German children playing with money.

One of the terms stated in the Treaty of Versailles was that of reparations due to the Allies from Germany. This created an immense amount of debt for the German economy which in turn created hyperinflation which effected the German population directly. Many lost their jobs, prices of everyday needs, such as bread, went up and people lost their savings so Germany could begin paying what they owed to the Allies.

Germany’s economy in the 1920’s suffered greatly partly because of the Treaty of Versailles. Germany owed an abundant amount of money to the Allies, “[a] contracting 21.5 billion RM in foreign debts…”1 The reparations due caused a state of hyperinflation within Germany which also produced many to lose their jobs and savings because of the collapsing economy. As the economy continued to collapse, the Third Reich started to materialize, however, in the beginning, the new parliament too had to deal with the ensuing debt. “The Third Reich inherited from the Weimar Republic a chronically weak balance of payments that severely limited its freedom of maneuver. The First World War had stripped Germany of its foreign capital assets and replaced them with the liability of reparations.”2 It is clear that the effect of the reparations due to the Allies had a tremendous effect on the economy, which in turn would directly affect the people of Germany as well.

Growing up during the time after the Great War and witnessing firsthand how Germany suffered on account of the reparations and inflation, Ursula Mahlendorf writes in her biography of how it affected her family and the people around her, “…the ensuing inflation ensured that Germany’s economy would remain fragile; in this respect my family shared in the misfortune of many German middle-class citizens, who lost their savings, businesses and positions…”3 The concern inside the German people, especially those of the middle and lower class, began to rise after the signing of the Versailles Treaty. It is clear that after the reparations began to be paid, the German economy began to fall, which created many hardships for Germans people. Mahlendorf continues, “Rising anger over tax increases, salary cuts for the large civil service, business bankruptcies, and farming failures moved the lower middle class and middle class from the conservative center in Hitler’s party, or at least far to the Right.”4

The failing economy created a crutch for the rising Nazi Party. They portrayed solutions for the German people, generating a false sense of hope for the party and an unstable trust for their upcoming policies and resolutions as to how the Nazi Party would take the country out of an economic crisis, bring the people back to a secure, steady and prosperous way of life. It was the reparations that created a lack of faith inside the German people for their government, but it was the Nazis who would bring that faith back through false allegations.

1. Caplan, Jane, Nazi Germany. (Oxford University Press: Oxford, NY, 2008.) p. 181
2. Caplan, Jane, Nazi Germnay. P. 181
3. Ursula Mahlendorf, The Shame of Survival, Working Through a Nazi Childhood (Pennsylvania State University Press:University Park, PA, 2009) pp. 12-13
4. Malhendorf, Ursula, The Shame of Survival. P. 38


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