e Co No MIC CRISIS led to WWII

e. Co. No. MIC CRISIS led to WWII The Kaiser’s gov’t resigned, refusing to sign the treaty. The incoming Weimar Republic had no choice but to sign the Treaty

Reaction to the guilt clause Many ordinary Germans were antagonized by this clause ¡ As a result a large percentage of the population disapproved of the government and its actions ¡ Therefore threatening the stability of the government. ¡

Psychological impact ¡ ¡ ¡ National pride plummets At the same time large and wealthy sector of the upper middle classes suddenly have their positions and role in society taken away Military cuts upset the pre-war balance of power creating a feeling of insecurity Trade was restricted reduces economic security Areas of the nation were occupied by French and Belgian troops causing insecurity & feel under threat

Inflation - increase in the cost of goods in an economy ¡ ¡ On average 2 - 6% per year If something costs £ 1 at the start of the year, it will cost £ 1. 02 - £ 1. 06 a year later. Low levels are good for the economy High levels of inflation pose problems: l l companies cannot accurately forecast results value of money drops disproportionately to the value of goods and / or labor

Hyperinflation- very high levels of inflation ¡ ¡ Germany in the period 1919 - 1923. To control inflation, a government can limit the amount of currency in circulation. At the height of the repayment crisis the W. G. did the exact opposite, it printed MORE money. In January 1919 one US Dollar could buy 8. 9 German marks. In January 1922 one US Dollar could purchase 191. 8 German marks.

¡ ¡ Inflation rises rapidly The value of money depreciates approx. 4 million% in 6 months.

Causes of hyperinflation ¡ ¡ ¡ Reparations meant majority of income was leaving the country Strict economic controls and taxes French occupation of the Ruhr (industrial heart) the German economy could not benefit from its industrial output The cost of war Loss of land colonies = cost of raw materials increased Printing more money.

Solution: The Dawes Plan - 1924 ¡ ¡ ¡ ¡ U. S. coordinated a restructure of reparation payments on a more manageable scale Introduction of the new Rentenmark Payments in 1922 - $2 billion, 1924 was set at $50 million. $200 million US loan for reinvestment in German infrastructure Also provided for withdrawal from Rhineland Allowed the currency to stabilize

Results ¡ ¡ ¡ Well organized companies managed well prospered. Those that had relied on credit would suffer – the number of companies going bankrupt in Germany rose from 233 in 1923 to over 6000 in 1924. Economy became more streamlined & efficient

How did the economic crisis of 1923 aid the Nazi party? ¡ ¡ ¡ Economic crisis of 1923 led to rifts in government Government struggled to agree on a strategy & the democratic process deteriorated. Parts of Germany were in a state of emergency ¡ The middle class turned to the right wing (Nazi Party) for support. ¡ Led to the rise of a totalitarian government. (one with total control)

Name _________ Directions: Speak with your parents, grandparents or elderly neighbor & determine the cost of the following items from earlier decades, Then discuss what those same items cost now. In addition, select two items not listed to compare to today. Examples of Inflation Item Gallon/gasoline Milk Car Newspaper Rent/Home $/hr @ 1 st job Coca-Cola Ticket to ___ event _______________ $ Price then/year Price Now