Revision:Economic consequences of ww1 and reparations - The Student Room
Results are out! Find what you Get quick advice or join the chat
  • Revision:Economic consequences of ww1 and reparations

TSR Wiki > Study Help > Subjects and Revision > Revision Notes > History > Economic Consequences of WW1 and Reparations

  • There was a massive direct cost to all nations involved in WWI
  • The opportunity cost of all the resources used to destructive ends
  • There was a change in the financial center of the world (from Europe and G.B. to the USA) since European nations became debtor nations
  • A fall in European living standards (European countries had to cut down on imports)
  • Increase in USA’s economic strength
  • Decrease in international trade (lack of a stable currency)
  • Worldwide markets shrunk
  • Established trade patterns were disrupted
  • Intense hatred between the two sides meant that is was (in the short term) impossible to reestablish previous trading patterns.
  • Few saw beyond the short term, therefore most politicians sought revenge, and not the recovery of the defeated states (this was also the result of popular opinion)


The Reparations Problem

  • Division amongst the allies on this topic
  • The Germans did not believe such reparations could ever be paid (especially with its post-war losses)
  • Countries relied on reparations to finance reconstruction and the delaying of reparation payments meant the delaying of the reconstruction process

Major Developments 1921-1933

  • Genoa Conference (1922) — world economic conference
  • Prosperity could only be restored if recovery plans included all countries (inter dependence of countries)
  • The conference failed
    • The USA refused to attend
    • French did not admit the Russians/Germans
    • Germans & Russians had a revolution of their own
  • The occupation of the Ruhr (1923)
  • German workers refused to cooperate
  • The French and the Belgian intervened but the cost of intervention outweighed any benefits made by the seizure of German goods.
  • The German Economy collapsed — there was high inflation & it was unable to pay reparations
  • There was social unrest in Germany (led to the rise of movements like the fascists) however, a coup led by Hitler and General Ludendorff failed
  • Britain refused to support France/Belgium
  • The Dawes Plan (1924)
  • End of occupation of the Ruhr
  • Two year moratorium of German reparation payments
  • International loan for Germany
  • Introduction of an annuity basis on reparations
  • Financial controls imposed on Germany
  • The Young Plan (1929)
  • The total sum owed by Germany was cut down by 25%
  • Annual payments fixed to run until 1966
  • In the event of financial difficulties a part of the payment could be deferred for up to two years
  • 1/3 of payments could be made in kind
  • International controls (established by Dawes Plan) were abolished
  • Bank for International Settlements established
  • International loan made to Germany ($200 million)
  • October 1929: Wall Street Crash
  • 1931: Germany stops reparation payments
  • 1932: Lausanne conference: fixed reparation payments very low
  • 1933: Hitler became chancellor

Evaluation of Reparations

  • Could Germany afford them?
  • Keynes criticized reparations. He later admitted he might have underestimated Germany’s ability to pay reparations.
  • Some argued that there was a lack of will in Germany to pay for reparations
  • Some argue that Hitler spent more on rearmament (in a short time) then the total revised reparations payments
  • How much did Germany actually pay?
  • Estimations point to $9 billion but she receive $8 billion in loans
  • Reparation payments did little to help the recovery of the allies
  • Reparations contributed to inter-war period tensions
  • Britain and France linked war debts and reparations and refused to pay war debts until reparations were paid to them


Try Learn together, TSR's study area

revision notes




a study planner

of discussions

Today on TSR

Applying to uni

The latest advice and trending discussions are all here

What's your favourite kitchen utensil?
Study resources