The

reparations instalments were to be paid quarterly in gold or foreign exchange backed by gold,

along with tradable commodities such as steel, raw iron or coal. Berlin was informed that any

defaults on these payments would lead to the occupation of the industrial Ruhr region and the

confiscation of raw materials and industrial equipment there.6 France and Britain invaded the

Ruhr region in 1923 because Germany didnt make the payment. This sent the economy spiraling

down, as the Ruhr region was a big industrial and natural resource area of Germany. Germanys

4 Rice University, 2016

5 Neff, 2005

6 Llewellyn, 2014
economy relied on imported raw materials and foreign trade, but because of the war and the

ensuing Treaty of Versailles and the Great Depression that came next, German had become more

isolated. Dwindling gold reserves only added to the issue. Germany went through hyperinflation

and their money became basically worthless. Germany ended up taking loans from the U.S. to

pay for the reparations under the Dawes Plan in 1924 that shifted a little bit of burden off of

Germany, but was then replaced by the Young Plan in 1929. The Dawes Plan made Germany

more dependent on foreign markets and economies than before, especially with the loans given

by the U.S. The Young Plan reduced the amount of the reparation even more, but then the U.S.

economy crashed, which was basically a final blow to Germany who was heavily reliant upon

the loans. The Treaty of Versailles justification for taking so much from Germany and then

forcing the country to pay the entire wars reparation, caused Germanys dependence upon other

countries which then led to Germanys downfall.

The Treaty of Versailles greatly hurt Germanys economy. The treaty legitimatized other

nations taking land and valuable resources, demilitarizing Germany, and forcing them to pay

back war reparation costs. By taking land and cutting back the military, jobs were lost and the

economy was hit hard. With having to pay the cost of the war, Germany went into a depression

with hyperinflation and inability to pay the cost. The Treaty of Versailles was supposed to make

sure there would be no other World War, but instead it demolished Germanys economy, which

allowed Hitler to rise to power and then start the WWII.

 Bibliography

German Territorial losses, Treaty of Versailles, 1919 (accessed March 2017)

https://www.ushmm.org/outreach/en/media_nm.php?MediaId=1620.

Keynes, John Maynard. The Economic Consequences of the Peace Chap 2, pg. 10-11. 1919

Simkin, John, First World War: The German Army, September 1997, updated 2015 (accessed
March 2017) http://spartacus-educational.com/FWWgermanA.htm.

American Civilization: A Brief History, Chapter 11 pg. 384. 2nd Edition, Salt Lake Community
College, 2016. This text has been adapted from U.S History by OpenStax College
2014 Rice University. Textbook content produced by OpenStax College is licensed under a
Creative Commons. Attribution 4.0 International License.

Neff, Stephen C. War and the Law of Nations: A General History. 2005. Cambridge: Cambridge
University Press. ISBN 978-0-521-66205-5.

J. Llewellyn et al, War reparations and Weimar Germany, Alpha History, 2014, (accessed March
2017) http://alphahistory.com/weimarrepublic/reparations/.