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.
By the end of 1922 Germany was seriously behind on payments to France, what did this prompt the French to do?
French and the Belgians sent a military force of 60,000 men to occupy the Ruhr in January 1923.
What did the French and Belgians do when occupying the Ruhr in 1923?
Took control of all mines, factories, steelworks, and railways, demanded food from the shops and set up machine-gun posts in the streets.
What was the government of Chancellor Wilhelm Cuno’s reaction to the french occupation of the Ruhr?
Stopped all reparations payments and ordered a policy of ‘passive resistance’ where no one in the area would cooperate with the french authorities. The government promised workers that their wages would continue if they went on strike while parliamentary troops secretly crossed the border and disrupted the french effort.
How did the French respond when German government disrupted their efforts in the Ruhr?
French set up military courts and punished mine owners, miners and civil servants who did not comply. 150,000 German’s were expelled from the area. 132 Germans were shot in the 8 months of their occupation.
Economic effects of the French occupation of the Ruhr:
-Paying wages for striking workers drained government finances.
-Tax revenue lost from closed businesses and unemployed workers.
-Germany had to import coal and pay for it from the limited foreign currency reserves in the country.
-Shortage of good pushed up prices.
Germany’s 1923 inflation crisis:
-Money lost its meaning and prices soared.
-Workers collected wages in wheelbarrows and shopping baskets, and tried to sped their money immediately before prices went up again.
-Food began to run short as speculators hoarded supplies, in many areas this led to a breakdown in law and order.
-Large increase in convictions of theft.
Social welfare reforms and employment rights:
1919: Law passed limiting the work day to 8 hours.
1919: State health insurance system extended to include wives, daughters and disabled.
1919: Aid for war veterans incapable of working due to injury became responsibility of national government; aid for war widows and orphans increased.
1922: National Youth Welfare Act made all local authorities to set up youth offices with responsibility for child protection and all children has the right to an education.
Winners of hyperinflation:
-Black-marketeers bought up food stocks and sold them at high prices.
-Those who had debts, mortgages and loans as they could pay it off in worthless currency.
-Enterprising business people who took out new loans and repaid them when the currency devalued.
-Long-fixed renters as the rent was decreasing.
-Owners of foreign exchange and foreigners living in Germany
-Farmers as food was in demand.
Losers of hyperinflation:
-Pensioners
-Those who lent money to the government by purchasing ‘war bonds’
-Landlords reliant on rent
-Unskilled workers and those who did not belong to trade unions
-Artisans and small business workers (Mittlestand)
-The sick
-Children suffering from malnutrition and diseases increased.
