Empire to democracy 1914-1929: Economic

Question 1

How did the war impact Germany’s economic situation?

Answer 1

• Funded through treasury bills rather than increased taxation
• Due to losing the war, paying back these bills was very hard
• Government resorted to printing more money which increased national debt
• Loss of the war also made paying back the debts more difficult due to added burdens of the Treaty of Versailles
• However, the decision to continue borrowing paid off, as, with low unemployment, investment into Germany was encouraged

Question 2

What was the national debt situation within this period?

Answer 2

1913- 2000 million marks
1919- rose from 5000 million to 144,000 million marks (due to printing money)
1919- 45,000 million marks

Question 3

What led to hyperinflation?

Answer 3

• Prices doubled between 1918 and 1919
• Prices quadrupled between 1919 and 1920 (14x higher than 1913)
• Government was dominated by Centre Party who benefitted from inflation by taking short term loans to expand their businesses
• Germany paid 1st instalment of £50 million in 1921
• However, by 1923 they stalled the payment which prompted the occupation of the Ruhr
• Led to hyperinflation in 1923

Question 4

How did Stresemann respond to hyperinflation?

Answer 4

• Called off passive resistance to the occupation of the Ruhr in 1923
• His government introduced a new currency; The Rentenmark to replace the mark which was now worthless

Question 5

How did Stresemann address the reparations bill?

Answer 5

• 1924 Dawes Plan
• 1929 Young Plan

Question 6

When was industrial action picked back up?

Answer 6

• After 1923
• Pre war levels were reached by 1927
• Pre war levels exceeded from 1928/1929

Question 7

What was the rate of unemployment in Germany compared to Britain?

Answer 7

1921 Germany- 1.8%
1921 Britain- 17%

Question 8

How did the occupation of the Ruhr worsen Germany’s economic situation?

Answer 8

1. Paying wages or providing goods for strikers drained government money
2. Tax revenue was lost from businesses who ceased and workers who became unemployed
3. Germany had to import coal and pay for it with limited foreign currency reserves
4. Goods shortages increased prices
5. Value of the mark collapsed

Question 9

What did the government printing money lead to?

Answer 9

• German currency being completely worthless by 1923
• Workers had to be paid daily or twice a day due to prices rising by the hour
• When people received money they had to spend it as quick as they could before the currency further devalued

Question 10

What were the inflation statistics within this time?

Answer 10

• Inflation exceeded 100% for most of 1920
• In 1922 the monthly rate of inflation passed 50% for the 1st time
• Fell below 0 in 1926

Question 11

Who did Stresemann appoint as Reich currency commissioner?

Answer 11

Hjalmar Schacht

Question 12

What measures did Hjalmar Schacht implement?

Answer 12

1. 1923- Introduced the Rentenmark (valued at 1 Rentenmark to 1 trillion marks) It’s supply was strictly limited, sp was seen as safe and it ended up holding its value
2. Took over leadership of the Reichsbank and created a range of measures to reduce inflation and balance expenditure against income
3. Taxes on individuals and companies were introduced
4. Enabled the government to reinvest a larger proportion of the nation’s wealth

Question 13

Did Hjalmar Schacht’s measures improve Germany’s economic situation?

Answer 13

• Helped the economy to grow rapidly in 1924 and 1925
• Companies prospered
• Number of companies that went bankrupt increased from 233 in 1923 to over 6000 in 1924, but this helped to make the economy more efficient
• Old inflated marks were cashed in and in 1924 the Rentenmark became the Reichsmark
• Inflation was no longer much of a problem

Question 14

What did the Dawes Plan state?

Answer 14

1. Reparation payment of £6.6 billion remained, but the amount paid each year would be reduced until 1929
2. Germany should receive a large loan of 800 million marks from the USA
3. Germany would reorganise the Reichsbank and establish a new stable currency

Question 15

What was the response to the Dawes Plan?

Answer 15

• DNVP and smaller right wing groups, such as the Nazis, bitterly attacked it
• Accepted by Germany and the Allies

Question 16

How did the Dawes Plan benefit Germany?

Answer 16

1. Allies accepted that Germany’s problems with the payment of reparations was real
2. Loans to the value of 25.5 billion marks were received between 1924-1930, mainly from USA (helped to provide new machinery, factories, houses, jobs)
3. Evacuation of the Ruhr and better relationship with France

Question 17

What did the Young Plan do?

Answer 17

1. Reduced total reparations by 75%
2. Reduced annual payments by extending period of payments to 59 years
3. Ended allied supervision of German banking
4. Provided the deferment of payments in times of economic hardship

Question 18

What was the response to the Young Plan?

Answer 18

• Severely criticised by right wing politicians such as Hitler
• Schacht disagreed with it and resigned

Question 19

What was the rate of economic growth in Germany in comparison to the USA?

Answer 19

• German economy grew by 4% between 1913 and 1929
• US economy grew by 70%

Question 20

What was unemployment like within Germany during this period?

Answer 20

• Never fell below 1.3 million
• By 1929 it reached 3 million

Question 21

What were some of the industrial developments?

Answer 21

1. Industrialists rationalised their plants- introduced new technology, adopted new management/production techniques and formed cartels (by 1925 there were around 3000 cartels)
2. 1927- Coal production reached 79% of its pre 1913 level, iron reached 68% and steel reached 86%
3. Advancements in the chemical industry
4. Electrical industry continued pre war expansion
5. Car and aeroplane industry expanded

Question 22

What was the agriculture situation?

Answer 22

1. Suffered greatly during the war from the loss of unprotected rural labour (army conscription), leaving the fields to women and old men
2. 1916 failure of the potato crop which led to the 1916-1917 turnip winter (population was reduced to living on traditional animal fodder)
3. 1917-1918 poor harvests
4. 1919- More than 20% of cultivated land belonged to less than 1% of landowners
5. 1927-1928 Farmers were getting barely any return on the cost of running farms, and were faced with high tax demands, rents, interest payments