Economic Crisis after WWI

Germany's Post-WWI Economic Crisis

Post World War I was not a time of prosperity, but rather of generalized economic disaster worldwide.
The Treaty of Versailles required Germany to pay significant reparations.
Germany financed war spending through borrowing.
Losing WWI prevented Germany from acquiring resources to repay debts.

The German government responded by printing more money, causing hyperinflation.
The German Mark's value plummeted.
Example: By November 1923, one U.S. dollar was equivalent to 4.2 trillion marks.
Bread prices: 160 marks in 1922, 200 billion marks in 1923.

Germany's inability to pay reparations affected Britain and France.
Britain and France struggled to repay war debts to the U.S.
The Soviet Union refused to pay back war debts due to the Communist Revolution.
Colonial governments in Africa, Asia, and Latin America suffered due to their dependence on parent countries' economies.

By 1924, the economic situation was stabilized.
Germany borrowed money from U.S. banks to pay reparations to Britain and France.
This led to the rapid economic recovery of all involved.

Russia exited World War I during the Russian Revolution of 1917, which devastated its economy.

Vladimir Lenin introduced the New Economic Policy (NEP) in 1923.
The NEP introduced limited free market principles while maintaining state control of major institutions.
The NEP aimed to provide economic breathing room to complete the Communist Revolution.
The NEP saw some limited success, but it ended with Lenin's death in 1924.

Joseph Stalin aimed to rapidly industrialize the Soviet Union.
He introduced a series of five-year plans to multiply Soviet industrial capacity.
This was to be achieved through a strong-armed state.

Stalin enacted the collectivization of agriculture to supply food to industrial centers.
Small, privately-owned farms were merged into large, state-owned collective farms.
Wealthy landowners (kulaks) resisted and were arrested, executed, or sent to labor camps (approximately 8 million).
Peasants lacked managerial skills, leading to failure to meet production quotas.

Ukraine was the most significant grain producer in the Soviet Union.
The 1932-33 harvest was about half of pre-collectivization levels.
Grain was exported to feed urban workers, leaving Ukrainian farmers with almost no food.
Policies prohibited farmers from leaving their homes, leading to mass starvation.
Millions starved to death in an event known as the Holodomor, or death by hunger.

The U.S. economy boomed and helped prop up other economies recovering from World War I.
The U.S. stock market crashed in 1929, plunging America into the Great Depression.
European economies relying on U.S. investment were affected, leading to a worldwide phenomenon.

The U.S. government had been largely hands-off with respect to the economy before the Great Depression.
President Franklin D. Roosevelt introduced the New Deal, consisting of government-sponsored policies.
The New Deal included infrastructure projects, a government-sponsored retirement program, and government medical insurance for the elderly and children.
Whether the New Deal would have turned the economy around is debatable, as World War II broke out in 1939 and resolved the U.S.'s economic hardships.