5. Hyper Inflation Flashcards
When and at how much are the reparations set ?
Summer 1921 at £6.6 billion
What happens when the Germans say that they cannot make the payments? Why can’t they stop them? (2)
- French and Belgians do not believe the Germans and decide to invade the demilitarised Rhineland to take goods to repay reparations
- German army too small to stop them
What happens after the French and Belgians invade the Rhineland ? (3)
- German government calls all workers to go on strike and not help the Belgians and French
- this is called Passive Resistance
- This created two problems: all the production and income from the Ruhr had stopped and they now had to pay the workers on strike.
Why can’t the government pay workers? What is their solution?
The government needs to pay workers but have less money because of the French and Belgian takeover of the Rhineland
Therefore they begin to print more money
What are the consequences of printing more money? (7)
- value of the Mark slums
- Hyper inflation begins
- unemployment
- businesses collapse
- homelessness
- Barter economy
- loss of savings
Who benefited from the hyper inflation crisis? (3)
- Peasants did not suffer too badly as they depended less on money and were more self sufficient
•Some shopkeepers and craftsmen did well by raising the price of goods. - Borrowers, such as businessmen, landowners and those with mortgages found they were able to pay back loans easily
Who suffered because of the crisis ? (2)
- people on fixed incomes, like students, pensioners or the sick found that their incomes didn’t keep up with prices
- People with savings and those who had lent money e.g to the government
Social effects of the hyperinflation Crisis (5)
- decline in law and order •An increase in crime •A decline in morality e.g. prostitution •A growth in suicides •An increase in prejudice e.g. against the Jews
Who does Ebert appoint to fix hyperinflation
He appoints a new chancellor called Stresemann and gives him article 48
Give four of Stresemann’s actions (5)
- Replaces the Reichmark with a new currency, Rentenmark
- Ends passive resistance
- Public expenditure was reduced and 700,000 public employers sacked
- creates a new central bank
- Promises to pay reparations
What agreement does Stresemann sign to get loans from the USA ?
With an American called Dawes in 1924. Signs the Dawes Plan
Who was charged with creating a new currency called the Rentenmark?
Schacht
What were the reasons for the economic instability of the Weimar Republic (6)
- At the end of the First World War, Germany was in a very weak economic position. There were lasting effects of a disastrous harvest, the Allied naval blockade worsened food shortages and Germany had significant war debt.
- The new Weimar Constitution involved a welfare scheme for paying pensions and benefits to those wounded from the war, veterans and widows and an Unemployment Insurance Act where employers had to pay half of the contributions
- As a result of the Treaty of Versailles, Germany was given the War Guilt Clause and so required to pay extensive reparations. The figure was set in 1921 at 136,000 million marks. This would contribute to hyperinflation in 1923, as Germany struggled to make the payments required
- Germany also lost important economic resources. It lost 13% of its land, 16% of its coal production and 48% of its iron ore
- Since, in 1922, Germany couldn’t pay the second instalment of reparations to the Allies, the French decided to take their payment in the form of resources and invaded Germany’s industrial heartland (Ruhr) and to take control of its coal
- Due to the French occupation of the Ruhr and the consequent passive resistance policy, all the production and income from the Ruhr had stopped and they now had to pay the workers on strike.
- Stresemann ordered Schacht to replace the Reichmark with a new currency, Rentenmark. He ended passive resistance expenditure was reduced and 700,000 public employers sacked
