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German Interwar Economy
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After Germany’s loss in World War 1, they fell into a depression, as they owed money to most of the countries in accordance to the treaty of Versailles. Most of the other countries around the world were also having economic problems because of the repercussions of the war. Then in the 1930’s due to a huge stock market crash, the world flung into ‘The Great Depression.’ This depression caused most of the world’s economies to decline however; Germany’s economy started taking an upward turn. Germany went through a lot of ups and downs in their economic cycles in the Interwar years. There were a lot of economic crashes and booms in these twenty odd years. There were many factors that contributed towards these economic instabilities. Through this report we take a look at how the German economy pulled through in some of its toughest times and managed to stabilize its economy. To observe how the German economy worked through the pre-war years, we have to take a look at it through its different stages. Firstly there was the period between the First World War all the way up to the Great Depression in 1929; from there we look at Germany from the 1930’s to World War 2 and Adolf Hitler’s contribution to their economy. Finally the German economy must be compared to the world during this time period. Germany’s defeat in World War 1 left the country in shambles. The Treaty of Versailles was a major contributor to the collapse of the German economy. The Paris Peace Conference was a meeting to decide the fate of Germany; thirty-two states representing 75% of the world’s population attended this one-year conference (Versa, par. 1). The five major powers that attended this meeting were the United States, Britain, France, Italy and Japan; each of them came out with a treaty for Germany. These were combined and came to be known as ‘The Treaty of Versailles.’ This harsh treaty put many restrictions on Germany: Germany was forced to surrender all its colonies, the Rhineland a huge source of German income was to be demilitarized, The Ruhr a major economic sector was to be placed under control of the League of Nations for 15 years, Germany had to pay reparations of £6,600 million, Germany and Austria were not allowed to merge, Germany had to accept full guilt for war, their army was limited to 100,000 men with very strong military restrictions, and the German navy was limited to vessels under a 100,000 tons with no submarines (Versa, par. 3). The treaty caused an enormous burden on the German economy. The total cost of the war to Germany was calculated to be about 164 billion marks. This consisted of about 93 billion marks in war loans and 29 billion marks from the Treasury Bills.
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