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History: Tov

By celineruthfoo Feb 18, 2013 349 Words
Economic problems in Germany (TOV)

The amount Germany had to pay for reparations was simply unbearable. They had to pay a total of 6650 million pounds and this would take up to 3 generations. Reparation was partly by money and the rest in terms of goods, such as coal. The loss of coal caused hardships to the German government and the people. Coal was an important natural resource in Industrialization. The reparations reduced the amount of coal Germany possessed and this had an adverse effect on Germany's economy. Germany saw the reparations as unreasonable for a country that was also recovering from the destruction caused by WWI.

When Germany could not pay France the reparations, the French government invaded the Ruhr, where many heavy industries were located. This further aggravated the economic problem as production fell and the prices of manufactured goods subsequently went up. In response to this, the Weimar government printed more money which resulted in hyperinflation. The German currency was of no worth. People's savings were of no worth, the money was used to start a fire and to do many other things. Many people suffered; prices rose and wages fell. Standards of living dropped, and the unemployment rate worsened.

Gustav Stresemann introduced a new currency, the Rentenmark, to counter the rising inflation and the increasing worthlessness of the German mark. He managed to negotiate with the Allied powers so that paying the reparations would not be a daunting task. The Dawes plan which was implemented in 1924 required German to pay lesser reparations. The USA would give loan to assist Germany. The French troop also agreed to leave the Ruhr. Germany agreed to giving gold to the Agent General for reparations so that it could also be invested and the profits would be used to pay reparations. German railways would also be supervised by an international group and would be used to pay off reparations. However, this plan only worked short term.

In 1929, the Young plan was implemented and reparations were cut further. Germany was also given more years to pay off reparations.

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