Page 117 - Heavenly Signs III by Mel Gable

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In the Treaty of Versailles the so-called “war guilt” clause of Article 231 declared Germany and its allies
responsible for all “loss and damage” suffered by the Allies during the war and provided the basis for reparations.
The total compensation demanded was 132 billion gold marks which were far more than the total German gold
reserves. The economic problems the repayments brought German resentment based upon the undue burden. It
is usually cited as one of the more significant factors that led to the end of the Weimar Republic and the
beginning of the dictatorship of Adolf Hitler. After Germany's defeat in World War II, repayment of the debt
was not immediately resumed. Nevertheless, Germany finished paying off the reparations on October 2010. It is
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now in the process of transferring 3,500 tons of gold held by France, England and the U.S. back to Frankfurt.

Great Depression

The U.S. Government needed to raise money in preparation for their participation in World War I. To
accomplish it the U.S. Government raised taxes. The United States also raised money by selling “Liberty Bonds.”
Americans bought the bonds to help the United States pay for the war. Later, they were paid back the value of
their bonds plus interest. By the end of the war, the U.S. debt was more than 25 billion dollars. Following World
War I was the Great Depression. It was a decade after the war that a severe worldwide economic depression
occurred. The timing of the Great Depression varied across nations. In most countries it started in 1929 and
lasted until the late middle 1940s. It was the longest most widespread and deepest depression of the 20th century.
In the 21st century, the Great Depression is commonly used as an example of how far the world's economy can
decline. The depression originated in the U.S. around September 4, 1929 which was after the fall in stock market
prices. It became worldwide news when the U.S. stock market crash of October 29, 1929 became known as
Black Tuesday. The Great Depression had devastating effects in countries rich and poor. Personal income, tax
revenue, profits and prices all dropped. It affected international trade which plunged by more than 50%.
Unemployment in the U.S. rose to over 25% and in some countries rose as high as one-third of the employed
population. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction
was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by approximately 60%.
This was due to plummeting demand. There were few alternate sources for jobs. Jobs were dependent on
industries such as cropping, mining and logging which suffered the most in business. 193

The Wall Street Crash of 1929 and the ensuing Great Depression led to government efforts to restart the
economy and help its victims. Nevertheless, recovery was very slow. The depth of the Great Depression was in
1933 and recovery was rapid until the recession of 1938 proved a major setback. There were no major new
industries in the 1930s that were big enough to drive growth the way autos, electricity and construction had done
in the previous decade. Finally, the GDP surpassed 1929 levels in 1940. 193

The recovery of the world's financial systems tended to be quicker during the Great Depression of the 1930s as
compared to the late-2000 recession. If we contrast the 1930s with the financial crisis of 2008, it is clear that the
U.S. dollar on the gold standard was completely different in comparison to the free-floating U.S. dollar currency
we have today. In 2008, gold went through the roof exceeding one-thousand dollars per ounce. Both currencies
in 1929 and 2008 were the U.S. dollar. We have experienced inflation since the financial crisis of 2008. While the
situation was much different in the 1930s, it was where deflation set in on the economy. Unlike, the deflation of
the early 1930s the U.S. economy currently appears to be in a trap. This trap is where monetary policy is unable
to stimulate the economy back to health. Where many of us may feel we are living through a Great Depression
based upon the national unemployment rate, we are simply not living in the 1930s.

192 "Germany finishes paying WWI reparations, ending century of guilt". Christian Science Monitor. 4 October 2010.
193 Schultz, Stanley K. (1999). "Crashing Hopes: The Great Depression". American History 102: Civil War to the Present.