Economy of the Weimar Republic (3) Flashcards
Economic crises and responses
What type of social welfare programs were there for different groups in 1918-23?
- Retraining schemes and loans for ex-soldiers until they found work.
- Pension payments for the wounded, widows and orphans.
- The govt and national committees helped oversee care in the Lander.
- 10% of the population received federal welfare payments or on regional poor relief.
- The consequence was the increasing debt.
Number of people on benefits in 1920 and 1924.
+ 1920 - estimated 1,537,000 disabled veterans and 1,945,00 non-disabled survivors with a mixture of lump sum payments and pensions.
+ 1924 - 760k disabled veterans, 420k war widows with 1.02m children, and 190k parents of dead soldiers.
Economic crises and responses: debt and reparations
- Borrowed heavily during the war - 150 billion marks (3x in 1914).
- Treaty of Versailles demanded a reparations policy of 6.6 billion marks = further debt and struggled to pay it off by borrowing/printing money.
- 1921= engaged in negotiations with the Allies on payment time and amount - but France thought they deliberately avoided payment (occupied the Ruhr).
- Until 1924, reparations were paid in kind: coal, wood and railway carriages.
Economic crises and responses: The Ruhr
Vital in 1918-23 because of its coal and other industries based there.
- In 1921, the London Ultimatum for Germany falling behind in payments was that payments should be met or the Allies would occupy the Ruhr.
- In Jan 1923: as they again failed to pay = France and Belgian troops occupied the Ruhr.
Consequences of this:
- Germany stopped all payments to France only.
- Instructed German officials not accepting orders from non-Germans .
- Urged passive resistance from workers via strikes and sabotage.
What was the result of the France-German ‘battle’ over the Ruhr?
- France cut off the Ruhr from the rest of Germany:
- Set up a patrolled border of armed forces which dealt with resistance by using force or bringing their own workers.
- Neither country benefited - in 1923, the coalition govt ordered a stop to passive resistance and began negotiations with the French.
Economic crises and responses: hyperinflation
- Crisis of the Ruhr escalated inflation to hyperinflation.
+ Newspapers cost 1 mark on May 1922 to 700B in Nov 1923. - People lost faith in money = burned it as fuel and increasingly relied on the barter and the black market.
- Black markets and businesses introduced their own ‘emergency money’.
- Govt cut staff: 750,000 federal and regional jobs.
- Those on fixed payments (incl. social welfare) struggled to pay as it lost value.
Change of Government in August 1923
- Govt collapse - replaced by one led by Streseman (DVP) as Chancellor.
- In August 1923 = passed the Emergency Decree to grant Govt powers to act rapidly and decisively compared to previous coalitions.
Change of Government in November 1923
- Coalition Government lasted until November 1923.
- Stresemann also served as foreign minister from 1923-29 = acted as a stabilising force in the Govt, urging compromise on political ideals to work together.
Some of Stresemann’s attempt to regain control over money:
October 15, 1923
November 17, 1923
15 October 1923 = Replaced the Mark with the Retenmark + limited the amount of money printed.
17 November = Banned all forms of emergency money.
Overseen by Hjalmer Schact.
How did the introduction of the Retenmark stabilise the economy?
- Restored faith in money as Germans changed their hoarded foreign currency and ‘emergency money’ for the Retenmark - the currency settled.
- Schact also oversaw the change to the Reichsmark (RM) on 30 August 1924, just before the introduction of the Dawes Plan to fix reparations in the new currency.
How did Stressemann’s foreign policy support German economic recovery?
Key dates:
September 10, 1926.
December 1, 1925,
August, 27th 1928
- Dawes and the Young Plan made reparations more manageable and provided loans to rebuild the economy.
- Germany became a more acceptable foreign power, others more willing to trade and loan.
+ September 10, 1926: Joined the League of Nations.
+ December 1 1925: Signed the Locarno Treaty
+ August, 27th 1928: Kellog-Briad Pact
Examples of Foreign Policy: Dawes Plan
- Signed on August 16th 1924 (temporary until the Young Plan 1929).
+ Evacuated foreign troops in the Ruhr area.
+ Reparations begin at one billion marks, increasing annually to 2.5 billion after 5 years.
+ Allies supervise reorganising the Reichsbank.
+ Loaned $200 million dollars (Wall Street Bonds).
Examples of Foreign Policy: Young Plan
- Written in August 1929 and formally adopted in 1930 as Germany struggled to pay - reduced debt by 90% and prepare Germany for the issuance of bonds.
- In Dec 1932, the US’s rejection reverts to the previous plan granted by the Young Plan. But upon the collapse of the system and the rise of the Nazis, they repudiated the debt and made no further payments (failed).
- By 1933, one eighth of the WW1 reparations was paid.
Recovery of businesses
- Big businesses were able to ride out economic problems, unlike many small businesses (most bankruptcies than the previous 5 years altogether in 1924).
- Surviving big businesses formed cartels - their fixed prices helped stabilise the economy. Some cartels organised themselves into associations of shared interests.
Who was I.G Farben (example)
- United various chemical-based cartels in 1925.
- Rebuilt factories with mass-production assembly lines and ‘time and motion’ thinking.
- By 1925, the chemical industry produced 1/3 more than 1913, and 2/3 by 1930.
