5. Economic Developments Flashcards
why was 1923 a crisis year ?
hyperinflation
occupation of the Ruhr
Munich Putsch
What were Stresemann’s two main strategies / aims ?
Restore the German economy
Restore Germany’s position in foreign affairs
What did Stresemann use Article 48 to do ?
end passive resistance
create new currency
convince French to begin leaving the Ruhr
convinced allies to begin looking at reparations payments
Why did Stresemann end passive resistance
Strsemann thought he had no alternative.Germany’s economy was beginning to grind to a halt. Inflation was completely out of control.Ending passive resistance was an essential first step reducing government expenditure .
The issuing of a new currency ?
In November, a new currency called Rentenmark was introduced to replace the old and worthless Reichsmark.The new currency was exchanged for the old on the basis of one Rentenmark for one trillion old marks.
What helped the new currency flourish ?
In August 1924 , the Rentenmark became the Reichsmark , backed by the German gold reserve, which had to be maintained at 30% of the value of the Reichsmarks in circulation.
What did the new currency do ?
Helped balance the economy and stabilise the currency
How did Stresemann balance the budget ?
Stresemann’s government cut expenditure and raised taxes.
The salaries of government employees cit , some 300,000 civil servants lost their jobs.
Taxes were raised for both individuals and companies.
These changes that helped balance the budget, did have some negative effect ?
Weaker companies that were heavily reliant on credit crumbled.
The number of companies that went bankrupt in Germany rose from 233 in 1923 to over 6000 in 1924
Who did not benefit from the new currency ?
Moreover, those who had lost their savings in the collapse of the old currency did not gain anything from the introduction of a new currency.
