Hyperinflation of the Weimar Republic

Hyperinflation of Weimar Republic

The Weimar Republic, Hyperinflation and the Hidden Economic War against the Western Allies

Like a bookshelf with two halves, so the period of World War I to World War II had two halves and a center. The Weimar hyperinflation orgy marked a transition to the second half of this period, which some have called the Second Thirty Years War. These were the thirty years that passed between 1914 to 1945 and did not represent a single war, but a series of them that occurred at varied times and locations. It is the period that gave birth to political ideologies such as fascism, Communism and Nazism, and was later renamed the European Civil War.

Certainly, this name can be applied to Europe in the twentieth century, where unprecedented death and destruction occurred after 1914. This stirred memories of the Thirty Years War in many Europeans' minds, including relatives or survivors of some 10 million dead or injured in the Great War. If one includes those millions who died in the immediate aftermath of the war in Eastern Europe, where the conflict did not end in 1918, dead civilians numbered 5 million more, in addition to another 5 million who fled or were driven out of their places of origin (Kershaw, 2011).

Many times, we forget that the First World War was formerly known as the Great War because we have endured a second one since ("Introduction to the Great War"). In addition, to put things in historical perspective, one must realize that the path from Flanders, Ypres, the Marne, the Aisne and Jutland in the Great War did not end at Versailles, but continued on to Weimar, the Ruhr, in 1923, where the French occupation fought against the hyperinflation that brought about Hitler's regime and the second half of the global struggle, known as the Second World War.

In this milieu, the Weimar Republic is one of history's best examples of inflationary monetary policy and the lack of political and social frameworks working together to create an economic disaster. Historians and economists still use the Weimar debacle as an example of how an economy and a nation can fall into a state of disrepair from which there is simply no easy return.

In other words, the analysis of the hyperinflation situation in the Weimar Republic is important due to its historic role, but it is also relevant through economic lenses (Laidler, p.139). Specifically, the situation encountered at Weimar does not reflect the single and most impressive inflation the world has ever witnessed. But it is its historic resonance that has made economists and historians pay attention to it. And additionally, it was the stage of economic development which fostered a context for the analysis of the situation.

Through the lenses of economic development, it has to be argued that the theory applicable up to the twentieth century had dealt only limitedly with inflation. And this then explains why previous hyperinflation episodes were not assessed and realized to this degree. Today, the hyperinflation in the Weimar Republic is an episode to which historians and economists continually return and use it as an example of poorly implemented politics.

Ultimately, in the context of its historic and economic importance, the current project seeks to assess the features and manifestation of the hyperinflation in the Weimar Republic. In doing so, it would focus on a wide array of issues, such as Germany's position at the end of World War One, the Treaty of Versailles, the politics within the Republic or the direct impacts on the population. It is finally understood why such a burdened population would look to Adolph Hitler and his Nazis to restore economic stability in the country.

2. Germany at the end of World War I

The German parliamentary republic, also known as the Weimar Republic, was established in 1919, shortly after the end of World War I, and officially brought the German Revolution to an end (Blanning, 2000, p. 159). This era was one of much political and social turbulence, as Germany was left in shambles after being defeated by the Allies in the Great War.

The stage for the conflict was set by the terms by which Germany was held accountable in the Treaty of Versailles. The Versailles Treaty of 1919 was an agreement that was signed by the Allied Powers and the German authorities during World War I, and it is this treaty that officially brought this particular war to an end. This treaty included several conditions that were imposed on Germany, which reduced the authority and, more significantly, the economic prowess of Germany (Michael Duffy, 2009).

Some of the worst punitive measures included the loss of colonies, mandatory payment of reparations to the victors, the seizure of territory and the reduction of its military to a maximum of only 100,000. The treaty also apportioned the larger blame of the war on Germany, and the consequent reparations contributed to the social and financial instability of the Weimer Republic. The terms and condition of this treaty are said to have been the precipitators of World War II.

To be fair to the Allies, the Versailles Treaty was not nearly as severe as the treaty that the Germans imposed upon the Russians at Brest-Litovsk (Hickman, 2011). However, to the German people, the Versailles Treaty was a national humiliation. After all, their troops were still in the field at the end of the war. Without an Allied invasion of Germany to settle the issue, as in Word War II, there was room for the Junker elite to circulate its negative, turncoat propaganda.