Explain how war bonds work. (WWI)
1 answer:
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Correct answer: D) The German government printed extra money to pay protesting workers, causing hyperinflation.
Explanation: The Treaty of Versailles (1919), signed after the end of World War I, was very harsh in the terms imposed against Germany. Germany was forced to pay large reparation payments to the countries that it had fought against in the war. Along with accepting full responsibility for causing the war, Germany was ordered make monetary payments for the damage caused "as a consequence of the aggression of Germany and her allies." Occupation of territories in the Rhine and Ruhr valleys was threatened if Germany did not make good on reparations payments.
The Germany economy was crippled by the payments it was supposed to make, and its government (as the Weimar Republic) was unable to keep up with the payments. In 1923, French troops occupied the Ruhr region. Germans living in the region responded with civil disobedience and a workers strike. The Weimar Republic government sided with the workers and printed bank notes to pay the workers while they were on strike. Printing additional money with no real economic foundation to support the increased money supply led to extreme inflation. The German economy got worse and worse.
Then came the Great Depression, beginning in 1929. The Great Depression was worse in Germany than in America. The hyperinflation in Germany got so bad so that their currency became essentially worthless. I've attached a photo which shows children playing with stacks of money as if they were building block toys -- because they weren't really worth anything as money.
The bad situation in Germany made it possible for a radical leader like Hitler, making all sorts of bold promises, to win over enough people to rise to power.
