During WWI, Germany had purchased bonds under the assumption that victory over the Entente would be swift. As the war turned against Germany, it became clear that seizing foreign resources to pay back these bonds was unlikely. When Germany signed the Treaty of Versailles, all hopes of a return on their investment were effectively dashed. Under the Treaty, the Entente powers limited German weapons manufacturing, effectively muzzling military production, which was the engine of economic growth throughout WWI. More importantly, the Entente levied harsh reparation requirements on the fledgling republic, demanding 132 billion goldmarks as restitution for the damages Germany wreaked throughout WWI. Notably, the Germans could not pay back the Entente with their steadily depreciating currency as the reparation payments “were fixed in real Goldmarks.” Effectively bankrupt at its inception, these concessions to the Entente began …show more content…
Comparing the reparation requirements to “slave-labor,” the roaring-right produced propaganda that reflected this anger, and “rendered the establishment of a democratic majority almost impossible.” Unlike traditional taxation where collected capital stood to benefit the average citizen, taxes levied to meet reparation payments would not recirculate within the German economy. For a German citizen to accept the tax, was to accept guilt for the war and subsequently pay penance for Germany’s earlier belligerence. As a result, the proposed tax to meet reparation requirements was widely perceived to lack the “moral legitimation” that traditionally accompanied taxation. Notably, by expressing a willingness to pay, the representative government’s legitimacy was called into question as they failed to represent the majority of Germans who “were indignant” over