Hyperinflation

• What did most Germans believe was the cause of hyperinflation in 1923?


  Reparations
• Why was the view that reparations caused hyperinflation significant for Weimar?


  It influenced public perception and political consequences
• What was the national debt of Germany after World War I?


  144,000 million marks
• What financial issues did Germany face before reparations were set in 1921?


  Germany already had grave financial problems
• What could the German Government have done to improve its financial situation?


  Raise taxes and reduce government expenditure
• Why were tax increases and expenditure cuts against the principles of the early Weimar SPD Governments?


  They contradicted Socialist principles
• How much were reparations set at in May 1921?

  20,000 billion gold marks
• What was the payment rate for reparations agreed upon by the German Government?


  2,000 million gold marks a year plus 26% of exports
• What threat did the allies make if Germany refused to agree to reparations?


  To invade the Ruhr
• Who agreed to the reparations terms on behalf of the German Government?

  Chancellor Wirth
• How much did the German Government owe by December 1922, excluding reparations?


  469 million marks
• What was the financial situation of Germany when Chancellor Wilhelm Cuno took over in November 1922?


  Germany was in a financial mess
• How did the German Government attempt to resolve its financial issues?


  By printing more money
• What was the effect of printing more money on the internal debt?


  It made the debt easier to pay
• Why did printing more money not help with reparations payments?

  Reparations had to be paid in gold or material goods
• What did the German Government request from the allies in July 1922?


  To suspend reparations
• How did Britain and France respond to Germany's request to suspend reparations?


  They had little sympathy and believed Germany was avoiding payments
• What action did France take in response to Germany missing a reparation payment in 1922?


  Sent engineers and soldiers to secure coal production in the Ruhr
• What was the German Government's response to the occupation of the Ruhr?


  Ordered passive resistance
• What was the consequence of the German Government's commitment to pay striking workers during passive resistance?


  It led to more money printing
• How many paper mills were working around the clock by 1923 to produce money?

  300 paper mills
• What was the circulation of marks by August 1923?

  663 billion marks
• What was the exchange rate of marks to dollars in December 1922?


  8000 marks to $1
• What was the exchange rate of marks to dollars by November 1923?


  1. 2 billion marks to $1
• What was the price of bread in November 1923?

  201,000,000,000 marks
• How much did a single egg cost by November 1923?


  80 million marks
• What was the impact of hyperinflation on workers' wages?


  Wages could halve by the end of the day
• What alternative did many people resort to due to hyperinflation?


  Barter, swapping goods instead of using money
• What was one consequence of hyperinflation on food availability?


  Major food shortages occurred
• What were the main causes of hyperinflation in Germany in 1923?


  • Heavy reparations payments
  • National debt from WWI (144,000 million marks)
  • Financial mismanagement by Weimar Governments
  • Passive resistance leading to increased money printing
• What was the summary of the economic situation in Germany by 1919 and the final trigger for hyperinflation?


  • Economic troubles due to WWI costs
  • Problems worsened by Weimar economic policies
  • Final trigger: Government ordered workers to strike while paying them
• Who benefited from the use of worthless currency during the economic situation described?

  Those with debts and mortgages, large business owners, farmers, and the Weimar government
• How did large business owners benefit from worthless currency?


  They took out loans to expand their business and paid them off with worthless currency
• Why did farmers and those in the countryside fare better during this economic situation?


  They had food to eat and trade
• What financial obligation did the Weimar government fulfill with the worthless currency?


  They paid off money borrowed by the Kaiser’s government to finance the war
• Who suffered losses due to the economic situation described?

  Those who bought war bonds, pensioners, middle classes, unskilled working class, and the sick
• Why did those who bought war bonds experience losses?


  The value of their bonds did not keep up with inflation
• How were pensioners and war widows affected by the economic situation?


  They were on fixed incomes and could not keep up with rising costs
• What happened to the middle classes with savings in the bank?


  Their savings became worthless, leaving many impoverished
• How did the unskilled working class fare during this economic situation?


  They found their wages slipping behind inflation