| | Germany struggled with democracy in its new Weimar Republic. This government was already disliked by the German people for having signed the humiliating Treaty of Versailles. The huge reparations required by that Treaty caused an even bigger problem. Germany simply could not pay. | | Germany struggled with democracy in its new Weimar Republic. This government was already disliked by the German people for having signed the humiliating Treaty of Versailles. The huge reparations required by that Treaty caused an even bigger problem. Germany simply could not pay. |
| − | So Germany began printing money, and lots of it. This made it easier for Germany to pay its reparations, but caused enormous inflation in Germany. People were outraged at the loss in value of their savings, and hardship resulted as the German mark (its currency) became almost worthless. The German people disapproved even more of their own government. | + | So Germany began printing money, and lots of it. This made it easier for Germany to pay its reparations, but caused enormous inflation in Germany. People were outraged at the loss in value of their savings, and hardship resulted as the German "mark" (its currency) became almost worthless. The German people disapproved even more of their own government. |
| | An international committee funded by the United States and England intervened to try to save German’s economy. The Dawes Plan, named after American financier Charles G. Dawes, implemented in 1924 the committee’s recommendations that Germany begin paying 1,000,000,000 gold marks in the first year and increasing to 2,500,000,000 by 1928. It also called for a loan of 800,000,000 marks ($200 million) to Germany. The Dawes Plan ignored the original reparations set by the Treaty of Versailles. By 1929 the Dawes Plan was considered a big success and financial controls over Germany were relaxed. Germany factories were producing again at prewar levels and inflation was no longer a big problem. | | An international committee funded by the United States and England intervened to try to save German’s economy. The Dawes Plan, named after American financier Charles G. Dawes, implemented in 1924 the committee’s recommendations that Germany begin paying 1,000,000,000 gold marks in the first year and increasing to 2,500,000,000 by 1928. It also called for a loan of 800,000,000 marks ($200 million) to Germany. The Dawes Plan ignored the original reparations set by the Treaty of Versailles. By 1929 the Dawes Plan was considered a big success and financial controls over Germany were relaxed. Germany factories were producing again at prewar levels and inflation was no longer a big problem. |