Hyperinflation. Flashcards
1
Q
Causes of Hyperinflation:
Long term.
A
- Germany had no provisions for a long drawn - out war ~ government decided against increasing taxation.
- Borrowed sums by selling war bonds to public.
- Allowed national debt to increase.
- High demand for and shortage of consumer goods began to push prices up.
1
Q
What happened during the occupation of the Ruhr?
A
- 1923, German government became bankrupt.
- Germany asks for decrease in reparations = refused.
- Workers went on strike.
- Government had to print more money for workers.
- New government “Great Coalition” under Gustav Streseman.
- Nationalists viewed it as surrender.
- Germany didn’t give France all that they owed.
- French occupied Germany.
- Resistance to French occupation added to Germany’s economic problems.
2
Q
Causes of Hyperinflation:
Medium term.
A
- Government could only control inflation by narrowing gap between government income and expenditure through:
-> increasing taxation to raise income.
-> cutting government spending to reduce it’s expenditure. - Wiemar government continued to print large quantities of marks and sell them.
- Values of marks declined.
3
Q
Causes of Hyperinflation:
Short term.
A
- Germany kept avoiding reparation payments -> French realised.
- December 1922, declared Germany to be in default, Poincare ordered French & Belgium troops to occupy industrial Ruhr.
- Government started policy of passive resistance -> urged workers to go on strike but would still pay them.
- Governments finances collapsed the mark fell to worthless levels.
- German currency ceased to any real value.
4
Q
Events of hyperinflation.
A
- 1919 - 23 revenue only a quarter of what they need.
- Imports dry up, foreign employers refuse marks.
- People sell goods to get profits.
- This and invasion of Ruhr came close to ending the republic.
- Caused black market and gambling to flourish -> people turned to bartering.
- People blame Weimar Republic.
