Reparations and the Ruhr Flashcards
Difficulty with paying reparations
The period of 1919 to 1923 was particularly difficult for Weimar Germany. Most especially because they were unable to pay their reparation instalments (fixed regular payments).
In 1922, the Weimar Republic stopped paying their reparation instalments (fixed regular payments).
In 1923, France and Belgium retaliated by seizing the Ruhr (German region) to take what they believed Germany owed in the form of coal and other goods.
The seizing of the Ruhr
The Ruhr was the main industrial region in Germany.
The French and Belgians took control of all factories, mines and railways in the area.
The actions of the French and Belgians were legal in the eyes of the international community because of the Treaty of Versailles.
The German reaction
In response to the seizing of the Ruhr, Ebert told German workers to go on strike. This was called ‘passive resistance’.
But France and Belgium simply brought their own workers in to take their place.
Over 8 months, 132 people were killed and 150,000 Germans were kicked out of their homes in the Ruhr.
Cause of Hyperinflation ( printed more money to help pay Belgium, France quicker )
When money was printed, governments tied currency to a fixed value of gold.
But Weimar Germany did not have enough gold to match the amount of money it was printing.
This meant that the value of the German mark fell and that the price of goods increased rapidly.
This caused hyperinflation (price of everything increases extremely quickly).
Germany’s war debts and the interest payments on these meant that they had debts worth 175% of their total national output (Debt: GDP of 175%). This is the same level as Greece in the Eurozone crisis
Consequences of hyperinflation
In 1918, a loaf of bread cost 0.6 German marks. By November 1923, it cost 201 billion German marks.
As prices rose every hour, people bought goods as soon as they were paid. This meant that they carried money round in wheelbarrows.
To get around the problem of hyperinflation, people used a barter system (trading items) instead of money.
Social problems with hyperinflation
People with savings (especially the middle class) lost their money.
People with a fixed income could not renegotiate (discuss again to change) their earnings.
The elderly with fixed pensions could not get any more money and so their incomes were destroyed.
Small business owners went bankrupt.
Benefits of hyperinflation
A few people benefitted from hyperinflation.
People with debt benefited because it was easier to pay off.
Farmers benefited because people paid more for food.
However, it is important to remember that most people suffered because of hyperinflation. People did not get their savings back when hyperinflation ended.
