This came up in a history class today and it struck me as odd that the Allies would have structured the reparations agreement in a way that would have allowed the Germans to inflate their way out of it. And even if the Germans hadn't done so, it seems to me that German currency would have been good for a whole lot in the years after WWI. So what was the nature, both intended and actual, of the post-WWI reparations scheme?
No. Per the Treaty of Versailles, as quoted below, reparations were to be made in either gold or objects of value (coal, steel, etc).
Article 235
In order to enable the Allied and Associated Powers to proceed at once to the restoration of their industrial and economic life, pending the full determination of their claims, Germany shall pay in such installments and in such manner (whether in gold, commodities, ships, securities or otherwise) as the Reparation Commission may fix, during 1919, 1920 and the first four months of 1921, the equivalent of 20,000,000,000 gold marks. Out of this sum the expenses of the armies of occupation subsequent to the Armistice of November 11, 1918, shall first be met, and such supplies of food and raw materials as may be judged by the Governments of the Principal Allied and Associated Powers to be essential to enable Germany to meet her obligations for reparation may also, with the approval of the said Governments, be paid for out of the above sum. The balance shall be reckoned towards liquidation of the amounts due for reparation. Germany shall further deposit bonds as prescribed in paragraph 12 (c) Of Annex II hereto.
Article 236
Germany further agrees to the direct application of her economic resources to reparation as specified in Annexes, III, IV, V, and VI, relating respectively to merchant shipping, to physical restoration, to coal and derivatives of coal, and to dyestuffs and other chemical products; provided always that the value of the property transferred and any services rendered by her under these Annexes, assessed in the manner therein prescribed shall be credited to her towards liquidation of her obligations under the above Articles.
An important note is that the nature of reparations scheme changed multiple times.
The amount agreed on by the inter-Allied Reparations Commission in January 1921 was set at 132 million gold marks. This was however split into 3 categories. Schedule A payments were to be 12 billion marks, Schedule B 38 billion, and Schedule C 112 billion marks.
There are some scholars (Sally Marks is a prime example) that argue that the Schedule C payments basically only ever existed on paper, and that the Allied powers never expected to actually receive these nor for the Germans to actually pay them. The 'real' figure was the A+B payments of 50 billion marks.
This only lasted three years until the Dawes Plan of 1924 which informally rescinded the C payments, and set up a repayments scheme that after five years (and thereafter) was to be 2.5 billion marks/year.
The Young Plan of 1929 modified this again - setting out a total amount of 112 billion marks, with repayments on a schedule until 1988. This had the effect of basically halving the Dawes Plan annual payments.
An interesting article on the whole thing is Sally Marks, 'The Myths of Reparations' Central European History 11 (1978) 231-55