Chapter 6: The Great Inflation Flashcards
What were the major causes of hyperinflation during the early 1920s in Germany ?
Reich government had borrow significant amounts of money to finance its wartime expenditures and had expected to make this back through forced reparations at the end of the war.
Heavily populated industrial areas such as Lorraine and Silesia were removed under the Treaty of Versailles resulting in a 42% decrease in production from 1913 to 1919.
Political division in Weimar meant leading parties were hesitant to raise taxes to fund welfare programs out of fear that they would be accused of imposing taxes to meet wartime reparation requirements.
For industrial leaders, the period of hyperinflation was positive in a way because it allowed them to do this…
They could purchase new equipment for their business with borrowed money and then pay it back later when the value of currency had decreased significantly.
In response to Germany’s inability to meet reparation payments due to hyperinflation, this occurred in January 1923…
French and Belgian troops occupied Germany’s leading industrial district in January 1923 in order to force reparations.
During its worse stages, citizens would often experience these situations…
They would have to collect their pay using a wheelbarrow.
They would have to immediately go out and spend their money as its value depreciated by the hour.
The height of hyperinflation saw the average German citizen paying the portion of their income towards food…
Approximately 90% of household income was used for purchasing food.
This American financial expert is responsible for developing the plan that helped pull Germany out of the period of hyperinflation…
Charles Dawes (Dawes Plan)
This German politician serving as Foreign Minister was able to successfully negotiate the terms of the Dawes Plan…
Gustav Stresemann
These two men were responsible for the development and implementation of the Retenmark as a method for bringing Germany out of hyperinflation…
Hjalmar Schacht and Hans Luther
This new form of currency helped Germany come out of the period of hyperinflation; it was tied to the value of gold…
Retenmark
Many major industries faced collapse or were required to merge as a result of hyperinflation. These two German industrial giants emerged out of this period…
United Steelworks and IG Farben
These were some of the residual effects of hyperinflation in Germany…
Anyone who had invested in war bonds essentially lost all of their money.
People who had held mortgages were able to pay off their homes for basically no cost.
Middle-class was fragmented due to differential effects across social classes.
This man was a Russian-Jewish entrepreneur who had collaborated with leading Social Democrats in importing food supplies after the wat and then invested the credits he obtained in financial speculation during inflation. His business collapsed and left 10 million marks of debts behind and provided the far-right with a scapegoat for their theories of Jewish corruption,,,
Julius Barmat
