Geopolitics Magazine March - April 2015 ( 8th Edition ) | Page 94

Geopolitics & Daily News Magazine
Written by T. Pitikaris
ΒΑΒ,ΒSc, MSc
Financial Analyst
PhD candidate of
Macroeconomics

From Versailles to WWII, the political liberties and economic
developments
The end of World Word (I) came at a great cost, new devastating weapons (chemical gas) , "La
Grippe" , and the brutality of the war cost the life of more than 10 million people. The terms of the
Treaty of Versailles (Traité de Versailles) was extremely harsh for the defeated states (Germany,
Poland, Bulgaria, and Austria) and
Ottoman Empire. The war reparations and
the restrictions that were including as part
of the Treaty of Versailles forced the
Republic of Weimar to face extreme
challenges, and a period of hyperinflation
(1921-1923) but helped by the Dawes
Committee which implemented a set of
measures to revive the German economy
( the return of Ruhr, the restructuring of
war reparation payments and the reform
of the reform of Weimar’s national bank,
the Reichsbank) combined with the USA
Bank’s loans to Weimar even the Republic
of Weimar has managed to flourish.
The Great Depression and the Banking
Crisis that followed in USA forced the
major creditors of Weimar to retrieve their
money back home, where under the Gold
standard rule the US Banks were facing serious solvency issues. The stagnation, in European
continent under the economic dogma of that period, forced the governments to impose unpopular
austerity measures.
To make it worse in the Republic of
Weimar the technocratic government
lacking parliamentary majority impose
such harsh fiscal measure by
bypassing the democratic parliament
(lawmaking using the presidential
order provision)(Maier 1970). By
that time Italy had abolished
democracy while in several other
countries the public liberties had been
suspended. The extreme austerity
forced to a lower level of aggregated
demand thus to lower profits lower
salaries (special in countries without
labor collective structures) new
austerity measures was necessary triggering a vicious circle of less political liberties and lower
incomes. The international cooperation started to decay and new barriers in commerce were raised by
the national governments(Landes 1998).
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