The Treaty of Versailles (1919) formally asserted Germany's war guilt and ordered it to pay reparations to the Allies. The United States did not ratify the treaty and waived all claims on reparations. A reparations commission fixed sums in money some payments were to be in kind (i.e., coal, steel, ships). The chaotic German economy and German government resistance made it difficult for the Allies to collect amounts due them, and they in turn declared it impossible to honor their war debts to the United States. In 1923, French and Belgian troops occupied the Ruhr district after Germany was declared in default. The Dawes Plan (1924) and the Young Plan (1929) sought to ease the strain of reparations payments. By 1931 the world economic situation had so deteriorated that a one-year moratorium on all intergovernmental debts was announced. The Lausanne Pact of 1932 substituted a bond issue for the reparation debt, but Adolf Hitler repudiated the debt, and German payments were not resumed until after 1953. Reparations were also demanded in treaties with Germany's allies in the war—Austria, Hungary, Bulgaria, and Turkey—but the amounts were never set and nothing was collected.
In 1945 the Allies assessed Germany for damages suffered in World War II. Payments were to be effected chiefly through removal of assets and industrial equipment. The Western powers and the USSR came into conflict over reparations, and seizures of capital goods and German assets in Allied or neutral countries proceeded unevenly. The Western powers ended reparations collections from West Germany in 1952, and the USSR ceased collection from East Germany a year later, although official renunciation of claims did not occur until 1954 in both cases. In 1953 the West German government agreed to pay reparations to Israel for damages suffered by the Jews under the Hitler regime. Lesser reparations claims were made against Germany's allies in the war—Bulgaria, Finland, Hungary, Italy, and Romania. The Western powers did not support these claims, and payments to the nations that asked compensation were arranged through separate treaties.
Japan also had to pay reparations after World War II. The United States administered removal of capital goods from Japan, and the USSR seized Japanese assets in the former puppet state of Manchukuo. The United States ended collections from Japan in 1949 and renounced further claims in 1951. At that time Japan agreed to settle the reparations claims of Asian nations by individual treaties with those countries. These treaties were subsequently negotiated.
See J. M. Keynes, The Economic Consequences of the Peace (1919) C. G. Dawes, A Journal of Reparations (1939) B. Ratchford, Berlin Reparations Assignment (1947) A. Cairncross, The Price of War (1986) B. Kent, The Spoils of War (1989).
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.
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