Economic and Social Problems Flashcards
What was the economic situation after WW1?
.They had increased borrowing and printing due to government spending.
.Currency value fell as debt grew.
.Idea based on Germany winning but they didn’t and faced reparations and loss of territory and no choice in method of repayment.
.1919 - 1.44 billion marks in debt - could raise tax or reduce spending.
Define inflation.
Rate of increase in prices for services and goods, usually as a percentage.
Why were raising taxes or reducing spending risky?
.Rising taxation - alienate republic support, anti-republican parties could claim it was to pay reparations to allies.
.Reducing spending - pay civil servants and welfare benefits for the public needed - war compensation, subsidies and cheap credit for employment.
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What were the social welfare and reforms?
.1919 - 8 hour max working days.
.1919 - Birsmarck’s state health insurance system for workers in employment extended to disabled, daughters and wives.
.1919 - War veteran aid for injuries if they couldn’t work as well as widows and orphans.
.1922 - National Youth Welfare Act - youth authorities for child protection and all children with the right of education in all local authorities.
What was the effect of social welfare and reforms?
.More money printed.
.1921 - unemployment virtually disappeared and economic activity rapidly recovered.
.1918-1919 prices doubled, 1919-1920, quadrupled, 14x higher than 1913.
.1920 coalition
(Fehrenbach) dominated by Centre Party. Industrialists took short-term loans to expand businesses and value reduced by inflation of loans.
.Reduced burden of debt but not reparations. Unemployment to 1.8% in 1921 and 17% in Britain but USA investment needed to recover economically.
What was the effect of the Treaty of Versailles?
.132 billion gold marks in annual payments presented in 1921 with a 6-day ultimatum.
.Wirth replaced when Fehrenbach resigned - policy of fulfilment.
.January 1922 - Postponment of Jan and Feb instalments. July - further postponement. November - loan of 500 million marks and released for 3-4 years to stabilise economy but refused.
What was the effect of foreign government action?
.Wouldn’t accept payments in manufactured goods as imports a threat to their businesses and jobs.
.Confiscated merchant fleet and increased tariffs on goods.
.Germany printed more money so value of mark fell more.
What was the Franco-Belgian invasion of the Ruhr 1923?
.January 1923 - 60,000 men sent to occupy the Ruhr to force Germany to comply with reparation payments.
.Seized steel, coal, manufactured goods, mines, railways, factories, steelworks, food. 100,000 men and machine-gun posts.
.Cuno stopped all reparation payments and began the policy of passive resistance - co one to cooperate with French and promised paid wages and army secretly blew up railways, destroyed bridges and sank barges.
.French set up military courts, punished miners, mine owners, civil servants. 150,000 expelled, 132 shot after police clashes in 8 months, own workers brought.
.May 1923 - deliveries 1/2 amount of 1922 per month output has fallen to 1/5 of before.
What were the effects of the occupation?
.Had to pay strikers wages and revenue lost so businesses closed and unemployment rose.
.Imported coal paid for with limited foreign currency reserves, shortages of goods.
.Cost became twice of annual reparation payment but taxes not increased so more money printed.
.Hyperinflation triggered.
What was the hyperinflation crisis?
.Money lost meaning - wages collected in wheelbarrows/shopping baskets and immediately spent.
.Food shortages and hoarding of supplies.
.Food riots, looting, gangs taking food from farms, angry farmers.
Why wasn’t there mass unemployment 1919-23?
.Demobilisation - millions back to labour market.
.Workers needed to restock.
.Economy stimulated by mild inflation.
.Labour needed for supply of reparation goods.
