Essay on Hyperinflation in Germany during the Early 1920's

- Inflation happens, that’s when the value of the dollar raises, not everyone gets higher wages when that happens, but things end up getting more expensive, causing consumers not to buy stuff.

The Weimar Republic would have continued to be a functional government far longer than achieved if not for the defeat of WWI, the economic burdens imposed by the Versailles Treaty, and the flawed Article 48 which all contributed to the down fall of Germany’s first attempt at a legitimate Democracy. This paper will argue that the societal, economical, and constitutional aspects all played a role in the hopeless Democracy Germany attempted which ultimately lead Germany into a totalitarian state that would further shake the world with the rise of the NSDAP and Adolf Hitler.

After World War II Germany was left devastated and in ruins. There had been massive destruction of the country’s infrastructure (Bessel 2011), it lacked political structure and economic activity had plummeted. There was a scarcity of food, fuel and housing and Germany was in no condition to clothe or feed its population (O’Dochartaigh 2003).

Instead, most money was in the hands of a few families and businesses who saved or invested rather than spent their money on American goods. Supply became greater than demand on products. Certain people profited, but many others did not. As a result of this, prices went up and Americans could not spare the money for many goods. While the wealth in America was not being distributed evenly, and overspeculation of the stock market led to a lack of confidence, the United States began to fall into a deep depression that would last until the beginning of World War II (Gupta).

After the Golden Years, which brought great prosperity back to the economy and saw the middle class turn away from the extremists, the Wall Street Crash in 1929 occurred. The middle class turned back to the Nazi’s, especially in the industrial north of Germany. The German

One of the terms that Germany had to meet was A large debt in gold for reparations to the other countries, Which was 132 billion gold marks (Doc C). Although they had to pay off reparations to other counties they did not have to rebuild bridges, roads, schools, and business as did their other allies. Germany had to suspend payments due to the Great Depression in 1931 also

During the hardship of the 1920s and1930s, political incompetence was highlighted, the Weimar Government proved its incompetence time and time again. .The instability of the Weimar Republic was so great that the average life-span of Reich cabinets was from 6-7 months. Their incapability of providing justice to outbreaks of violence, such as political assassinations is one example of the incompetence of the Weimar Republic. When Germany found its self in undesirable economical situations due to the Treaty of Versalles, they printed money to pay off reparations, which resulted in super-inflation. During the period of super-inflation people’s life savings became worthless which contributed to the downward circle of a reduction in standard of living. As unemployment rose and people began to afford less and less with their money, people commenced searching for a better alternative to the Weimar Government. Hitler’s ability to build upon these feelings whilst offering security, prosperity and full employment, convinced Germany, in a state of disillusionment, to support the nazi party. The Weimar’s instability contributed to the collapse of the Weimar republic provided perfect conditions for the nazi party to rise to power.

After coming out of the Great Depression the United States could not afford to be in anymore debt. From purchasing guns, ammunitions, aircrafts, and warships, the debt was rising dramatically. While the American public supported the troops, the cost of the war would affect America for years to come.

It is a known fact that war causes inflation which makes the prices of everything go higher as well as taxes. After World War I instead of going back down the prices continued to rise which helped to contribute to the deep depression felt during the Great Depression.

Germany emerged from World War I with huge debts incurred to finance a costly war for almost five years. The treasury was empty, the currency was losing value, and Germany needed to pay its war debts and the huge reparations bill imposed on it by the Treaty of Versailles, which officially ended the war. The treaty also deprived Germany of territory, natural resources, and even ships, trains, and factory equipment. Germany’s population was undernourished and contained many widows, orphans, and disabled veterans living in poverty. The new German government struggled to deal with these crises, which had produced a serious hyperinflation.

In Germany the economy was especially vulnerable since it was built out of foreign capital, mostly loans from America and was very dependent on foreign trade. When those loans suddenly came due and when the world market for German exports dried up, the well-oiled German industrial machine quickly ground to a halt. As production levels fell, German workers were laid off. Along with this, banks failed throughout Germany. Savings accounts, the result of years of hard work, were instantly wiped out. Inflation soon followed making it hard for families to purchase expensive necessities with devalued money. Overnight, the middle class standard of living so many German families enjoyed was ruined by events outside of Germany, beyond their control. The Great Depression began and they were cast into poverty and deep misery and began looking for a solution, any solution. By mid-1930, amid the economic pressures of the Great Depression, the German democratic government was beginning to unravel. The crisis of the Great Depression

Due to an increase in social welfare spending, local authorities took advantages and used loans to embark on vast public housing schemes. The balance of trade was an economic indicator of the stability. Unfortunately for the economy of Germany the successfulness of the country was largely supported by foreign funding. Although this gave Germany stability it was not a secure way to live, if any communication went wrong with another country, then that country would stop funding.

After World War I Germany could make no money because all of these factories were bombed. They could not make any goods because they had no factories to make any in. Also a lot of farmland was destroyed so they had to get all that back and grow more food. They had no money so they couldn't buy anything from other countries. They had to get by with the little amount of things they have left. Germany had money but after the war there currency was just about worthless. This was the complete opposite for the United States seeing as World War I really helped our economy. After World War II Austria Hungary was no longer a country.

The German government ordered the workers to strike as a form of passive resistance. To compensate these workers the German government printed huge amounts of new money. This led to inflation. German currency rapidly lost value. Many people were unemployed and on the brink of starvation.

A third way to fund war is to print more currency, which fuels inflation. Inflation thus often acts as an indirect tax on a national economy to finance war. Industrial warfare, and especially the two World Wars, created inflationary pressures across large economies. Increasingly, governments mobilized entire societies for war - conscripting labor, bidding up prices in markets for natural resources and industrial goods, and diverting capital and technology from civilian to military applications. World War I caused ruinous inflation as participants broke from the gold standard and issued currency freely. Inflation also accompanied the U.S. Civil War, World War II, and the Vietnam War, among others. War-induced inflation, although strongest in war zones, extends to distant belligerents, such as the United States in the World Wars, and, in major wars, even to neutral countries, owing to trade disruption and scarcities. Present-day wars continue to fuel inflation and drive currencies towards worthlessness. In Angola's civil war (1975-2002), for example, the government currency became so useless that an alternative "hard" currency - bottles of beer - came to replace it in many daily transactions.