In 1919, European nations embraced the idea to construct peaceful global order at the Paris Peace Conference, resulting in the creation of six main treaties: Saint-Germain, Neuilly, Trianon, Sevres and the most controversial, the Treaty of Versailles. However, the creation of these treaties sparked criticism and resentment, due to the brevity of the consequences. There were few positive aspects of the Paris Peace Conference, while the negative opinions based on the Paris Peace Conference continued to fester for years to come. This is similar to the economic and social outcomes of World War I. There are fewer positive outcomes of economic and social issues than negative due to the burden of reparations imposed by the Treaty of Versailles.
There is no doubt that war is directly associated with economy. War costs and outcomes affect economic conditions, as does economic conditions affect war costs. Casualties run in both directions. The shadow of war correlates with economic history, influencing its pace and direction; and war continues to both shape economic developments and respond to them. Thus, there should be no surprise when Europe entered an economic recession in the aftermath of World War I.
The Paris Peace conference and Treaty of Versailles did not include provisions to rehabilitate Europe, causing slower progress of reparations. Wilson, Clemenceau and Lloyd George were not able to fully analyze how heavy economic burdens were. War reparations were great from the loss of prime agricultural land in battle and due to military expenditure, and thus the creation of War Guilt Clause, as a legal basis for reparations, declared Germany and its allies responsible for all loss and damage the Allies suffered. However, Germany was unable to fully pay reparations of £6,600 million in damage, and ceased payment in 1931. The Paris Peace Conference’s inability to foretell the inevitability of German failure to pay reparations contributed further to the economic burdens that were impeding greatly on Europe.
This influenced hyperinflation, raising interest rates, reducing investments, employments and imports, within Europe. Hyperinflation is mainly caused by the massive and rapid increase in the amount of money which is not supported by growth in the output of goods and serves. This is demonstrated by the inflation in the Weimer Republic in 1923 and Britain in 1921. In Germany, by 1921 the price inflation had risen by 700%. Under the forced draft of inflation, businesses were now operating at feverish speed and the rate of unemployment increase significantly. Those who managed to find work endured wage decreases.
Social outcomes of World War I indicated the social repercussions of the pursuit of independence and nationalism caused by the impositions on the Treaty of Versailles. Nationalism was disregarded at the Paris Peace Conference, causing many of the defeated countries were indignant with the conditions of the treaties. Since the defeated...