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Germany's Economic problems - Coggle Diagram
Germany's Economic problems
By 1918, Germany was close to bankruptcy due to WW1.
Treaty of Versailles Made this worse
The Allies took huge parts of Germany's income-genrating areas.
Germany had to make payments every year, and they always missed them
This led to French retaliation
The invasion of the Ruhr
A. January 1923, Belgian and French troops marched into the Ruhr, Germany's center in production for iron, steel and coal
B. This is because in December 1922, Germany was falling behind with reparations Payments
C. French and Belgians took industrial products as payments by force
D. Germany knew there was no way to use troops to fight them offf, so the goverrnment issued a policy of passive resistance
E. Workers in the Ruhr simply refused to work and produce and went on strikes
F. France brought in their own workers which started disputes between Germans and French, where 100 people were killed
The French and Belgian forces backed out in 1925 after the Dawes plan
Effects of the Invasion of the Ruhr
-The German government gained popularity as it resisted occupying forces efficiently
-The German government also offered strike pay which united the German people
B. Negative effects
-The Ruhr made the economy decline even more than before
-Germany was forced to print more money to pay workers
The more notes printed, the more their value fell
-A lot of Germany's industrial resources were gone
A. Positive Effects:
Hyperinflation
From 1919-1923, the income of the German government was 1/4 of what tit needed to be, so the country decided to print more money to fix this issue.
The government decided to print more money:
This was bad, because the amount of money in circulation had to equal the total value of gold that the country had.
A. If there are more banknotes in circulation, their value drops
B. If the total value of gold was 10 million marks, and there are 20 million marks in circulation, the value of each mark drops by a half
A. for the first world war
B. Decided to print more to pay for reparations
C. Decided to print even more to pay the strikers at the Ruhr
Proof:
1A. In 1914, 4 marks were equal to 1 dollar
1B. By 1922, 493 marks were equal to one dollar
1C. By November 1923, 4.2 billion marks were equal to one dollar
2A. A loaf of bread cost 0.54 marks in 1918
2B. A loaf of bread cost 163.5 marks in december 1922
2C. A loaf of bread cost 1,465 marks by june 1923
2D. A loaf of bread cost 201,000,000,000 marks in November 1923
Effects of Hyperinflation
German people didn't care about the falling value of the mark, they just were concerned with how expensive things got
B. This was a really quick process, which would take place several times during the day
A. A customer with money to pay for a meal at a restaurant didn't have enough to pay by the time they finished their meal
Forced millions of Germans into Poverty:
A. Pensioners were affected the worst, because they would receive the same fixed amount of money
B. People's savings and insurances were wiped out overnight
C. Affected some people in work, becuase their salaries would never increase at the same rate as hyperinflation, always slower
D. Most blamed the Weimar Government
Some groups Benefitted from this:
A. People with loans/mortgages could pay them off way quicker
B. Businessmen with Business loans were able to pay them of easily
C. Farmers benefitted, as the food they produced was sold at a higher price