War reparations
"War Guilt" Clause
The Allied delegates placed a clause in the stating that Germany was at fault for the war and took full responsibility for her actions. As similar clauses are in most peace treaties, the German delegates saw it as simply assigning blame for the war. Instead it open the door for extensive war reparation payments from Germany to the Allies.
"Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies." ~Excerpt from Article 231 (the "War Guilt" Clause) of the Treaty of Versailles
The Numbers
Originally assessed at 269 billion German gold marks, it was established in 1921 that Germany and its Allies caused 132 billion German gold marks of damages. Of these damages, Germany and her allies had to pay 50 billion marks of war reparations. The remaining 82 billion marks were just to convince the public Germany was paying for the devastation it had caused. Before World War II, Germany would only pay 21 billion marks of the amount due by 1988.
Hyperinflation
The war reparations quickly devalued the German currency, as they had to be payed in either gold marks or foreign money. The exchange rate between paper marks and the U.S. dollar skyrocketed. At the end of World War I (1919) , the paper work was worth over 8 U.S. dollars. In early 1921, 60 marks were worth about one U.S. dollar and by the end of the year the exchange rat had fallen to 330 to the dollar. By November 1923, hyperinflation was at its worst. The German government would create a new currency, back it up with gold, and fix the amount of money in circulation. Hyperinflation would stall, then reverse.
In November 1923, One U.S. Dollar was worth 4,210,500,000,000 German Paper Marks.