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Name _____________________ Germany’s Economy After the War Signed at the 1919 Paris Peace Conference, the Treaty of Versailles — the formal agreement that.

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Presentation on theme: "Name _____________________ Germany’s Economy After the War Signed at the 1919 Paris Peace Conference, the Treaty of Versailles — the formal agreement that."— Presentation transcript:

1 Name _____________________ Germany’s Economy After the War Signed at the 1919 Paris Peace Conference, the Treaty of Versailles — the formal agreement that ended World War I — stripped Germany of its colonies overseas and the region of Alsace-Lorraine (now part of France), placed restrictions on its military and made Germany pay reparations for damages during the war which it supposedly started which was, at the time, the most destructive war the world had ever seen. The first reparation demands were 266 gold marks, which amounted to roughly $63 billion then (close to $768 billion today). That's a lot of money. So much money, in fact, that British economist John Maynard Keynes famously stormed out of the Paris Peace Conference. When it came time for Germany to make its first payment of $500 million in August 1921, it "just literally printed the paper money," says Schuker. "They gave it to the Reparations Commission saying essentially, 'O.K., here you go.'" In fact, Germany began printing money for everything. They printed so much money, devaluing their currency, that within a few years it "literally took a wheelbarrow of money to buy a loaf of bread," as Shucker puts it. By 1923, Germany had defaulted (not paid) on its reparations so many times that France sent troops to occupy the Ruhr region in northern Germany to force them to pay. This means that Germany, which took out loans, could not pay money to the nations of France, Britain, and the U.S. which hurt their economies. Soon German unemployment reached between 30% - 40%. With the crash of the economy, people lost faith in the government which would eventually lead to the rise of the Nazi Party. Beginning of the Great Depression During the 1920s, many in the U.S. began buying on credit. Credit is when you buy something which you do not have the money for, so you put down a percentage of the price and then pay off the rest over time. Businesses and people began using credit too much and eventually it caught up to them. The U.S. Economy began to spiral downward in Sept Instead of leaving their money in banks and stocks (where someone would invest in the economy), people started losing confidence in the economy and took their money out of these institutions. This served to worsen the economy. Investors sold their stocks (when you invest in a businesses and either make or lose money.) and got less in return. Many investors had bought their stocks on credit, and now they were losing money and could not pay back their loans and credit. Oct 29, 1929 – Black Tuesday - The Economy took a worse dive and entire fortunes were wiped out, billions lost. Since the U.S. was largest economy in the world, it affected other economies in nations around the world. After WWI, the U.S. had loaned countries money to rebuild their nations after the destruction of the war such as France and Germany. Now, their economies collapsed. The selling and trading of goods decreased sharply, and the economic crisis turned into a Global Depression plunging the much of the world into economic hardship. for years. Bad Economies and Depression

2 Directions: Read the document and study the charts to answer the questions 1.How do you think the loss of colonies hurt Germany? (think about what we already learned on colonies) 2.How much in reparations did Germany have to pay in terms of then and in today’s amount? 3.What did Germany do so it could pay its loans and reparations? 4.How did this negatively affect the German economy? 5.How did this negatively affect the other economies of France, Britain, and the U.S.? 6.Using the chart on Germany Currency, what was one German Mark worth in 1914, 1921, and November 1923? 7.What did many people in the U.S. begin doing in the 1920s? What is credit? 8.What are stocks and what did people in the U.S. start doing when the economy began to decline? 9.What happened on Black Tuesday? 10.Why did the Depression spread to other countries around the world? 11.What was the highest percentage of U.S. unemployment? When was it? When did unemployment begin to decline for good? (use the chart)


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