Chapter 10: Economic developments

Question 1

How much had national debt in Germany increased by 1919?
Why did it increase so much?

Answer 1

**5000 million in 1913 to 144,000 million marks **
-government issued treasury bills - expected that they would win the war and be able to pay these back - but that was not the case

Question 2

How much did the value of the currency fall by 1919?

Answer 2

worth less than 20% of its pre-war value

Question 3

What was the German unemployment rate in 1921?

Answer 3

1.8%
- encouraged outside investment - allowed the economy to grow rapidly

Question 4

How much had prices inflated by 1920?

Answer 4

14 times higher than in 1913

Question 5

What were the economic benefits of inflation for right wing politicians?
Which right-wing individual is know for his success during hyperinflation?

Answer 5

• elite industrialists could take short term loans to expand their businesses and then pay these back with inflated currency
• also gave the appearance of lessening the governments
• Hugo Stinnes (hyperinflation king) - is able to take out huge loans to fund hard assets - he could then pay this back using deflated currency

Question 6

When did french and german troops march into the Ruhr and why was this?

Answer 6

11 January 1923
- Germany had fallen behind on reparations payments

Question 7

Which chancellor initiated passive resistance?

Answer 7

chancellor Cuno

Question 8

How did the Ruhr invasion worsten the economic situation in Germany?

Answer 8

• paying wages of striking workes was a drain on government money
• germany had to spend money to import coal
• shortages of goods causes prices to rise further

Question 9

What happened to the rate of inflation in July 1922?

Answer 9

passed 50% - hyperinflation
- by november 1923 the currency was worthless

Question 10

When did Gustav Streseman become chancellor?

Answer 10

august 1923

Question 11

What role did Gustav Streseman have in the Ruhr invasion?

Answer 11

• called off passive resistance
• appointed Hjalmar Schacht - introduced the Rentenmark

Question 12

How did Hjalmar Schacht control inflation?

Answer 12

took over the bank and introduced economic measures
* lending rates were controlled
* government had to stop offering credit to industry
* new taxes introduced - to reduce spending powers - allowed the government to re-invest a larger proportion of the nations wealth

Question 13

When did the Reichmack arise?

Answer 13

August 1924

Question 14

Why did the USA decide to aid German economic growth?

Answer 14

• wanted Germany to be a strong trade partner
• wanted Germany to pay its reparations to britain and france - so these countries could repay war debts to the USA

Question 15

When was the Dawes plan agreed?

Answer 15

April 1924

Question 16

What was the value of the american loan to Germany under the Dawes plan?

Answer 16

800 million marks
- so Germany could invest in infrastructure

Question 17

What changes were made to the bank under the Dawes plan?

Answer 17

new Reichmark was introduced

Question 18

What was the value of loans received
between 1924 and 1930?
What was these used for?

Answer 18

25.5 billion marks
-helped to provide machines, factories and houses - financial confidence in Germany was renewed

Question 19

When was the evacuation of the Ruhr?

Answer 19

1924-1925

Question 20

What was the Young plan and how much importance did it have for Germany?

When was the plan introduced?

Answer 20

• reduced the total reparations bill by 75%
• allowed the deferment of payment in times of economic crisis
• never put into effect due the 1930 wall street crash - 1931 - allies agreed to suspend all reparations payments

August 1929

Question 21

How much did the economy grow between 1913 and 1929?
How did this compare to the US?

Answer 21

just 4% while the US economy grew 70%

Question 22

What did German industrialists do to increase profits?

Answer 22

• reduced surplus labour and introduced new technology
• formed cartels - 3000 by 1925

Question 23

What areas of the Germany economy expanded after inflation?
Give some examples

Answer 23

• electrical industry - Siemens continues to have “virtual monopoly”
• chemical industry - fertilisers, dye, dynamite

Question 24

What were the levels of coal and steel production like by 1927?

Answer 24

coal - 79% of pre-1913 levels
steel - **86% **

Question 25

What was agricultural growth like after the war?

Answer 25

failed to make much of a recovery
* **poor harvests **in 1917 and 1918 - low yield
* **prices remained low **due to worldwide over production
* high tax demands - little return on the cost of running their farms

Question 26

What were the four main weaknesses of the German economy by 1929?

Answer 26

• relying on foreign credit - dawes plan, short term loans from foreign investors - vulnerable to recession
• economic growth was not universal - small businesses and agriculture never benefited (cartels made things worse)
• welfare state - overstrained state resources - wages were rising faster than productivity
• economic performance was below the rest of the world - 1926 - balance of trade moved into a deficit