Franco - Belgian occupation of the Ruhr ( caused hyperinflation crisis ) Flashcards
What caused the Invasion of the Ruhr ?
By the end of 1922, Germany had seriously fallen seriously behind their reparation payments.
What was the purpose of invading Ruhr ?
Ruhr was an industrial area.It was seen as a way for the allied forces to get their money from Germany through either making the Germans work harder or seize the area’s coal, steel and manufactured goods as reparations.
How did Germany respond to the invasion of the Ruhr?
Chancellor Cuno knew the Germans could not fight back as Ruhr was part of the Rhineland which was demilitarised zone.So Chancellor Cuno instead , responded by stopping all reparations payments and ordered a policy of ‘ passive resistance’ to the Germans in the area to not cooperate with the French.
Why did the German workers accept the ‘ passive resistance ‘ that the Chancellor proposed where no one in the area worked ?
German workers were promised by their government that their wages would continue if they went on strike.
What was the economic effects of the occupation ?
paying the wages or providing goods for the striking workers was a further strain on the government finances which also led to government printing money.
Tax revenue was lost from those whose businesses were closed and workers who became unemployed.
Shortages of goods pushed prices up further.
Production decreased.France and Belgium workers were brought in but the output didn’t increase.
Who invaded the Ruhr
The French, together with the Belgians, to send a military force of 60,000 men to occupy the Ruhr.
The combined cost of all these economical effects lead to what ?
The combined cost of the events in Ruhr amounted to twice the annual reparations payments.Since the government still refused got pay taxes, its only option to pay the reparations was to print more money.This was the trigger for hyperinflation.
How did Germany deal with the costs of WW1 ?
In Germany, wartime governments chose to finance the war through increased borrowing and by printing more money.This meant that debt grew and the value of there currency fell.The government widths in the expectance of winning the war and forcing the others to pay heavy reparations.
