The History Hub.

Europe was in a very difficult position post World War One. The future of Europe had been decided at the Treaty of Versailles by the big three countries, America, Britain and France; the victors.

 

Many countries were disatisfied by the arrangements made. Germany found it the most difficult and the humiliation of the Treaty combined with the conditions of the 1920's eventually led to the election of Adolf Hitler in 1933.

 

The Weimar Republic were the government that had been democratically elected in Germany in 1918. Unfortunately their first action was to sign the Treaty of Versailles, accepting the blame for starting the war and paving the way for the conditions of the Treaty. This made the German people unhappy. They felt they had been humiliated and the terms of the Treaty were too harsh.

 

One condition in particular, the Reparations, caused immense diffculty because of inflation. Inflation refers to the purchasing power of your money, in other words, what you can buy with your pound. For example if you bought bread for 1 pound this year, but next year it costs one pound and 10 pence, that is a 10 per cent increase in the price of a product, or, you could say inflation is at 10 per cent. In Germany at this time the country was asked to pay reparations worth far more money than it actually had in gold reserve, government guarantee or any other reserve for that matter. The country was also asked to pay the reparations in foreign currency, which it had to buy. In order to buy the foreign currency Germany simply printed more paper money. However, the more money printed meant the value (purchasing power) of each paper note went down. Germany was left in a ridiculous situation whereby there was so much paper money in the country that a loaf of bread cost 120,000 Marks (German money); it got much higher than this also, explore the sources on the right. When inflation like this happens so quickly it is called Hyperinflation. The result of this was that peoples life savings were wiped out over night, food was very hard to come by and the country could not afford to upgrade its factories to produce food, money or jobs as the purchasing power of the Mark was so low.

 

In other countries around Europe factories had been converted to make weapons and other items involved in the war economy, but with the war over, no one wished to buy items for the war effort. These countries were in debt and so they had to borrow money from the U.S.A. These loans were very useful and as money flooded in, factories were converted and jobs were created, the economies of Europe grew (but not Germany's until after 1924). People were happy and the period was known as the 'Roaring Twenties'. Therefore Europe was a very interesting place; Germany was in a dire state of affairs but the rest of Europe slowly picked up and enjoyed a good life. That was all to come crashing down in 1928.