3. Economic and Social problems 1919-1924 Flashcards
When was the hyperinflation crisis?
1923
How did the war affect finance?
War required unprecedented levels of government spending. German wartime governments chose to finance the war through increased borrowing + printing money which caused debt to grow and the value of currency to fall
What did the wartime government assume?
That they would win the war, and be able to annex industrial areas of defeated enemies and force them to pay reparations
What debt did the government of 1919 face?
1.44m marks
What would a rise in taxation risk?
Alienating support for the new republic
Why couldn’t expenditure be reduced?
Civil servants needed to be paid
Support was so fragile that government avoided making them redundant and even extended welfare benefits
True/False: Unemployment was high by 1921
False - Unemployment had virtually disappeared by 1921
How extreme was inflation?
1918-1919 - prices double
Quadrupled in 1920
How did industrialists benefit from inflation?
By taking out loans and paying them back when the value was much lower
How did Germany’s unemployment compare to Britain’s unemployment in 1921?
Germany - 1.8%
Britain - 17%
Which cabinet resigned in protest of the reparations?
Fehrenbach - replaced by Wirth
Why were the 1922 January and February installments of payments postponed?
Germany’s economic difficulties
What did Germany ask for in November 1922?
A loan of 500m gold marks and to be postponed for 3-4 years to stabilise the economy
French were suspicious that this was an excuse and declined
What happened in the Ruhr in 1923?
French occupation due to disputes over reparations
What was the economic impact of the reparations?
Made war debt more difficult to pay
Germany’s gold reserves were inadequate
Reparations were to be made in coal but they lost their reserved in Versailles
How did the government respond to economic issues?
Printing more money
How many men did the French and Belgians sent to the Ruhr in January 1923?
60000
What was the Ruhr?
Heavily industrial area, generating 85% of coal, many iron and steel works
What policy was introduced by Chancellor Cuno?
Passive resistance - no one in the Ruhr was to cooperate with the French
Workers were promised that their wages would continue if they went on strike
How did the French react to the policy of Passive Resistance?
Set up military courts and punished mine owners, miners, and civil servants who would not comply
Around 150000 germans expelled
132 shot in 8 months
How was the Ruhr affected when the French brought in their own workers?
Output fell to a fifth of what it had been previously
What were the economic effects of the occupation of the Ruhr?
Paying wages drained finances
Tax revenue from closed businesses and unemployed lost
Shortage of goods increased prices
The combined cost of all this was twice the reparations payments
Effects of the hyperinflation crisis
Prices soared, food ran short, breakdown of law and order
How was the welfare system reformed in 1919?
limited working day to 8 hours
state health insurance (previously only for unemployed)
war aid for veterans who couldnt work, war widows and war orphans
What did the National Youth Welfare Act set up in 1922?
Youth offices with responsibility for child protection and decreed that all children had the right to education
How did welfare reforms affect economy?
Put a huge strain on finance
Printing of money largely to pay out welfare benefits
Who benefitted from hyperinflation?
Black marketeers, those with debts/mortgages/loans, new businesses, owners of foreign exchange, farmers
Who lost from hyperinflation?
Those who relied on savings, investments, fixed incomes, pensioners, those who lent money to the war effort, landlords, those who did not belong to trade unions
How much did short-time working increase?
By 1923 only 29.9% of the workforce was fully employed
