Economic Development/Was it a golden age economically Flashcards
all reasons for economic development ?
- end of passive resistance in the Ruhr
- new currency ( Rentenmark )
- balancing the budget
- Dawes Plan
End of passive resistance ?
Passive resistance was called off by Stresemann, despite being an unpopular move
Why did Stresemann end passive resistance ?
- Germany’s economy was beginning to grind to a halt
- inflation was out of control
Impact of end of passive resistance ?
- Essential first step in reducing government expenditures
Why was passive resistance so difficult for the German government ?
- paid wages of workers
What was the new currency
- New currency was called the Rentenmark was introduced to replace the old and worthless Reichsmark
Info about new currency ?
- New currency was exchanged on the basis of one Rentenmark for one trillion Reichsmarks
- Government kept tight control of money in circulation.
- Old inflated marks were gradually cashed in and , in August 1924, the Rentenmark replaced the Reichsmark
Impact of new currency
- hlped balance the economy and stabilise the currency
- inflation ceased to exist
- value of new currency established at home and abroad
- Hyperinflation did not exist anymore, therefore social and economic situation was better in Germany
how did Stresemann balance the budget
cut expenditures and increased taxes
How were expenditures cut and how were taxes raised ?
- salaries of government employees cut
- 300,000 civil servants lost their jobs
- Taxes were increased for the individual and companies
Impact of balancing the budget : cut expenditures and higher taxes ?
- Number of companies who went bankrupt increased from 233 in 1923 to 2000 in 1924
Why were the US keen on the Dawes Plan which involved Germany paying reparations ?
- USA wanted Germany to be in a position where reparation payments could be made to France, as some of this money was passed to the US to repay loans.
How was the Dawes Plan made ?
- Committee of financial experts created to address Germany’s financial concerns.
What did the Dawes Plan include/ recommend ?
- That Germany should pay a reduced amount of reparation payments until 1929
- Proposed that Germany should pay 1000 million marks which would go up by 2500 million marks annually
- Crucially, loans would be granted to Germany. 800 million marks.
How did the Dawes Plan create economical developments for Germany ?
- Loans were granted, 800 million marks, with which new machinery, factories and jobs could be provided by and the German economy rebuilt
Did these economic developments in 24-28 actually cause economic development ( Yes )
- There was monetary stability and the influx of foreign capital
- By 1928, Industrial production levels increased that of 1923
- German industries achieved economies of its scale
- Exports rose to 40%, Trade increased
- Hourly wages rose in real terms each year from 24-28
Did these economic developments in 24-28 actually cause economic developments ( No )
- Unemployment never fell below 1.3 million
- German imports always exceeded exports
- Collapse in food prices in 1922 resulted in widespread rural poverty
How/Was the economic recovery in Germany superficial and temporary
- After 1924 Germany continually ran on deficits, relying on foreign loans to balance the books
- The reliance on foreign loans for any sort of economic prosper left Germany vulnerable to shifts in the world economic climate
Did farmers gain from these economic developments/ recovery
- Farmers gained very little from economic recovery
Population of farmers in Germany ?
Farmers made up about a third of the population
extent of economic recovery - German industry successes ?
- Industrial output grew after 1924, but not 1913 levels until 1929
- The years 24-25 were good years
- Advances in the chemical industry, such as large scale production of artificial fertilisers
Who gained very little from the economic recovery ?
Farmers
How did farmers become saddled with debt ?
- During the inflation of the early 1920s, large landowners and farmers borrowed money to buy new machinery and improve their farms
- After 1923, the government made it easier for farmers to borrow money, but this made them extremely in debt
What was an extra burden on farmers and landowners which contributed to their economic state ?
- increased taxes for welfare benefits was regarded as an unfair burden on farmers and landowners.
Impact of debt for farmers and large landowners ?
- By late 1920s, there was an increase in bankruptcies and many lost land
Evidence that shows farmers discontent with their financial state and perhaps the government in Germany ?
In 1928, farmers initiated a series of small- scale riots known as’ farmers revenge ‘ in protest against low market prices.
