EARLY ECONOMY / HYPERINFLATION

Question 1

WHAT was the state of the German economy post WW1?

Answer 1

• 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

Question 2

HOW did Germany finance WW1?

Answer 2

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

Question 3

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

Answer 3

1.44 billion marks

Question 4

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

Answer 4

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

Question 5

WHAT did English economist John Maynard Keynes say about reparations?

Answer 5

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)

Question 6

WHAT did historian Detlev Peukert say about reparations?

Answer 6

• 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

Question 7

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

Answer 7

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

Question 8

WHY was government expenditure rising before 1923?

Answer 8

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

Question 9

WHY did France and Belgium invade the Ruhr?

Answer 9

Germany had fallen behind on their reparations payments

Question 10

WHEN was the French-Belgian invasion of the Ruhr?

Answer 10

January 1923

Question 11

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

Answer 11

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

Question 12

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

Answer 12

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

Question 13

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

Answer 13

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.

Question 14

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

Answer 14

Almost double annual reparations.

Question 15

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

Answer 15

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

Question 16

WHO were some losers of hyperinflation?

Answer 16

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

Question 17

WHO were some winners of hyperinflation?

Answer 17

• 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

Question 18

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

Answer 18

“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

Question 19

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

Answer 19

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

Question 20

WHEN did Stresemann call off passive resistance?

Answer 20

September 1923

Question 21

WHEN was the Rentenmark introduced?

Answer 21

November 1923

Question 22

WHAT was the Rentenmark?

Answer 22

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.

Question 23

WHEN was the Reichsmark introduced?

Answer 23

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

Question 24

WHAT was the Reichsmark backed by?

Answer 24

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

Question 25

HOW MANY companies went bankrupt in 1924?

Answer 25

Over 6,000

Question 26

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

Answer 26

• 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