Economic and Social problems in Germany, 1919-24 Flashcards
How did Germany finance the war?
Increased borrowing and printing more money.
Why did they think borrowing and printing money would work?
They thought Germany would win the war and recoup it’s losses by annexing the industrial areas of its defeated areas and forcing them to pay heavy reparations.
What was the debt the government faced in 1919?
1.44 billion marks.
What were the risks to the Weimar Republic if they raised taxes?
It would risk alienating support for the new republic as anti-republican parties would be able to claim that taxes were being raised to pay reparations to the Allies.
What happened to prices (inflation) after war?
Prices had quadrupled between 1919 and 1920, reaching a a point 14 times higher than 1913.
Who was the 1920 coalition led by?
Konstantin Fehrenbach, dominated by the centre party which was supported by many powerful German industrialists.
How was inflation beneficial?
It lessened the government’s burden of debt and it is often suggested that German politicians had an interest in allowing it to continue unchecked.
By 1921 unemployment was only 1.8% compared with nearly 17% in GB. This encouraged investment especially from USA.
How much did Germany have to pay in reparations?
132 billion gold marks, or £6.6 billion in annual instalments.
Why did the reparations cause political crisis?
The cabinet of Fehrenbach resigned in protest at what it considered to be excessively harsh terms and was replaced Chancellor Joseph Wirth.
Why were the January and February instalments postponed?
Germany was in such economic difficulties.
Why did Germany struggle to pay back the reparations?
Germany’s gold reserves were inadequate for the scale of the reparations that were required in gold.
Part of the payments were to be payed in coal but they lost majority of their cola reserves in the Versailles Treaty.
A possible payment method was manufactured goods, but workers in the allied countries did not agree as it would take work from them.
Germany could increase its reserves of foreign currency by increasing exports to other countries but the allies confiscated its entire merchant fleet and later added high tariffs on import of German goods.
