 Compensation demanded from the defeated party was a common feature of peace treaties . The financial burden of the Treaty of Versailles was labelled " reparations " , which distinguished them from punitive settlements usually known as indemnities . The reparations were intended for reconstruction and as compensation for families who had been bereaved by the war . Sally Marks wrote that the article " was designed to lay a legal basis for reparations " to be paid . Article 231 " established an unlimited theoretical liability " for which Germany would have to pay but the following article " in fact narrowed German responsibility to civilian damages " . When the final reparation figure was established in 1921 , it was based on an Allied assessment of [ the ] German capacity to pay , not on the basis of Allied claims . 
