What are some economic effects Germany experienced in the years 1919-22?

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World War I had stretched the German economy to its limit--this was one of the reasons why leaders within Germany had sought a negotiated peace to end the war. When the war came to an end, matters did not much improve. The Treaty of Versailles had imposed harsh reparations on...

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World War I had stretched the German economy to its limit--this was one of the reasons why leaders within Germany had sought a negotiated peace to end the war. When the war came to an end, matters did not much improve. The Treaty of Versailles had imposed harsh reparations on Germany, which was forced in signing the document to accept responsibility for starting the war. Germany had to pay billions of marks in reparations to France, especially. This, along with the lingering economic effects of the war, led to runaway inflation in Germany. By 1923, the German mark, which had exchanged with the dollar at a rate of about 5:1 before the war, exchanged at a staggering rate of 5.7 billion:1 in 1923, according to some estimates. According to others, the rate was closer to one trillion marks. This, of course, is to say that German currency was worth far less than the paper on which it was printed. The effects on the German economy were devastating. People with money in savings saw it completely wiped out, and working-class Germans had to resort to a barter economy to pay for basics such as bread and soap. People found that their entire life savings were not sufficient to buy even a quart of milk. Businesses collapsed and the economy basically ground to a halt. These conditions improved somewhat with the combination of credit from American banks, a revaluation of the currency, and a renegotiation of reparations payments in the mid-1920s. But the social unrest created by this economic nightmare, combined with the humiliation of World War I in its own right, contributed to the rise of far-right radicals like the National Socialist (Nazi) Party. These conditions made Germans willing to accept radical solutions. As one observer, novelist Thomas Mann, wrote:

The market woman who without batting an eyelash demanded 100 million for an egg lost the capacity for surprise. And nothing that has happened since has been insane or cruel enough to surprise her.

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