Weimar Economy

German Economy - Weimar

Impact of First World War

• War Debt - borrowed almost 150 million marks from Britain and France - led to inflation of 200%
• Reparations - 1921 set at a £6,600 million
• Loss of income - took lands such as Alscace-Lorraine and Saar in Treaty of Versailles which had high economic value - meant reduction in 1/2 of iron ore
• Unemloyment - in 1919, reached 1.1 million and caused tensions between genders as men's jobs had been taken by women during war, however by 1921, unemployment was at 12,000

Inflation

• Reparations meant more money needed to be printed in order to cover debts and buy foreign currency - fixed in 1922 to 750 million but showed investors/bankers that the German economy was weak and decreased investments
• Occupation of Ruhr (1923) - couldn't withstand reparations so French army took over Ruhr and took coal as substitute
  • Germany responding by ceasing all reparation payments until the French had left and encouraging workers to strike - this however disadvantaged the Germans further who were loosing more income - in the end Germany forced to pay reparations with more money they had to print
• Hyperinflationary Crisis (1923) - In November 1923, conversion rates meant 200,000,000,000 to one dollar which meant that money had become effectively useless and led to further problems:
  • Wages became more difficult to pay as inflation changed per hour and so companies were unable to pay continous rate - cup of coffee cost 5,000 at 11 but 8,000 at noon
  • People started bartering with…