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Germany was in a depression because of the treaty of Versailles and the debts it created for them. Germany in 1939 had not been crippled by the debts of the Versailles treaty. Hitler in a short period of time spent more on re-arming Germany than Germany had ever paid to France & the UK. The view that the Versailles treaty caused (or would cause) great German hardship was a view held by many economists in 1919 and by the American government. The great economist Keynes voiced grave concern over the economic effects of the treaty at the time however he later admitted to underestimating Germany's ability to pay. In fact little ever was paid. Many people to this day still blame the Versailles treaty for Germany's economic problems but I'm not sure how valid such an opinion is when scrutinized with the facts. Much of Germanys inter war economic problems were a natural side effect of WWI itself and of German governmental miss management of the German economy. The Versailles treaty was a factor but one that should not be exaggerated. Reparations expenses only made up about a third of the German government spending budget deficits in the years immediately after WWI and the German government appears to have deliberately pursued the economic policy of printing more and more money to flood the money supply to pay for their deficit. Hyperinflation was the result. This was largely self inflicted. "Germany was neither dismembered nor ruined. Reparations could, and were, scaled down and, until the great world depression of the 1930s; the Germans recovered a high degree of prosperity. In fact, the establishment of the London schedule of Payments in 1921 determined that the real amount the Germans had to pay amounted to only 6 percent of their annual national income. The Dawes plan of 1924 reduced this to 3.3%, and the Young Plan of 1929 to 2.6%. Germany never paid even these amounts in full, and the payments were cancelled entirely in 1932. Furthermore, if Versailles is compared to the French settlement the Prussians imposed in 1871, Brest-Litovsk, and the war aims of the Kaiser (to effectively subjugate all of Europe and use it as a probable base for launching a veritable Weltpolitik), it was not at all harsh

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โˆ™ 2009-08-10 07:45:35
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Q: How did World War 1 affect the world economy?
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