Weimar Germany as we have seen was a democratic state whose fate was largely out of its own control. It was facing political opposition from left and from the right and had no way of dealing effectively with the political polarisation. Unfortunately, it also continued to bleed through its economy.
1. The Treaty of Versailles
1. Reparations for the German economy were set at 6.6 billion marks
2. Germany had lost 12% of its population, mostly men. Therefore, it lost a significant amount of the manpower required to rebuild the industrial strength of Germany.
3. Germany was forced to give up the region of Alsace-Lorrains, one of the most important industrial regions in Germany at the time.
4. The ToV stipulated that the reparations were to be paid back to the allied nations in a staggered payment. This payment was to be 2.5% of Germany's annual GDP.
5. In 1921, the Germans were able to pay the said reparations, however in 1922 they were forced to default on their loan, leading to dire consequences.
2. Hyperinflation
1. The German government called for passive resistance from its workers in the form of a strike. The French and Belgian would not stand for such nonsense, instead choosing to kill 130 workers and displacing a further 156,000 from their homes.
2. The German government responded with rather desperate measures and decided that it would be a good idea to start printing money excessively in order to repay the reparations. This forced the value of the mark to devalue at an exponential rate. In January of 1923, a loaf of bread cost 163 marks, by November of 1923, a loaf of bread cost 230 billion marks.
Primary Source:
"People had to start carting their money around in wagons and knapsacks. I used a knapsack."
George grosz, German Artist
3. The Rebirth of Economic Stability (somewhat)
In the middle of what seemed to be a never ending crisis, along came a saviour in the form of Gustav Stresemann. Stresemann was at the time foreign minister and he incited a great economic turnaround for the struggling democratic nation.
Facts:
1. He managed to stabilise the currency, replacing the mark with the Rentenmark
2. He managed to organise the Dawes plan for Germany, upon which 800 million mark was to be lent in order to kickstart the flailing economy.
3. By 1925, steel production was greater than even pre-war (pre 1914) levels. By 1929, a staggering 33% increase had been reached.
However, this economic prosperity was to be short lived as it meant that the German economy was tied to the fate of the American economy. Hence, when the wall street crash took place on October 29th, 1929, the platform of financial aid that had been built for Germany was stripped from underneath.
1. The Treaty of Versailles
- The ToV stipulated that Germany be forced to pay huge reparations to the allied nations - with the intention of cutting Germany off from below its knees.
1. Reparations for the German economy were set at 6.6 billion marks
2. Germany had lost 12% of its population, mostly men. Therefore, it lost a significant amount of the manpower required to rebuild the industrial strength of Germany.
3. Germany was forced to give up the region of Alsace-Lorrains, one of the most important industrial regions in Germany at the time.
4. The ToV stipulated that the reparations were to be paid back to the allied nations in a staggered payment. This payment was to be 2.5% of Germany's annual GDP.
5. In 1921, the Germans were able to pay the said reparations, however in 1922 they were forced to default on their loan, leading to dire consequences.
2. Hyperinflation
- In the beginning of 1923, the Belgian and French troops occupied the Ruhr region (Borussia Dortmund's home for you football aficionados) - one of the last remaining industrial areas in Germany. The intent was to recuperate the lost reparations, however things quickly turned sour.
1. The German government called for passive resistance from its workers in the form of a strike. The French and Belgian would not stand for such nonsense, instead choosing to kill 130 workers and displacing a further 156,000 from their homes.
2. The German government responded with rather desperate measures and decided that it would be a good idea to start printing money excessively in order to repay the reparations. This forced the value of the mark to devalue at an exponential rate. In January of 1923, a loaf of bread cost 163 marks, by November of 1923, a loaf of bread cost 230 billion marks.
Primary Source:
"People had to start carting their money around in wagons and knapsacks. I used a knapsack."
George grosz, German Artist
3. The Rebirth of Economic Stability (somewhat)
In the middle of what seemed to be a never ending crisis, along came a saviour in the form of Gustav Stresemann. Stresemann was at the time foreign minister and he incited a great economic turnaround for the struggling democratic nation.
Facts:
1. He managed to stabilise the currency, replacing the mark with the Rentenmark
2. He managed to organise the Dawes plan for Germany, upon which 800 million mark was to be lent in order to kickstart the flailing economy.
3. By 1925, steel production was greater than even pre-war (pre 1914) levels. By 1929, a staggering 33% increase had been reached.
However, this economic prosperity was to be short lived as it meant that the German economy was tied to the fate of the American economy. Hence, when the wall street crash took place on October 29th, 1929, the platform of financial aid that had been built for Germany was stripped from underneath.