3) Economic And Social Problems In Germany Flashcards
In comparison to Britain how did Germany finance the war
Britain financed through a combination of higher taxes and government borrowing while Germany tried to finance the war through increased borrowing and by printing more money
Meaning the government debt grew and the value of the currency fell.
Risky strategy based on the fact that Germany would win the war and would be able to force the Allies to pay by annexing the industrial areas and heavy financial reparations
Defeat for germany not only deprive them for a repayment method but imposed a heavy burden of reparations and losses of industrial areas.
What could the new government of the Republic in 1919 have done to reduce the debt and why didn’t they do it
The Republic faced a debt of 1.44 billion marks
Government could have raised taxes or reduced spending or have done both but the political instability in the earlier years carried serious risks. A rise in taxes would alienate support for the Republic as anti-Republican parties could claim tax rises were to pay reparations. Reducing spending was difficult for the government to achieve as the civil service had to be paid as they were the backbone of the Republic which was fragile but military expenditure had dramatically reduced
What was the economic recovery of Germany like after World War I
The national debt was high but unemployment was only 1.8% compared to nearly 17% in Great Britain by 1921 and there was a rapid recovery in economic activity helped by investment from the USA
German economy coped better than European economies transforming from wartime to peace economy
Inflation continued and checked until between 1919 and 1920 it had quadrupled
What was the reason why the German government in 1920 allow inflation to continue unchecked
The 1920 coalition was dominated by the Centre party which had support from powerful industrialist who were benefiting from inflation by taking short term loans from the central bank to expand their business and by the time they repaid the money the value had decreased due to inflation
Inflation had the effect of lessening the governments burden of debt apart from reparations which were to be paid in gold marks or goods
What were the political impacts of the reparations
The Treaty of Versailles require Germany to pay reparations in both cash and goods. A reparation commission was set up to determine the damages caused by German Armed Forces in Allied countries which was concluded at 132 billion gold marks or £6.6 billion paid in annual instalments
The report was presented to the German government in 1921 with an ultimatum to accept in six days which caused a political crisis with the Cabinet resigning in protest of the harsh terms
This would be the start of the German policy of the filament of the Treaty of Versailles
What happened to reparations by January 1922
By January 1922 Germany was in such economical difficulty that the reparations commission granted a postponement of the January and February instalments
June the German government asked for a further suspension of the payments during that year
In November 1922 it asked to be released from its obligation for 3 to 4 years in order to stabilise it economy
The French were suspicious of Germany and refused to accept Germany’s request for suspension of reparations.Leading to France and Belgium occupying the ruhr to forcibly extract payment from Germany
What happened as a result of Germany being unable to pay reparations in 1923
The French were suspicious of Germany and refused to accept Germany’s request for suspension of reparations in November 1922
French and Belgian forces occupied the Royal industrial area of western Germany to extract payment By force
What were the economical impact of the reparations
Reparation payments made repayment of the huge government debt resulting from the war even more difficult
Germany’s gold reserves were in adequate for the scale of the reparations payment that had to be made in gold.
The other part of the reparations had to be made in coal but Germany had lost a large part of it: revenue in the Treaty of Versailles.
Another payment method was manufactured good but workers and manufacturers in the Allied countries would not agree to this as they regarded it as a threat to jobs and businesses.
Germany might have been able to increase its foreign currency to make payments by making exports to other nations but the Allies confiscated the entire merchant fleet and later imposed higher tariffs making it difficult for Germany to find money to pay reparations
The response of the German government was to print more money therefore making inflation even worse and making the value of the mark for even more
Why did the Franco-Belgian occupation of the ruhr occur
By the end of 1922 Germany had fallen behind in its payment of reparations to France in the form of coal
The French together with the Belgians sent a military force of 60,000 men to occupy the ruhrTo force Germany to comply with the Treaty of Versailles.
The aim was to seize the areas cold, steel and manufactured goods as reparations. They took control of all the mines, factories, steelworks and railways, Demanding food from the shops and setting up machine-gun post in the street
What was the German idea of passive resistance towards the occupation of the ruhr
The German government could not fight back because the Treaty of Versailles had reduced the size of the army and the Rhineland of which the ruhr was part of Had been demilitarised.
They responded by stopping all reparation payments and ordered a policy when no one living in the area from businessmen and postal workers to rail men and minors would cooperate with the French authorities.
German workers were promised by the government that their wages would continue if they went on strike while paramilitary troops working with the army secretly organised acts of sabotaged by blowing up railways and destroying bridges to disrupt the French effort
What did the French do in response to passive resistance of the German people
The French set up military courts and punished minors, miners and civil servants who did not comply with their authority.
150,000 Germans were expelled from the area, 132 Germans were shot in eight months in clashes with the police
The French port in their own workers to operate the railways and get coal out but this did not prove particularly effective.
The output in the ruhr had fallen to around a fifth of its pre-occupation output
What are the views of the reparations issue
John Maynard Keynes was highly critical of the Allied demand for six .6 billion in reparations. He calculated that £2 billion was a safe maximum figure for Germany’s capacity to pay and he predicted that the burden of reparations would not only damage the German economy but also the economy of Allied countries since it would hamper economic recovery
A modern historians argue the final figure for the reparations were actually quite manageable for Germany since it amounted to only 2% of its gross national product. His view is that the effects of the reparations had been exaggerated
What were the economic effects of the occupation
Paying the wages or providing goods for striking workers was a further rain on the government finances
Tax revenue was lost from those whose businesses were closed and the workers who became unemployed
Germany had to import coal and pay for it from the limited foreign currency reserves within the country
Shortage of goods push prices up
What happened during the hyperinflation crisis
Money lost its meaning as prices soared
Printing presses continued to print worthless paper money
Workers collected their wages and salaries in wheelbarrows and try to spend their money immediately before prices rose
Rising prices for food because food began to run short as people started hoarding suppliesIn anticipation of higher prices
Lead to breakdown in law and order – food riots when crowds looting shops, gangs of citydwellers travel to the countryside to take food from farms
Large increase in the number of convictions for theft
What were the social welfare reforms of 1919 and 1922
1919-limited the working day to a maximum of eight hours, state health insurance system but limited to workers in employment was extended to include wives, daughters and the disabled and aid for war veterans incapable of work because of injury became the responsibility of the national government, war widows and orphans aid was increased
1922 - National youth welfare act requested authorities set up youth offices for child protection and all children have a right to education
