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Reasons for economic instability of Weimar Republic 1919-23 - Coggle…
Reasons for economic instability of Weimar Republic 1919-23
Effects of WW1
no financial provision for long war
Kaiser's gov decided against increases in taxation
borrowed massive sums by selling "war bonds" to public
proved insufficient in 1916, allowed nationall debt to increase
by 1918 only 16% of war expenditure was from taxation-84% borrowed
almost full employment-economy concentrated on supply of military weapons
didn't satisfy requirements of civilian consumers
high demand for + shortage of consumer goods pushed prices up
defeat meant Weimar Republic had to cope with massive costs of war
could narrow the gap by increasing taxation in order to raise income + cutting gov spending to reduce expenditure
Weimar decided to adopt policy of deficit
maintain demand goods + create jobs
overcome problems of demobilising millions of troops
cover cost of public spending on extensive welfare state
reduce real value of national debt
allow inflation to continue
1922 German mark worth 1% of pre-war level
National income was 2/3rds of pre-war levels
Impact of Treaty of V + Reparations
constraints like land loss means it didn't have potential like Imperial successor
£6,600 million in reparations by Inter-Allied Reparations Committee-had to be in hard currency
Weimar proceeded to print larger quantities of marks + sell them to obtain stronger currencies of other countries-not a solution, short term measure
mark went into sharp decline + inflation increased even higher
Dec 1922 IARC declared Germany to be in default, French + Belgian troops (60,000) occupied Ruhr, industrial heart of Germany(80% of steel + 71% of coal)-causing hyperinflation
helped to unite German people-gov urged workers to go on strikes + refuse cooperation with French authorities but promised to keep paying wages
gov unable to collect taxes from Ruhr + French prevented delivery of coal to Germany, forcing necessary stocks of fuel to be imported
passive resistance
gov's finances collapsed + mark fell to worthless levels + Germany people had to resort to barter
1913: 1 pair of shoes=12.00 marks - November 1923=32,000,000,000,000
Marks to Dollars: 1914 4.2 - !923 Nov: 200,000,000,000
150 German workers killed
French action criticised by Br + USA
new currency Retenmark introduced in Nov 1823 by Stresemann