Economic development and Policies Flashcards
1919-23 What is Hyperinflation (1923)?
Prices spiral out of control because the government increase the amount of money being printed. Money becomes worthless
1919-23 How did WW1 contribute to the hyperinflation crisis?
- Germany was not prepared for such a long war so borrowed money instead of raising taxes
- Reparations had to paid in gold marks, which held their value as the currency declines. Forced gov to print larger quantities of money to meet payment deadlines
1919-23 How did Weimar Republic’s constitution contribute to the hyperinflation crisis?
- Social Security was a constitutional right - the government had to support the unemployed
- Cost of introducing social reforms and welfare
1919-23 What event triggered the hyperinflation crisis?
Occupation of the Ruhr in 1923
Government ordered passive resistance
Weimar Government had to rely on expensive imports
More banknotes printed to pay for it
1919-23 who suffered during Hyperinflation?
- anyone with savings now saw them become worthless
- people on fixed incomes/ pensioners wages became worthless
1919-23 who benefited during Hyperinflation?
- anyone with debts, mortgages or loans
- groups of businessmen and homeowners could buy at a fraction of the cost
1923-29 How did Stresemann deal with hyperinflation?
- ordered sharp cuts in government
- Introduced the Rentenmark Dec 1923
- Dawes Plan 1924 - negotiated a strict timetable for reparation payments
1923-29 What evidence is there of a more stable economy under Stresemann?
- some sectors prospered. I.G. Farben became largest chemicals company in Europe
- exports rose by 40%
- Inflation and unemployment remained low
1923-29 what evidence is there of improved living standards?
wages rose every year between 1924 and 1929
1923-29 What was the main weakness of the German economy?
too dependent on the USA
1923-29 What evidence is there that the German economy had not fully recovered by 1929?
- Agriculture was in recession, farmers incomes were 44% below the national average
- Unemployment did not fall below 1.3 million
- imported more than they exported.
1929-32 How did the Wall Street Crash contribute to the depression in Germany?
- US loans and investments disappeared, and they demanded repayment of short term loans
- world trade slumped, export trade fell
- wages and prices fell
1929-32 How far did the WSC contribute to the depression in Germany?
- would have probbaly happened without WSC
- WSC as final push that brought economy down
- determined the timing of the depression, and made effects worse, but not only cause
1929-32 what effects did the depression have on Germany’s economy?
- 6 million unemployed
- 50,000 businesses went bankrupt
- 5 major banks collapsed in 1931
