economic and social problems of weimar germany (1919-1923)

inflation

a general increase in prices and a fall in the purchasing value of money

hyperinflation

an increase in prices occurring at a very high rate

marketeering/racketeering

to make an excessive or unfair profit, especially illegally by benefitting off other’s suffering and desperation

exports

the sale of goods to overseas markets

tariffs

a tax on goods imported into a country from abroad

subsidy

a sum of money granted by the state to help an industry or business keep the price of a product or service low

reparations

payments demanded by the allies as compensation for the cost of the war

welfare benefit

payments made by the government to try to prevent people from falling into extreme poverty due to unemployment, disability, sickness etc

what were the main 4 factors of the problems experienced by weimar germany?

• social impact → perceived threat to social order

• demographic impact → huge loss of life

• economic impact → heavy debt to repay

• political impact → extremism and division

how was the german demographic affected post ww1?

• 2 million killed

• 6 million wounded

• civilians died from starvation, malnutrition and hypothermia → caused by spanish flu, goods shortage, manpower shortage and naval blockade

• reintegration of soldiers into society → where will they work? jobs filled by women during the war

how was the social order threatened in the early years of the republic?

• percentage in women in the workforce rose to over 30%, stepped up during ww1

• growing anti-semitism and anti-communism created at the shock of the loss of the war

how was the economy of the early weimar republic affected post ww1?

• 1.44 billion marks of government debt

• output fell between 1914-1918

• skilled labour shortage → men died/injured during war, people also unable to retrain

• shortages of raw materials → used to create armaments,also affected by naval blockade

• trade barriers and tariffs imposed by allies → prevents german exports, lost trade as couldn’t sell goods to foreign countries

how was german politics affected by the post ww1 environment in the early republic?

• radicalisation of political views

• support for communism grew in some large cities → known as sparticists during this time, especially popular with workers

• SPD led the government’s policy of fulfilment, accepting the treaty and leading to the weimar politicians being dubbed as november criminals

what were the main 4 causes of economic problems?

1. war loans

2. land lost as a result of the treaty of versailles

3. economic impact of defeat

4. impact of reparations (after 1921)

how did the kaiser pay for the cost of the war?

• took out loans from foreign countries

• printed more money → provided reasoning for why the cost of living trebled during 1914-1918

why did he kaiser’s war loans become a problem after ww1 for the early weimar republic?

• originally intended to pay back loans when they had won the war, having seized land and valuable resources from the allies (reason why the treaty of brest litovsk was so harsh)

• faced with debt of 1.44 billion marks

how did the land lost as a result of TOV propagate problems in the early weimar’s economy?

• lost 75% iron ore

• lost 26% coal → some found in saarland now temporarily owned by france

• lot 15% arable land

• experienced reduce tax revenue → lost 6 million citizens, many who would pay taxes

• exports affected by allied imposed tariffs on german goods → reduced international trading

how did their defeat affect the economy?

• entire reich’s budget needed to pay interest o outstanding loans from the war

• ebert and government needed to find way to pay back their debts while paying soldier’s pensions, wages of government staff (judiciary, civil service etc) new welfare benefits, subsidies and cheap credit to aim businesses so that they could restart the german industries

what did germany feel about having signed the treaty, not yet knowing the agreed upon reparations amount?

• unsettled, as if they’d been forced into signing a blank cheque

what did john maynard keynes warn about the agreement of reparations?

• believed germany would not be able to pay more than £2 billion

• warned of the consequences the actual demands would have on the german economy and europe as a whole

who was the chancellor during 1920-21?

konstantin fehrenbach

who was the chancellor during 1921-22?

joseph worth

how was inflation affected between 1919 - 1920?

it quadrupled

what happened to the value of mark by 1922 in comparison to 1914?

1% of its 1914 value

how many german marks were to ONE us dollar

4.2 marks to 1 dollar

how many marks were to the us dollar in january 1920?

64.8 to the us dollar

how many marks were to the us dollar in january 1923?

17972 marks to one us dollar

how much was a loaf of bread in 1918?

0.63 marks

how much was a loaf of bread in 1922?

163 marks

how much was a loaf of bread in january 1923?

250 marks

who were the ‘winners’ in the hyperinflation crisis?

• mortgage holders → able to pay off loans quickly due to devaluation of the currency

• entrepreneurs and industrialists → took out loans, buy up other businesses (competition) and pay off loans quickly as they became worthless

• owners of foreign currency → retained value, german mark could be bought for far less in foreign currency

• the government →value of debt was reduced significantly, making payments easier to meet → created accusations that the government failed to stop crisis and kept printing money deliberately

why were accusations made that the government were responsible for the hyperinflation crisis?

• value of government debt was reduced significantly

  • made payments easier to meet

• some believed that the government was printing money deliberately and not intending to stop crisis

who were the losers in hyperinflation?

• pensioners with fixed pensions → pensions didn’t rise with as prices rose, leaving their savings to be wiped out

• anyone with savings → now made worthless

• those on welfare payments → couldn’t keep up with the increase in prices

• workers → experienced cut in spending power as wage increases failed to match pace of price increases

• small businesses and the mittlestand → costs increased faster than they could increase prices

how large was the cut in spending power that the workers experienced?

30% cut

how was hugo stinnes (of the stinnes-legiens pact) successful through the hyperinflation crisis?

• gained cheap credit

• able to buy up struggling competition

• pay off loans in near valueless marks

by 1924, how many companies did hugo stinnes own?

• 1535 companies

• 20% of german industry

what did hugo stinnes hope to achieve with his newfound empire?

support a dictator who would defeat communism and restore germany to greatness

• would later support adolf hitler