mobility by reducing her railway network, rolling stock and platforms, and
seized much of her physical and intellectual industrial property. All of this
precipitated a feeling of national humiliation which fuelled a social, political
and financial transformation in the country. The immediate post-war years
therefore saw chaos in Germany, with the emergence of unusual and transient
political systems, a sweeping away of the old certainties with the abdication of
Kaiser Wilhelm II, and eventually by August 1919, the replacement of
imperial government with a relatively stable, but weak, parliamentary
democracy, viz, the ‘Weimar’ Republic.
3
The Republic lasted for the next 14 years, but it faced many problems, one
of the earliest being the hyper-inflation of June 1921 to January 1924.
Hyper-inflation was caused by increases in prices and interest rates, by
redenomination of the currency, by ‘printing money’, by consumer flight
from cash to physical assets, and by the rapid expansion of industries that
produced those assets. Hyper-inflation for example saw the value of one gold
Mark escalate from one paper Mark to one trillion paper Marks. By late 1922,
Germany announced that—simply to survive—she had to default on her
reparation payments until inflation could be brought under control. Many
recipients of the monies were content to give Germany the time she needed to
stabilize her economy, but not the Belgians and the bitter French.
Consequently, on 11 January 1923 their troops occupied Germany again, this
time in the heavily industrialized Ruhr region so that reparations could be
made in tangible goods such as coal. In the longer term, hyper-inflation, the
resentment that Germans felt at their humiliation and the deepening of social
unrest led to the rise of Adolf Hitler and National Socialism which, in 1933,
finally ended the Republic. In his book Mein Kampf, Hitler makes many
references to the German debt and its negative consequences.
Events in Germany during this time were also to affect other European
countries. Seizure of the German coal stocks for example flooded reserves,
which depressed the international market and led in part to the devastating
general strike of 1926 in the UK. Funding the war in the UK came at a severe
economic cost. From being the world’s largest investor, post-war she became
one of the biggest debtors. The value of the pound fell by more than 60% and
inflation rose, then peaked in 1920. But the military historian Correlli
Barnett
4 argued that ‘in objective truth the Great War in no way inflicted
crippling economic damage on Britain’ but rather, the German naval bombardments of Scarborough, Hartlepool and Whitby on the English east coast
in 1914, and the new innovations of aerial bombing, chemical warfare and
the U-boat ‘crippled the British psychologically …’, hitherto being a nation
that had regarded herself as ‘impregnable’. Now one might have thought that
320
D. Sheppard
seized much of her physical and intellectual industrial property. All of this
precipitated a feeling of national humiliation which fuelled a social, political
and financial transformation in the country. The immediate post-war years
therefore saw chaos in Germany, with the emergence of unusual and transient
political systems, a sweeping away of the old certainties with the abdication of
Kaiser Wilhelm II, and eventually by August 1919, the replacement of
imperial government with a relatively stable, but weak, parliamentary
democracy, viz, the ‘Weimar’ Republic.
3
The Republic lasted for the next 14 years, but it faced many problems, one
of the earliest being the hyper-inflation of June 1921 to January 1924.
Hyper-inflation was caused by increases in prices and interest rates, by
redenomination of the currency, by ‘printing money’, by consumer flight
from cash to physical assets, and by the rapid expansion of industries that
produced those assets. Hyper-inflation for example saw the value of one gold
Mark escalate from one paper Mark to one trillion paper Marks. By late 1922,
Germany announced that—simply to survive—she had to default on her
reparation payments until inflation could be brought under control. Many
recipients of the monies were content to give Germany the time she needed to
stabilize her economy, but not the Belgians and the bitter French.
Consequently, on 11 January 1923 their troops occupied Germany again, this
time in the heavily industrialized Ruhr region so that reparations could be
made in tangible goods such as coal. In the longer term, hyper-inflation, the
resentment that Germans felt at their humiliation and the deepening of social
unrest led to the rise of Adolf Hitler and National Socialism which, in 1933,
finally ended the Republic. In his book Mein Kampf, Hitler makes many
references to the German debt and its negative consequences.
Events in Germany during this time were also to affect other European
countries. Seizure of the German coal stocks for example flooded reserves,
which depressed the international market and led in part to the devastating
general strike of 1926 in the UK. Funding the war in the UK came at a severe
economic cost. From being the world’s largest investor, post-war she became
one of the biggest debtors. The value of the pound fell by more than 60% and
inflation rose, then peaked in 1920. But the military historian Correlli
Barnett
4 argued that ‘in objective truth the Great War in no way inflicted
crippling economic damage on Britain’ but rather, the German naval bombardments of Scarborough, Hartlepool and Whitby on the English east coast
in 1914, and the new innovations of aerial bombing, chemical warfare and
the U-boat ‘crippled the British psychologically …’, hitherto being a nation
that had regarded herself as ‘impregnable’. Now one might have thought that
320
D. Sheppard