Germany Flashcards
Causes of the hyperinflation crisis
- many Germans assumed it was the result of the treaty of Versailles and particularly the reparations of ww1
- some simply blamed it on the financial greed and corruption of the Jews
- clear cause is the huge increase in paper money in circulation (gov printing too much to pay off interest on its massive debts)
Long term effects of hyperinflation crisis
- Germany had no financial provision for a long, drawn-out war
- KAISER’S gov, for political reasons decided AGAINST increasing TAX but instead borrowed massive sums by selling ‘WAR BONDS’ to the public but this just created national debt to become larger
- war had seen almost full employment- because the economy focused on the supply of military weapons
Medium term effects of hyperinflation crisis
- gov of Weimar Republic could control inflation by narrowing gap between govs income and expenditure through:
• increasing taxation in order to raise its income (not good for public)
• cutting gov spending to reduce its expenditure (cause political and social difficulties) - deficit financing (reduce tax) to increase nations debt
- reparations issue is seen as contributory factor
Short term effects of hyperinflation crisis
- July 1922 Germany made request for ‘holiday’ from making reparations payments,
Dec 1922 the reparations commission declared Germany to be in default. So french leader Poincaré ordered French Belgium troops to occupy the Ruhr (heart of Germany) - urged workers to go on strike and Refuse to cooperate with the French authorities although it also promised to carry on paying their wages but Germany government was unable to collect taxes from the ruhr area
- gov finances crashed
Consequences of the great inflation
- massive damage to middle class
- upper class won as able to pay off debts
- some businessmen profited by investing and borrowing cheaply
- those gained from buying property off financially desperate by the inflated money
- those in debt able to pay off easier as cheaper
Germany’s improved international position 1924-29
- us loans (dawes plan)
- league of nations 1926
- Locarno treaties 1925
- Streseman
- young plan 1924
Us Loans (Dawes Plan 1924)
- Dawes plan was needed for the re-organisation of German currency.
- International loan of 800 million gold marks to aid recovery
- Dawes plan meant:
Germany’s annual payments were reduced
French occupation of the Ruhr ended
Total reparations fixed
The whole process of the Dawes plan was that US lent Germany money to pay off their reparations and the countries that collected the reparations fees would use this money to pay off US debts.
Short term the Dawes plan was a success
But whole system was dangerously dependent on the continuation of US loans and France didn’t remove last loans
However many positives came out of the Dawes plan:
- secured foreign loans
- improved relations between France and Germany
- new machinery, factories. houses could be built
League of nations 1926
Kellog-briand pact 1923?
League of nations was set up as part of Versailles agreement…Germany was initially excluded.
By signing of Locarno treaties Germany showed that it was accepting the Versailles settlement.
Year later was ACCEPTED as permanent member of the council of the league and then that made Germany one of the most powerful countries in the whole league.
Kellogg pact was signed by France Germany USA
Voluntarily renounce (get rid of) use of offensives to settle disputes
Germany one of first to sign agreement
^symbolic importance
Lack of enforcement mechanism
Locarno Treaties 1925
- October 1925 Germany, France, Belgium agreed to respect western frontierborders, whilst
- Germany agreed with Poland and Czechoslovakia to settle any border disputes peacefully.
- Germany had previously complained bitterly about their loss of territory
- Germany no Rhineland
- managed to make Europe less hostile towards them
Streseman
Since Gov support had collapsed
- Streseman scrapped old currency, the mark and brought a new one ‘rentenmark’ (100 days as chancellor) so could pay back reparations increasing confidence in Germany economy leading to better relations.
- hyperinflation stopped and that made Germany worth something again.
- Dawes Plan settled war debts
- Strengthened relations with enemies by the Dawes plan
- He also continued to maintain good relations with the Soviet Union, and signed the Treaty of Berlin in 1926.
- stopped passive resistance
Young plan 1929
- Final troops agreed to leave the Ruhr by 1930
- Total reparations bill reduced to 1.3 billion but that meant Germany had to increase their annual payment.
- All foreign control over reparations over reparations ended leaving Germany fully responsible —> shows the foreign powers trusted Germany.
