Economic and social problems in Germany 19-24

• Financial problems after the war

  • Wartime gov chose to finance the war through increased borrowing and printing more money, the debt grew and value of the currency fell.
  • 1919, Weimar gov. faced with 1.44 billion marks debt; 2 options: raise taxes or reduce spending or both. Difficult to reduce spending as civil servants had to be paid so they didn't use this method. A rise in taxation would risk alienating support for the new republic
• Financial problems after the war

  • Unemployment virtually disappeared by 1921
  • Leaving the financial crisis meant prices doubled between 1918-19, quadrupled between 19-20- the gov allowed this to happen.
  • 1920 coalition led by Konstantin Fehrenbach dominated by centre party which was supported by many industrialists. These people were benefiting from inflation by taking short term loans from banks to expand businesses and by the time thee loans were called for repayment, the real value had significantly decreased
• mpact of reparations- political

  • Reparations commission set up to determine the scale of damage caused by German army forces in allied countries concluded should pay £6.6 billion in annual instalments
  • Cabinet of Fehrenback resigned in protest at what it considered excessively harsh terms replaced by Joesph Wirth
  • January 1922, Germany was in such economic crisis that the reparations committee postponed jan and feb instalments
  • In July German gov asked for further suspension
  • In Nov 1922, asked for loan of 500 million marks and to be released from obligations for 3-4 years to stabilise currency
• Impact of reparations- economic

  • gold reserves inadequate for scale of payments
  • Had to be paid in coal but Germany lost many coal reserves in Versailles treaty
  • Allies hammered German export trade by confiscating entire merchant fleet making reparations difficult
  • Government responded by printing more money but the mark value fell.
• Hyperinflation crisis of 1923- Franco Belgium occupation of Rhur

  • End of 1922 Germany behind in payments to france in form of coal
  • Prompted france and Belgium to send 60,000 men to occupy the Rhur in January 1923 to force compliance
  • Aimed to seize areas coal, steel and manufactured goods
  • Forces increased to 100,000
  • Controlled mines, factories, steelworks and railways, demand food and set up machine gun posts
• Hyperinflation 1923- Invasion of Rhur pt 2

  • Gov of Chancellor Wilhelm Cuno knew couldn't fight back
  • Stopped all reparation payments ad ordered policy of 'passive resistance' whereby no one in area would cooperate with French
  • Workers promised wages still if on strike
  • Paramilitary troops worked with army to organise sabotage of French
  • Crossed customs barrier at night and blew up railways, sank barges, destroyed bridges to disrupt the French.
• Paramilitary= Group of civilians organised in military style with uniforms and ranks
• Hyperinflation- invasion of Rhur pt 3

  • French operation grew in response
  • set up military courts and punished those who didn't comply
  • 132 germans shot in 8 months
• Social welfare

  • Those involved in revolution of 1918- sailors, soldiers and workers were motivated by desire for better and free life
  • Large amounts of people who needed support as result of death or injury during war
  • The reforms introduced put pressure on the government.
  • The printing of money was largely to pay out welfare benefits that Weimar committed to making which increased hyperinflation
• Social welfare- series of reforms to welfare system and employment:

  • 1919- law passed limiting work day to 8hrs max
  • 1919- state health insurance system extended to include wives, daughters and disabled
  • 1919- Aid for war veterans incapable of working due to injury became national government responsibility. Aid for war widows and orphans increased
  • 1922- National Youth Welfare Act. All local authorities had to set up youth offices with responsibility for child protection and decreed all children had right to education.
• Social impact of hyperinflation- winners

  • Black marketeers who bought up food stocks and sold at inflated prices
  • Those with debts, mortgages and loans- pay off money in worthless currency
  • Helped enterprising business people to take out loans and repay when value fell
  • Leasing property on long term fixed rents gained, real value of rents decreased
  • Owners of foreign exchange and foreigners in Germany
  • Farmers as food in demand and money less important rural
• social impact of hyperinflation- winners- High Stinnes

  • Owner of substantial business before 1923
  • Owned German-Luxemborg mining company and Rhine-Westphalian electric company
  • Deputy of DVP
  • Raised large bank loans and purchase whole forests to supply lumber to mines
  • Went on to build empire that inc. 150 newspapers and magazines and interests in railways, banks and more.
• social impact of hyperinflation- losers

  • Pensioners and war widows living in state pensions
  • Those who patriotically lent money to gov. in wartime by purchasing 'war bonds' because interest in payments decreased in value.
  • Landlords reliant on fixed rents
  • Unskilled workers and those who didn't belong to trade unions; wage increase didn't increase with inflation. Standards of living decreased and increased unemployment
  • Artisans and small business owners- Mittelstand. Their prices rose and prices they charged couldn't keep pace. Also paid disproportionate share of taxes
• Social impact of hyperinflation- losers pt 2

  • The sick- medical care cost increased whilst rapid rise in food prices meant malnutrition- death rates increased and so did suicide rates.
  • Amongst children suffering malnutrition, many incidence of disease such as tuberculosis and rickets increased.
  • Those who worked hard whole life- pensions and savings gone
  • Feelings did vary because it had different impacts on different classes and areas