1.3 Economic and social issues Flashcards
War Impact: What HAD been the plan to deal with war debt?
-Wartime government simply printed more money, under the assumption that the would recoup their losses when they won the war, by taking over industrial areas, and making allies pay reparations.
-They, however, did not win the war, and inherited a debt of 1.44 billion marks.
War Impact: What options did the Gov have to deal with War debts? What were the limitations of these options?
They could:
-Raise taxes (which would antagonise the public)
-Reduce spending (after wartime, there is a greater need for government support, so this would be quite heartless & unpopular
War Impact: What did the Gov do? How was this beneficial?
-They did nothing!
-Inflation could be beneficial as businesses could benefit by strategically borrowing money, and it helped lessen their debt (not reparations debt, as this was material goods).
-Whilst national debt was exceptionally high, unemployment had virtually disappeared by 1921.
War Impact: What did this strategy result in, long term?
-Prices had doubled between 1918 and 1919, had quadrupled between 1919 and 1920, and were 14x higher than they had been in 1913.
War Impact: Why did the Gov. allow this to continue?
-The 1920 Centre coalition, led by Konstantin Feherenbach, was supported by many powerful German industrialists, who benefitted from this.
-Inflation helped lesson the impact of national debt .
-By 1921, unemployment was only 1.8, compared to 17% in USA- it seemed that nobody was suffering too much.
Reparations Impact: What was the political impact of reparations?
-The reparations bill was not determined until 1921, when the Reparations Commission settled on £6.6 billion in annual instalments.
-This figure had to be accepted within 6 days, and shook the country.
-Feherenbach’s cabinet resigned in protest, and was replaced by Joseph Wirth’s. They then signed the agreement & begun their policy of fulfilment.
Reparations Impact: Were Germany able to pay the reparations?
-By January 1922, Germany were in such economic difficulty that the January & February payments were postponed.
-In July, the Gov asked for further suspension of payments.
-In November, they asked for a loan of 500 million gold marks & to be released from its obligations for 3-4 yrs in order to stabilise the country. France were suspicious and refused.
Reparations Impact: What was the economic impact of reparations?
-German gold reserves were inadequate for the scale of reparations that were to be payed in gold.
-Germany had lost 75% of coal ore, but a large part of reps was to be payed in coal
-They might’ve been able to increase its reserves of foreign currency by increasing exports, but the allies hampered export trade by confiscating its entire merchant fleet & imposing high tariffs.
-They had to pay reps, but the allies were making it incredibly hard, so gov had no choice but to print more money.
GIVE SOME HYPERINFLATION STATS
-In Jan 1922, it was 191 marks to $, by 4 Aug 1923 it was 620,000, and by 4 Nov 1923, it was 200,000,000,000.
-Cost 80 million marks for an egg in Nov 1923.
-Money was carried around in knapsacks & wheelbarrows.
-Food riots & shop lootings were not uncommon.
-Rye bread rose from 9 million marks in October 1923 to 233 billion marks in November.
Ruhr: Why did France enter the Ruhr?
By 1922, Germany had fallen behind on their payments to France in coal, so France (along with Belgium) sent 60,000 men in to occupy the Ruhr in Jan 1923 to force the Germans to comply.
Ruhr: Detail the events of the occupation. (Pre-passive resistance)
-France aimed to seize that areas, coal, steel, and manufactured goods as payment.
-Troops occupied the whole Ruhr &, over 1923, it rose to 100,000 soldier, who took control of mines, factories, steelworks, and railways.
-Chancellor Wilhelm Cuno knew the Germans couldn’t fight back, so instead introduced a policy of passive resistance.
Ruhr: What was passive resistance?
Ruhr: What was passive resistance?
-No one in the area was to comply with the French authorities.
-Workers were promised that they would continue to be payed if they went on strike whilst paramilitary groups sabotaged the French.
-These troops secretly crossed borders and blew up railways, sank barges, and destroyed bridges to interrupt the French.
Ruhr: What did France do in response to passive resistance? Was it effective?
-French operation grew, setting up military courts to punish mine owners and workers, and civil servants.
-Around 150,000 Germans were expelled from the area, and 132 shot over the 8-month occupation, including a 7 year-old boy.
-They then brought in their own workers, but they were incredibly ineffective: in 1923, deliveries were a 1/3 of what they had been in 1922, & the total output had fallen to 1/5 of its pre-occupation output.
-By Autumn 1923, it cost more to print a note than it was worth.
-There were 300 paper mills & 2000 printing shops running to keep up demand.
-There were massive increases in rickets & TB due to malnutrition.
Ruhr: What were the economic impacts of the occupation?
Passive resistance was catastrophic for Germany.
-Paying wages, and providing goods for striking workers was draining.
-Tax revenue was lost, and coal had to be imported and payed for with foreign currency reserves
-Shortage of goods further increased prices.
-The combined cost amounted to 2x the annual reparations payments.
Social Impact: How was social Welfare developed?
-The aims of many revolutionaries had been for a freer & better life. Part of this, was about receiving welfare.
-It was mentioned in the constitution that every citizen had a right to work or welfare.
-In 1919, maximum working day of 8 hours, state health insurance, and aid for war veterans incapable of working became state responsibility.
In 1922, National Youth Welfare Act required all local authorities to set up youth offices with responsibility of protection. It was also ruled that every child had the right to education.
