4.13 Hyperinflation

The Interwar Period

While October 24th, 1929 was devastating to Europe in general, Germany had already suffered nearly a decade of hyperinflation before the Great Depression began. Hyperinflation – a period in which inflation is out of control – does not have a precise numerical value; it describes a rate of inflation so severe that trying to calculate it is nearly meaningless. The combination of the Great Depression and hyperinflation doomed the Weimar Republic in Germany, leading to the rise of the National Socialists and Hitler. Watch this video clip on the impact of hyperinflation on Berlin in 1922 and the rise of the National Socialists in Germany.


“Inflation Leaves Berlin Desperate.” Berlin: Metropolis of Vice—Legendary Sin Cities. 2005. Films on Demand. 2:20.

Between Wars

Orphen, William. "The Signing of Peace in the Hall of Mirrors, Versailles, 28th June, 1919.
Orphen, William. “The Signing of Peace in the Hall of Mirrors, Versailles, 28th June, 1919.” 1919. Imperial War Museum London. Wikimedia. March 9, 2018.

Three of the major powers were unhappy with the outcome of World War I – particularly with the outcomes of the Paris Peace Conference. The Germans, who had not been allowed to participate in the Peace Conference, were handed the conditions of the Treaty of Versailles and they resented their territorial losses and the heavy reparations imposed upon them. On the other hand, Italy, an ally in the Great War, had been promised colonies when Germany was defeated, but they did not receive any. Japan, also an ally during World War I, resented that they were not treated as equals and that they were not given control of China.

In many ways, World War I was what truly ended the nineteenth century. It undermined the faith in progress that had grown, despite all of its setbacks, throughout the nineteenth century among many, perhaps most, Europeans. The major political movements of the nineteenth century seemed to have succeeded: everywhere in Europe nations replaced empires (nationalism). Europe controlled more of the world in 1920 than it ever had or ever would again (imperialism). In the aftermath of the war, almost every government in Europe, even Germany, was a republican democracy based on the rule of law (liberalism). Even socialists had cause to celebrate: there was a nominally Marxist state in Russia and socialist parties were powerful and militant all across Europe. The old order of monarchs and nobles was rendered all but obsolete, with noble titles holding on as nothing more than archaic holdovers from the past in nearly every country. In addition, of course, technology continued to advance apace.

Despite the success of all of those movements, however, with all of the hopes and aspirations of their supporters over the last century, Europe had degenerated into a horrendous and costly war. The war had not purified and invigorated the great powers; they were all left reeling, weakened, and at a loss for how to prevent a future war. Science had advanced, but its most noteworthy accomplishment was the production of more effective weapons. The global empires remained, but the seeds of their dissolution were already present.

The results were bitterness and reprisals. The Treaty of Versailles that ended the war imposed harsh penalties on Germany, returning Alsace and Lorraine to France and imposing a massive indemnity on the defeated country. The Treaty also required Germany to accept the “war guilt clause,” in which it assumed full responsibility for the war having started in the first place. Simultaneously, the Austrian Empire collapsed, with Hungary, Czechoslovakia, and the new Balkan nation of Yugoslavia all becoming an independent countries and Austria a short-lived republic. Almost no one would have believed that another “Great War” would occur in twenty years.

In other words, World War I did not resolve any of the problems or international tensions that had started it. Instead, it made them worse because it proved how powerful and devastating modern weapons were, and it also demonstrated that no single power was likely to be able to assert its dominance. France and Britain went out of their way in blaming Germany for the conflict, while in Germany itself, those on the right believed in the conspiracy theory in which communists and Jews had conspired to sabotage the German war effort – this was later called the “Stab in the Back” myth. Thus, many Germans felt they had been wronged twice: they had not “really” lost the war, yet they were forced to pay outrageous indemnities to the “victors.”

It was in this context of anger and disappointment that fascism and its racially-obsessed offshoot Nazism arose. World War I provided the trauma, the bloodshed, and the skepticism toward liberalism and socialism that underwrote the rise of fascism. Fascism was a modern conservatism, a conservatism that clung to its mania for order and hierarchy, but which did not seek a return to the days of feudalism and monarchy. It was a populist movement, a movement of the people by the people, but instead of petty democratic bickering, it glorified the imagined nation, a nation united by a movement and an ethos.


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PPSC HIS 1320: Western Civilization: 1650-Present by Wayne Artis, Sarah Clay, and Kim Fujikawa is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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