ECONOMIC AND SOCIAL PROBLEMS IN GERMANY 1919-24 Flashcards
Why did the new Weimar Republic face financial debt?
This is partly due to the legacy of the war as wartime governments had to finance the war effort by borrowing and by printing more money
How did the debt grow?
The value of German currency declined
Why couldn’t the government reduce expenditure and raise tax?
It would have been highly unpopular and risked alienating support for the new Republic taxes were not increased and spending was increased
What did governments continue to do?
Print more money and to borrow more
What did printing more money lead to?
Inflation to rise between 1919-1920
How did inflation benefit some?
Many politicians and businessman thought inflation was beneficial as its stimulated investment and economic growth and government debt became less of a burden.
The devaluation of the mark that Germany is exports became cheaper and foreign trade boomed unemployment was kept low.
What was the level of reparations set at in 1921?
£6.6 billion to be paid in annual instalments
What did the confirmation of reparations cause politically?
Another political crisis in Germany and led to the resignation of Fehrenbach govt
Bitterly divided
What did reparations do to the German economy in 1922?
Exacerbated Germany’s debt and inflation German governments
in 1922 try to negotiate a suspension of reparation payments for three years but the French would not agree
What did the Franco-Belgian occupation of the cause?
Inflation in Germany to spiral out of control and reach the level of hyper inflation in October and November 1923
What happened in January 1923?
French and Belgium forces occupied Germany’s main industrial area in the ruhr valley to extract reparation payments in the form of goods
What policy did the Kouno government declare?
Policy of passive resistance to the occupation
so workers in the area went on strike the wages of striking workers were paid by the government
What happened to tax revenue for the government?
It was reduced
How was the supply of any goods in Germany?
It was in short supply further increasing prices
What did the government print to cover its debt?
More money
