History

gover nm en t s as they pai d the r epar at i on s. Repar at i on s d i d not cause i n f l at i on because i n f l at i on had al r eady begun i n Germ any wel l bef or e the f i r st paym en t of r epar at i on s was due. I t had begun because Germ any had ended the war w i th a debt of £8,934 m i l l i on . T he Germ an gover nm en t p r i n ted m or e ban knotes to star t r epay i ng th i s debt , and th i s star ted i n f l at i on . T hey d i d th i s because po l i t i cal l y i t was too d i f f i cu l t to pay i t by r ai si ng m oney f r om taxat i on or by cu t t i ng gover nm en t spend i ng. I n 1919, Er zber ger d i d i n t r oduce taxat i on on p r of i t s and i nher i ted weal th , bu t al though f u r ther tax r ef orm was needed to r ai se m or e m oney, none occu r r ed because gover nm en t s though t i t wou l d be too unpopu l ar and they wer e too weak . T hen i n 1923 when Fr en ch and Bel gi an t r oops i nvaded the Ruh r because the Germ an gover nm en t had m i ssed an i n stalm en t of r epar at i on s, the gover nm en t adop ted a po l i cy of passi ve r esi stan ce and i n st r ucted

wor ker s to st r i ke bu t pai d thei r wages by p r i n t i ng m or e ban knotes. H y per i n f l at i on then took ho l d . T he r epar at i on paym en t s undoubted l y d i d add to the hy per i n f l at i on , bu t they wer e not the or i gi nal cause. An al ter nat i ve ar gum en t i s that the r epar at i on s wer e of such an i n cr ed i b l e and r i d i cu l ous si ze that they wer e the cause of hy per i n f l at i on . U l t im atel y, however , the r epar at i on s shou l d have been m anageab l e. Germ an gover nm en t s b l am ed the r epar at i on s f or hy per i n f l at i on because th i s was easi er than adm i t t i ng that thei r own po l i ci es wer e to b l am e. Accor d i ng to M ar gar et M acM i l l an , Germ any pai d on l y £1.1 m i l l i on i n the who l e per i od un t i l 1932. She says that ?th i s i s p r obab l y sl i gh t l y l ess than what Fr an ce, w i th a m uch sm al l er econom y, pai d Germ any af ter the Fr an co-Pr ussi an War of 1870 - 71.? I n add i t i on , because hy per i n f l at i on caused the val ue of the Germ an cu r r en cy to f al l , ther e i s a suggest i on that Germ an gover nm en t s del i ber atel y

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