5 - economics developments Flashcards
when was and what happened at the height of hyperinflation?
August 1923
Cuno government collapsed - replaced with Stresemanns ‘Great Coalition’ - by time Stresemann left office, currency stabilised and inflation under control
what was the end of passive resistance?
- called of in September
- unpopular, lead to unrest and Beer Hall Putsch
- essential to reduced government expenditure
- Stresemann calculated no alternative
what was the new currency?
- November - Rentenmark to replace worthless Reichsmark (one to one million)
- supported by mortgage on all industrial and agricultural land
- direction of Hjalmar Schacht
- August 1924 - Rentenmark became Reichsmark
- tight control over money circulation
how was the budget balanced?
- cut expenditure and raised taxes
- those who lost savings didn’t gain
- salaries cut
- 300,000 civil servants lost jobs
- taxes raised for individuals and companies
what did Stresemann ask in November 1923?
asked Allies Reparation Committee to set up committee of financial experts to address repayment concerns
what was the Dawes plan?
-finalised April 1924
-confirmed reparations payment £6.6 billion, made payments more manageable
-amount paid each year reduced, Germany receive loan 800 million marks from USA
Reichstag debate:
Stresemann didn’t believe in it but agreed due to foreign loans
‘national opposition’ believed Germany should defy Treaty of Versailles
what were the benefits of the Dawes plan?
Allies accepted Germanys problems with payments were real, loans granted, French left Ruhr (1924-25 - occupation no longer justified)
how did Germany seem more stable and prosperous?
- Dawes plan, new currency, Schnacht’s work at Reichsbank
- American loans stimulated economy
- industrial output grew after 1924 (didn’t reach 1913 levels until after 1929)
how did industry develop?
- advances in chemical industry
- cars + aeroplanes developed (still too expensive for average German)
- inflation close to zero
- loans helped finance public works
- state initiatives to provide affordable homes (great importance for future stability)
- living standards and wages rose
how did agriculture develop?
- strikes declined (compulsory arbitration farmers)
- gained little (food prices low)
- debt
what were limits to economic recovery?
- unemployment
- didn’t benefit mittelstand
who made the Young plan?
International Committee headed by American business man Owen Young - met in Paris 1929
what did the Young plan entail?
- obliged Germany to pay reparations until 1988, total bill reduced (to £1.8 billion), annual payment increased
- responsibility to pay solely on German gov.
- Britain + France agreed to withdraw all troops from Rhineland by June 1930
what did the Young plan lead to in Germany?
- inflamed nationalists opinion
- DNVP leader launched campaign against plan, with other groups including Nazis - drew up draft of ‘freedom law’ (defeated in Reichstag)
