Versailles and Hyperinflation, Germany 1919-28.

Versailles and Hyperinflation,

Germany 1919-28.

Explain why Germany was treated in the way it was at Versailles. The most obvious reason to why Germany was treated in the way it was at Versailles is because the representatives of the country were not at the peace negotiations. The other countries would not allow them to be present, as these countries could then give severe punishments without having to argue with the German representatives over the consequences.

There were also many other reasons for the way Germany was treated. Germany before and during World War One, was one of the most powerful countries in Europe. If the Germans were treated very badly at Versailles, Britain would have been the most powerful country. This is what Lloyd George and the British public wanted. Britain also wanted revenge as she had lost many men during the War. Lloyd George did not, however want to take revenge on Germany, as he feared that she would retaliate later on, when she had become stronger. British politicians were under much pressure from the angry public. The British public wanted to take revenge as it was their family members that had died or been injured during the War. They felt that they should make Germany suffer, just as they had.

Georges Clemenceau, the French President, agreed with the British Public’s opinion. He agreed that Germany should suffer for the damages and loss she had caused. The French public also accepted that Germany should pay. Most fighting had taken place on French land; therefore, France had suffered the most damage, mainly by Germany. They had lost many soldiers and had damage to many buildings and much land. They wanted Germany to agree to many terms.

America had a completely different view on the consequences that should be faced by Germany. The President of America, Woodrow Wilson, felt that Germany should not be treated too harshly. He wanted World peace and proposed that Germany would take revenge. To help preserve world peace, Wilson made “fourteen points” which would hopefully reserve the peace which was lost during the Great War.

America’s views were not appreciated by the French and the British public. They believed that America should not have a very strong say in the peace treaty, as they were hardly effected by the War. America did not join the War until April 1917. The War ended on the 11th of November 1918. America only participated in the War for just over a year and a half, where Britain and France had been fighting since 1914! Britain and France lost thousands more men than America did. It was obvious that they would want revenge a lot more that America.

Many countries blamed Germany for starting the War. Germany was the first country to declare War on Russia, as they felt under threat. This sparked off a whole chain reaction of events, which lead to nearly all of Europe being at War. Many countries wanted Germany to accept the blame for starting the War, even if they believed it was not their fault.

Germany was in no place to argue with the other countries over disagreements. Germany’s army was defeated in World War One, so they had no way of physically fighting for their rights. Germany’s economy was also in trouble because of the War. There were food shortages, many people had died during the War and there was a severe case of Spanish flu, which was killing many people. Germany was also in a bad position politically. There was a communist revolt, which made Germany even weaker than it already was. The fact that Germany was in no position to argue made it a lot easier to meet harsh consequences for Germany.

Past controversies may be a reason as to why Germany was treated the way it was at Versailles. Because Germany had had disputes with the countries behind the peace treaty in earlier years, they may have appreciated t

Hat as a perfect time to take revenge. This was the case for France. In a previous disagreement, Germany had taken the territory of Alsace Lorraine from France. France then wanted this land, which was on the border of France and Germany, back.

The three big leaders of America, France and Britain eventually came to the decision of six major terms, which ...

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The three big leaders of America, France and Britain eventually came to the decision of six major terms, which Germany had to abide by. Germany had to take full blame for the War. This made them feel as if they were being blamed for losing the War. They had to reduce the size and placing of their army, navy and airforce. This would mean that they would have been a lot weaker than other countries, which still had full size military services. Germany had all of her overseas colonies taken away from her. Germany also lost land to France, Belgium, Denmark, Poland and The League of Nations. This meant that Germany lost some of its population as many Germans lived in the areas taken by these countries. The League of Nations was set up to settle future disputes by talking about problems between countries’, instead of using violence. Germany was forced to pay £6600 million reparations. By giving Germany economic problems, the allies felt safe from attack of a Nation, which before the Great War was extremely powerful.

All of the reasons which led to Germany being treated the way it was, were consequences of Germany not being allowed to be present at Versailles.

Versailles and Hyperinflation,

Germany 1919-28.

Describe the features of the economic crisis in Germany in 1923.

The main feature of the economic crisis in Germany in 1923 was hyperinflation. The Germany currency, the mark, became almost worthless because Germany had to pay reparations of £6600 million to the allies. They printed thousands of notes, which meant that their value decreased. The more notes printed, the lower the value of the mark became. In January 1929 there was 64 marks to the dollar, but in November 1923 there was 4.2 trillion marks to the dollar! People needed a wheelbarrow to carry their daily wages! Instead of using wallets, people used suitcases to carry their money in! The daily salary of an editor of a magazine, which would be a fairly well paid job, was only enough to buy a loaf of bread, a small piece of cheese and some oatmeal. Many people lost their life savings because the value of the mark had decreased so dramatically. Overnight, savings could be reduced to almost nothing! Many people were starving because they were not being paid enough to keep up with taxes and the cost of food.

The government was not helping the Germany people because they had to pay reparations to the allies. All payments of any kind made to the Government went to the allies, rather than helping the German people first.

Lots of Germans became unemployed. People working in any kind of job other than food shop keeping or farming found it hard to make a living. This is because people didn’t have money to buy anything else, other than food, so other trades were declining.

Not everyone, however, was badly affected by the economic crisis. The shop keeping trade was booming! As soon as people were paid their daily salary, they would rush out to buy their essentials before the shop was sold out or prices went up. With most of Germany doing this, shop owners had money pouring in. Bankers, industrialists and currency speculators who were able to deal in foreign currency or land also benefited from the economic crisis and hyperinflation.

People who lived in the countryside were not doing too badly either. This is because they were growing their own food, which meant that they could feed their family as well as selling some of their produce.

Yet in the cities, health and hygiene standards were decreasing. City people were eating a very un-nutritional and unbalanced diet, as they could not afford to have a variety of foods. This lead to the appearance of diseases. There were appearances from diseases such as “edema” and “War dropsy” because of a watery diet. Food poisoning became common because people were eating spoiled foods, as they were starving. People could easily die from these conditions, as German medical care was not as good as it was before the economic crisis.

Even though some people benefited from the economic crisis in Germany, millions did not. The amount of people earning lots of money and being able to afford food and have good hygiene standards was not enough to equal out to the amount of people who were unemployed, homeless, starving and dying from disease.

Versailles and Hyperinflation,

Germany 1919-28.

Why was there an economic crisis in Germany in 1923?

There are several causes to the economic crisis in Germany in 1923. The Great War contributed greatly to this, but Germany’s problems had begun even before the War had started.

In 1914 the German Government decided to come off of the ‘Gold Standard’. This was a system in which every bank note had an equivalent sum of gold, kept in the vaults of the German Central Bank. You could go to the bank and would be able to swap your note for gold, although people would normally use the notes to buy things, like an IOU, as it was easier to do this than to use pieces of gold. When the First World War began in 1914, Germany needed more money to pay for food and weapons. The German Government found that the easiest way to obtain more money was to print more notes. This decreased the actual value of the money, as there was more money in circulation. During the War there were food shortages, this meant that there was too few goods to buy for the amount of money that there was in circulation. We can see that inflation occurred, because of the drastic fall in the value of money. In January 1921, there were 64 marks to the dollar, by November 1923; this amount had risen drastically to 4.2 trillion marks to the dollar! Inflation had been occurring since 1914, so was a long-term cause of the economic crisis.

When Germany lost the Great War to the allies, they had to agree with the terms of the ‘treaty of Versailles’. One of the terms of this treaty was that Germany had to lose land to France, Belgium, Denmark, Poland and the League of Nations. When losing this land, the German Government lost the tax income from it. The tax income could have helped to pay the reparations of £6,600 million, which was also a term of the ‘Treaty of Versailles’. Reasons for the economic crisis, involving the ‘Treaty of Versailles’ were short-term causes because they happened quite suddenly, rather than over a long period of time. The land lost contained 14% of arable farmland. It produced food and work for the surrounding area. There was now even less food, making the problem of food shortages even worse. This land also contained 74% of Germany’s iron ore, 68% of her zinc ore and 26% of her coal- most of the country’s wealth. Germany could not afford to pay her reparations. This was linked to the invasion of the Ruhr. The ‘Treaty of Versailles’ also meant that Germany had to reduce its army to 100,000 men. As France no longer felt as strongly under threat by the German army and wanted their reparations paid up, they felt that they could invade the Ruhr. The Ruhr is the most industrialised part of Germany. Poincarre, the French leader, sent in five divisions of French soldiers to acquire the reparations they were owed. A division of Belgian soldiers joined them. They intended to take control of the German factories and mines in this area. All goods produced would be shipped off to France, until the reparations owed to the French were paid. This was a short-term cause to the economic crisis, as it only happened over a matter of days and weeks, unlike inflation, which was occurring for years. Germany could do nothing to stop this. This made Germany very ashamed, especially after losing the War and having to agree with the terms of the ‘Treaty of Versailles’ as well. The Government ordered passive resistance. The French had no one to work for them as the Ruhr workers’ were ordered to go on strike. They were ordered to refuse to co-operate with the occupiers. The French then kicked 150,000 German workers out of the Ruhr. They fled as refugees. This produced yet another problem for the already suffering Government and people of Germany. How could they afford to feed, clothe and house the refugees? All their money was already being used to pay reparations, how could they afford this? These problems were solved, but by causing another problem. It seemed that the only way to overcome the problem of the refugees was to print more money. The money in circulation now was growing greatly and the cost of living was increasing. The economic crisis was a vicious circle, by solving one problem they were creating another. It seemed as though it was never going to end.

Although there were many causes for the economic crisis, I believe that one made a bigger impact than the others. The Great War, the costs of which were astronomical, both during and after. The War increased the effect of inflation, as the Government printed more notes to try and cope with the problems the War was bringing, therefore decreasing the value and making problems worse. After the War, the ‘Treaty of Versailles’ produced many difficulties. All of the problems caused by this linked with each other and then back to inflation. The German economic crisis was inevitable because the Government did not know that coming off of the ‘Gold Standard’ would cause inflation- it was going to happen, they thought it would be better, not worse. They could not have prevented the ‘Treaty of Versailles’ as they lost the War. They didn’t purposely lose the War to cause themselves problems,the problems were inevitable. The economic crisis was waiting to happen, Germany could not have stopped it!

Versailles and Hyperinflation,

Germany 1919-28.

4) How far was the political situation in Germany stabilised by 1928?

By 1928, the German political situation was fairly stable, although not completely.

The main reason for Germany managing to stabilise herself was Gustav Stresemann. Stresemann became chancellor briefly in September 1923 and remained Foreign Minister until his death in October 1929. Stresemann came to power during the German economic crisis of 1923. He aimed to relieve Germany of the turmoil, which she was in at this time. The economic crisis of 1923 meant that the government was weak. Weak leadership led to the German people having problems, which could not be solved. People began to protest and demonstrate against the government. The Treaty of Versailles also gave many problems, which the government could not solve.

He began his aim by solving the problem of Hyperinflation. He did this by recalling all the old inflated banknotes and destroying them. He created a new currency, called the Retenmark. As the German people saw that Hyperinflation was being defeated, they gained trust in money again.

To recover industry, however, the economy needed more money. They received this in the form of loans from abroad and from the United States of America in the form of investment. As a result of this, more goods were produced and exports rose. This meant that the labour force had to be increased and therefore unemployment dropped.

There was still the problem of all German money going towards paying the War reparations. Stresemann negotiated the Dawes Plan in 1924. The Dawes Plan was an agreement between Germany, the U.S.A., Britain and France. It aimed to avoid a crisis over reparations like the one in 1923. It reorganised the reparation payments into stages that Germany would only pay if she could.

Stresemann called off passive resistance in the Ruhr. Since Germany had begun to pay her reparations again, the French and Belgian troops had no real reason to stay in the Ruhr, so began to withdraw.

Germany also signed the Locarno pact with France, Belgium, Britain and Italy. The pact was an agreement that the countries keep the existing borders between Germany, France and Belgium. At this Locarno Pact agreement, Germany was involved in the negotiations as an equal to the other countries. This was a great success, showing that Germany had managed to remove some of the bitterness left over from the War.

It was made even clearer that Germany was successful in removing the bitterness left from the war when in 1926 Germany was given a permanent seat on the council of the League of Nations.

Even though Germany had had all of these successes, she was still not completely stable.

Germany had become dangerously dependant on the American boom of the 1920’s, through loans and trade. If America was to have any future financial problems, which it did with the economic depression of 1929, then Germany would also be badly affected by it.

As much as it seemed that Germany had removed bitterness between foreign countries, she still had not. Although they had agreed with Stresemann’s plans and pacts, they had still not been won over.

Even though the German people were relatively stable and did not need to support extremist parties, some still agreed with their ideas, so still supported them. The Munich Putsch seemed to be a problem for Hitler and the Nazis but was not completely. Although Stresemann managed to overcome the problem in the short term, he made it worse in the long term because he enabled Hitler to produce plans, which were more likely to work. Extreme parties like the Nazis opposed Stresemann. They had Storm Troopers that encouraged support for the Nazis. If you did not support the Nazis, the Storm Troopers would beat you up and damage your property.

Even though the political situation had been partially stabilised, it was on the surface only. Stresemann needed to conquer a lot more problems, especially the problem of opposition extremist parties, before the political situation was safely stabilised and there was no longer a threat of revolts, uprisings etc.