Describe the economic crisis in Germany in 1920.
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- Germany was economically devastated after a draining defeat in World War I. Due to the Versailles treaty, Germany was forced to pay incredibly sizeable reparations to France and Great Britain. Germany began creating transportation projects, modernization of power plants and gas works.
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ECONOMIC CRISIS OF GERMANY IN 1920
- Germany had fought the war largely on loans and had to pay reparations in gold. This depeleted gold reserves at a time when resources were scarce.
- In 1923, Germany refused to pay, and France occupied Germany's leading industrial area, Ruhr, to claim its gold.
- Germany retaliated with passive resistance and printed paper currency recklessly.
- With too much of paper currency in circulation, the value of German mark fell, from 1 U.S. Dollar being equivalent to 24,000 Marks in April to a value which ran into trillions by December.
- As a result, the price of goods soared phenomenally high.
- This situation came to be known as Hyperinflation.
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