Text|Thorndike's Ru
Edited | Thorndike's Ru
The Weimar Republic was a direct product of Germany's defeat in 1918, and it was born with a mess on its tender shoulders.
Germany's devastated war wounds, economic devastation, and deprivation, the heavy burden of foreign reparations, and complicated disputes over war debts all put pressure on the Republic's leaders to make economic decisions.
The blow that World War I brought to Germany
The blow that World War I brought to Germany was painful: 2.7 million people died, accounting for 10% of the total number of strong men, the cost of war accounted for 22% of its national wealth, and in 1918, Germany's entire industrial production fell by 43% compared with 1913, of which civilian industry fell by 59%, agricultural production fell by 40%~60%, and Germany's import and export trade decreased by 3/5 and 3/4 respectively.
National income and consumer expenditure in 1918 were only 57% and 42% respectively equivalent to 1913, German public debt soared during the war, and by the end of 1918, German currency issuance had risen 9 times, the budget deficit had increased 6 times, wholesale prices were 5 times higher than pre-war levels, and the value of the mark had fallen to half of its pre-war face value.
The standard of living fell sharply, and the entire German society was filled with hunger and misery. The Treaty of Versailles, signed at the behest of the Allies, added to the collapse of the German economy.
Lenin pointed out that the Treaty of Versailles was an "appalling and predatory treaty" that placed the full responsibility for the war on Germany, which put Germany in a position of plunder and enslavement, and Germany lost more than 70,000 square kilometers of land, 7.3 million people, half of whom were German-speaking, and lost 15% of its arable land, 75% of its iron ore, 44% of pig iron production capacity, 38% of steel production capacity, and 26% of coal production.
After the war, Germany also lost Upper Silesia, Alsace-Lorraine and abandoned all its colonies. Germany, which has suffered these losses, is largely dependent on foreign food and raw materials, which means an additional burden on Germany's international payment balance.
At the same time, Germany had to pay huge reparations, and to set up a treaty committee on reparations to determine the total amount, before which Germany should first pay 20 billion gold marks in gold, commodities, ships and securities. However, the gradual recovery and improvement of economic life in Germany does not mean that the treasury is full.
On the one hand, the State spends more and more on reparations, servicing the public debt and supporting the victims of war. The war brought back from the Western Front a large number of "new poor" waiting for government relief, and the funds needed to settle their livelihoods and ensure their social welfare stretched the finances of the otherwise not wealthy country.
On the other hand, the purchasing power of government revenue due to inflation is also gradually declining, and the payment of high reparations has directly caused the serious consequences of the international payment trade deficit, so Germany cannot buy enough foreign exchange.
In order to raise reparations and cope with the financial crisis, the republican authorities began to increase the issuance of currency, but this did not completely solve the problem. The government of the Republic, which had no choice but to use 1 billion gold reserves, seriously affected the balance of payments of the national treasury. Due to the shortage of gold, inflation is inevitable.
The depreciation of the mark was exacerbated by the fact that some people in Germany sent money abroad in order to save their property from taxes or as reparations, and the government's reluctance to restrict conglomerates based on the principle of free market.
By 1921, Germany had to stop paying reparations for a moment of respite. In August 1922, the reparations payable for the current year were officially reduced to 720 million marks, and the payment of reparations stipulated in August was postponed for six months. "During this period, the British believed that the Germans were indeed unable to pay, while the French believed that the Germans were unwilling to meet his obligations".
In order to weaken Germany to the greatest extent possible and to obtain funds from German reparations to restore their productivity and economic vitality, France and Belgium entered and occupied the Ruhr, the heart of German industry, on January 11, 1923, in order to demand reparations directly.
The occupation of the Ruhr region had dire economic consequences, and the aggressive France had irresponsibly pushed the recovering German economy into the abyss again.
After the occupation of the Ruhr, France intercepted the coal, steel and other important industrial raw materials produced by the Ruhr, cut off the organic economic ties between the Ruhr and the rest of Germany, and caused many industrial production and enterprises and mines in Germany to stop and close, production fell sharply, and the number of unemployed increased.
In 1923, pig iron was mined 1/2 less than in 1922, coal mined by 1/2, and copper production was also the same. With the exception of the Ruhr region, the number of complete unemployed is 3 million. In 1923, Germany was robbed of 47 million francs by France, and 88% of Germany's coal, 96% of pig iron and 82% of steel were controlled by France and Belgium.
The Ruhr crisis led to a general disorder in the economic life of the Weimar Republic, and the government printed more money in response to various financial subsidies, which seriously worsened the worst inflation since the second half of 1922, and finally turned into hyperinflation in 1923, like a flood.
The assassination of Ratnau has a more fuse effect, exacerbating the distrust of the German currency in the foreign financial community, and the country's central bank has limited gold reserves, and it is also unable to reverse the decline of currency depreciation.
As a result, the exchange rate of the dollar to the mark soared like a rocket, "On November 2, 1922, 1 dollar was exchanged for 9,000 marks, and by the end of the year, the budget figure had to be measured in trillions, and the House Finance Committee estimated the deficit at 7 trillion.
In March 1923, the government headed by William Kuno tried to stabilize the foreign exchange rate of the mark to 22,000 marks to the US dollar, but this measure was ineffective.
The dollar climbed to 29,500 marks the next day, more than 40,000 marks at the end of April, 1 million in August, and then 3 million, 6 million, 10 million soon after. On November 1, 1923, 1 dollar was worth 1 billion marks".
A whirlwind of numbers blew throughout Germany, the blow of hyperinflation swept across all social classes, the Deutsche Mark as a monetary unit almost lost its measured value, "In Germany, the dollar has become the standard for measuring value, and price adjustments are calculated not in marks but in dollars".
The exchange rate rises every day, prices change overnight, and the mark no longer has the value of preservation, to the point where the mark must be sold as soon as it is available. The weather issues that people usually talk about on a daily basis have given way to talking about the dollar every day."
More than 300 paper mills and more than 2,000 printing houses are working around the clock to provide the Bank Negara with the banknotes they need, but they still can't meet the market demand, so much so that the government fears that the face value of the printed banknotes will not cover the cost of printing.
inflation
As inflation continued, people's living standards fell sharply, and the whole of Germany was shrouded in a miserable fog. Prices have increased hundredfold, "In Berlin, the price of subway tickets has increased 30 times, sugar is almost impossible to find, mineral water is no longer available, even if there is a heavy reward.
In most homes, meat on the table only appears once a week." 12 The mark plummeted, "By October 1923, the units of coins that people had to pay to buy a loaf of bread or send a letter were not solved in millions or billions, but had to be counted in trillions." The unemployment rate has increased dramatically in a very short period of time.
In the chaos of 1923, workers' economic positions generally deteriorated as unions were unable to reach valid wage agreements with employers. Wages have fallen sharply and unemployment has increased significantly. At the end of 1923 it was estimated at 25 percent, reaching 27 percent of the employed population in January 1924, while 52 percent of unemployed Germans were not employed full-time.
The worst consequences of inflation fell on the urban middle class, which lived on fixed income, pensions or bank savings, while the depreciation of the mark wiped out all their savings overnight, and all deposits held in securities, insurance policies and money became worthless.
The middle class was devastated both mentally and economically, leaving an indelible wound on German society at the time. In Memories of a German, Ernst Erich Knott recounts an old man who had saved 8,000 marks in the bank for his grandson's university and was taken out of the bank in 1923 to buy just a loaf of bread, 500 grams of margarine and 60 grams of coffee.
As Stresemann put it on June 29, 1927: "The educated and accomplished middle class has always been the traditional intermediate force of the state, but the price of their self-sacrifice for the country in wartime was to be deprived of all their property and become proletarians."
In contrast to the complete collapse of the middle class and the miserable life of the proletariat, profiteers, speculators and the huge industrial magnates of Konzen profited greatly from inflation and amassed huge wealth.
Since the mark is not worth much, Germany has become a paradise for foreigners to spend, shop and travel on vacation. Businessmen use subsidized low-interest loans granted by the National Bank to buy up market goods and real estate in order to make a profit.
The industrialist Hugo Stinees is one such example. In 1923 he quadrupled his fortune with bank loans, owned 4,500 businesses, and ventured into steel, newspapers, hotels, shipping, tobacco, and sugar refining.
Companies like Krupp, Tysen, and Klyckner all suffered less than their profits, and the German national economy did not record significant losses. Currency devaluation, credit collapse, market depression, soaring prices, rampant speculation, and hyperinflation made 1923 the most unfortunate year in the economic life of the Weimar Republic.
The suffering of people in economic life is only secondary, and the more permanent and difficult to heal is the psychological trauma of the Germans.
The idea of democracy and the concept of democracy in traditional German culture is rather indifferent, and the rational Republican Mainnock once said: "Germans are not mature enough to adapt to democratic parliamentary politics, especially under the pressure of the terms of the Treaty of Versailles."
The Republic was like a Trojan horse introduced into the city by the Allies, and the Germans looked at the new with suspicion and caution, not knowing where the Republic could take Germany's fate.
Machiavelli once said: "Building a new order is the most difficult to organize, the most prone to failure, and the most risky cause, and people are always full of doubts about new things, knowing that they have experienced the benefits firsthand."
However, after accepting the "imposed democracy and peace" with suspicion under the pressure of the Allies, the Germans did not taste the sweetness of new things, and the burden of international reparations, the deficit in international trade, the chaotic political situation and the international situation after the war forced Germany's economic recovery to stagnate, and the onslaught of excessive inflation, the weakness of the government's economic policy, and liberalism, which had become abusive, made 1923
Germany has suffered bitterness and pain. Economic life was in general disorder, the entire middle class collapsed, the proletariat struggled with unemployment, and industrial magnates and speculators took advantage of the opportunity to make a fortune.
German social strata underwent a reorganization, polarization became increasingly serious, the hardships and hardships of life caused people to have strong dissatisfaction and distrust of the Republic, and activists joined extreme right-wing forces to openly oppose the Republic, as evidenced by Adolf Hitler's attempt to seize power at the Munich Beer Hall on November 9, 1923.
Such a poignant early history doomed the young Weimar democracy to be abandoned by German mistrust and eventually destroyed by the Nazis.
At the same time, the inflation of 1923 also left extremely serious sequelae for the future development of German economic life.
Any mistrust of a country's economic policies, especially any doubt about the country's political or military stability, increases doubts about investment and thus reduces those that promote production", is the truest picture of the German economy at that time.
Excessive inflation has caused huge losses to Germany's financial industry, the painful memory of the worthlessness of the family wealth accumulated for many years has made the majority of savers completely lose their confidence in saving, and the savings rate in Germany after 1923 is particularly low, these worries and doubts have greatly reduced investment in the domestic market, greatly restricting the development of the German economy.
In order to raise sufficient funds for the domestic economic development, the government of the Republic and the local authorities had to borrow a lot of foreign debt, which accumulated to make the German economy heavily dependent on foreign funds, and the increasing impact of international factors on the German economy further exposed the fragility of the Weimar German economy.
In 1910~1913, investment accounted for 15.2% of net GDP at market prices, while in 1925~1929 it accounted for only 11.1%. All in all, the economic chaos of 1919~1923 became a lingering shadow in the hearts of Germans.
Although the economy resumed the track of benign development after the comprehensive rectification in 1924, the bad psychological impact on all aspects of the Germans was not diluted by the passage of time, but left some inextricable traps for the economic life of Germany in the future, and became a bottleneck restricting economic development and a psychological bargaining chip for the people to oppose the republic.
bibliography
[1] CHEN Congyang. The American Factor and the Rise and Fall of the Weimar Republic. China Social Sciences Press, 2007.