3 - Economic and social impact of treaty Flashcards
how did wartime governments choose to finance the war?
increased borrowing and printing more money
what did borrowing and printing more money lead to?
debt grew, value of currency fell
1919 - debt of 1.44 billion marks
how did republic decide to address economic issues?
didn’t want to use unpopular measures (raise taxes and reduce spending)
inflation continued - German industrialists benefitted (short term loans), turned into hyperinflation
political impact of reparations
cabinet resigned and replaced by Wirth, no alternative to acceptance, by 1922 granted postponement of instalments
how much reparations?
£6.6 billion to be paid in annual instalments
presented to German government in 1921 with six days to accept
economic impact of reparations
gold reserves inadequate, Allies forcing reparations but making difficult to find money to do so, made repaying debt even more difficult
what was the Franco-Belgian occupation of the Ruhr?
- by end of 1922 Germany fallen behind in coal to France
- French and Belgians sent 60,000 men to occupy Ruhr in Jan (forces grew to 100,000)
- Germans couldn’t fight back (striked and government promised they’d be paid
economics effects of Ruhr occupation
- paying striking workers further drain
- tax revenue from closed businesses lost
- had to import coal
- shortage of goods pushed up prices
- trigger for hyperinflation crisis (money lost meaning)
who were the winners of the hyperinflation crisis?
- black-marketeers
- those with debts and loans
- those leasing property on fixed term rents
- farmers (food in demand)
who were the losers of the hyperinflation crisis?
- pensioners
- those who’d lent government money in wartime
- landlords reliant on fixed rents
- workers
- artisans and small business owners (mittelstand)
- sick and diseased
