Economic and Social Problems

• how did Britain finance the war

  through a combination of higher taxes and increased gov borrowing
• how did Germany finance the war

  through increased borrowing and printing more money.
• what was a flawed strategy Germany had to finance war

  that they would win the war, annex industrial arras of opponents and make them pay reperations
• what was the government debt of the Weimar Republic in 1919

  1.44bn marks
• what are some methods of paying debt

  raise taxes, reduce spending or both
• why was increasing taxes a risky option to pay debt for Weimar republic

  it would have decreased support for the Republic
• why was decreasing spending a risky option to pay debt for weimar republic

  civil servants needed to be paid, or risk of outrage
• as a result of the risks of methods for paying of debts, what did the gov do? what was the result of this?

  did nothing. inflation increased (prices X2 between 1919-20)
• how did industrialists benefit from inflation

  they took out short term loans to expand business, and repaid the banks when value of currency lower than before (due to inflation)
• inflation became uncontrollable. what happened by 1923

  hyperinflation occured
• what did the treaty of Versailles require Germany to do

  pay reperations with both cash and goods
• why was a reperations committee set up to do? what did they conclude?

  determine scale of damage made by Germany. report concluded Germany should pay 132bn hold marks (6.6bn GBP) in instalments
• when was the reperations report presented to the German gov

  1921. caused political crisis
• as a result of the reperations, what did chancellor fehrenbachs (central) cabinet do (1921)

  resigned as they believed terms too harsh. was replaced by chancellor Joseph wirth
• as Germany where in economic difficulties, what did reperations comitte do in Jan 1922

  postponed Jan/Feb instalments
• what did German gov ask in July 1922

  asked for suspension of payments due for that year
• what did German gov ask for in Nov 1922

  loan of 500mil gold marks and release from obligations for 3/4 years to stabilise currency
• why where reperations a burden

  made repayment for gov debt from war finance harder
• ways which gov could pay reperations

  German gold reserves, coal, increasing exports.
• why where the main methods of paying reperations an issue for germany

  gold/coal reserves inadequate, as they lost a lot of reserves as a result of treaty (giving up land)

  
  

  increasing exports to other nations wasn't possible as allied powers confiscated merchant fleet and increased tarrifs for German imports
• as the methods for reperation payment was an issue for Germany, what was the only solution? what was the aftermath?

  printing more money. pushed Germany into further inflation/decreased currency worth
• France refused to agree to German requests and forced Germany for reperations. what did they do?

  French/Belgium forces occupied Thur industrial area of western Germany
• what was the rhur

  heavily industrialised area of western Germany.

  
  

  generated 85% of German vial and had large iron/steel works and engineering factories
• when Germany fell behind in payments if reperations to France in form of coal (1922) what did French/Belgium forces do in Jan 1923

  sent 60,000 men to occupy rhur, with aim to seize areas of coal, steel and manufactured goods as reperations (grew to 100,000 later)
• why did chancellor Wilhelm cuno know that Germany couldn't fight back the occupation of the rhur

  as treaty reduced size of German army/Rhineland DEMILITARISED
• chancellor Wilhelm cunos response to rhur occupation

  stopped all reperations and ordered policy of passive resistance (where nobody living in the area, from businessmen to miners wouldn't comply with French)
• what did the chancellor Wilhelm cuno promise workers in order to comply with passive resistance

  wages would continue to be paid if they went on strike (while paramilitary groups worked with army secretly to sabotage french efforts)
• what did German military do to sabotage french efforts

  German military sneaked in at night and blew up railways/destroyed bridges. as a result French operations grew and set up military courts and punished anyone who didn't comply
• French punishments for passive resistance

  150,000 Germans expelled from area.

  
  

  132 Germans shot for clashing with police
• French brought in their own workers to the rhur. why was this an issue

  may 1923 deliveries of coal only third of average monthly deliveries in 1922. and output around 1/5.
• why was passive resistance bad for German economy

  paying wages for workers on strike drained gov finances

  
  

  German business closed and replaced with french. increased unemployment

  
  

  combined costs amounted to X2 the annual reperations cost. so printed more money. leading to hyperinflation in 1923
• how low was the currency worth

  got to a point where people carrying wages in shopping baskets and wheelbarrows
• as a result of hyperinflation, law and order broke down. how?

  food riots and gangs of city dwellers traveled to countryside to take food from farms.

  
  

  large convictions for theft
• who benefitted from hyperinflation

  black marketeers who bought up food stocks and sold them at inflated prices

  
  

  those who had debts/mortgages/loans could pay off money in worthless currency

  
  

  enterprising businesspeople who took out loans to expand business

  
  

  farmers as food was high demand and money wasn't important in countryside
• who lost out during hyperinflation

  pensioners

  
  

  sick as healthcare prices increased whilst increased food prices led to malnutrition

  
  

  children suffering from malnutrition due to increased food prices