Economic Issues

Question 1

Reparations sum

Answer 1

£6.6 billion, fixed in 1921

payments to be made in gold or in another way, such as with goods or raw materials

Question 2

Inflation

Answer 2

Inflation occurs due to more money being printed without economic growth
Currency loses value, which means that more money is demanded for goods by shops and suppliers

Question 3

Inflation in Germany

Answer 3

Marks lost value very quickly
In Jan. 1918 - 8.9 marks to 1 dollar
Jan. 1920 - 14 marks to 1 dollar
Jan. 1921 - 64.9 marks to 1 dollar
Jan. 1923 - 17,792 marks to 1 dollar
The German government fell behind on their reparation payments

Question 4

Debt

Answer 4

the government was already in debt as a result of war expenditure
The already low gold reserves were soon exhausted
Goods and raw materials had to be bought to meet payments of reparations, as well as more money being printed to meet expenditure

Question 5

Expenditure

Answer 5

Weimar Republic brought in welfare benefits, as well as having to pay widows and veterans pensions and compensating for war victims, which increased expenditure
cheap loans and subsidies were also given to help industry

Question 6

French invasion of the Ruhr

Answer 6

France invaded the Ruhr as Germany began to fall behind with reparations payments
Ruhr - industrial region
workers were ordered to stop working by German government - passive resistance
Hyperinflation only got worse with no income coming from the Ruhr

Question 7

Stabilisation of German currency

Answer 7

passive resistance was called off by Stresemann in September
The Rentenmark was introduced in November 1923 - a new currency
1 trillion marks was swapped for 1 Rentenmark
People had confidence in the new currency so were happy to swap

Question 8

Hyperinflation - the losers

Answer 8

money lost all value
cash savings and fixed incomes became worthless
monthly salaries didn’t hold their value
the middle class was mainly affected
people with assets or heirlooms sold them to bring in money

Question 9

Hyperinflation - the winners

Answer 9

people who held money in another currency, such as dollars benefitted - purchasing power of foreign currency soared
People with fixed rents benefitted
Loan value plummeted, which helped borrowers
some businessmen took loans out to but out competition, such as Hugo Stinnes who, by 1924, owned 1535 companies, 20% of German industry
The government benefitted - the 150,000 million marks they were in debt translated to 15 pfennigs in Rentenmark

Question 10

Invasion of the Ruhr

Answer 10

11 January 1923 - French and Belgian troops invaded the Ruhr
Troops took control of all factories, steelworks, mines, railways and rolling stock
German government ordered passive resistance on the 19th of Jan
Germans refused to produce or transport goods
communications cut
economic activity halted
132 germans shot dead by French and Belgians
150,000 people were removed from the region for refusing to obey orders

Question 11

Motivation behind invasion

Answer 11

Germany couldn’t pay France or Belgium their reparations

They were dissatisfied, so wanted to seized what, in their eyes, was theirs for the German economy

Question 12

Ending the hyperinflation/invasion crisis

Answer 12

26th September - Stresemann ended campaign of passive resistance
Rentenmark introduced, currency stabilised
however, the invasion led to significant political unrest and social hardship

Question 13

Gustav Stresemann

Answer 13

German Chancellor, 13 August 1923 - 30 November 1923