The Effects of Treaty of Versailles / The German Reply / John Maynard Keynes on Germany
After World War I Germany was a full on train wreck of a country. The people of Germany had been beaten in every way. They lost the war, they lost faith in their government, and they had no hope that their future would be any brighter anytime soon.
The Treaty of Versailles punished Germany in many ways. Germany had to pay reparations for all damages that the Allied governments had sustained as a result of the war. There were territorial provisions that took away great swaths of agricultural land needed to grow food and get raw materials. Germany reduced its army, cut back its Navy and eliminated the Air Force completely. Germany felt it would not be able to live up to the conditions of the Treaty and believed the entire country would fall into financial collapse.
The Germans lost a considerable amount of land that was used to grow crops to feed their huge population. Germany had transformed from an agricultural to an industrial state and could now not feed their 40 million inhabitants. Germany lost territory in the East that represented 21% of their wheat and potato production. Germany also needed raw materials and coal. Germany had to give up its merchant marine vessels and could no longer import raw materials from abroad. Germany felt their citizens would move away if their basic needs cannot be met. During the blockade almost a million people starved to death in Germany and they did not want this to happen again. Inflation in Germany made the mark worthless. There was unprecedented devaluation of Germany's currency. Prices were being marked up by 20% every day in 1923.
Germans had to change and adjust their lives significantly due to the economic crisis during 1919-1923. Money became worthless by late 1923 and hard-working couples were suddenly beggars on the street. Germany had become a barter society. Shoe factories paid their workers in shoes. People paid their bills with butter. Foreigners who came to Germany could live like kings while the Germans were barely surviving. Germans were impoverished and starving while foreigners eat like kings for pennies on the dollar.
The impact of the Dawes plan on Germany from 1924 to 1929. The Dawes plan was a series of loans from the United States meant to help stabilize the German economy. The plan provided foreign investments and loans and softened the burden of war reparation payments. The plan was accepted by Germany and went into effect September 1924. German business began to rebound and it started making payments again on reparations. This plan was dependent on the United States economy doing well though and when the depression came to the United States it also hurt Germany's economy. When the United States stock market collapsed Germany's industrial output fell 40% and by 1932 German unemployment was at 40%.
The Treaty of Versailles crushed Germany's economy after World War I. The German people had no way to grow food, get a job, grow their business or feed their children. The economic crisis was so great people began to use the barter system because money became worthless. Germany had no raw materials and they were dependent on foreign investment in their infrastructure. The Dawes plan began to stabilize the German economy but once the United States stock market collapsed Germany's problems started all over again.
The impact of total war on the continent of Europe was very broad. Governments began to take control of everything in their countries. Governments to control by rationing goods, setting up price controls, taking over transportation, taking over the press and eventually the free market system was gone. During a total war all the citizens in the country were involved in some way in the war effort. You didn't need to live close to a battlefield to be impacted. The government expanded all of its powers to appoint where they controlled everything.
The Paris Peace Conference included France Britain and the United States. Each country had their own agenda. Georges Clemenceau the premiere of France wanted revenge and security against Germany. France wanted Germany stripped of weapons and wanted them to pay reparations to cover the cost of the war. France also wanted a new country called Rhineland as a buffer state between them and Germany. David Lloyd George the Prime Minister of Great Britain wanted to make the Germans pay for the war. Woodrow Wilson had a more idealistic desire. He thought World War I was a war against militarism and he wanted a United Nations with political independence so big and small nations could have international cooperation.
The Treaty of Versailles was five separate peace settlements with Germany, Austria, Hungary, Bulgaria and Turkey. The treaty with Germany was the most important. Article 231, the war guilt clause, said that Germany and Austria were responsible for starting the war. Article 231 said that Germany had to pay reparations for all damages that the Allied governments had sustained as a result of the war. As you can imagine Germany did not like any part of this treaty that article 231 was particularly harsh. The Germans also did not like the territorial provisions. Germany had to reduce its army to 100,000 men. Germany had to cut back its Navy and eliminate the Air Force completely. Alsace and Lorraine were given back to France. Sections of Eastern Germany were awarded to a new Polish state. There was a demilitarized zone stripped of weapons along the Rhine River. The Austro-Hungarian empire disappeared.
Nation states carved out of what used to be other countries include Finland, Latvia, Estonia, Lithuania, Poland, Czechoslovakia, Austria and Hungary. On May 15, 1919 the Germans sent a reply to tell their version of what will happen because of the Treaty of Versailles. Germany's response was clear if this treaty goes through millions of Germans will die of starvation in their country will collapse. Germany said that it has transformed from an agricultural to an industrial state and now could not feed 40 million inhabitants if it has to give up its merchant marine vessels. Germany says if it loses its territory in the East that they will lose 21% of their wheat and potato production. They need raw materials and coal as well they fear they will lose a third of the production of the coalfields and that what little coal they do get they have to give to the allies. With the loss of the colonies and merchant fleet there will no longer be a position to import raw materials from abroad. Germany believes that it industries would be extinct. They will not be able to feed their people. Germany feels that many of their citizens will move away. 1,750,000 people were killed in 1 million were killed as a result of of the blockade that made their people starve. Germany feels that this will happen again and millions more will die.
The German reply to the Treaty of Versailles was all about dear. John Maynard Keynes talks about the economic consequences of the peace in Germany. The Germans could not possibly live up to the expectations of the Treaty. They have become to industrialized and did not have enough land left over to produce food for their people. He wrote in his book about the economic consequences and was an outspoken critic of the agreement Germany signed. He predicted Germany couldn't possibly comply with the harsh terms. He believed the entire country would fall and financial collapse. He further believe that Germany collapsing would cause political repercussions in Europe and all over the world. War reparations were completely unrealistic. He believed that the people of Britain lived too far away and work too far removed to understand the realities of what was going on in the rest of Europe. He believed that people in America were even further removed and could not possibly understand the harsh terms of the treaty. He would of course be proven right World War II was caused by the rise of German militarism caused by the suffering of the people of Germany after World War I.