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.