Causes of hyperinflation in Germany 1922-23 Flashcards
What were the long term causes to hyperinflation?
Financial problems and the after effects of war.
What were the medium term causes to hyperinflation?
Impact of reparations: political and financial.
Costs of social and welfare reforms
What were the short term causes to hyperinflation?
French and Belgian invasion of the Ruhr
Policy of passive resistance/gvt policy.
What did Volker Berghahn describe Germany’s finances in 1919?
‘An unholy mess’
What percentage of war expenditure had been raised by taxation?
16%. 84% had been borrowed
What did wartime gvts decide to do in Germany?
They decided to finance the war through increased borrowing and printing more money. This meant that the value of currency decreased while the amount of debt increased.
What amount of debt did the German gvt face in 1919?
1.44 billion marks. This carried a risk of causing political instability in the early years of WR. They could only raise this money by raising taxes or cut spending.
Who was the financial minister of Weimar gvt in 1919?
Matthias Erzberger
How could the gvt control inflation?
By narrowing the gap between income and expenditure by:
- Increasing taxation
- decreasing gvt spending
What strategy did the gvt decide to adopt?
Deficit financing in the hope that it would give people more money, cover the cost of public spending and overcome the problems of demobilising millions of returning troops.
What was the essential part of the deficit financing policy?
To allow inflation to continue.
What did the reparations payment had to be paid in?
Hard currency. Strong currency. Not printed money
What was a contributing factor to inflation?
Reparations
What were the key rights in the constitution?
Each German citizen should have the right to work or to welfare
What was passed in 1919?
A law that limited each working day to 8 hours
What state health insurance system was extended to include wives, daughters and disabled in 1919?
Bismarck
What happened in 1922?
National Youth Welfare Act required all local authorities to set up youth offices with responsibilities for child protection and gave children the right to have an education.
What percentage of the workforce was fully employed by the end of the war?
29.3%
What happened in January 1923 regarding the Ruhr?
French and Belgians sent a military force of 60,000 men to occupy the Ruhr industrial area to force Germany to comply with the terms of ToV. The no. of troops grew to 100,000 by the end of 1923.
What were the French’s intentions with the Ruhr?
Seize the area’s coal and steel and manufactured goods as reparations
What did the gvt of Wilhelm Cuno do?
They realised that the Germans couldn’t win back so he stopped all reparation payments?
What happened by the end of 1922?
Germany had fallen behind with reparation payments in terms of coal.
Who introduced the policy of Passive Resistance?
Wilhelm Cuno
What did the passive resistance policy include?
No-one living in the area, from businessmen and postal workers to railwaymen and miners would co-operate with the French. They were promised that their wages would continue while they were on strike
