Map of the occupation of the Rhineland
The Ruhr region had been occupied by Allied troops in the immediate aftermath of the First World War, during the Allied occupation of the Rhineland (1918–1919). Under the terms of the Treaty of Versailles (1919), which formally ended the war, Germany accepted responsibility for the damages caused in the war and was obliged to pay war reparations to the various Allies, principally France. The total sum of reparations demanded from Germany—around 226 billion gold marks (US $878 billion in 2018)—was decided by an Inter-Allied Reparations Commission. In 1921, the amount was reduced to 132 billion (at that time, $31.4 billion (US $442 billion in 2018), or £6.6 billion (UK £284 billion in 2018)). Even with the reduction, the debt was huge. As some of the payments were in raw materials, German factories were unable to function, and the German economy suffered, further damaging the country's ability to pay.
By late 1922, the German defaults on payments had grown so regular that a crisis engulfed the Reparations Commission; the French and Belgian delegates urged occupying the Ruhr as a way of forcing Germany to pay more, while the British delegate urged a lowering of the payments. As a consequence of a German default on timber deliveries in December 1922, the Reparations Commission declared Germany in default, which led to the Franco-Belgian occupation of the Ruhr in January 1923. Particularly galling to the French was that the timber quota the Germans defaulted on was based on an assessment of their capacity the Germans made themselves and subsequently lowered. The Allies believed that the government of Chancellor Wilhelm Cuno had defaulted on the timber deliveries deliberately as a way of testing the will of the Allies to enforce the treaty. The entire conflict was further exacerbated by a German default on coal deliveries in early January 1923, which was the thirty-fourth coal default in the previous thirty-six months. The French Premier Raymond Poincaré was deeply reluctant to order the Ruhr occupation and took this step only after the British had rejected his proposals for non-military sanctions against Germany. Frustrated at Germany not paying reparations, Poincaré hoped for joint Anglo-French economic sanctions against Germany in 1922 and opposed military action. However, by December 1922 he was faced with Anglo-American-German opposition and saw coal for French steel production and payments in money as laid out in the Treaty of Versailles draining away. Poincaré was exasperated with British opposition, and wrote to the French ambassador in London:
Judging others by themselves, the English, who are blinded by their loyalty, have always thought that the Germans did not abide by their pledges inscribed in the Versailles Treaty because they had not frankly agreed to them. ... We, on the contrary, believe that if Germany, far from making the slightest effort to carry out the treaty of peace, has always tried to escape her obligations, it is because until now she has not been convinced of her defeat. ... We are also certain that Germany, as a nation, resigns herself to keep her pledged word only under the impact of necessity.