Chapter 3: economic and social problems in Germany, 1919-24 Flashcards
What were the financial problems in the aftermath of the war?
In Germany, wartime governments chose to finance the war through increased borrowing and by printing more money. This meant that government debt grew and the value of the currency fell.
What took place in 1919?
The new government of the Weimar Republic was faced with a debt of 1.44 billion marks.
What was the political impact of the reparations?
When the report was presented to the German government in 1921 that they had to pay £6.6 billion within six days, the cabinet of Fehrenbach resigned in protest and was replaced by another led by Chancellor Joseph Wirth.
Describe the events of the hyperinflation crisis of 1923
By the end of 1922, Germany had fallen seriously behind in its payment of reparations to France in the form of coal. This prompted the French, together with the Belgians, to send a military force of 60,000 men to occupy the Ruhr industrial area in January 1923 in order to force the Germans to comply with the Treaty of Versailles. These troops occupied the whole Ruhr area and, in the course of 1923, the numbers of occupying forces grew to 100,000.
How did Chancellor Wilhelm Cuno know the Germans could not fight back?
The Versailles Treaty has reduced the size of the German army and the Rhineland, of which the Ruhr was a part, was demilitarised.
As a result, what did Chancellor Wilhelm Cuno do?
He responded by stopping all reparations payments and ordered a policy of ‘passive resistance’ whereby no one living in the area would cooperate with the French authorities. German workers were promised by their government that their wages would continue if they went on strike.
What were the economic effects of the occupation and the policy of passive resistance?
- paying the wages or providing goods for striking workers was a further drain on government finances.
- tax revenue was lost from those whose businesses were closed and workers who became unemployed.
- shortage of goods pushed prices up further.
What were the advantages of the hyperinflation?
- there were black-marketeers who bought up food stocks and sold them at vastly inflated prices
- hyperinflation also helped enterprising business people who took out new loans and repaid them once the currency had devalued further.
- in the countryside, most farmers coped well since food was in demand and money was less important in rural communities.
