The Treaty of Versailles &The German Economic Collapse

The Causes of WWII Part 1:

The End of World War One By the summer of 1918, it was clear Germany had

lost the war The Germans tried negotiate terms to end the war

while maintaining their honor The US President, Woodrow Wilson, proposed 14

points that Germany must agree to for the war to end Wilson was not interested in punishing Germany Rather, he wished to build systems and institutions

that would provide a more peaceful future (e.g. The League of Nations)

Germany was pleased with the 14 points and eventually surrendered under the impression that these points would be the basis of the peace treaty.

The Paris Peace Conference The Paris peace

conference is where the combatants met to create the peace

However, the meeting was dominated by the French who wanted to forever destroy Germany’s ability to make war

The Treaty of Versailles

Some important Articles of the Treaty include: Germany accepts all blame for the war

(War Guilt) Germany would pay $32,000,000,000 in

reparations Germany’s military is destroyed (no Aircraft,

reduced Navy, 100,000 man army) Germany lost all colonies Germany lost almost 20% of its territory (to France,

Poland and others) Rhineland (border with France) was demilitarized Saar Region (Germany’s richest land in terms of

natural resources) was occupied by the French

The Effect of the Treaty

The Treaty was considered excessive by many at the time

Germany was humiliated and economically destroyed

Austria/Hungary was completely destroyed

Italy received no benefit for its war efforts and fell into poverty

Russia and Germany were both banned from joining the League of Nations

http://www.jewishvirtuallibrary.org/jsource/images/maps/Europe1922.jpg

The German Economy in the 1920s

It would have been very difficult for Germany to make repartitions payments even if their economy was healthy

However, with no colonies and the loss of so much territory, Germanys situation was completely hopeless

In order to find a way out of this situation, the new German government, began to print extra money to make the payments on time.

Hyperinflation

Printing too much money and other foolish economic policies soon led to rapid inflation

Inflation is when the prices of products rise

The prices in Germany rose so fast that German money became completely useless

Almost the entire German population became poor almost overnight

German Inflation (Berlin Prices in German marks)

Items 1914 July 1921

July 1922

July 1923

Sept.1923

Nov.1923

1 kg ofBread

$0.28 $2.64

$8.75 $22,500 $10,370,000

$470,000,000,000

1 kg of Beef

$1.17 $28.00

$133.00

$112,000

$76,000,000

$5,600,000,000,000

1 Egg $0.09 $1.60

$7.00 $4,000 $4,000,000

$320,000,000,000

10 Million Marks

4 Billion Marks

100 Gold Marks = 100 Trillion Marks

The Effect of Hyperinflation The German rich did very well during inflation They bought up land, assets and expanded

their businesses The inflation cancelled out their debt However, lower and middle class Germans

were completely destroyed – life savings were eliminated

Employers could not keep up with the inflation, many stopped working as their weekly cheque would not be enough for a cup of coffee.

The Effect of Hyperinflation Part 2

Police and government officials stopped working

The streets were run by gangs and groups of ex-soldiers

Violence and crime were rampant Most transactions were from Trading or

Bartering Communists and Right wing groups fought for

control of the country and the hearts and minds of the citizens

1923 Germany made our depression seem like a picnic!

What’s next?

This terrifying environment was the perfect place for psychopaths and misfits to gain attention

Those who promised revenge and the restoration of Germany’s greatness soon became national heroes

The greatest of all these was . . .