World War 1 Economic Consequences

World War I, also known as the Great War, began in Europe. Germany and Austria-Hungary started the war against Serbia. Eventually both sides involved their allied countries for help, increasing the size of this war. All of these countries were going to face consequences that happen from every war. Some countries were hurt worse than others. With all these countries involved in the war many treaties were created to keep the peace and numerous countries’ economies suffered. World War I led to consequences including economic consequences, the creation of peace treaties, and the creation of the League of Nations.

Whenever there is a war, it generally follows with economic consequences for those involved. In 1918, there were protests occurring in Berlin about the effects of war on the population and this decrease in population occurred from financial problems in Germany, from the expenses of war and British blockades of German ports were causing them to starve (“World War One - End of the War”). This

was just the beginning of the Germans financial problems from lack of trade and money spent on war. Once the war officially ended, Germany truly paid for the war. The Treaty of Versailles did not help Germany’s economy. When drafting the treaty, Wilson did not want to punish Germany, nearly as much as the rest of the countries did, however, did not speak up. Mao Zedong wrote “He did nothing except to attend various kinds of meeting where he could not speak his mind” (Foner, 104). Germany had to pay back $31.5 billion dollars to primarily France and Belgium after the war (The Dawes Plan, the Young Plan, German Reparations, and Inter-allied War Debts). At this amount it is no surprise that Germany had begun to have economic problems. Inflation that started occurring back in 1922 later turned into hyperinflation leading to the collapse of Germany currency and this caused disputes over how the reparations will get paid for (The Dawes Plan, the Young Plan, German Reparations, and Inter-allied War Debts). Meanwhile due to the reparations not being paid, the Allies were lacking money to pay for the loans they borrowed. The United States gave loans to the Allies during the war and now want their money back, however, the Allies did not have the money at the time leading the United States to create the United States War Commission to negotiate plans to repay (The Dawes Plan, the Young Plan, German Reparations, and Inter-allied War Debts). A payment agreement was eventually reached and Germany only recently paid off all of this debt. Germany was initially hit the hardest economically and this took some time to recover from.
Germany was not the only country suffering economically from the war. Russia economy began to fail before the war could end and on the other hand the United States economy began to prosper. Russia was successful throughout much of the war, however, they had begun having food shortages and a loss of work “on the home front” (“Significance of Russian Withdrawal From WWI”). This loss of workers hurt the economy in Russia and the food shortages not only led to deaths, but was hurting the economy as well. This economic distress made it hard for the Russians made it hard to pay for the war because they had to take care of those living in the country (“Significance of Russian Withdrawal From WWI”). The United States economy, as of the end of the war, was doing well. A statistic from 1919 states that “America's gross national product (GNP) grew from $78 billion to $103 billion” (“Industry and Social Changes- Economic Boom”). This statistic shows that the US was able to increase the number of finished goods in this time after World War I showing economic prosperity. Jobs were easier to find, people were making better wages for these jobs, and car industry was increasing rapidly (“Industry and Social Changes- Economic Boom”). The American economy was at its prime as of 1919 unlike other countries involved in the war. However, later the United States ran into economic issues later on due to unpaid loans given to the Allies in World War I, leading to a recession and eventually even contributed to the Great Depression.
Peace treaties was one of the major consequences countries had to face due to World War I. The Treaty of Versailles, presented to Germany on May 7, 1919 and created primarily by the French, forced Germany to concede territories to Belgium, Czechoslovakia, and Poland ("World War I: Treaties and Reparations"). This treaty contained many different sections and had multiple other conditions for Germany to follow. The Alsace and Lorraine were returned to France, thanks to this treaty, after Germany had annexed them after the Franco-Prussian War ("World War I: Treaties and Reparations"). This treaty may have made Germany face the consequences in terms of returning land to those they took it from, but it also makes sure that Germany will be unable to start another war because of this.
The French feared that Germany would start another war and were not going to let that happen. The Treaty of Versailles, created by England, France, and the United States, ordered demilitarization of the Rhineland by only allowing for them to have a maximum number of 100,000 troops, 6 naval ships, and no submarines and gave the French control over the Saar Basin for 15 years (St Rosemary Educational Institution). What this treaty was also intended for was for a country to take fault for starting the war. A portion of the treaty contained Article 231, known as the “War Guilt Clause,” which “forced Germany to accept complete responsibility for initiating World War I” and this meant that Germany was held liable for all the damages from the war and had to make reparation payments, eventually amounting to £6,600 million (St Rosemary Educational Institution). Knowing how much it would cost Germany to pay all of these reparations and demilitarizing their land was the premise of this treaty because the other countries knew that Germany would not have the economic stability to cause another war. Some lesser known treaties that dealt with Germany’s allies were the treaties of St.Germain, Neuilly, Trianon, and Sevres, all dealing with lessening the size of these allied countries and their military (St Rosemary Educational Institution). This plan may have backfired on the French because this treaty angered the Germans and may have been one of the causes for World War II.
The League of Nations was created as an effect of World War I and does not last. The League of Nations was an idea created by Woodrow Wilson in 1918 from his original 14 Point Plan (“League of Nations”). The League of Nations may not have been a perfect plan, but it was sufficient for the time being. Woodrow Wilson’s design for his 14 Points was to prevent another great, he stated the way to do this is to “… vindicate the principles of peace and justice in the life of the world as against selfish and autocratic power…” (Foner, 101). Wilson’s plan started early on, however, it took time for the League of Nations to officially begin. Wilson was struggling to get the approval of his own country because the United States believed that they would lose their sovereignty and was never ratified by the United States (“League of Nation”). Despite this plan being created by the President of the United States, the United States could not participate in the League of Nations. The League of Nations did not last and by the time of World War II, it was replaced by the United Nations (The United States did join this) (The League of Nations, 1920 - 1914–1920). The other countries proceed with the League of Nations, even though the creators (the United States) did not join this committee to prevent another great war.
The consequences of World War I effected everyone involved.

Germany’s economy had begun suffering before the Treaty of Versailles was created. Once this treaty went into effect, being passed by the reluctant United States (who wanted peace), the German economy tanked further. The United States did not only cause consequences for others, but also had consequences of their own to face. The United States economy blossomed as the immediate result of World War I, allowing for more jobs with better wages and increased the production of goods. Eventually the United States economy takes a turn from loans not being repaid, contributing to the start of the Great Depression later on. The League of Nations was a creation by Woodrow Wilson to prevent another great war from occurring after the devastation of this one. The consequences of World War I caused great trouble for the world, whether these effects occurred as an immediate effect or a ripple effect in later

years.