The Was The German Reparations Problem?

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ECO342 Essay #1 Ning Kong 1000399730 November 18th, 2015 What was the “German reparations problem?” What, if anything, can we learn from the experience? After losing the WWI, Germany was forced to accept full responsibility for the war. Treaty of Versaille was signed in 1919 and it was leading by France, Britain and United States. The victorious western powers imposed the harsh treaties upon Germans without considering Germany’s capacity to pay it. The unfair blame and huge amount of reparations brought economic collapses and hyperinflation to this nation. While Germans were living in despair, it was an ideal situation for the Nazis and Hitler made the most of it. In this paper, I will argue how the ridiculously high reparation…show more content…
By 1921, she can not afford to pay the huge sum of reparation. Total expenditure under the terms of the Versailles treaty “in the years 1920 to 1923 amounted to at most 15% of Germany total spending. That total was still running around 33% of NNP although the reparations payments were subtracted.”On the other hand, Germany also needed to put energy on its own recovery after the war. Germany was caught between a rock and hard place. Moreover, she was forced to pay all the unfair debts and reparations in devalued Gold Marks, which led Germany to hyperinflation and economic distress. The huge sum of reparations destabilized Germany’s economy and led it into hyperinflation. After the WWI, Germany’s financial situation was already terrible, but the ridiculously high reparation further destructed her economy. To make reparations payments, Germany had to borrow large debt from other foreign countries. “Until 1931, German foreign debt stood at 21.514 billion marks.” “During the time, the debt Germany had was about 300% of its 1913 GDP, and reparation GDP per capita was around 2129 gold mark”It refers that every German wake up in the morning with debt greater than disposable income. Although the reparation commission reduced the reparation to “132 billion gold marks in 1921”, it was still
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