Perhaps the Allies would have been more sympathetic to the German plight if the Spa Conference of July 5-16, 1920 had not concluded in a complete d�b�cle. The Allies were willing to negotiate alternative payment methods, as well as arms reduction. The occasion was ruined when Hugo Stinnes, a Rhenish mining tycoon, engaged in an outburst of threats to completely stop coal shipments if they continued with their arrogance. As a consequence, the Allies retorted with an ultimatum, demanding that Germany agree within three days to compensate for the belated shipments and disarm at once or face the occupation of the Ruhr. The distaste with which the Allies regarded Germany can also be attributed to her denial of the war guilt, which they perceived as a direct provocation. Furthermore, the government insisted it had delivered 21 billion marks of the 20 billion prescribed by Article 235 of the Versailles Treaty, when its calculation exaggerated its assets and even included material lost in the war, such as the scuttled ships at Scapa Flow. The Allies deemed such behavior evasive, leading Lloyd George to assert at the London Conference on March 3, 1921:

[Either] the German government does not intend to carry out its treaty obligations � or it has not the strength to insist, in the face of selfish and shortsighted opposition, upon the necessary sacrifices being made.¹⁹

In early 1921, two events would end the brief period of financial recuperation: (1) the situation in Upper Silesia, and (2) the London Ultimatum. In March, a plebiscite promised by the Versailles Treaty was held over the possession of Upper Silesia, with the result favoring Germany 1.46 : 1. Poland refused to accept the outcome and declared war. Before actual hostilities broke out, the League of Nations settled the dilemma, so that Poland acquired 93% of the coal mines, 64% of the steel mills, all lead and zinc foundaries, 69% of zinc and lead mines, and 75% of coal producing areas. The decision was a blow to the economy as well as the national pride, and Germany was deeply aggrieved by what she considered brazen favoritism.

On April 27, 1921, the Reparations Commission delivered the London Ultimatum, which demanded an immediate imbursement of a billion gold marks, and set the total reparations at 132 billion gold marks, or $33 billion, 52% of which would be appropriated by France, 22% by Great Britain, 10% by Italy, 8% by Belgium, and 8% by all other claimants. Following the Commission schedule, A and B bonds worth 12 billion and 38 billion gold marks, respectively, would be issued at the end of May 1921, both due by November 1, 1921. Beginning in November of 1921, Germany would also be expected to pay 26% of her export value, i.e., approximately 3 billion gold marks annually. When the A and B bonds were paid off, the 82 billion gold mark C bond would be issued. The new German government paid the one billion marks in 25 days as required by selling paper currency on the foreign exchange. As a result, from May to November, the mark had fallen from 62.3 to 262.96 to the dollar.

Footnotes
19     International Conciliation Pamphlets, May 1931, no. 162, p. 171, cited in Erich Eyck, A History of the Weimar Republic: From the Collapse of the Empire to Hindenburg's Election, Harvard University Press, Cambridge, MA � 1967, p. 177

       

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