Economic Issues

Question 1

When does inflation become hyperinflation?

Answer 1

When prices of services and goods rise more than 50% each month

Question 2

What was Germany’s miscalculated wartime strategy with money?

Answer 2

• Increased borrowing - debt grew
• Printed more money - value of currency fell

Question 3

Why did Germany have a miscalculated wartime strategy with money?

Answer 3

They believed they would win the war and simply gain all money back by annexing the industrial areas of defeated enemies and reparations

Question 4

How much debt was the new government in?

Answer 4

1.44 billion marks

Question 5

What are the two ways to solve debt?

Answer 5

• Rise in taxes
• Cut down spending

Question 6

Why would a rise in taxation be a problem?

Answer 6

It would risk alienating support for the new Republic and anti-republican parties could claim that taxes were being raised to pay reparations to Allies

Question 7

Why would cutting down on spending be a problem?

Answer 7

It would be difficult as there were civil servants to be paid and social welfare increased due to war and constitution

Question 8

What were 3 benefits for the government of the inflation?

Answer 8

• Had the effect of lessening the Government’s burden of debt
• Unemployment lowered
• Investment increased

Question 9

How long did the German Government have to agree to the terms of reparations?

Answer 9

6 days

Question 10

Which cabinet resigned and why? Which cabinet replaced and signed the terms?

Answer 10

• Cabinet of Fehrenbach resigned in protest
• Replaced by Cabinet of Joseph Wirth, signed unwillingly due to no alternative

Question 11

What was the issue with part of reparations being expected in coal?

Answer 11

The Treaty took away most of Germany’s coal reserves

Question 12

What was the issues with paying with foreign currency?

Answer 12

• Needed to pay for the foreign currency to then pay with it for reparations
• The Treaty confiscated Germany’s merchant fleet

Question 13

Why was Germany not allowed to pay with manufactored goods?

Answer 13

Workers and manufactorers in other countries viewed it as a threat to their jobs/business

Question 14

What did the Reparations commission do in January 1922 due to Germany’s economic difficulties?

Answer 14

Granted a postponement of January and February installments of the reparations

Question 15

What happened in July 1922

Answer 15

The German government requested another suspension of payments due that year

Question 16

What happened in November 1922?

Answer 16

• Germany asked for a loan of 500 million gold marks + a release from obligations for 3-4 years in order to stabilise economy
• France was suspicious and refused

Question 17

What happened by the end of 1922?

Answer 17

Germany had fallen far behind in its payments of reparations to the French in the form of coal

Question 18

What happened in January 1923?

Answer 18

France and Belgium sent military to occupy the Ruhr (60 000 men which increased to 100 000 through 1923)

Question 19

What was the unemployment rate in Germany, what did this mean for social welfare?

Answer 19

1.8% - meant less benefits needed to be paid

Question 20

Why did the new government not make unpopular decisions that would solve debt?

Answer 20

Lacked political capital

Question 21

What Treaty did Germany charge Russia harsh reparations within and what year was it signed?

Answer 21

Treaty of Brest-Litovsk, 1918

Question 22

What was Chancellor Cuno’s passive resistance response to the Franco-Belgium invasion of the Ruhr?

Answer 22

Workers of the Ruhr to go on strike with pay

Question 23

What were the negatives of Cuno’s passive resistance plan?

Answer 23

• Have to pay welfare to strikers
• Strikers not producing anything to sell or use
• Damage relations with France and Belgium further
• Tensions high between occupants and German people of the Ruhr

Question 24

How did France respond to Chancellor Cuno’s passive resistance in the Ruhr?

Answer 24

• 130 civillians killed by French army due to trying to sabotage the factories
• France brought its own workers to work in factories
• France sent 70 000 soldiers into the Ruhr

Question 25

What was the economic impact on Germany due to the Ruhr invasion?

Answer 25

• All mines, factories, steelworks and railways occupied in the Ruhr -unable to trade or sell • French troops demanded free food from the shops • Paying wages and providing goods for striking workers • Tax revenue was lost from the businesses that were closed and workers became unemployed • Import coal and pay for importing coal • Shortage of goods pushed prices up further

Question 26

What did speculators do at the beginning of hyperinflation?

Answer 26

Bought it in bulk and hoarded it in anticipation

Question 27

How did hyperinflation lead to a breakdown in Law and Order?

Answer 27

• Food shortage • Food riots where crowds looted shops • Gangs travelled to countrysides to take food from farms • Large increase in convictions of theft

Question 28

How much was a loaf of bread worth before hyperinflation and during?

Answer 28

Before: 0.5 marks In November 1923: 201 billion marks

Question 29

How did pensioners and war widows lose out during hyperinflation?

Answer 29

They were living on state pensions which had been reduced

Question 30

How did the Mittelstand (Artisians and small business owners) lose out during hyperinflation?

Answer 30

• Their costs rose (unable to buy more stock/supplies) • Prices they charged could not keep up with inflation • Paid a disproportionate share of taxes

Question 31

How did the sick lose out in hyperinflation?

Answer 31

•Cost of medical care increased •Rapid rise in food prices led to widespread malnutrition •Death rates in large cities increased •Suicide rate increased

Question 32

How did children suffer in hyperinflation?

Answer 32

•Malnutrition •Cases of tuberculosis and rickets increased

Question 33

How did workers suffer in hyperinflation?

Answer 33

•Unskilled workers and those not in trade unions got hit worst •Wage increases did not keep up with rising prices - standards of living declined •Increase in unemployment and short time working

Question 34

By the end of 1923, how much of Germany's workforce was fully employed?

Answer 34

29.3%

Question 35

How did black marketers win in hyperinflation?

Answer 35

•Bought up food stocks and sold them at a vastly increasing price

Question 36

Who was Hugo Stinnes?

Answer 36

•He was the owner of substantial businesses (German-Luxemburg mining company and the Rhine-Westphalian Electric company) •Deputy of the DVP (German people's party) in Reichstag

Question 37

How did Hugo Stinnes win during hyperinflation?

Answer 37

•Able to raise large bank loans in 1923 - Bought whole forrests to supply lumber to his mines •Built an empire of 150 newspapers and magazines and interests in railways and banks