Economic and Social Problems in Germany 1919-24

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  • Economic and Social Problems in Germany 1919 - 24
    • Financial Problems
      • German government borrowing money and printing more left them in a lot of debt
        • Government of the Republic had 1.44 billion marks worth of debt
          • A rise in taxes might alienate support
          • They had civil servants to pay so could not reduce spending
          • However by 1921 national unemployment had virtually disappeared
        • Due to inflation prices doubled between 1918-19 and quadrupled in 1919-20.
          • The 1920 coalition was led byu industrialist who gained from inflation by taking short term loans to expland their businesses
          • Inflation also lessened the government's burden of debt
    • Impact of Reparations
      • Political impact of reparations
        • When the reparations of £6.6 billion were presented to the German Republic - the cabinet of Fehrenbach resigned in protest + was replaced by another lad by Chancellor Joseph Wirth
          • There was no other option but to sign it
            • The German economy was in no state to pay the reparations, and the Reparations committee granted postponement of the january and february installments
              • In November 1922 they asked for a loan of 500 million gold marks and to be excused from paying for 3-4 years, to get the economy under control.
                • The French refused
      • Economic Impact of reparations
        • Germany's gold reserves were inadequate for the payments which had to be made in gold
        • Workers and manufacturers in other countries refused for them to be paid in goods because it threatened their work
        • The German merchant fleet was confiscated, so trade couldn't be increased to make payments
        • The Allies were making it very difficult for the payments to be made paid
    • The Hyperinflation Crisis of 1923
      • The Franco-Belgian occupation of the Ruhr
        • By the end 1922 Germany had fallen behind in its payments
          • The French sent 60,000 troops to occupy the Ruhr
            • they took control of the mines, factories, steelworks and demanded food s from the shops + set up machine gun posts in the streets
        • Chancellor Wilhelm Cuno ordered 'passive resistance' - no one would cooperate with the French authorities
          • German workers were promised their wages would be paid by the government
          • Paramilitary groups working with the government blew up railways at night and disrupted the French effort secretly
          • The French set up courts and punsihed workers who went against them
            • 132 Germans were shot during the 8 month occupation
          • By May 1932 output of the Ruhr had fallen to a fifth of its preoccupation output
      • The Economic Effects of the Occupation
        • Paying wages + providing food for striking workers was another burden on the government
        • Tax revenue was lost from closed businesses + workers who became unemployed
        • Germany had to import coal from other countries
        • Shortage of goods meant prices went up
      • The Hyperinflation Crisis
        • Printing presses supplied banks with worthless money - money lost its meaning
        • Workers collected wages in wheelbarrows + tried to spend it immediately before prices went up more
        • There were food riots and people looted shops + tried to take food from farms + were greeted with angry farmers
    • Social Welfare
      • Those who helped bring the down the Kaiser wanted a better + freer life
      • Every German citizen should have the right to work + welfare
        • This led to a series of reforms of rights
      • Social Impact of Hyperinflation
        • Losers
          • Pensioners/war widows living on pensions
          • Those who lent money to the government during the war
          • Landlords reliant on fixed rents
          • By 1923 only 29.3% of the workforce were employed
          • The Mittelstand (small business owners) were badly hit
          • Medical care costs rose - the sick were badly afected
            • There was a rise in diseases
        • Winners
          • Black marketers who brought up food stocks and sold them at inflated prices
          • Those who had debts, mortgages and loans could pay them in worthless currency
          • Helped enterprising people who took out new loans and repaid them in worthless currency
          • Those on fixed rents
          • Owners of foreign exchange and foreigners living in Germany
          • Farmers in the countryside because food was more important


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