Meltdown

World War I marked the end of an economic era. Faced with an urgent need for more liquidity, the combatant countries took their currencies off the stabilizing gold standard and printed more money. This triggered high inflation, which persisted after the war.

Economic Consequences of the Peace

The postwar settlement, known as the Treaty of Versailles, exacerbated tensions and economic instability rather than fostering growth and cooperation. The European allies, especially France and the United Kingdom, felt that the losers should compensate them for the cost of the war by paying reparations. In 1921, Germany's reparations alone were fixed at 132 billion gold marks almost twice its prewar national income.