1.3 Economicand Social Problems In Germany 1919-24 Flashcards
How did Germany fund WW1?
-increased borrowing
-printing more money
How did Britain fund WW1
-higher taxes
-government borrowing
What did the German methods of printing money and borrowing money lead to?
-the currency of the mark falling and government debt growing
Why was the German war strategy dependent on?
The fact they would win the war recoup losses by annexing the industrial areas of its defeated enemies and forcing them to pay heavy reparations
-defeat for Germany meant this method couldn’t be utilised and they had to pay reparations as well as deal with the loss of ket industrial areas
What was the debt the Weimar Republic was faced with in 1919?
1.44 billion marks
What are the two ways government debt can be reduced and why didn’t the Weimar Republic do these methods?
- Increases taxes
- Reduce public spending
The Weimar Republic was to politically unstable,
- Risk alienating support and anti-republic parties can claim taxes are being used to pay reparations
- Welfare benefits and civil servants had to be paid as the government was to fragile
When was unemployment really low?
1921
Between 1918 and 1919 prices….
Doubled
Between 1919 and 1920 prices
Quadrupled
Why did the Weimar government allow inflation to increase from 198-1920?
1920 coalition led by Konstantin Fehrenbach was dominated by the centre party who supported many powerful German industrialists (they benefited from inflation by taking short-term loans from the central bank to expand their business)
Why were the reparations not affected by inflation?
They were paid in goods such as gold which remained stable
How did inflation lessen the governments burden of debt?
The payments due were worth less as the value decreases, German politicians allowed it to continue unchecked
What were the unemployment rates in Germany and Britain(shows benefits of inflation)
Britain: 17%
Germany: 1.8%
When did inflation become hyperinflation?
1923
The treaty of Versailles was a key reason for hyperinflation,why?
Germany required to pay reparations but the fixed amount had not been decided
-Reparations commission set up to determine damage caused by German forces in allied countries
-132 billion gold marks paid annual instalments
German government given ultimatum of 6 days to accept -caused political crisis in Germany
What was the reparations commissions job and what was their conclusion?
Reparations commission set up to determine damage caused by German forces in allied countries
-132 billion gold marks paid annual instalments
What did the German cabinet do when faced with the reparations ultimatum in 1921?
Resigned in what they viewed as excessively harsh terms
Who was the chancellor of the new government that replaced the 1920 coalition led by Konstantin Fehrenbach ?
Joseph Wirth
Who was the chancellor of the 1920 coalition?
Konstantin Fehrenbach
What did Joseph Wirth do with the reparations ultimatum?
Accepted it grudgingly (start of the policy of fulfilment)
What was the policy of fulfilment?
Fulfilling the conditions of the treaty of Versailles in the hope that a revised payment would be made by the allies in the future as the current amount was beyond their capacity
What is a piece of evidence that the payments were beyond Germany’s capacity?(3)
The Reparations committee granted a postponement in payments of January and February 1922
-July 1922 Germany ask for further suspension of payments
November 1922 Germany take a loan of 500 million gold marks (realised from obligations for 3/4 years to stabilise currency)
Why did the French and Belgian take over the Ruhr in 1923?
The reparations from Germany had stopped
-attempt to extract payment by force
How did the Burden of reparations make the situation worse?(3)
Made repayment of government debt (build up from the war) much harder
-germanys gold reserves inadequate for the scale of reparations that had to be made In gold
-Germany had lost its coal areas in treaty of Versailles(made coal aspects difficult)
What was another possible method of repayment that wasn’t undergone?
Manufactured goods,allies did not accept as it was a threat to their jobs and businesses
How did the allies cripple Germanys ability to get foreign currency for payments?
-Entire German merchant fleet was confiscated and there was high tariffs on German in ported goods (response to this from German government was printing more money which made the situation worse)
By the end of 1922 what had Germany seriously fallen behind in?
Repayment to France in the form of coal
What did the failure of coal payments lead to in the end of 1922?
French and Belgians together to spend 60,000 men to occult Ruhr industrial area in January 1923 to force the Germans to comply with the treaty
What was the aim of the invasion of the Ruhr in 1923?
Seize the areas coal steel manufactured goods and reparations, these troops occupied the whole area and the numbers went up to 100,000
Took control of all mines, factories, steelworks and railways(demanded food from shops and set up machine gun posts in the streets
What was the Ruhr?
Heavily industrialised area of western Germany, it generated 85% of German coal and had many large iron and steel works
What was Germany’s response to the invasion of the Ruhr?
Stopping all reparation payments and adopting a policy of passive resistance
What was the policy of passive resistance?
No one living in the area would cooperate with French authorities
What did the German parimilary groups actually do?
Blew up railways, sank barges and destroyed bridges in order to disrupt the French
What did the French do in response to the action of German paramilitary groups in the Ruhr?
Set up military courts and punished mine owners and civil servants who wouldn’t comply with their authority (150,000 Germans expelled from area)+132 Germans shot
Desc the French failing to extract these resources from the Ruhr?
Despite getting the French to extract the resources in may 1923 monthly deliveries were a third of what they were in 1922 (output in Ruhr fell to 1/5 pre occupational output)
What were the four economic effects of the occupation of the Ruhr and passive resistance?(4)
-paying wages of workers for passive resistance(further drain on government finances)
-loss of tax revenue from the workers and businesses that become unemployed
-Germany has to import coal and pay for it from the limited foreign currency reserves in their country
-shortages pushed the prices of goods up
(Combination of all this resulted in twice the reparations payments-led to hyperinflation)
During hyperinflation how would workers collect their wages?
Wheelbarrows and shopping baskets
What led to a break down in law and order in some areas?
Rising food prices and and suppliers hoarding supplies in anticipation for higher prices in the future (led to food riots and looting of shops)
What did people do to gain vital supplies?
Bartered possessions
Number of marks per dollar In 1914
4.2
Number of marks per dollar
Jan 1919
Jan 1920
Jan 1923
1919: 8.9
1920: 64.8
1923: 17,972
Marks per dollar
July 1923
August 1923
September 1923
July: 353,412
August: 4,620,455
September. 98,860,000
Marks per dollar
October 1923
November 1923
October: 25.2 billion
November: 4.2 trillion
What and when were the 4 laws passed to reform the welfare system and employment rights?
1919: max working day to 8 hours
1919: state health insurance system limited to workers in employment (was extended to wives daughters and disabled)
1919: aid of war veterans incapable of working and war widows and orphans from the war
1922, national youth welfare act:all local authorities required to set up youth offices with responsibility for child protection and all children have a right to an education
However this put pressure on government funds and contributed to the hyperinflation crisis
Winners or hyperinflation (6)
-those with debts and morgages
-black marketeers
-enterprising business people who took out loans and paid them back quickly
-paying fixed rents on property
-people owning foreign exchange
-farmers
Losers or hyperinflation (7)
-pensioners
-landlords with fixed rents
-people who had lent out war bonds to government
-unemployed
-small business
-sick
-those reliant on savings
5 key events that led to the crisis
- Economic impact of the war
- Treaty of Versailles
- Weimar government response
- French invasion of Ruhr
- Weimar government response
