Germany was blamed for starting World War I, and this guilt was stated in Article 231 of the Treaty of Versailles that ended the war. This clause has been called the "War Guilt Clause." Part of the reason Germany was punished for the war was so that the Germans could pay reparations, or money, to Britain and France to compensate them for the losses these countries had incurred in the war. This amount was crippling to Germany (in 1921, it was settled at about $12.5 billion) and was far more than the fines, or indemnities, that more lenient victors thought Germany should pay. Though the reparations that Germany agreed to were very high, they were still less than some Europeans wanted. The Americans who wrote the War Guilt Clause, including John Foster Dulles, did not think the clause would engender as much controversy as it did, as they saw the clause merely as a legal way to get Germany to pay reparations. 

Germans were also punished because they had pushed the conflict between Serbia and Austria-Hungary into a war. Instead of agreeing to a peace conference after the assassination of Archduke Franz Ferdinand of Austria-Hungary in June of 1914, they declared war on Russia and France. Nations such as France also wanted to punish Germany through large reparations to make sure Germany's economy would be crippled so that the Germans could not threaten other European nations.

The Germans reacted to the War Guilt Clause with great opposition, as their loss was a humiliation and they did not think they deserved all the blame for starting the war. Many historians and diplomats began to believe, particularly in the years leading up to and after World War II, that the guilt clause and reparations had been mistakes that in part paved the way for Hitler's rise to power after Germany was humiliated.