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The Treaty of Versailles of 1919-20, aside from setting up a kind of international police force - the League of Nations, mainly set terms for dealing with Germany. These included taking blame for initiating World War I, restrictions on military, loss of territory, and reparations. The losses of territory militarily would be a lesser extent than the losses on Germany economically. Germany's military losses included restricting its armed forces. The army was limited to 100,000 men, …

…hope for peace, and military affairs were to be of less importance. Germany certainly did not want another war, especially as its economy was in ruins. Reparations was the main factor which injured the German economy further, as the country was already damaged, demoralized, and now in debt. Looking at effects of the Versailles treaty, we can see that the economic component is arguably a major enervating factor on Germany after the First World War.