EARLY ECONOMY / HYPERINFLATION Flashcards

1
Q

WHAT was the state of the German economy post WW1?

A
  • In debt (from the war and from reparations)
  • Reduction in raw materials after the loss of areas like the Saarland from the Versailles Treaty
  • Food shortages and rising prices
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2
Q

HOW did Germany finance WW1?

A

Through increased borrowing and printing more money (increased government debt and decreased the value of the German currency)

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3
Q

HOW MUCH was Germany’s debt in 1919 (not including reparations)?

A

1.44 billion marks

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4
Q

WHY didn’t the government intervene during the rapid inflation from 1918-20?

A

Because the Centre Party (leader of 1920 coalition) was backed by industrialists who benefitted from inflation by taking short-term loans and paying them off when they were worth less

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5
Q

WHAT did English economist John Maynard Keynes say about reparations?

A

He calculated that £2 billion was a “safe maximum figure of Germany’s capacity to pay” and predicted that reparations would damage the economies of both Germany and the Allied countries (e.g. due to trade)

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6
Q

WHAT did historian Detlev Peukert say about reparations?

A
  • Reparations were manageable and Germany exaggerated it possibly to use it as an excuse to abolish reparations as a whole
  • Final figure was only 2% of Germany’s gross national product
  • Government allowed inflation as it benefitted them
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7
Q

WHAT was the ratio of pounds to marks in 1914, 1921 and November 1923

A

1914: £1 : 20 marks
1921: £1 : 256 marks
November 1923: £1 : 1.7 quadrillion marks

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8
Q

WHY was government expenditure rising before 1923?

A
  • New welfare benefits: widows’ and veterans’ pensions and compensation for war victims
  • Compensation to people who had lost land under Versailles Treaty
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9
Q

WHY did France and Belgium invade the Ruhr?

A

Germany had fallen behind on their reparations payments

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10
Q

WHEN was the French-Belgian invasion of the Ruhr?

A

January 1923

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11
Q

HOW MANY French and Belgian men were sent to occupy the Ruhr?

A

60,000 initially, which later grew to 100,000

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12
Q

WHAT was the government’s response the the French-Belgian invasion of the Ruhr?

A

‘Passive resistance’ - the government stopped reparation payments and told workers to stop working

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13
Q

WHY was the policy of ‘passive resistance’ bad for the German economy?

A

The government promised to pay the wages and provide goods for striking workers and they now had no income from the Ruhr so had even less money to pay for this.

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14
Q

Compared to reparations, how much was the combined cost of Germany’s response to the invasion of the Ruhr?

A

Almost double annual reparations.

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15
Q

HOW did the Allies hamper (hinder) Germany’s export trade after WW1?

A

They confiscated Germany’s entire merchant fleet and later, imposed high tariffs on imported German goods

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16
Q

WHO were some losers of hyperinflation?

A

(MAJORITY):
- Middle class the most
- Those with savings lost them overnight
- People with fixed incomes (e.g. pensioners, and people on welfare benefits)

17
Q

WHO were some winners of hyperinflation?

A
  • People in debt (including the German government)
  • Entrepreneurs/industrialists who used loans which they easily repaid when they were worth less
  • Foreigners/owners of foreign exchange as foreign currencies’ purchasing power increased
18
Q

WHAT did historian Detlev Peukert say about the impact of hyperinflation?

A

“It was precisely through the confusion experienced by individuals and their fears for their social status that the real psychological impact of the inflation made itself felt”
- People had turned to crime
- A profiteering ethic became common

19
Q

HOW MANY companies did Hugo Stinnes own by 1924 (and what % of industries was this)?

A

1,535 (an estimated 20% of German industries)

20
Q

WHEN did Stresemann call off passive resistance?

A

September 1923

21
Q

WHEN was the Rentenmark introduced?

A

November 1923

22
Q

WHAT was the Rentenmark?

A

A temporary German currency introduced after the hyperinflation crisis where 1 trillion old marks = 1 Rentenmark. It was supported by a mortgage on all industrial and agricultural land.

23
Q

WHEN was the Reichsmark introduced?

A

August 1924, when all the old currency had been cashed in

24
Q

WHAT was the Reichsmark backed by?

A

The German gold reserve (which had to be maintained at 30% of the value of the Reichsmark in circulation)

25
Q

HOW MANY companies went bankrupt in 1924?

A

Over 6,000

26
Q

WHAT are some key events in the invasion of the Ruhr?

A
  • French and Belgian troops took control of all factories, mines, steelworks, railways and rolling stock
  • Over a week later, passive resistance was called
  • Communications were cut during this time as well