Germany's Payments Over The Next 50 Years essay example

353 words
GERMAN HYPERINFLATION CRISIS: 1923 Treaty of Versailles gave away German territory of great economic value, such as the Saar region to France. Two million German men died in the First World War and a further five and a half million sustained injuries, many of which prevented return to work. This represented a massive loss of workforce. Germany was ordered to pay reparation debts of $30.4 m in the Treaty of Versailles to the Allied countries.

By 1922 Germany had borrowed so heavily that inflation began to occur; the Weimar government accentuated this to try and gain sympathy from the Allies who would then stop the reparation payments. France and Belgium invaded the Ruhr region when Germany stopped paying reparations all together in January 1923. German Chancellor Wilhelm Cu no encouraged Ruhr workers to 'passively resist' French occupation by refusing to mine raw materials and ceasing production of secondary materials. The Reichsbank increased production of 'worthless' money, resulting in the onset of hyperinflation.

By the end of January 1923 there were 4.2 trillion marks to the Dollar. French and Belgian troops withdrew from the Ruhr region in 1924 following pressure from Britain and the United States. The Ruhr occupation proved to be an economic disaster for France who spent far more on occupying The Ruhr than they gained financially from the region. The crisis was largely blamed on France who had held an irrationally paranoid fear of France since the end of the war. The occupation of the Ruhr was seen as unnecessary. The sympathies of Britain and the United States lay firmly with Germany, ho saw the country as an essential bulwark preventing communism spreading from Russia.

The Dawes' Plan was agreed with Germany which saw reparation payments reduced to just $250 m annually for the next four years. This allowed Germany to recover economically until the next revision of the reparations issue. The Young Plan of 1929 spread Germany's payments over the next 50 years; however, reparations were stopped following the Great Depression, later in 1929.