Economic and Social problems in Germany 1919-1924 Flashcards
What were the finance problems post WW1?
-Wartime government financed the war through increased borrowing and printing of money = government debt grew and the value of the currency fell
In 1919, how much in debt was Germany?
1.44 billion marks
What was the new Weimar Governments response to the national debt?
-Chose to do nothing
As raising tax would risk alienating support for the new republic and reducing the spending would mean there would have to be a reduction of civil servants and welfare benefits
= Political move to prevent any lose of support
By 1920 how much higher was inflation compared to 1913?
14 x higher
Why did the government allow inflation to continue unchecked?
Partly Political
-1920 coalition led by Fehrenbach was dominated by the centre party which was supported by many powerful German industrialists. They were benefitting from inflation by taking short-term loans from banks to expand businesses. By the time the loans were due for repayment, their real value had been significantly reduced
- Inflation also reduced the government’s debt and it is often suggested that German politicians had vested interest in allowing it to continue unchecked.
By 1921 what percentage of the German population unemployed ?
1.8%
Compared to nearly 17% in GB
How much was the reparations owed by Germany calculated by the Reparation Commission?
£6.6 billion to be paid in instalments
What happened in January 1923?
Germany had seriously fallen behind on reparation payments in 1922 which led to the French and Belgiums sending a military force of 60,000 men to occupy the Ruhr industrial area to force Germany to comply with the treaty of Versailles
What was the Governments response to the occupation of the Ruhr industrial area 1923 ?
Government allied for a “passive resistance” to not cooperate with the French authorities
What as the French response to the German “Passive resistance”?
-150,000
Germans expelled from the area
-132 Germans shot in the 8 months of the occupation
By 1923 what was the production rate in the Ruhr compared to 1922?
1/5 of pre- occupation output
What was the economic effects of the occupation?
-paying wages of striking workers was draining the Government’s finances
-Germany had to import coal and pay for it with limited foreign currency reserves
-Shortage of goods pushed prices higher
= costed double the annual reparation payment and since the government did not want to raise taxes it’s only option was to print money = triggered 1923 hyperinflation
What was the exchange rate Mark to the dollar in 1914?
4.2
What was the exchange rate mark to the dollar in 1919?
8.9
By November 1923 what was the exchange rate for the Mark to the dollar?
4,200,000,000,000
