Economic and social problems in Germany (1919-24)

Question 1

How did Germany finance its war effort?

Answer 1

through increased borrowing and printing more money

Question 2

What was the effect of Germany’s method of financing the war?

Answer 2

government debt grew and value of the currency fell

Question 3

How much debt did the Weimar Republic have in 1919?

Answer 3

1.44 billion marks

Question 4

What were the two possible methods of reducing debt and why weren’t they used?

Answer 4

• raise taxes: not used because it would risk losing even more support for the republic as anti-republic parties will claim taxes are being raised to pay reparations
• reduce spending: not used because support for the republic was so fragile that they wanted to avoid making civil servants redundant

Question 5

What was the unemployment rate in Germany by 1921?

Answer 5

1.8% while it was nearly 17% in Britain

Question 6

What was the inflation levels between 1918 and 1920?

Answer 6

• prices doubled between 1918 and 1919
• quadrupled again between 1919 and 1920, reaching a point 14 times higher than in 1913

Question 7

Why was inflation allowed to continue unchecked?

Answer 7

• 1920 coalition led by Konstantin Fehrenbach was dominated by the Centre Party who was supported by German industrialists
• these industrialists were benefitting from inflation by taking short term loans to expand their business and by the time they were repaying the loans, their real value had been significantly reduced
• inflation also lessened the govt’s burden of debt

Question 8

What happened when inflation levels became uncontrollable?

Answer 8

Germany’s high inflation became hyperinflation

Question 9

What and when was hyperinflation in Germany?

Answer 9

• 1923
• hyperinflation is where prices rise uncontrollably, meaning the local currency loses its value

Question 10

What was the political crisis of 1921?

Answer 10

• the Treaty of Versailles said Germany will have to pay reparations but amount wasn’t finalised
• a Reparations Commission concluded Germany should pay £6.6 billion with the ultimatum to accept the terms within 6 days
• Fehrenbach resigned
• replaced by Chancellor Joseph Wirth
• Germany had no option but to accept

Question 11

Did Germany make the reparations payments and how did France respond?

Answer 11

• Germany made its first payment soon after they accepted the reparations imposed on them
• by Jan 1922: Germany not in a position to pay so Reparations Commission postponed Jan and Feb payments
• July: Germany asked for payments to be postponed again
• Nov: Germany asked for a loan of 500 million gold marks which won’t be paid back until 3/4 years later so they can stabilise their currency
• France were suspicious of Germany’s intentions so refused

Question 12

Why was paying the reparations difficult for Germany?

Answer 12

• also had the huge govt debt from the war to pay
• Germany’s gold reserves not enough for the reparations which had to be in gold
• Germany lost a huge amount of coal reserves in the Treaty of Versailles so couldn’t pay the coal reparations
• couldn’t pay in manufactured goods as workers in Allied countries refused as it would threaten their work
• may have been able to increase its reserves of foreign currency by increasing exports but Allies confiscated Germany’s merchant fleet and imposed high tariffs on German imports

Question 13

How did Germany deal with these difficulties in paying reparations?

Answer 13

they printed more money which made inflation worse and dropped the value of the mark further

Question 14

What and when was the Franco-Belgian occupation of the Ruhr?

Answer 14

• Jan 1923
• by end of 1922, Germany was very behind in reparation payments in coal to France
• France with the Belgians sent a force of 60000 men to occupy the Ruhr (industrial area) to force Germany into paying by taking coal, steel etc and taking control of mines, factories etc
• during 1923, the number of forces increased to 100000

Question 15

How did Chancellor Wilhelm Cuno respond to the occupation of the Ruhr?

Answer 15

he knew Germany weren’t in a position to fight back so instead stopped all reparations payments and ordered a policy of passive resistance while paramilitary troops worked with German army to sabotage the French e.g by destroying bridges

Question 16

What was passive resistance?

Answer 16

this was where no one living in the area, from businessmen to miners would cooperate with French authorities and they were promised their wages while striking

Question 17

How did the French respond to Cuno’s actions in resistance to the occupation of the Ruhr?

Answer 17

• they set up military courts and punished Germans who wouldn’t comply with the French
• around 150000 Germans expelled from area
• 132 Germans shot during the occupation months
• brought in their own workers to operate railways, mines etc

Question 18

What were the economic effects of the occupation and policy of passive resistance?

Answer 18

Germany’s economy suffered because:
- pay striking workers
- tax revenue lost from striking businesses
- had to import coal using limited foreign currency reserves
- shortage of goods pushed prices higher
this all amounted to double the cost of reparations
this was again financed by printing more money which triggered the hyperinflation crisis

Question 19

What were the effects of the hyperinflation crisis?

Answer 19

• workers collected wages in wheelbarrows trying to use it before prices rose again
• rising food prices meant food shortages as people hoarded supplies which led to food riots
• increased convictions for theft
• suicide rate went up

Question 20

What were some social welfare reforms made in the Weimar Republic?

Answer 20

• 1919: law passed limiting working day to 8 hours
• 1919: state health insurance system which was limited to workers in employment extended to wives, daughters and disabled
• 1919: aid for war veterans who were unable to work and for war widows and orphans increased
• 1922: National Youth Welfare Act required all local authorities to set up youth offices for child protection and ruled all children have the right to education
  most of the money printed was to pay for social welfare

Question 21

Who were the winners of the hyperinflation crisis?

Answer 21

• black marketeers bought up food stocks and sold them at vastly inflated prices
• those with debts, mortgages etc could pay them off in worthless currency
• those with enterprising businesses as they could take loans and repay once currency had devalued further
• those leasing properties on fixed rents because real value of rent decreased
• owners of foreign exchange
• farmers as food was in demand and money was less important in rural communities

Question 22

Give one specific example of an individual who benefited from the hyperinflation crisis.

Answer 22

Hugo Stinnes:
- owner of substantial businesses before 1923
- deputy in DVP
- with his business providing security and using his political contacts, he was able to raise large loans in 1923
- these helped him buy large forests to supply lumber to his mines
- built an empire that included 150 newspapers and magazines plus interest in banks, railways etc.

Question 23

Who were the losers of the hyperinflation crisis?

Answer 23

• anyone on pensions
• those who purchased fixed interest war bonds
• landlords reliant on fixed rents
• unskilled workers and those not in trade unions
• Mittelstand
• the sick as medical care costs rose
• children suffering from malnutrition developed diseases e.g TB