As World War One ended in 1918, all of the nations involved had suffered extreme losses. Vast casualties along with economical and political instabilities were facts that had to be dealt with at the end of the war, even for the victories nations. However, the two worst hit were the defeated Germany and the USSR who were forced to pull out of the war. Germany had been in total war1 in the whole duration of WW1, a state which is not durable in the long term. Following the war, Germany’s economy therefore collapsed, due to the absence from the labour force, as the generations of the youth were killed in the war, and due to the intense war debts that Germany were to pay. The political state of Germany were also hugely affected at the close of the war.

Russia on the other hand, had to pull out of the war in 1917 due to extreme losses at the front and an army that was unwilling to cooperate. Russia were in no state to carry on the war, as they lacked the resources and will to continue, however, they were still technically in war with the central powers2. Meanwhile, there were serious problems back in Russia associated with the political system. The Tsar was overthrown and revolution was inevitable. At the end of war, Germany and Russia were the worst hit nations, and they faced tremendous difficulties in the near future.

Treaty of Versailles

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The defeated nation of Germany was left in a serious economic crisis at the end of the war. The victorious nations were looking to exploit Germany for loosing the war, and thus imposed heavy war debts. It is to be noted that Germany were economically exhausted, and were in no condition to repay the vast war debts demanded by the allied powers. The Treaty of Versailles imposed the reparation payments that were viewed as intolerable and impossible by the German people. The USA and Britain were in favour of the treaties, while France wanted Germany to pay a higher price.

France had been invaded by Germany many times before, and the trust in Germany and a time of peace was simply non existent. Therefore, France demanded the German army and economy to be heavily decimated in order to ensure no more future wars. Moreover, the majority of fighting in WW1 had taken place in eastern France, and thus houses and cities were destroyed, leaving France in the state of rebuilding its infrastructure. France’s views upon German reparations were heavily influenced by the emotional hatred shared by many French towards the Germans, as they seen as causing the war and suffering.

The USA and Britain however, did not share the same extreme views as the French, and German reparations were fixed at a more convenient level.

Inflation, Occupation of the Ruhr and the Dawes Plan

As being the case in Russia, Germany also underwent a revolution by influence from Russia. Although not as wide as the Russian one, it did make Kaiser Wilhelm II abdicate in 1918. The revolution ended with the formation of the Weimar Republic, marking the beginning of a republican Germany.

In the years following WW1, the German economy had to be rebuilt. This proved to be a very serious task, as Germany suffered from inflation. French and Belgian troops occupied the Ruhr3, in 1923 as Germany couldn’t repay the war debts. Germany’s economy now completely collapsed, skyrocketing inflation and unemployment. France wanted the war debts to be repaid, but another motivation for occupying the Ruhr was to cripple Germany forever, as the Treaty of Versailles hadn’t proved to be harsh enough in France’s opinion.

After the war years, in 1921, there were 64 marks to the dollar, while in November 1923 it had changed to 4,200,000,000,000 marks to the dollar. This hyper inflation was caused by the demand for goods which simply couldn’t be produced due to the lack of raw materials, and unemployment reaching alarming levels. Politicians in the USA and Britain began to realize that Germany would never be able to repay its war debts imposed by the Treaty of Versailles if its economy wasn’t working. They realized the treaty was too harsh, and in April 1924, Charles Dawes proposed the Dawes Plan. This plan would be beneficial towards the Germans as the total sum to be repaid would remain the same, but annual debts were decreased and Germany was granted a loan. The plan was accepted by Germany and as a result, the German mark began to stabilize and Germany was able to repay its debts on time for a while.

Russia’s economical problems

Russia, on the other hand, was also economically crippled at the end of the war on onwards, but this was largely caused by its own people. Revolutions in Russia led to very instable political systems. The Bolsheviks, who took power in the October Revolution in 1917, caused Russia to abandon the war due to the many internal problems. The tsar was overthrown as a result of the February revolution, and the Bolsheviks finally seized power of Russia in October. The result was a long period of instability, famine, civil war and isolation.

The Russian economy turned from bad to worse when the Bolsheviks were in power, as the economy had never been competitive to that of the Western Europe. The Bolsheviks were incapable of exploiting Russia’s natural resources, thus harming the economy even further. Moreover, Russia seriously lacked the heavy industries used by Western Europe, and the majority of Russians lived in the countryside as farmers. This contributed to the bad state of the Russian economy, which soon would experience famine and a massive civil war.

War Communism and the NEP

The aftermath of the war proved to be of a much bloodier calibre than that of Germany. While Germany experienced the depressing war debts and a ruined economy, Russia had some serious political problems.

When civil war broke out after the war, due to the Bolsheviks trying to consolidate their power of Russia, a new economic policy was taken into use. This was the war communism, which basically aimed for keeping towns and the Red Army supplied with weapons and food. During war communism, peasants of Russia were unwilling to cooperate with the Bolsheviks, as almost all food were taken away from them. A famine followed, causing vast masses in the cities to migrate to the countryside where they were better chances of surviving the famine. Many hardships were experiences, and to this day war communism is thought to have been solely a method used to win the civil war. Others say that it was to implement an instant communist economic policy that would increase the economic output.

War communism, which lasted from 1918 to 1921 was replaced by the NEP4 introduced by Lenin as a last solution to the economic difficulties. The economy had been damaged during the harsh war communism, so the NEP was meant to limit the damages and rebuild the economy. The NEP allowed small businesses to open for private trade, while the larger industries and banks etc would still be controlled by the government. The NEP allowed some capitalist measures to take place, which many Bolsheviks doubted as it was amoral to communism. Lenin explained the NEP by saying that Russia was not yet ready for full socialism, as it needed a stronger industrial base.

The NEP provided the farmers an incentive to produce more, as they could now sell their surplus for their own benefit. Therefore, agricultural output increased greatly with the launch of the NEP.

The way that the NEP went against the communist ideals caused a lot of debate in Russia. After the war and in the Bolshevik regime, there were communist uprisings like the Kronstadt uprising, where soviet sailors demonstrated against the government. War communism was replaced by the NEP as a result of the uprisings.

In conclusion, it can be said that both Russia and Germany suffered greatly in the aftermath of World War One. Germany, having to pay the war debts to the victories nations of the war, was in a serious economical state as they were close to bankrupt at the end of the war. However, with loans from abroad and a strong will to survive, Germany conquered its extreme economical condition against all odds, and became a powerful nation once again.

Russia on the other hand, can be concluded to have been inflicting damage to itself, as the Bolsheviks who seized power in the middle of the war, were partially responsible for a clear deterioration in the country’s economical state due to harsh leadership and the outbreak of a severe civil war. Also, an interesting point to note is how Lenin didn’t want to accept loans from abroad to tackle the economical crises, which Germany happily did and thereby improved its economy. Russia was more or less isolated in the years 1918-1924 and thereby depended on itself alone to improve conditions.

Ultimately however, both Germany and Russia survived the aftermath of WW1, not without consequences though., but in the end they both recovered from the economical and political instabilities.

Bibliography

Books:

Weimar and the Rise of Nazi Germany 1918-33, Geoff Layton, Hodder Murray

Bolshevik and Stalinist Russia 1918-56, Michael Lynch, Hodder Murray

Internet:

http://www.usagold.com/germannightmare.html

http://www.spartacus.schoolnet.co.uk/GERreparations.htm

http://en.wikipedia.org/wiki/New_Economic_Policy

http://en.wikipedia.org/wiki/Occupation_of_the_Ruhr

1 The state of total warfare in which a country allocates all ressources for war

2 The German Empire, Austria-Hungary, the Ottoman Empire and Bulgaria

3 The main centre of Germany’s iron, steele and coal production

4 New Economic Policy – replaced by the Five Year Plan by Joseph Stalin in 1928

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