2. The Weimar Republic: The Economy KNOWLEDGE CARDS Flashcards
What was Germany’s debt after the First World War?
150 million marks.
How much (%) did living standards fall during the First World War?
Between 20% and 30%.
What happened to the printing of money during the First World War, which led to inflation and the declining value of Germany’s currency (marks)?
It increased nearly fivefold, causing the value of the mark to decline by 75%.
By 1924, what proportion of the German population was receiving state welfare (%), leading to a significant rise in government spending?
10%
Under the terms of the Treaty of Versailles, what was the total amount of reparations demanded from Germany?
£6.6 billion
In what form were Germany’s reparations payments made?
Payments were made in gold or “in kind” (e.g. raw materials), as these held their value against the declining German currency (which made the goods even more expensive for the Weimar government).
What did the Weimar government do to attempt to manage their increased debt, and make the reparations payments?
They began to print more and more money, increasing the amount of marks in circulation and causing inflation to rise.
When did the Weimar government fail to pay Germany’s reparations payments?
Early 1923
How did France and Belgium respond to Germany’s failure to meet its reparations payments?
In January 1923, French and Belgian governments ordered an invasion of the Ruhr, a key German industrial region. Here, they seized Germany’s raw materials and goods.
How did the Weimar government respond to the invasion of the Ruhr in January 1923?
They called for all German workers and business owners in the Ruhr to follow a policy of passive resistance and to go on strike.
How did the crisis on the Ruhr increase the Weimar government’s debt?
- Raw materials and other goods had been seized by French and Belgian troops, which could not be used by Germany for production/trade. They had to import these goods/materials.
- After having called for passive resistance in the Ruhr, the German government paid the wages of workers who went on strike, and compensated owners for lost revenue, increasing their debt.
What did the Weimar government continue to do after the invasion of the Ruhr to manage their debt?
They continued to print more and more money, increasing the amount of marks in circulation and causing inflation to rise significantly.
What had happened to the Germany currency by mid-1923?
The currency had inflated to unprecedented levels (hyperinflation). By autumn 1923, it cost more to print a bank note than the note was worth.
By December 1923, how many German marks were needed to buy $1?
4.2 trillion marks
Identify two groups of people who suffered severely as a result of the hyperinflation crisis.
- Pensioners and those on fixed incomes suffered heavily during the economic collapse. Their incomes completely lost value.
- People’s savings in the bank also lost value.
What was the name of the new temporary currency introduced in Germany in October 1923?
The Rentenmark
What was the name of the new permanent currency introduced form August 1924?
The Reichsmark
What was the result of the currency reform after the hyperinflation crisis?
- It restored faith in the German currency, both at home and abroad.
- Prices began to settle.
What else did the Weimar government do to stabilise the currency after 1923?
They used emergency decrees to control rents, wages and prices.
What was the name of big businesses which joined to set and control prices?
Cartels (e.g. I.G. Farben)
How many cartels were there by the mid-1920s?
2500 cartels
By 1925, how much had the production of Germany’s chemical industry increased by (from 1913 levels)?
Approx. 30% more (this had risen further to around 65% by 1930).
By how much did exports rise between 1925 and 1929 (%)?
40%
What happened to wages every year between 1924 and 1929?
They rose.
What two plans were negotiated with the USA to make reparations payments more manageable and to provide loans to rebuild Germany’s economy?
The Dawes Plan (1924)
The Young Plan (1929)
How much money was loaned to Germany between 1924 and 1930?
25.5 billion marks
Identify three pieces of evidence that suggest a limited economic recovery during the “golden years”.
- Although Germany’s export trade did improve, the value of imports always exceeded that of exports. Heavy tariffs had been placed on German exports following its role in the First World War.
- The agricultural sector was sluggish during the “golden years”, and was in recession from 1927.
- The Weimar government did not increase rates of taxation, which could have been used as a source of income for the country. Instead, the government resorted to borrowing more money causing the economy to be kept afloat by government support and foreign loans.
What event in America in October 1929 triggered the collapse of the German economy?
The Wall Street Crash
How did the Wall Street Crash affect Germany?
America recalled foreign loans from abroad, and stopped paying out loans to Germany.
How much did national income fall between 1929 and 1932 (%)?
39%
How much did industrial production fall by between 1929 and 1932 (%)?
Over 40%
How many German businesses went bankrupt after 1929?
50,000 businesses
How many major German banks collapsed after 1929?
5 major banks
What proportion of people were unemployed by 1932?
One-third
By how much did wages fall by? (%)
Between 20% and 30%
What policies did Chancellor Brüning adopt to try and tackle the economic crisis after 1929, which did not work?
- Deflation: reducing the prices of goods and services to reduce government spending.
- A reduction of state expenditure: Brüning used an emergency decree to introduce wage cuts, rent cuts and tax rises.
What other ways of dealing with the crisis (1929-1932) were put forward to Chancellor Brüning, but ignored?
- A plan for job creation, as had happened in the US.
2. Devaluing the Reichsmark to make German goods cheaper and to increase demand for these goods abroad.
