raharris1973
Well-known member
I have seen several discussions of hyperinflation in the Weimar Republic and its causes, with several emphasizing the hyperinflation was an outcome of deliberate Weimar Government policy to demonstrate that Germany could not afford to pay reparations demanded by the Allies.
The argument goes that the Germans abandoned sensible fiscal policy and printed money like there was no tomorrow, heedless of inflation, in part to demonstrate economic chaos caused by reparations. Whereas a more fiscally responsible German government should have been able to keep up timely reparations payments to pay off the reparations (at least that part the Allies truly expected to be paid, rather than renegotiated away), much like France was able to pay off its indemnity to Prussia-Germany in the 1870s actually ahead of schedule.
But it might also seem logical that another part of the early Weimar Republic's lack of fiscal conservatism and discipline was the great parliamentary power of the Social Democrats and its working-class trade unionist base in the Reichstag and as supporters of the Republic. The Weimar Republic Constitution and policy provided for a more uniformly generous welfare state, and wage workers at least based on their wartime experience, seemed to always have less savings and more opportunities to renegotiate wages in line with economic conditions and cost of living, making inflation relatively less of a problem for them than for middle-class professional with accumulated savings that could more rapidly depreciate and less flexible institutional salary arrangements slower to rise with the increased cost of living.
Chancellor Gustav Stresemann finally came in and tamed hyperinflation with conservative fiscal policies while obtaining western loans, and getting some aome adjustments on past loans and reparations. Part of him doing that was giving up on the more nationalistically satisfying policy of funding the striking workers of the Ruhr to remain idle in protest of the Franco-Belgian occupation of the Ruhr. Stresemnan judged the damage was too great to Germany and German's finances to keep doing this, just to poke France and Belgium in the eye for humiliating Germany. In his time, he may have also cut other categories of government spending.
Might the 1920s hyperinflation in Germany have been avoided altogether if the dominant Reichstag, Cabinet, Chancellor parties of the Weimar Republic from the beginning had been center-right types like the Catholic Centre Party or classical liberals like the Free Democrats rather than center-left parties like the SDP, and therefore, more orthodox about fiscal balance and inflation, and unwilling to let either budget deficits and inflation to run out of control?
Of course, to be fair to the Germans, there was more to Germany's balance of merchandise trade being in deficit, which directly affects budget deficits and currency value, than just the factors mentioned above. German had been on hiatus from world markets for all the years of wartime and months of postwar blockade, so buyers had gone to substitute sources. Some countries had raised tariff levels even when trade was permitted again. Germany had lost most of its own merchant shipping. So it couldn't expect to automatically occupy the same global market shares it had in 1914.
The argument goes that the Germans abandoned sensible fiscal policy and printed money like there was no tomorrow, heedless of inflation, in part to demonstrate economic chaos caused by reparations. Whereas a more fiscally responsible German government should have been able to keep up timely reparations payments to pay off the reparations (at least that part the Allies truly expected to be paid, rather than renegotiated away), much like France was able to pay off its indemnity to Prussia-Germany in the 1870s actually ahead of schedule.
But it might also seem logical that another part of the early Weimar Republic's lack of fiscal conservatism and discipline was the great parliamentary power of the Social Democrats and its working-class trade unionist base in the Reichstag and as supporters of the Republic. The Weimar Republic Constitution and policy provided for a more uniformly generous welfare state, and wage workers at least based on their wartime experience, seemed to always have less savings and more opportunities to renegotiate wages in line with economic conditions and cost of living, making inflation relatively less of a problem for them than for middle-class professional with accumulated savings that could more rapidly depreciate and less flexible institutional salary arrangements slower to rise with the increased cost of living.
Chancellor Gustav Stresemann finally came in and tamed hyperinflation with conservative fiscal policies while obtaining western loans, and getting some aome adjustments on past loans and reparations. Part of him doing that was giving up on the more nationalistically satisfying policy of funding the striking workers of the Ruhr to remain idle in protest of the Franco-Belgian occupation of the Ruhr. Stresemnan judged the damage was too great to Germany and German's finances to keep doing this, just to poke France and Belgium in the eye for humiliating Germany. In his time, he may have also cut other categories of government spending.
Might the 1920s hyperinflation in Germany have been avoided altogether if the dominant Reichstag, Cabinet, Chancellor parties of the Weimar Republic from the beginning had been center-right types like the Catholic Centre Party or classical liberals like the Free Democrats rather than center-left parties like the SDP, and therefore, more orthodox about fiscal balance and inflation, and unwilling to let either budget deficits and inflation to run out of control?
Of course, to be fair to the Germans, there was more to Germany's balance of merchandise trade being in deficit, which directly affects budget deficits and currency value, than just the factors mentioned above. German had been on hiatus from world markets for all the years of wartime and months of postwar blockade, so buyers had gone to substitute sources. Some countries had raised tariff levels even when trade was permitted again. Germany had lost most of its own merchant shipping. So it couldn't expect to automatically occupy the same global market shares it had in 1914.