Economic development and policies: 1918-1989

Question 1

What initial economic problems did the Weimar government face?

Answer 1

• Social welfare to support ex soldiers who were wounded and unemployed
• 10% of the population received welfare support
• Debt and reparations left from the war and Treaty of Versailles
• Invasion of the Ruhr in 1923
• Hyperinflation crisis after Ebert called for mass strikes
• 17393000 million marks in circulation

Question 2

How did the Weimar economy recover?

Answer 2

• Work of Gustav Stresemann
• Worthless mark withdrawn and new currency (Rentenmark) introduced
• 1924 Dawes plan (American loans)
• 1925 Locarno pact (Respect borders)
• 1928 Kellogg-Briand pact (prevented future conflict)
• 1929 Young Plan (reduced reparations)
• Admission to League of Nations saw demand for coal and steel production increase
• Supported farmers with new equipment

Question 3

What was the impact of the great depression on the Weimar Republic?

Answer 3

• 1929 Wall Street Crash
• Businesses sell fewer goods
• Unemployment rises
• Wages fell by 30%
• Grand coalition collapsed
• Hunger chancellor (Bruning) introduced welfare cuts

Question 4

How did the Nazis attempt economic recovery?

Answer 4

• Came to power promising economic recovery
• Schacht introduced a “New Plan”, making trade agreements with other countries which involved trading goods rather than paying for imports
• First Four-Year Plan with the aim of achieving autarky
• Reduced unemployment by manipulating statistics
• RAD job creation schemes provided manual work
• Road building schemes

Question 5

What was the first Four-Year Plan?

Answer 5

• Economic plan aimed at achieving autarky
• Agriculture was important to Nazi desire for autarky
• Increased import tariffs made German produce cheaper
• RAD schemes sent people to work on farms
• German farmers provided 80% of produce in 1934

Question 6

What was the DAF?

Answer 6

• Many workers had hoped that the Nazis would provide not only work, but good working conditions
• DAF was declared the only workers union
• Membership was voluntary but it became increasingly difficult for non-members to find work

Question 7

What was the second Four-Year Plan?

Answer 7

• More tight focus on autarky
• Hermann Goering in charge and had control of all business and agricultural production
• Raw materials Germany could not produce were replaced with synthetic alternatives
• Results were not as rapid as hoped because production was very lengthy and expensive
• Required 6 tonnes of coal to produce 1 tonne of synthetic fuel
• Goering introduced the slogan “Guns or butter”, addressing the problem reconciling the needs of rearmament and the needs of the people for food
• Second Four-Year Plan aimed to create a balance

Question 8

How did the Nazi economy change during wartime?

Answer 8

• Speer as new economic minister
• Convinced Hitler that the armaments took priority
• Factories machinery standardised so construction and repair was easier
• Mass production methods used

Question 9

How was economic recovery achieved after the war?

Answer 9

• Currency was worthless and black market thrived
• Effects of war so devastating that 160000 prisoners of war stayed in France rather than returning
• The mass influx of refugees became one of Germany’s biggest assets
• Western zone provided with $1.4 million in Marshall aid
• New currency (DM)

Question 10

What economic reform did Erhard introduce?

Answer 10

• Believed in the idea of a social market economy
• New currency (DM)
• Abolished all but the essential rationing
• Kept wages fixed
• Goods were increasingly in sale in shops
• Did not bring immediate recovery
• Car production 4.5 times greater
• Steel production doubled
• Faced opposition for shifting towards social market economy but reached policy of co-determination with worker’s representatives

Question 11

What was the economic miracle?

Answer 11

• German economy improved so rapidly that some called the recovery an “economic miracle”
• Korean war sparked a need for war supplies and FRG had great demand for chemicals, steel and electrical goods
• FRG joined NATO in 1955, allowing them to continue to produce war materials to support the effort in Korea
• New businesses concentrated on producing high-quality goods and kept prices as low as possible
• Reputation of German goods increased
• Influx of refugees meant there was a large pool of “guest workers”
• Once the problem of training was overcome they provided an efficient workforce
• 3.6 million workers came to the FRG in the 1950s

Question 12

How did the FRG survive the recession?

Answer 12

• 1966-1967
• Trade reduced and unemployment increased
• Many guest workers lost social benefits
• Productivity began to fall as the number of guest workers fell from 1.3 million to 900000
• Public spending was out of control
• Schiller reorganised the government planning and introduced subsidies for agriculture and the coal industry
• Schiller replaced with Schmidt

Question 13

How did Schmidt overcome the oil crises of 1973 and 1978?

Answer 13

• FRG reliant on oil rather than coal for fuel
• The Arab-Israeli war broke out and OPEC sharply raised prices
• Unemployment rose sharply
• Oil consumption dropped due to government measures
• “Car free Sundays”
• Introduction of speed limits on the autobahns
• Government increased investment in atomic power
• German industries converted to new fuels more rapidly than other countries

Question 14

How did Germany seek integration into the European economy?

Answer 14

• Joins the ECSC in 1951, setting up preferential trade links between European countries
• Joins the EEC in 1957 after signing the Treaty of Rome