Economic And Social Problems In Germany, 1919-1924 Flashcards
What caused the economic crisis in Germany?
TOV payments
Germany’s defeat
Revolution within Germany
How did the war efforts impact both Britain and Germany differently?
Both countries used huge levels of government spending to recover
. Britain - situation was resolved with higher taxes and government borrowing
. Germany - wartime government increased borrowing and printed more money, causing government debt to grow and currency lost value
What was Germany’s original plan to deal with the financial problem after the war efforts?
To win the war and reverse financial losses by annexing industrial areas of defeated areas and forcing them to pay heavy reparations. This didn’t work at all
How much debt was the Weimar Republic in when it came into government in 1919?
1.44 billion marks of debt
What were the Weimar’s obvious options to fixing their debt and what was wrong with these ideas?
Raise taxes or reduce spending, both too risky due to political instability during early years of Weimar Republic, would’ve caused an outrage
What were the problems with Weimar Republic raising taxes?
Risks losing support for Weimar Republic as anti-republican parties could claim taxes were being raised to pay reparations to the Allies, which Germans didn’t want to do.
What was the problem with Weimar Republic reducing government spending and how did they respond to this?
despite the now lowered military spending after war, civil servants still had to be paid
Support for Weimar was so fragile that successive governments avoided making civil servants redundant to avoid conflict and even extended welfare benefits to keep people happy and maintain support
Why didn’t Germany want to impose unpopular means of addressing economic issues?
Due to the political instability of Germany
How were things looking good in Germany by 1921 despite high debt?
Unemployment was virtually zero and there was a fast recovery in economic activity
Germany economy coped surprisingly well from wartime to peacetime
What was the main fault in Germany’s seemingly improving economy by 1921?
They’d left inflation to increase unchecked
Why did the German government allow inflation to sky-rocket?
. 1920 coalition of Konstantin-Fehrenbach was dominated by centre party who were supported by POWERFUL GERMAN INDUSTRIALISTS
- took short-term loans from central bank to expand businesses
- only repaid the loans when the value of currency was significantly reduced by inflation, taking advantage of the economic state
How were the TOV reparations to be paid?
Gold marks or goods
What were some of the ways that inflation could be seen as beneficial?
. Effectively reduced government burden of debt
. By 1921, unemployment in Germany was only 1.8% compared to 17% in Britain, encouraging investments, especially with USA
What year did high inflation become hyperinflation?
1923
Why was a Reparations Commission set up and what was the result?
To assess the damage done by Germany in allied countries to come up with a reparations figure which hadn’t been fixed yet:
. Result: Germany should pay:
- 132 billion gold marks (£6.6 billion), paid in annual investments
- ultimatum for Germany to accept terms within 6 days
How did the result of the reparations commission cause a political crisis in Germany?
Fehrenbach’s cabinet resigned in protest to the harsh terms of the TOV reparations
- replaced by Chancellor Wilhelm Wirth
No alternative but to pay the reparations so this government signed unwillingly, the first payment was made soon after
How did the start of Germany’s policy of fulfilment towards the TOV come about?
From a belief that cooperation would win sympathy from the Allies and Germans hoped a revision of the terms would come about once it was clear that Germany couldn’t possibly pay full reparations figures
What were the attempts and successes at compromising the reparations figures in 1922?
January - Germany in such bad economic state that Reparations commission postponed the January and February instalments
July - Germany asked for further suspension of payment for that year
November - Germany asked for 500 million gold marks loan and to be released from payments for the next 3/4 years to stabilise their currency
- French refused as they were suspicious Germany were just making up excuses to not pay reparations
- set the scene for the invasion of the Ruhr in 1923