Economic problems 1918 - 23

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Created by abikj18 about 5 years ago


economic problems in 1918-23

Resource summary

Economic problems 1918 - 23
1 Bankruptcy
1.1 Germany had no money - all was spent on war, which they then lost.
1.2 Treaty of Versailles made things worse - deprived Germany of wealth-earning areas, such as coalfields in Silesia. Also made German government pay for reperations - victors, especially France, needed money to pay war debts to USA, so no reductions were made. However, with no gold reserves/ falling income, by 1923, Germany could no longer pay.
1.3 Had to pay 6.6 billion marks - reperations. Could be paid in material/goods aswell as cash (eg. coal/iron)
2 Occupation of the Ruhr
2.1 As the Germans couldn't pay, French confiscated raw materials, manufactured goods and industrial machinery. As a result of this, workers went on strike. Germany's troop was reduced to 100,000 and France had 750,000
2.2 Occupation of Ruhr did France little good, but did Germany even worse. Disruption increased Germany's debts, unemployment and shortage of goods.
3 Inflation
3.1 Shortages meant the prices went up - inflation. Had to pay more for essentials.
3.2 Government needed money to pay debts, but they recieved less money from taxes.
3.3 During 1919-23, government income was only a quarter of what was required, so government printed more money.
3.4 1923 -government had 300 paper mills and 2000 printing shops, just to print money.
3.4.1 Made it easier initially for government to pay reperations - made inflation even worse. More money was printed - more prices rose. This lead to hyperinflation
4 Who was effected?
4.1 Everyone suffered from shortages. 1918 - £1 cost 20 marks. By November 1923 - £1 cost 20 billion marks.
4.2 Everyone found it difficult to buy what they needed. Many workers were paid twice a day, so they could rush out and buy goods before prices rose further! Extreme suppliers refused to take money at all - asked for swapping goods instead.
4.3 People with savings were hit hardest. Savings became worthless - mainly middle class.
4.4 Big business men and industrialists were well benefitted. Others did well by hoarding goods
5 Resolution
5.1 August 1923, new chancellor was appointed - Gustav Stresemann. November 1923, he cancelled old mark and made a new currency - Rentenmark. This lead to a period of stability.
5.2 Germans blamed Weimar Republic for their suffering.
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