Versailles reparations
As punishment for losing the First World War, Germany had to pay
massive reparations to the victorious sides.
£100 million per year was a huge figure that
would not have been paid off until 1986.
Reparation difficulties
Germany had also been badly damaged by war so
struggled to pay the reparations.
Equally, the loss of land and industry (part of the Versailles Treaty) made it
harder still.
Hyperinflation
Due to financial problems in Germany, in 1921
prices started increasing quickly. This made it
harder for people to afford basic items.
By 1923, these price increases had caused
hyperinflation.
Hyperinflation
Hyperinflation is where prices increase by a
massive amount in a short period of time.
In January 1922, an American dollar ($1) was
worth 80 German marks. By November 1923, $1
was worth 4,420 million marks.
Effects of hyperinflation
Hyperinflation destroyed lives. It wiped out people’s
savings, caused huge unemployment and left people unable to afford
items such as food or fuel.
Some people did benefit though by easily paying off
loans.
1929 Depression
Hyperinflation eventually ended and for a few years Germany was prosperous.
However in 1929 the Wall Street Crash led to
financial problems across the world, including huge
unemployment.
The Depression
In Germany the Depression (as it was
known) brought back huge unemployment. People
were scared of a return to hyperinflation.
Ultimately the government collapsed because of this.
Arguments for influence
The different economic crises of the 1920s caused German people to be very
angry with their government.
This persuaded many to back a different political
system to help them.
Arguments for influence
It is telling that Nazi support fell during 1924-1929, when the Germany
economy was strong.
Some historians claims that without the 1929 Crash, Hitler would never have
come to power in Germany.
Arguments against influence
Economic problems go back to the Treaty of Versailles;
without this, Germany would not have suffered
hyperinflation.
Then, even if the 1929 Crash had then still
happened, Germans may have been less fearful.