Economic developments 1914-29 Flashcards
How many corporations were formed for war materials by Walter Rathenau?
200
What were treasury bills?
Short term treasury bills from the Reich central bank which could be redeemed at a higher value
What blunder did the government make economically during WW1?
Assumed they’d be able to pay back all their debt after they won the war, particularly with treasury bills
How much did the national debt grow between 1913 and 19?
5 billion to 144 billion marks
How much did the price of basic foodstuffs and consumer goods increase between 1913 and 1919?
Tripled
(Prices of goods in short supply even rose on the Black Market)
How much of Germany’s merchant fleet was surrendered to the Allies?
90%
Why did the new government not want to devalue the currency? What did they do instead?
- Would have made paper money in circulation worth less, reducing the value of savings
- Didn’t want any political repercussions
- They carried on borrowing instead
How did Zentrum benefit from inflation?
- Supported by many powerful industrialists
- These supporters benefitted from inflation by taking short term loans from Germany’s central bank to expand businesses
- They then repaid this with inflated currency
How did the government benefit from inflation?
- Lessened their burden of debt
- Means some historians believe that it was wise for the government to allow some inflation
- Though they couldn’t do that with reparations, because these were in goods/gold marks
What was fulfilment?
- Driven by Walter Rathenau
- Policy to cooperate w/Allies
- Hoped a willingness to meet demands would win sympathy and mean that the Allies would revise reparations
How did patriots fuel inflation?
Right wing elites speculated against the mark to show their objections to “unreasonable” allied demands as a patriotic duty
Who was Walter Rathenau?
Minister of Reconstruction in 1921
How much were the Saar coalfields worth? Who were they given to?
- 2.5 billion marks
- Given to France
What economic problems existed besides reparations?
- Germany’s traditional Western trading partners wanted to rebuild their own economies, meaning that Germany couldn’t export goods
- Western European nations were in debt to the USA, so reparations didn’t help stimulate European trade but just went to the US
- Germany had lots of other debts, eg. pensions, social welfare payments, war loans
What did Germany try to negotiate in Jan 1922?
A reparations extension and a further loan
What did Germany try to negotiate in Nov 1922?
- 4yr non-payment period
- Loan of 500 million gold marks
How did the Ruhr occupation worsen Germany’s economic situation?
- Paying striking workers’ wages
- Tax revenue lost for now unemployed workers and inactive businesses
- Importing coal
- Shortages of goods — even higher prices
- Collapsed international confidence in the mark
What was required to keep up with printing paper money?
300 paper mills, 2000 printers working 24hrs to print enough
What were the immediate effects of hyperinflation?
- Workers being paid once or twice daily
- People immediately spending money to make sure currency didn’t get devalued further
- Serious food shortages — farmers not prepared to sell their products for worthless money. People barter
When did Schacht introduce a new currency? What was it?
- November 1923
- Rentenmark
Apart from a new currency, what other measures did Schacht introduce?
- Gov stopped offering credit to industry
- Lending rates controlled
- New taxes on individuals and companies introduced
How many companies became bankrupt between 1923 and 24?
- 233 in 1923
- 6000 in 1924
What did the Dawes Plan state?
- Amount of reparations to be paid annually reduced until 1929
- Sum paid related to Germany’s industrial performance
- Germany to receive a loan of 800 mil from US
- Germany to establish a stable currency and reorganise the Reichsbank
- Sanctions for non-payment to be taken after consultation between all Allies
Why did US businessmen have an interest in restoring the German economy?
- If Germany paid reparations to France/Britain, they’d in turn pay the US back
- Germany would also be a valuable trading partner
- If they showed Germany the benefits of capitalism, they may not fall to communism easily
How did the Dawes plan benefit Germany?
- Showed acceptance that Germany’s issues with reparations were valid
- US loans helped provide new machinery, factories, houses, jobs
- France evacuated the Ruhr
- Financial confidence renewed
When did inflation fall below zero?
1926
What did the Young Plan do? When was it?
- August 1929
- Reduced total reparations bill by 75%
- Extended period of payments to reduce amount of annual payments
- Ended allied supervision of banking
- Provided for deferment of payment in economic hardship
Who disagreed with the Young Plan?
- Schacht disagreed w/the plan and resigned from office
- Opposition forced a referendum
- Criticised by right wing politicians, eg Hugenberg/Hitler
What role did Walter Rathenau play during the war?
Head of the War Materials Section of the Prussian War Office
What was set up to maintain trade with neutral countries?
Central Purchasing Company
What are some examples of ersatz substitutes?
- Aluminium instead of copper in munitions/electrical fittings
- Synthetic cellulose instead of cotton in explosives
- Animal tissue and seeds produced oil
What did unemployment never fall below throughout the whole period? What had it reached by Feb 1929?
- 1.3 million
- Reached 3 million by 1929
What is evidence for increased productivity in heavy industry? (coal/blast furnaces)
- Output of blast furnaces trebled
- By 1927 coal production reached 79% of pre-1913 levels
Where did the large-scale production of artificial fertilisers take place?
Leuna works, near Merseburg
What cartel was formed in 1925?
IG Farbenindustrie, made from major chemical cos
Who had a virtual electricity monopoly?
Siemens
What cartel expanded shipping and cement?
Wiking Konzern
How did agriculture suffer during the war?
- Loss of rural labour from conscription — only women/old men left on the fields
- Failure of the 1916 potato crop resulting in turnip winter
What agricultural law happened in 1919?
Reich Resettlement Law — meant large estates could be redistributed between smaller farmers (though wasn’t very effective)
