Reparations and the occupation of the Ruhr

Transcription

1 Reparations and the occupation of the Ruhr The middle classes of Germany had already been hit through the war lessening the value of their money. After the wa, :-:: Weimar Republic was unable to control the currency and economic uncertainty continued. Protection of interest and bonds was vital at this time, but the government had been crippled by reparations. The Trea. :- Rapallo with the Russian Communists (1922) was not pleasing to the right-wing and it only worsened the mood in c country. Occupation of the Ruhr Following World War I, Germany restricted its economic activities based on its inability to deal with reparations. Germe-_ announced their inability to pay the second reparations instalment in 1922, or for that matter any instalments over the three years following. The French reacted by invading the Ruhr with the Belgians on 9 January About r ::: took control of every mine, factory, steelworks and railway in the region. Active resistance was impossible for the Ger,,-,: and instead they used passive resistance, refusing to assist the invaders in any way. The French expelled people from the region, as a consequence of refusing to carry out orders, and over 100' :=-= shot in the first eight months of occupation. The French received little benefit from their action and in the end seeme :: lose face. Their troops, however, stayed for two-and-a-half years, withdrawing only on the eve of the Locarno confere r:= with its promise of better relations with Germany. 2. Do you think the French action in January 1923 was fair? Why or why not? 3. Why do you think the French stayed in the Ruhr for such a long time? Inflation had started long before the French occupation of the Ruhr, but by August 1923, the rapid decline in the purchasing power of the German currency caused hyperinflation. Germany supported the action of the Ruhr people v. - stood up to their invaders through passive resistance. The Germans took up the cost of paying for the passive resis e-: while they did not work. The lack of income from the unmanned mines and factories in the Ruhr made matters wor c --= government raised money by simply printing more of it. This, however, led directly to inflation, as the value of monel declined while the prices went up. The more money the government printed the faster the prices went up. The effects of reparations and inflation in Germany In a relatively short period of time people's savings depreciated and were very soon worth nothing. Fixed incomes...="= unable to keep pace with the value of goods. The middle class and factory workers were the worst affected in this _.~:: The price of basic goods, such as bread, tripled in one day. Lives were shattered and there seemed little the govern - could do.

2 Government reaction. decision to end passive resistance was taken under Gustav Stresemann's government, and the possibility of a negotiated se lement in the Ruhr began. A new unit of currency, the retenmark, was established, a step towards ending the inflation : a' had hurt so many in Germany. The policy of increasing production by increasing the working hours was not as popular. rough 1923 most continuous production factories and plants had returned to the pre-1918 hours of two 12-hour shifts o hours work and a two hour rest) per day. 6. Define German inflation in 1923 as you understand it. 7. What would it have been like living with such extreme inflation in Germany in How would the economic problems in Germany complicate the international difficulties (consider economic factors and political issues such as the balance of power and the threat posed by France and Russia) in matters such as: Petit Journa""< i'j\j1l'lihikllc IMic ~,', I I <I!,1'1ft \" 1,011'.I. ~,,;.a \ 14 '" 1"" -.hll' l-..ll'llol!.1l1 I II I",. ".:.,;:,t.. l..i I ','lw\.. ource 1 shows French soldiers in the Ruhr in January The caption reads, 'At the gates of every public building and actory the blue helmets of our soldiers remind the forgetful Germans of France's rightful claims'. It shows the people of the Ruhr standing firm to the invasion. This approach was called 'passive resistance'.

3 Lady starting a fire to begin her cooking in Germany, Item Prices in marks 1913 July 1923 November kg loaf of bread egg kg of butter kg of beef pair of shoes Using the French magazine cover 'Le Petit Journal' (Source 1) and information above, explain your views as 0 the workers' reaction to the French occupation. 10. Look at the image in Source 2 and answer the following: a. Describe what the person in the picture is doing with the money. b. What do you understand about the value of money from this image? c. What would this suggest about the German workers' plight in this period? 11. Study Source 3. What caused the first price increase shown, from 1913 to July 1923? 12. The French journal shows the French view of their invasion of the Ruhr. Describe what visual details, as opposed to written text, suggest that this has been drawn from a French perspective.

4 ~ Hyperinflation "e middle classes suffered greatly as a result of hyperinflation (the rapid decline in money value) as the value of their ::: lings and war bonds was wiped out. But those at the bottom of the economic scale, the working class and people on := sions, found that the daily costs of living were impossible to meet. --", middle and lower classes of Germany blamed the Weimar Republic. However, the government blamed reparations and :-e harsh 'make Germany pay' attitude of the French. By 1922 Germany was under great pressure to sustain itself == nomically and was unable to pay reparations, resulting in the French and Belgian invasion of the Ruhr and the takeover :-=. dustries in the Rhineland. --:: Germans experienced a harsh regime under the French army in the Ruhr. Factories, forests, mines and aspects of ;:.ernment administration were taken over. Local Germans were angry and treated the French and Belgians with hatred. --'- hatred was regularly returned by the French with minor assaults through to major violence. ncident at Krupp's steelworks ~':e days after the invasion of the Ruhr, the (uno Government, using a boost in patriotic feeling aroused by the invasion, :zlled upon the population of the Ruhr and Rhineland to commence passive resistance against the invaders. Passive "Esistance meant the non co-operation of workers, particularly in the mines and allied industries. The invaders then placed "creased pressure on managers and owners, by threatening them with fines and deportation. eighing up the demands of profits, politics and patriotism, business leaders chose patriotism and actively supported the -erman Government's call for passive resistance. The (uno Government agreed to prop-up heavy industry by maintaining exchange rate and subsidising industrialists' wages. While the government cancelled future reparation payments, they -ad also caused themselves considerable damage as they could not afford to subsidise the industrialists' wages. The end "esult of this decision was an increase in inflationary pressures on the German economy. 31 March 1923 French soldiers panicked when workers objected to their seizure of motor vehicles at the Krupp's -:-elworks, and twelve workers were shot dead. Acts of sabotage followed and the resolve of workers in all fields was -:i ened. The French imposed court martial and took over the railway system. The Germans then refused to ride on the )s em. The French attacked unruly towns and imposed harsh curfews. 1. Why do you think the French seized the railway system after the incident at Krupp's steelworks? 2. In your own words, sum up how the (uno Government dealt with the invasion of the Ruhr. What problems did this cause for the German people? 3. How were business leaders affected by the policy of passive resistance? Do you think they were justified in joining the passive resisters? State your reasons. _eo Schlageter - a martyr to German resistance in the Ruhr _::0 Schlageter, a member of a Freikorps sabotage group, was caught after blowing up a railway bridge and executed ::.r ay After his execution, Schlageter became something of a martyr and his death further united the left and ';Jh in Germany in their view that resistance was appropriate. This is despite the fact that resistance created a great :=ronomic burden for Germany as it not only faced the loss of earnings from various industries but it also sustained the.orkers by continuing to pay their wages while they resisted the invaders. This worsened inflation and made the ~ ernment highly unpopular. e government's popularity also suffered as Weimar officials had signed the Treaty of Versailles, and this was seen as e of the causes of the economic crisis. Further it was the Weimar Republic that had signed a pact with the Russian : mmunists (Treaty of Rapallo) in Members of the right-wing middle class used this deal to encourage fear at :: -ime of growing economic crisis. 4. How did Leo Schlageter's execution and the signing of the Treaties of Versailles and Rapallo lead to the unpopularity of the Weimar Government?

5 The German currency The German Government was now printing money to meet political and patriotic obligations. This money was not backed by real value in the German economy. The government was also printing money to buy coal from other coun ries as production in the Ruhr was very low. The German mark became increasingly worthless, as the table below dem n~ta:es. Date of decline Number of marks for $US1 Events in the context of currency July July January Reparation amount fixed in April January First reparations payment made in December I January Occupation of Ruhr and passive resistance. July Germany is printing money to guarantee workers' pc! August November Munich Putsch 9 November. Germany had suffered a series of events which would make the following five years seem like years of prosperity, Ie: --=impact was still to be played out. Hyperinflation had to be dealt with first. 5. Explain the term 'hyperinflation' and what caused this to occur in Germany in The basic reason for the economic problems faced by Germany was that its economic resources had been greatly constricted, but it still had to pay for its own war effort and the damage done elsewhere. The economic crisis was so severe that by August 1923 the mark had all but collapsed. Gustav Stresemann, who beca-= chancellor after a general strike in Berlin on 11 August, saw Cuno's Government resign. Disaffected Germans wan'e something done and Stresemann, with four socialists in his cabinet, gained strong support for the Reichstag. He mo E: quickly to end the debacle in the Ruhr and the financial catastrophe in the nation. Passive resistance was called 0 I -~: September and Stresemann agreed to recommence reparation payments. A policy of co-operation with the French.c encouraged. To many Germans this was yet another back-down by Weimar Germany. Backlash to Weimar action Stresemann's Government faced a backlash in Bavaria, and there were even fears that Bavaria might not only se c=:= from Germany but join with Austria. Further unrest was caused by separatists in the Rhineland and by the Black Reichswehr (secret volunteer army units). The latter faded away and the Rhenish separatist leader was murdered. There were widespread riots with talk of an 'October Revolution' along the lines of the Bolshevik Revolution of -:~ #- Stresemann responded by sending Reichswehr troops to prevent suspected communist uprisings in Saxony and r_--;. =- two German States bordering on Bavaria. Stresemann had used emergency power against the left in Saxony, resulting in the resignation of the SPD membe': := - _ Cabinet on 2 November This was followed by a revolt from the right a week later - the Munich Putsch I Hitler. Before resigning as chancellor, Stresemann set up plans for a new currency, the retenmark, lowered government 5 E-: -;. and increased taxes. The retenmark equalled 1 trillion marks with an exchange rate of 4.2 retenmarks to the Uni "''' _~:== dollar. This encouraged stability and, in terms of German prosperity, encouraged leaders, especially in the United :c:=::: lend to Germany.

6 6. Which groups in society were most affected by hyperinflation? 7. What sort of feelings would people from each of the following groups have about hyperinflation? middle class 8. Using the table provided, calculate the percentage of devaluation of the mark from , , , and July-August What role did Stresemann play in attempting to reduce inflation? How successful do you think he was? 10. Was Weimar in a stronger position because Stresemann had used Emergency Powers? Why or why not? 11. What decisions made the Weimar Government unpopular during 1923? Do you think the government could have made more sensible decisions? Give reasons for your answer. The plan to restore the economy - 1I0wing the war the German governments had not attempted to meet reparation payments by increasing taxation. "s ead they resorted to internal loans. During the amount of receipts incurred by the government was around _- per cent of its total expenditure. Costs included the support for the Ruhr resistance. There was continued resistance to creasing taxation by all the industrial and financial leaders which meant that the government borrowed more and --sorted to printing more money. -.5 a result Germany emerged from the inflationary crisis with almost its entire internal national debt paid off. In January 19, the internal debt was million marks but by 1924 it was only 1958 million marks. This can be compared to ~ eat Britain that had an internal debt of pounds and France with pounds. e use of inflation to solve internal debt was enhanced by the government acting to abandon passive resistance in the uhr in November 1923 and seeking an agreement with France on reparations. The introduction of the rentenmark was ssible because it was issued against a mortgage on all of the land and real estate in Germany. Fortunately for the ;0 ernment the German people accepted the new currency and this resulted in the government being able to balance the ~udget and introduced political stability which in turn allowed negotiations for the Dawes Plan on reparations. 12. How did inflation assist the German government between ? 13. Why was it important to convince the people that Germany needed a new currency? 14. What risks existed for the government in introducing the new currency? 15. How and why do you think the Weimar Republic survived 1923? 16. What do you think was learnt from the occupation of the Ruhr and the Rhineland by the French Government?