3 - Economic and Social Problems in Germany 1919-24

Question 1

How did Germany respond to the financial crisis?

Answer 1

They printed money and increased spending, so debt grew and the value of currency dropped.

Question 2

How did this compare to other countries?

Answer 2

Britain increased taxes and government borrowing.

Question 3

Why was Germany’s plan seen as ‘flawless’?

Answer 3

They thought they would win the war and annex their enemies industrial areas.

Question 4

What was the outcome of a defeated Germany on the economy?

Answer 4

1.44 billion marks of debt

Question 5

What options did the Weimar Republic have?

Answer 5

• reduce spending, dangerous because civil servants needed to be paid
• increase taxes, could alienate the public support

Question 6

Why was inflation not always bad?

Answer 6

• businesses can borrow from central banks
• value decreases and they don’t have to pay that worth
• lessened debts
• didn’t work for treaty which had to be paid in goods

Question 7

How did Germany deal with unemployment?

Answer 7

still high national debt, but unemployment gone by 1921

Question 8

How bad had inflation got?

Answer 8

• prices doubled from 18-19
• quadrupled from 19-20
• by 1920, the currency had increased to 14x higher than 1913

Question 9

Why didn’t the government intervene with hyperinflation?

Answer 9

It was lessening Germany’s debt.

Question 10

How did loans lead to hyperinflation?

Answer 10

Levels of loans became uncontrollable and by 1923 reached hyperinflation.

Question 11

How did Germany believe they would pay back the reparations?

Answer 11

The treaty never stated a specific amount, but in cash and goods.

Question 12

What was the reparations committee?

Answer 12

A committee set up to scale the damage caused by Germany. It concluded Germany would pay 6.6 billion in annual investments.

Question 13

What happened in 1921 and how did this cause issues for the government?

Answer 13

• Reparations report presented to Germany and they had 6 days to sign it.
• chancellor Fehrenbach refused and Wirth took over
• no choice but to sign
• policy of fulfilment starts

Question 14

What happened in Jan 1922?

Answer 14

The reparations committee agreed to a postponement of the January and February payments.

Question 15

What happened in July 1922?

Answer 15

The German government asked for further payment suspensions.

Question 16

What happened in Nov 1922?

Answer 16

German Government asked to be freed from 3-4 years of reparation payments

Question 17

Explain gold reserves in regard to the impact of reparations

Answer 17

Germany didn’t have enough gold to pay off the gold requirements

Question 18

Explain coal reserves in regard to the impact of reparations

Answer 18

Their coal reserves had been taken away but they still had to pay in coal.

Question 19

Explain manufactured goods in regard to the impact of reparations

Answer 19

Allies wouldn’t accept this form of payment as it threatened their jobs and businesses. They needed to rebuild their own economies.

Question 20

How did the allies make repayment difficult?

Answer 20

• wouldn’t let them pay in manufactured goods
• confiscated fleet merchants
• high tarrifs on German goods

Question 21

What did Maynard Keynes suggest about reparations?

Answer 21

6.6 billion was too much, 2 billion would’ve been better

Question 22

What did Peukert suggest about reparations?

Answer 22

Reparations were only 2% of Germany’s GNP

Question 23

What was the occupation of the Rhur?

Answer 23

In 1923, Ebert was president. Germany was behind on reparations so France and Belgium invaded the Rhur with 60,000 soldiers.

Question 24

What did the soldiers do in the Rhur?

Answer 24

Took control of mines, factories, steelworks and railways. They wanted the Germans to produce the missing coal to cover the debt.

Question 25

What was the idea of passive resistance?

Answer 25

To not fight back, but to refuse to work.

Question 26

What did the government promise to the workers?

Answer 26

That they would cover their wages, but this lead to inflation as they had to print more money.

Question 27

What did the German army do?

Answer 27

Secretly organised sabotage acts against the French, such as blowing up railways.

Question 28

How did the French respond to the German ‘passive resistance’?

Answer 28

They set up military courts and punished mine owners.
132 Germans were shot during the occupation.

Question 29

How did the French decide to ensure that the good were retrieved?

Answer 29

They brought in their own workers, but by 1923 the output had fallen by 1/5 of pre- occupied Rhur.

Question 30

How successful was passive resistance?

Answer 30

It ended up costing Germany twice as much as reparations.

Question 31

What were the economic effects of the occupation?

Answer 31

• paying Rhur worker wages caused a drain on government finances
• tax revenue was lost from closed businesses
• Germany had to import coal
• Shortage of good pushed prices further

Question 32

Why did the German constitution form a basis of ‘the right to work or welfare’?

Answer 32

Those who had overthrown the Kaiser wanted a better and freer life.

Question 33

What social welfare laws were introduced as a result?

Answer 33

1919 - max working hours a day is 8 hours
1919 - state health insurance by Bismarck, but only the employed and wives, daughters and disabled
1919 - aid for war veterans, war widows and orphans
1922 - national youth welfare act, all children had right to education and protection

Question 34

What were the impacts of the social welfare acts?

Answer 34

Huge demand for the economy. Lots of money went into providing it.

Question 35

How did hyperinflation impact the Weimar Government?

Answer 35

Loser
- parts of gov debt paid off, but not reparations
- collapse of new democracy
- people’s faith lost

Question 36

How did hyperinflation impact the Students?

Answer 36

Loser
- rapid rise in food prices, malnutrition
- suicide rates increased
- people turned to crime
- relied on loans which didn’t keep up

Question 37

How did hyperinflation impact the Mortgage holders?

Answer 37

Winner
- paid loans in devalued currency
- fixed income

Question 38

How did hyperinflation impact the Farmers?

Answer 38

Winner
- food remained in demand

Question 39

How did hyperinflation impact the Entrepreneurs?

Answer 39

Winner
- access to cheap credit

Question 40

How did hyperinflation impact the Workers?

Answer 40

Both
- received wage rises but they fell behind
- unskilled workers lost 30% of their spending power from 1913-23
- unemployment went up 4.1% in 1923

Question 41

How did hyperinflation impact the black marketeers?

Answer 41

Winner
- could buy large stocks ans sell at a higher price

Question 42

How did hyperinflation impact the big businesses?

Answer 42

Winner
- bought property with worthless money
- paid off mortgages

Question 43

Who was Hugo Stinnes?

Answer 43

• business owner in coal, iron and electrical industries
• granted workers more rights as a DVP reichstag member despite his conservative views
• “king of the Rhur”

Question 44

How did Stinnes manage inflation?

Answer 44

• granted workers more rights
• by 1924 owned 1535 companies, 20% of Germany’s industry
• used cheap credit to buy struggling competitors
• paid off loans in valueless marks