What were the major factors responsible for economic crisis in Germany during 1920’s
Answers
a. Treaty of Versailles: The end of First World War witnessed a host of Peace treaties being signed the most important being Treaty Of Versailles with Germany which was imposed by the victors on the vanquished and compelled Germany to give away all its territorial claims and it imposed huge economic burden on it. Treaty of Versailles proved to be a national shame and physiologically damaging for the Germans as they were held responsible for the war and were subjected to harsh terms.Germany had to lose all its overseas colonies, with resulted in a loss 1/10th of its population
It had to part with 13% of its territories, 75% of its iron and 26 %of its coal to France.
The War guilt clause made Germany responsible for all the damage war had inflicted on the Allied and made it pay for the damage . It was forced to pay a compensation amounting to £6 billion to the Allies.. The Allied forces occupied the resource-rich Rhineland till the 1920s.
b. Germany was financially crippled after the first World War, little could Weimer Republic do to recover its economy, Germany under the reparation clause had to part with much of its gold reserves and later decided to print and issue more currency to pay for war damage and to exchange it, they flooded the market with German mark that is increased its supply in the market therefore its value decreased.
c. The Great Depression of 1929, made Germany the worst sufferer and aggravated its economic problems. Germany after the Ist World war sought short term loans from US for its recovery and indeed was totally dependent on it.
After the depression struck US, there was a withdrawal of US loans to other countries including Germany.This impacted Germany as it became the worst sufferer and aggravated its already existing economic problems. There was unemployment, fall in German's currency, rise in crime rate creating great disillusionment among the masses.
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