Economic and social problems in Germany, 1919-24 Flashcards
Financial problems in the aftermath of the war, the impact of reparations, the hyperinflation crisis of 1923, social welfare
How did wartime governments choose to finance WW1?
Through increased borrowing and by printing more money
How did this method of wartime funding affect the gov and economy?
The government debt grew and the value of the currency fell
What was the financial strategy of borrowing and printing more money based on?
Flawed calculations: That Germany would win the war and would be able recoup its losses by annexing the industrial areas of its defeated enemies forcing them to pay heavy financial reparations
What did Germany’s defeat mean for the economy?
Deprived country of repayment method and also imposed a heavy burden of reparations and the loss of some industrial areas
In 1919 how much debt was the Weimar Republic faced with?
1.44 billion marks
Support for the new republic was so fragile that the government could not do what to reduce national debt?
Make civil servants redundant, raise taxes or reduce spending
Although national debt was high what had virtually disappeared by 1921?
Unemployment
Why was allowing inflation to continue unchecked a policy fraught with danger?
-Prices which had doubled between 1918 and 1919, had quadrupled again between 1919 and 1920 - reaching a point 14 times higher than in 1913
-Left unchecked inflation eventually became uncontrollable and by 1923, became hyperinflation
Why was government allowing inflation to go unchecked partly political?
-1920 coalition, led by Konstantin Fehrenbach was dominated by the Centre Party which was supported by many powerful German industrialists
-They we’re benefiting from inflation by taking short term loans from Germany’s central bank to expand their businesses
-By the time they had to pay it back their real value had reduced by inflation
How else did inflation help the government?
It also reduced gov debt
By what date was unemployment only 1.8% in Germany?
1921
What percentage was unemployment in Britain at the time?
17%
When did inflation become hyperinflation?
1923
What was set up to determine scale of damage caused by Germany?
A Reparations Commission
What did The Reparations Commission’s report conclude?
That Germany should pay 132 billion gold marks, or £6.6 billion, to be paid in annual instalments
