Welcome back everyone to our studies in AQA Alevel history. We're continuing talking about the establishment and the early years of the VHimar Republic, looking specifically at the economic and social issues in this video. specifically looking at the state of the German economy and society. Uh the impact of reparations, inflation, hyperinflation, the invasion of the RU and the economic impact and then finally looking at the social welfare and social impact of the hyperinflations crisis. This lesson and the next lesson is going to focus on um uh the impact basically of the treaty of Versailles, looking at the economic impact in this video and then looking at the social impact in the next video. Now essentially when we think about the treaty of Versailles when we think about the impact of the treaty of Versailles um the main issue was associated with this was the challenge of reparations. So Germany of course as per wargill clause 231 was obliged to pay reparations in 1921. that reparations number is finally made by the reparations commission and the reparations uh commission determined that Germany would to be to pay uh a reparations total of 132 billion gold marks which was a staggering figure considering the economic situation of Germany. The reparations were considered to be humiliating and harsh but the main issue was that they further strained the Germans already weakened economy. Couple that with the economic devastation that is caused by the first world war, the destruction of Germany's industrial infrastructure, especially regions like the rural valley, as well as the removal of a lot of industrial parts. So places like the Sar Basin for example um the mines of the Zar Basin being taken over by the French um we can see that the heavy reliance on heavy industry um meant that the paying off of these reparations payments was going to be very very difficult to achieve. So the cost of financing the war left Germany with enormous debts. Add on top of that a staggering eyewatering figure of 132 billion gold marks to pay in reparations and you can find yourself in a situation where uh very clearly um uh problems were going to take place. And so in response to Germany's failure to make reparations payments in 1922 because they fell behind on their payments or very very quickly, France and Belgium were very very keen to respond and they decided to invade uh Germany and to occupy the rural valley. This was the industrial heartland of the Vhimar Republic. They did so in January 1923. Now this uh occupation is one of the uh major events that causes what becomes known as the hyperinflation crisis. So the Belgium and French forces aimed to seize control of the RU's coal, steel and other industrial resources uh in order to help continuation for reparations payments. The German government being unable to defend the RU called for a policy known as passive resistance. Essentially they urged all the workers in the rural valley that was now under occupation by the French and the Belgian forces to just go on strike and to not cooperate with the occupying forces. The result is it led to a halt in industrial production in the rur and further exacerbated Germany's economic problems. Now there is two ways in which you can respond to having to make um significant payments as an economy. You can raise taxes, raise revenue for example, or you can print more money. Now, printing more money doesn't actually solve the problem in the long term because the printing of money just decreases the value of that money over time. This is something known as inflation, the value of money going down or the price of goods going up compared to the value of the money. Um, and so ultimately what we start to see is this uh this inflation crisis beginning to take place. Inflation began as early as 1920 and would gradually worsen getting worse as the result of the reparations commission's placing of reparations in 1921 and as it begins to cause the German uh the value of the German mark to plummet by 1923. Then the situation has spiraled away from inflation to hyperinflation. The German mark the currency fell so dramatically that the prices of everyday goods and services rose exponentially. Sometimes within hours the price would change. For example, in 1923 the exchange rate between the German mark and the US dollar was 4.2 trillion German marks for$1 US. So the result would be if you wanted to buy a loaf of bread in Germany in 1923 for the price of roughly a dollar US dollar, you would have to go to the shop with 4.2 trillion marks to uh to to to buy that piece of bread. People were therefore forced to carry wheelbarrows full of cash and to buy basic necessities like bread um with those huge wheelbarrows of cash. Uh this is particularly um devastating for the middle class within German society because their savings they might have had let's say 30,000 um German marks in their savings account for example um that the value of that money would just be wiped instantly. Uh a and so in 1918 or 1917 maybe that 30,000 German marks was actually a significant amount of money. But then by 1923 it's not even a percent of a percent of a percent of enough to even buy yourself a loaf of bread. So it wiped people's savings. On the other hand though you can you people do benefit from hyperinflation. If you have a mortgage, if you have any kind of debts then that makes it uh very easy. Okay. If you if you're in 20,000 uh German marks worth of debt and then all of a sudden that 20,000 German marks worth of debt becomes um basically uh the less than the value of a loaf of bread, you can pay off those debts within a single afternoon uh because of how little value that uh currency has gotten. So there are winners and losers from hyperinflation, but for the most part people lose as the result of such a drastic amount of inflation. Ultimately then you see that uh life savings are erased, pensions become worthless, social inequality deepens. While the rich could often protect their wealth by using foreign currencies or tangible assets, the working and middle classes were hit the hardest and there was widespread um poverty, unemployment and anger towards the German government. In terms of the impact of hyperinflation, then the there was an attempt during the VHimar Republic to provide social safety nets for everybody, including things like unemployment benefits and healthcare, which was important in a country that was recovering from the war. However, as the result of hyperinflation, these programs were insufficient to cope with the crisis. Many of the payments were eroded by the value of inflation by sorry eroded in value by inflation making them also effectively useless for anybody who was going to depend on them. The social impact of hyperinflation the royal crisis was also widespread in terms of the impact on the social fabric of German society. The middle class which had traditionally been stabilizing a stabilizing force in German society was particularly uh suffered. Um as I mentioned in the previous slide, you have loss of savings, you have increased poverty, you have disillusionment, you have resentment towards the government and the Versailles treaty leading to extremism from both the far left and the far right. And then finally the hyperinflation crisis and the rural occupation had different impacts on both rural and urban populations. So in urban areas where workers were dependent on wa on wages they were hit very hard by the inflation crisis. Meanwhile those in rural areas particularly farmers were more insulated because they could exchange goods for food. Uh so even in rural areas we can see that there is some benefits to hyper or at least some shielding from hyperinflation. But even here the overall sense of economic instability was still very much palpable. And so you could sort of make a sense of the winners and losers in the hyperinflation crisis. Um farmers weren't as poorly hit. Um those who um owed money uh were benefited from hyperinflation. But everybody who had money who had pensions who had any kind of loans like that um they would or or any kinds of savings would would would uh would have lost out as the result of hyperinflation. So overall there were more losers than there were winners but hyperinflation had some impacts that was um beneficial for some parts of the German society.