This thread got me wondering how Germany managed to pull itself out of what was essentially total ruin following WWI and the Treaty of Versailles. It’s my understanding that the ToV basically destroyed the economy and crippled their industry by taking a huge portion of their resources as reparations, the idea being to make it impossible for Germany to re-arm itself. I have looked this up and found many very technical and/or incoherent answers.
So how is it that in less than 20 years Germany was able to rebuild its economy and industrial capabilities to the point that it could just march across Europe? Can someone explain this to me in layman’s terms?
People on this board often list the most evil things done in history. If you want to list the opposite, human’ s best side, the Marshall plan would be up there. It was idealistic, realistic, and it did exactly what it was supposed to do, vastly improving the lives of many millions of people and strenghtening the Europe-USA trade relations and thus both their economies.
If it weren’t for the Marshall plan, the western parts of Europe may have done far worse for far longer, and may have fallen prey to god knows what kind of populist dictatorships, like Germany did after the first world war which left it crippled economically. You never hear much about the Marshall plan these days, but I still think it is something that we owe you guys for, big time. Well, that and liberating us from Hitler, of course.
The Marshall Plan was post-WWII, Maastricht. The OP is asking about post-WWI.
One of the main things Germany did to help their recovery was welch on their Versailles reparations, as well as repayment of money loaned to them by countries like the US. This freed them from a large part of the debt burden that was weighing down Britain and France.
That was nearly 30 years later. The OP’s question was about how Germany rebuilt its economy in the 1920s, and was then able to use its strength to overrun Europe in the late 1930s and early 1940s.
The answer, I think, is that Germany was not in ruins after WW1, not having been invaded or bombed as it was in WW2. It had some problems, such as inflation and the Versailles reparations, but these were not as hard to overcome as the results of WW2.
Lords of Finance: The Bankers Who Broke the World, by Liaquat Ahamed is a fascinating read. Ahamed looks at world finance from the end of WWI into the worldwide depression of the 1930s. He extensively covers both the collapse of the German economy into hyperinflation and its recovery to become an industrial power. Amazingly readable for a book about central bankers.
You’re lumping together several different periods. The first period, right after the war till Depression; the period during Depression; the period after Hitler gained power. The last period was the one of the biggest increase, but that was achieved by confiscating = stealing from the Jews, so that’s not an approved economic measure.
Secondly, Weimar govt. re-negiotated the punishment Germany had to pay, and also devalued the currency with inflation to pay off the debt. It was a massive pull, but they had almost bounced back when the Depression dealt the second blow. The biggest problem of the Depression was that the funds for unemployment were not adequate because they had been started so shortly ago.
It also helped that Germany proper was not damaged because it had been neither invaded nor bombed. There were no refuges (although in the mid- and long term, the WWII refugees were a benefit). And although many lives were lost on the Western Front, there were still enough able-bodied people to work. Once the blockade was lifted, the economy could pick up. And people yearned for things to take off their minds from the bleak war, or the bleak prospects. Hence the roaring 20s - although it was only a thin layer of people who enjoyed them, it was a huge transformation of society and morals, and entertainment was starting to bloom.
Combination. When Hitler decided to abrogate the Treaty of Versailles and start re-arming, at first it was done secretly. Germany became full of “glider schools” where young men of military age trained for future service in the air force; and a secret agreement with the Soviet Union was used to build tanks and practice with them in areas far from the prying eyes of the Western democracies – a deal the Soviets may have later regretted.
Eventually Hitler felt confident enough to openly proclaim the rebuilding of the German military, and the other European countries (themselves heartily sick of war and dealing with the financial woes of the 30s) weren’t sure how to react. While delaying did turn out to mean war eventually, attacking Germany immediately would also have meant war. Ultimately hindsight leads us to conclude their response was inadequate or foolhardy for a number of reasons, but they didn’t have hindsight at the time.
And remember they weren’t in great economic shape for quite a while. One of the arguments for the Marshall plan (it wasn’t quite as selflessly humanitarian as Maastricht implies), was the realization that people in a prosperous society don’t generally cede power to marginally-to-completely insane demogogues with a platform of militarily conquering their neighbors. But people mired in terrible economies sometimes do.
Ooh, and here’s a link on the German glider-school movement. Note that it predates the Nazi rise, but postdates the Treaty of Versailles and its provisions against a German air force. Obviously Germans were at least thinking of being prepared for the ban to end, if not outright remilitarization, even before the Nazis.
There were two main reasons:
-Germany was a very technologically advanced economy. German chemists were the best in the world. There was a ready demand for German dyes, chemicals, and other products. These products sold well and made a lot of money. The plants were never damaged by the war, so once hostility ceased, IG Farben and Bayer, etc. ramped up production.
-the German government engineered a hyperinflation in the mid-1920’s. The mark dropped in value to effectively nothing, and the debts of big companies were wiped out (it also wiped out the middle class and working classes). This caused a massive transfer of wealth to industry-you could borrow and build a new factory, and pay nothing back. In the words of a German economist “Germany recovered BECAUSE of inflation, not in spite of it” (For details, read Max Schapiro’s excellent book “The Penniless Billionaires”.
Finally, the stupid reparations policy of the Allies backfired on them-the British lost their German market for textiles, porcelain, and copper goods (the Germans coun’t pay for them), and the French aluminaum producers could not sell aluminum to the bankrupt Germans. The reparations policy caused much harm to the British and French economies, and actually helped the Germans develop other markets.
That was also one of the problems that enabled the Stab in the back legend, that Germany lost the war because of the treason of the Jewish and democratic officers and could have won otherwise. It was lie and the army was beaten and resources exhausted, but because “no foreign soldier had crossed onto German soil”, people believed it.
That, in turn, was given as reason during WWII that Germany had to “be beaten so thoroughly that nobody can doubt it”, which lead to widespread civilian bombing and denial of offers of armistice, made by the German army who wanted to prevent senseless deaths in the spring of 1945, but the Allies asked for Hitlers head on a silver platter, which was impossible.
The Treaty of Versailles most certainly hurt Germany. And it certainly was remembered inside Germany as an unbearable burden.
What’s your point? Are you just objecting to the word “ruin”? If you’re making the argument that it wasn’t a factor at all I’d need to see a lot of proof.
Wiped out the middle classes - yes. These were the groups, in particularly the petit-bourgeosie, who had their savings in cash. The working classes were less negatively impacted, as they didn’t have cash savings in the same way. And German unions were strong enough to secure cost of living increases for their workers - it was the lower middle class who had income protection from the hyperinflation, and also saw their bank accounts destroyed. Which was part of the biggest effect of this - it scared the crap out of middle class people that their position of social superiority over the working class was at an end.
there is no contradiction between “Germany lost WW1 in part for economic reasons” and “their economic basics were more or less intact”. The essential difference here is between the “cashflow” and the “capital”. If you run out of “cash” (food, oil, weapons, soldiers willing and able to fight who are not sick with flu of 1918) you are out of business. You cannot keep on fighting the war, so the High Command tells the emperor to resign and have democrats sign the armistice and so on. But the “capital” (land, factories, trained professionals, decent educational system) is still in place and can be made to work if macroeconomic sources of instability (like Communist revolts, taxation to pay reparations, inflation, Ruhr occupation etc) are resolved.
This is in sharp contrast to the outcome of WW2 where a lot of the capital was irretrievably lost (e.g. housing destroyed by bombing) or looted (factory equipment shipped to Russia). Which is why foreign aid and loans played a big role in financing buying the replacement industrial equipment for West Germany.
Never heard this before. Cite? The Allies required unconditional surrender right through May 1945, IIRC, and von Stauffenberg and his buddies had various unrealistic proposals for ending the war in the West while continuing to fight the Soviets in the East, but I don’t get the “silver platter” comment.
Don’t have the book at hand, but reading von Gersdorff memories, Soldat im Untergang (Soldat in the Downfall), he recounts how, when he was transferred to the Western front late in the war as the Allies were advancing, he tried for an armistice with his opposite officers because he knew that everybody knew that the allies were going to win, he wanted them to win to get rid of Hitler (he was one of the Kreisauer circle), and he didn’t mind the Western Allies advancing, so soldiers dying on both sides in these last weeks would be a senseless waste of life.
The immediate opposite officers, Majors/ Colonels etc. had a similar outlook, but when the proposal went up the chain of the command, the higher-ups said “If we accept an armistice, you Germans will claim again you could have won the war, we want you to loose, and we will only start negotiatins if Hitler is dead” (= if you bring us Hitlers head on a silver platter, which way my metaphoric way of midly exaggerting it).
Which was not possible for Gersdorff.
This is one direct memory, but it’s also the general account in my history school books: the Allies wanted Hitler dead and Germany beaten, and any offers below that were refused.