TREATY OF VERSAILLES (TOV) Effects on Economy
- 13% territory (ALSACE-LORRAINE, Polish Coridoor)
- 12% population
- 48% iron ore
- 16% coal (SAAR coal production until 1935 (to go to France)
- 15% agricultural production
GER signed 'blank cheque' ---------£6600 million
Reparations amount not set until 1921 by IARC
TREATY OF VERSAILLES (TOV) 1919
LED BY 'BIG THREE' **All wanted to keep Communsim at bay (Russian Bolshevik Rev. 1917)
- WOODROW WILSON (USA) - idealist, wanted 14 points, League of Nations
- DAVID LLOYD GEORGE (GBR) - practical, keen to uphold national interest & saw need to restrain GC as foresaw crippling effects of destabiling GER
- GEORGES CLEMENCEAU (FRA) - nationalist, wanted revenge, compensation & security
Jan. 18 - Peace conference begins (GER not invited)
May 7 - Terms presented
May 29 - GER responds with counter proposals (minor changes follow)
June 16 - Final terms presented (GER gov+ consider restarting war)
June 20 - Chancellor Schiemann resigns (Pres. Ebert persuaded otherwise)
June 22 - Assembly accepts 237 to 138
June 28 - Foreign Minister Muller signs TOV
TREATY OF VERSAILLES (TOV) Opinions
Assumed among German public that the treaty would result in fair peace as President Wilson's 14 points would lay basis of the terms.
Labelled The 'Diktat' as forced upon them
GBR - growing sympath
FRA - too lenient
Yet - strong economy poteintial recognised & collapse of Empires made GER powerful vaccum in centeral Europe
- Clemenceau forced to give way over more extreme demands e.g. Annexation of Saar
- Treaty moderate in comparison to Treaty of Brest-Litovsk 1918 (imposed on Russia)
Invasion of Ruhr
Dec. 1922 Raymond Poincare orders Franco-Belguim troops to occupy Ruhr
Jan.1923 Occupation begins
Why? GER had been postponing reparation paymemts from early 1922, then in July asked for holiday - France hugely angered.
Reaction? PASSIVE RESISTANCE from Cuno gov+
urged workers in heavily industrially based Ruhr to go on strike and refuse to cooperate with the French authorities.
AND promised to continue paying wages!! (could not afford)
GER at the time did not recieve tax OR coal from the area as prevented by French
Thus had to import fuel.
HYPERINFLATION (JAN.-NOV. 1923)
Due to mismangement of finances, war expenses, accumilating debts, reparation payments and the invasion of the Ruhr the German gov+ started to print more and more Marks. High levels of debt had been allowed to continue afte 1918.
This meant too much was in circulation, thus prices soared and the value of momey spiralled down. Money was not worth the paper it was written on. A majority of the public suffered especailly those wth savings (normally middle class)
Reparations payments had to be made in hard currency (with minor inflation e.g. Dollar) so gov+ printed larger quanities of Marks and sell them to obtain the stronger currencies of other countries. Serious consequences. Mark went into sharp declne and inflation soared.
Gov+ was reluctant to balance budget using taxation in fear of political and social unrest, instead opting for deficit financing (reducing tax burden on people to stimulate spending thus economy)