The Weaknesses Of The Weimar Economy

First, the defeat of WWI was not just the beginning of the Weimar Republic but could be considered a catalyst to its downfall as well. During the later stages of WWI

After World War One, Germany was thrown into downward spiral. They were left with a monstrous amount of

Hitler also brought his country out of an economic depression. The German depression was caused mainly by the Treaty of Versailles, and its detrimental economic impact on Germany. Basically, Germany was forced to pay for all damages caused by the First World War. Hitler’s policies that helped the German economy were part of his Third Reich. Hitler’s Third Reich led to one of the greatest expansions of industrial production and civil improvement in German history. This success was mainly due to the expansion of the military and the expansion of the money supply through deficit spending.

One of the terms that Germany had to meet was A large debt in gold for reparations to the other countries, Which was 132 billion gold marks (Doc C). Although they had to pay off reparations to other counties they did not have to rebuild bridges, roads, schools, and business as did their other allies. Germany had to suspend payments due to the Great Depression in 1931 also

• The German government made on payment of reparations to France, but the following year it announced it could not make any more payments due to financial crisis.

The defeat of Germany in World War I and the followed signing of the Treaty of Versailles reshaped the German society and economy and also created upheaval within them. The loss of the war and the signing of the Treaty of Versailles led to the collapse of the imperial government and economy (Aleskerov 25). As a result, in 1918, a new government called the Weimar Republic was established. During its history, the Weimar Republic was unstable and suffered budgets and high rates of unemployment essentially caused by the Treaty of Versailles (“Treaty of Versailles, 1919” 1). The Treaty of Versailles required that Germany pay outrageous war reparations which had notable effects on Germany’s economy (Aleskerov 26).

A factor that caused economic instability in Germany was the Weimar Republic. The Weimar Republic was put in place of the old German government post-WWI. The Weimar Republic caused many problems such as economic instability for Germany. An example of this is, “...the economic instability of the 1920s and early 1930s [made things worse for] the

Germany emerged from World War I with huge debts incurred to finance a costly war for almost five years. The treasury was empty, the currency was losing value, and Germany needed to pay its war debts and the huge reparations bill imposed on it by the Treaty of Versailles, which officially ended the war. The treaty also deprived Germany of territory, natural resources, and even ships, trains, and factory equipment. Germany’s population was undernourished and contained many widows, orphans, and disabled veterans living in poverty. The new German government struggled to deal with these crises, which had produced a serious hyperinflation.

When World War I ended in 1918, it had many unforeseen economic consequences. Despite a stable economy when entering the war, the political consequences of World War I helped to spread and exacerbate the Great Depression. After the war, Germany had millions of dollars in reparations to the winning countries. France and Great Britain had massive damage to their countries and cities, all of which required rebuilding. The United States recognized a need and was more than willing to lend to these countries. When the Great Depression hit in 1929, U.S. banks started to fail, and began to call in these foreign loans and refused to lend more. Results of the Great Depression include a decline

In Germany the economy was especially vulnerable since it was built out of foreign capital, mostly loans from America and was very dependent on foreign trade. When those loans suddenly came due and when the world market for German exports dried up, the well-oiled German industrial machine quickly ground to a halt. As production levels fell, German workers were laid off. Along with this, banks failed throughout Germany. Savings accounts, the result of years of hard work, were instantly wiped out. Inflation soon followed making it hard for families to purchase expensive necessities with devalued money. Overnight, the middle class standard of living so many German families enjoyed was ruined by events outside of Germany, beyond their control. The Great Depression began and they were cast into poverty and deep misery and began looking for a solution, any solution. By mid-1930, amid the economic pressures of the Great Depression, the German democratic government was beginning to unravel. The crisis of the Great Depression

Also to Germany's disadvantage, the funds could be withdrawn at short notice. As the country was economically becoming more stable, the public spending was increasing which was not good as the money in the country was coming from loans. Although export production was stronger than before, they had been accompanied by a wave of imports which caused a trade deficit; the country was importing more than it was exporting which meant trading was unbalanced. In the early 1920s there was unemployment however by they end of the 1920s the unemployment numbers had increased, one of the main reasons being because trade unions were successful in winning wage increases for their members.

After World War I Germany could make no money because all of these factories were bombed. They could not make any goods because they had no factories to make any in. Also a lot of farmland was destroyed so they had to get all that back and grow more food. They had no money so they couldn't buy anything from other countries. They had to get by with the little amount of things they have left. Germany had money but after the war there currency was just about worthless. This was the complete opposite for the United States seeing as World War I really helped our economy. After World War II Austria Hungary was no longer a country.

Their military was downsized to the maximum of 100,000. All weapons that remained from World War I were to be scrapped in efforts of disarming Germany. Submarines and aircraft were banned completely in Germany and only 36 ships were allowed to serve as the German Navy (Goldstien, Dillion, p.124,1988). Under the conditions of the treaty, Germany was also responsible for an estimate of 6.6 million dollars-worth of war reparations (Goldstien, Dillion, p.130,1988). In result of the high war reparations, Germany suffered great economic depression. Due to depression, the high rates of unemployment and severe inflation caused the people of Germany to become resentful toward the Treaty of Versailles deeming it’s terms too harsh. During these times of economic difficulty and doubt all throughout Europe, people were hopeful for leaders that were capable of reversing the severity of the current conditions.

The economy appeared to have stabalised with the introduction of the Dawes Plan. Before 1924, Germany was experiencing hyperinflation. The old Papiermark was rapidly depreciating and so Germany had to print more and more of it to pay reparations. By December 1922

Furthermore, as soon as the war broke out, the central bank (Reichsbank) declared its currency notes no longer redeemable for gold. This prevented a run on its gold reserves and allowed it to concentrate on helping the central government finance the war. However, by suspending the redeemability of its notes, the Reichsbank was no longer restricted in the amount of money it could print. With this restriction lifted, the German Government ordered the Reichsbank to print more and more money to finance the ever-increasing war expenditures. As the Reichsbank printed more money, the value of money already in circulation decreased, and people lost purchasing power as they indirectly financed their government’s debt.