Causes of hyperinflation in Germany 1922-23

Question 1

What were the long term causes to hyperinflation?

Answer 1

Financial problems and the after effects of war.

Question 2

What were the medium term causes to hyperinflation?

Answer 2

Impact of reparations: political and financial.

Costs of social and welfare reforms

Question 3

What were the short term causes to hyperinflation?

Answer 3

French and Belgian invasion of the Ruhr

Policy of passive resistance/gvt policy.

Question 4

What did Volker Berghahn describe Germany’s finances in 1919?

Answer 4

‘An unholy mess’

Question 5

What percentage of war expenditure had been raised by taxation?

Answer 5

16%. 84% had been borrowed

Question 6

What did wartime gvts decide to do in Germany?

Answer 6

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.

Question 7

What amount of debt did the German gvt face in 1919?

Answer 7

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.

Question 8

Who was the financial minister of Weimar gvt in 1919?

Answer 8

Matthias Erzberger

Question 9

How could the gvt control inflation?

Answer 9

By narrowing the gap between income and expenditure by:

• Increasing taxation
• decreasing gvt spending

Question 10

What strategy did the gvt decide to adopt?

Answer 10

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.

Question 11

What was the essential part of the deficit financing policy?

Answer 11

To allow inflation to continue.

Question 12

What did the reparations payment had to be paid in?

Answer 12

Hard currency. Strong currency. Not printed money

Question 13

What was a contributing factor to inflation?

Answer 13

Reparations

Question 14

What were the key rights in the constitution?

Answer 14

Each German citizen should have the right to work or to welfare

Question 15

What was passed in 1919?

Answer 15

A law that limited each working day to 8 hours

Question 16

What state health insurance system was extended to include wives, daughters and disabled in 1919?

Answer 16

Bismarck

Question 17

What happened in 1922?

Answer 17

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.

Question 18

What percentage of the workforce was fully employed by the end of the war?

Answer 18

29.3%

Question 19

What happened in January 1923 regarding the Ruhr?

Answer 19

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.

Question 20

What were the French’s intentions with the Ruhr?

Answer 20

Seize the area’s coal and steel and manufactured goods as reparations

Question 21

What did the gvt of Wilhelm Cuno do?

Answer 21

They realised that the Germans couldn’t win back so he stopped all reparation payments?

Question 22

What happened by the end of 1922?

Answer 22

Germany had fallen behind with reparation payments in terms of coal.

Question 23

Who introduced the policy of Passive Resistance?

Answer 23

Wilhelm Cuno

Question 24

What did the passive resistance policy include?

Answer 24

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

Question 25

What happened in the situation of passive resistance?

Answer 25

The gvt’s finances collapsed and the mark fell to worthless levels

Question 26

What happened by autumn 1923?

Answer 26

It cost more to print a bank note than the note was worth.

Question 27

What were the Reichsbank forced to use?

Answer 27

Newspaper presses to produce sufficient money.

Question 28

When did passive resistance end?

Answer 28

September 1923. it was en essential first step in reducing gvt expenditure as the gvt stopped paying workers who refused to work for the French.