Essay on Germany and the Inflation

Essay on Germany and the Inflation

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The road to the inflation era started with the terms of the Treaty of Versailles. The main clauses of the treaty stripped Germany of her overseas colonies as well as took chunks of German territory from the west and east. It also aimed to demilitarize the country by forcing her to downsize her navy to only six battleships, as well as reduce the army from around seven hundred fifty thousand troops to only one hundred thousand. In additional the country was forbidden from making or using heavy artillery or tanks. However the terms that outraged the German people the most were the fact that they would have to start paying reparation payments, and would have to accept blame for losing the war . As a result of the Treaty, Germany would slip into a debilitating inflation era that would have devastating short and long term political, social and economic consequences for the country, which eventually lead to the collapse of the Weimar Republic and the rise of the National Socialist party.
In order to best understand the impact of the inflation era it is necessary to give a timeline of events from 1921 to 1924.
The Treaty of Versailles was signed on June 28, 1919, however the final terms of the Treaty were signed in May of 1921. The Treaty of Versailles did not give the total amount of reparation payments that Germany would have to pay. The payment plan was later presented to Germany in what is known as the London Ultimatum. The ultimatum stated that Germany would have to pay one hundred thirty two billion (132,000,000,000) gold marks, and the reparations would bear five (5) percent interest charged annually and one (1) percent amortization. However this plan was presented to Germany in the form of an ultimatum, which stated that Germ...


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...ate the British position correctly however at a baseline it would appear Germany failed to recognize it no longer was on equal footing geo-politically.
It is apparent in both domestic and foreign affairs the German government was incapable of evaluating events as they happened. The combination of the two ensured a short-term consequence where Germany deluded itself into feeling everything was fine, even as it was very apparent everything was not. As time progressed such a group mindset in government would create the groundwork for increasingly militant reactions within the population even as a majority of the populace accepted the official position of the government.
However as could be expected there were long-term consequences as well, the country continued to deal with the economic, social and political ramifications as a result of the inflation era.

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