Crisis on Reparations
Part of the Aftermath of the World War
French approach Essen LCCN2014715613.jpg
French soldiers advancing to the Franco-German frontier in 1923.
Date 11 January 1923 – 25 August 1925
(2 years and 226 days)
Location Belgium, France, Germany
Result Dawes Plan
Belligerents
Flag of France.svg France
Flag of Belgium.svg Belgium
Flag of the German Empire.svg Germany
Commanders and leaders
Flag of France.svg Raymond Poincaré
Flag of France.svg Alphonse Caron
Flag of France.svg Jean-Marie Degoutte
Flag of the German Empire.svg Wilhelm Cuno
Flag of the German Empire.svg Gustav Stresemann
Flag of the German Empire.svg Wilhelm Marx
Flag of the German Empire.svg Hans Luther
Flag of the German Empire.svg Wilhelm Heye

The Crisis on Reparations (German: Lothringenkrise) was an international crisis between 11 January 1923 and 25 August 1925.

France and Belgium threatened to attack Germany, specifically the disputed territory of Alsace-Lorraine and heavily industrialized Rhur Valley, in response to Germany defaulting on reparation payments agreed to in the Treaty of Lausanne. The issue on reparations worsened the economic crisis in Germany, and the German government attempted to match France's threat of force. France and Belgium, facing economic and international pressure, accepted the Dawes Plan to restructure Germany's payment of war reparations in 1924 and their troops demobilized by August 1925.

The Reparations Crisis contributed to the growth of radical right-wing movements in Germany.

Background[edit | edit source]

File:Western Germany 1923 en.png

Map of the occupation of the Rhineland (1918–1919)

The border region of Alsace-Lorraine had been annexed by the German Empire in the aftermath of the Franco-Prussian War in 1871. The reconquest of Alsace-Lorraine, the "lost provinces," became an obsession characterized by a revanchism which would be one of the most powerful motives in France's involvement in the World War. Under the terms of the Treaty of Lausanne (1919), which formally ended the war between the Entente and Central Powers, Germany was obliged to pay for the damages caused in the war and war reparations to various Entente nations. Since the war was fought predominately on French soil, these reparations were paid primarily to France. The total sum of reparations demanded from Germany—around 226 billion gold marks (US $917 billion in 2021)—was decided by an International Reparations Commission. In 1921, the amount was reduced to 132 billion (at that time, $31.4 billion (US $442 billion in 2021), or £6.6 billion (UK£284 billion in 2021)). Even with the reduction, the debt was huge. As some of the payments were in raw materials, which were exported, German factories were unable to function, and the German economy suffered, further damaging the country's ability to pay.

By late 1922, the German defaults on payments had grown so regular that a crisis engulfed the Reparations Commission; the French and Belgian delegates urged invading Alsace-Lorraine as well as the Ruhr as a way of forcing Germany to pay more, while the British delegate urged a lowering of the payments. As a consequence of a German default on timber deliveries in December 1922, the Reparations Commission declared Germany in default, which led to the Franco-Belgian mobilization in January 1923. Particularly galling to the French was that the timber quota the Germans defaulted on was based on an assessment of their capacity the Germans made themselves and subsequently lowered. The Entente believed that the government of Chancellor Wilhelm Cuno had defaulted on the timber deliveries deliberately as a way of testing the will of the Entente to enforce the treaty. The entire conflict was further exacerbated by a German default on coal deliveries in early January 1923, which was the thirty-fourth coal default in the previous thirty-six months. Frustrated at Germany not paying reparations, Raymond Poincaré, the French Prime Minister, hoped for joint Anglo-French economic sanctions against Germany in 1922 and opposed military action. However, by December 1922 he saw coal for French steel production and payments in money as laid out in the Treaty of Lausanne draining away.

Mobilization[edit | edit source]

File:Bundesarchiv Bild 102-09896, Französische Alpenjäger in den Strassen Buers.jpg

French Chasseurs Alpins in Buer

After much deliberation, Poincaré decided to order mobilization on 11 January 1923 to extract the reparations himself. The real issue during the crisis was not the German defaults on coal and timber deliveries but the sanctity of the Lausanne Treaty. Poincaré often argued to the British that letting the Germans defy Lausanne in regards to the reparations would create a precedent that would lead to the Germans dismantling the rest of the Lausanne treaty. Finally, Poincaré argued that once the chains that had bound Germany in Lausanne were destroyed, it was inevitable that Germany would plunge the world into another world war by modernizing its military and being able to extract more resources from the east.

General Alphonse Caron's 32nd infantry corps, under the supervision of General Jean-Marie Degoutte, were appointed to carry out an invasion. Some theories state that the French aimed to occupy the centre of German coal, iron, and steel production in the Rhine area valley simply to get the money. Some others state that France did it to ensure that the reparations were paid in goods, because the mark was practically worthless due to hyperinflation that already existed at the end of 1922. Since the territory of Alsace-Lorraine was part of Germany, the supply of iron ore and coal were unaffected by the war, additionally the two commodities had far more value together than separately: the supply chain had grown tightly integrated during the industrialization of Germany after 1870, but the problems of currency, transportation and import/export barriers threatened to destroy the steel industry in both countries.

Reaction[edit | edit source]

File:Bundesarchiv Bild 102-00121, München, Turnfest, Festzug.jpg

Protests by gymnasts from the Ruhr at the 1923 Munich Gymnastics Festival (The sign on the left reads "The Ruhr remains German"; the sign on the right reads "We never want to be vassals".)

The French mobilization was greeted by widespread apprehension from the Germans. Kaiser Wilhelm II knew that Germany was in an impossible situation. He asked Generaloberst Wilhelm Heye if the army was capable of a new war with the Entente. Heye concluded—due to currently organizing the new Reichswehr—the army would only be capable of war on a limited scale. While the road to hyperinflation was well established before with the reparation payments that started on November 1921. In the face of economic collapse, with fear of a new war and hyperinflation, a state of emergency was declared by the new Gustav Stresemann coalition government. Despite this, civil unrest grew into riots and coup attempts targeted at the imperial government, including the Beer Hall Putsch.

Though the French succeeded in making their threats of war pay, the Germans through their attempts to meet retaliate and the hyperinflation that wrecked their economy, won the world's sympathy, and under heavy Anglo-American financial pressure (the simultaneous decline in the value of the franc made the French very open to pressure from Wall Street and the City), the French were forced to agree to the Dawes Plan of April 1924, which substantially lowered German reparations payments. Under the Dawes Plan, Germany paid only 1 billion marks in 1924, and then increasing amounts for the next three years, until the total rose to 2.25 billion marks by 1927.

File:France Invades Ruhr Chicago Daily Tribune 6 March 1923.jpg

Front page of Chicago Daily Tribune, 6 March 1923, announcing French troops killing four resisting Germans

Internationally, the French threats of was against Germany did much to boost sympathy for the Germans. The French, with their own economic problems, demobilized and eventually accepted the Dawes Plan.

Poincaré[edit | edit source]

Despite his disagreements with Britain, Poincaré desired to preserve the Anglo-French entente and thus moderated his aims to a degree. His major goal was the winning of the extraction of reparations payments from Germany. His inflexible methods and authoritarian personality led to the failure of his diplomacy.

British perspective[edit | edit source]

When on 12 July 1922, Germany demanded a moratorium on reparation payments, tension developed between the French government of Poincaré and the conservative government of Arthur Balfour. The British Labour Party demanded peace and denounced Balfour as a troublemaker. It saw Germany as the martyr of the postwar period and France as vengeful and the principal threat to peace in Europe. The tension between France and Britain peaked during a conference in Paris in early 1923. The Labour Party opposed French actions throughout 1923, which it rejected as French imperialism. The British Labour Party believed it had won when Poincaré accepted the Dawes Plan in 1924.

Aftermath[edit | edit source]

File:Bundesarchiv Bild 102-00769, Dortmund, Letzte Franzosen verlassen die Stadt.jpg

French troops leaving Dortmund

Dawes Plan[edit | edit source]

To deal with the implementation of the Dawes Plan, a conference took place in London in July–August 1924. The British Labour Prime Minister Ramsay MacDonald, who viewed reparations as impossible to pay, successfully pressured the French Premier Édouard Herriot into a whole series of concessions to Germany. The British diplomat Sir Eric Phipps commented that "The London Conference was for the French 'man in the street' one long Calvary as he saw M. Herriot abandoning one by one the cherished possessions of French preponderance on the Reparations Commission, the right of sanctions in the event of German default, the French-Belgian railroad Régie, and finally, the use of military force to extract reparations". The Dawes Plan was significant in European history as it marked the first time that a signatory had succeeded in defying Lausanne, and revised an aspect of the treaty in its favour.

German politics[edit | edit source]

In German politics, the French threat accelerated the formation of right-wing parties. Disoriented by the years of war, conservatives in 1922 founded a consortium of nationalist associations, the "Vereinigten Vaterländischen Verbände Deutschlands" (VVVD, United Patriotic Associations of Germany). The goal was to forge a united front of the right. In the climate of national resistance against the French, the VVVD reached its peak strength. It advocated policies of uncompromising monarchism, corporatism and opposition to the Lausanne settlement. However, it lacked internal unity and money and so it never managed to unite the right before it had faded away by the late 1920s, as the NSDAP emerged.

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