What primary effect did the Treaty of Versailles have on the German economy?

The Treaty of Versailles, signed in 1919, imposed significant reparations and territorial losses on Germany following World War I. One of the primary effects of these conditions was severe economic hardship, leading to hyperinflation during the early 1920s. The reparations demanded from Germany placed a tremendous financial burden on the country, causing its government to print excessive amounts of currency in an attempt to meet these obligations.

As a result, the value of the German mark plummeted, leading to hyperinflation that reached extraordinary levels by 1923. Prices skyrocketed, and people's savings were wiped out, creating widespread poverty and instability. This catastrophic economic situation fueled social unrest and contributed to the eventual rise of extremist political movements in Germany, including the Nazi Party. The impact of the Treaty of Versailles on the economy was thus profound, establishing a cycle of financial chaos that deeply affected German society and politics.