Germany Booklet 3: Reacting to economic challenges 1918-32

Question 1

Outline Germany’s war debt in 1918

Answer 1

Germany had borrowed over 150 million marks during the war under the assumption that they could pay it back using reparations paid to them by Britain and France when Germany won. This left Germany in lots of debt.
The government war spending led to inflation (prices rose by 200%)

Question 2

What happened to Germany’s industrial potential after WW1?

Answer 2

It was severely crippled by the loss of territory and therefore the loss of raw materials

Question 3

Why was Germany lacking investment after WW1?

Answer 3

There was a lack in global capital so hardly any of the powers could afford it
Germany wasn’t in a good place so anyone who could afford it wasn’t keen to invest

Question 4

What were the positive elements of Germany’s economy in 1919?

Answer 4

Germany’s export trade increased and unemployment fell sharply, benefitting the working class.

Question 5

Outline the reparations Germany was asked to pay

Answer 5

They were asked to pay a total of £6.6 billion, in annual £100 million payments

Question 6

Outline post WW1 unemployment in Germany

Answer 6

Approx. 6 million soldiers left the German army in 1919 and they were unemployed, so they took the jobs of the women who had been working during the war. However, the unemployment dropped drastically due to the low wages, so by 1922 it had dropped from 1.1 million in late 1919 to only 12,000.

Question 7

Outline Germany’s loss of income after WW1

Answer 7

As they lost many trading partners and colonies, there was a mass drop in income and production.
Coal production reduced by 15% and iron-ore deposits halved.

Question 8

What were the consequences of Germany’s request for a payment holiday from the reparations in 1922?

Answer 8

This implied that their economy wasn’t strong enough to pay the reparations, leading to many of their investors pulling out, which led to a fall in the value of the mark.

Question 9

What happened in December 1922 when Germany failed to make its payments?

Answer 9

France and Belgium sent 60,000 troops to the Ruhr to seize the coal produced in the region in replacement for the missed payments

Question 10

What was the passive resistance campaign of 1923?

Answer 10

In January, the German government announced that it would suspend all future reparation payments till France and Belgium left Germany. The workers in the Ruhr went on strike in an attempt to get the French and Belgian soldiers out of the area.

Question 11

How did the campaign of passive resistance lead to hyperinflation?

Answer 11

In order to pay the striking workers in the Ruhr, the government had to print more money and this therefore decreased the value of the mark.

Question 12

What were the political repercussions of hyperinflation?

Answer 12

Some people blamed the state (Weimar government) which therefore reduced the faith people had in the state, weakening the Weimar republic.

Question 13

Who benefited from the hyperinflationary crisis of 1922 and how?

Answer 13

The middle classes who had debt as they could pay off that debt with inflated currency.
Businesses or people with foreign money as they could use this money to buy property and increase their assets, leafing to an industry boom.

Question 14

Who were the main losers of the hyperinflationary crisis of 1922?

Answer 14

The working classes (on fixed income) as their wages were worth almost nothing, health conditions plummeted, life expectance decreased, many turned to crime, making Germany a dangerous place.

Question 15

What were the benefits of the Hyperinflationary crisis of 1922?

Answer 15

Unemployment dropped (because wages were lower so more people could be employed)
Exports increased (because the Mark was worth so little that the goods were cheaper)

Question 16

Outline Streseman’s three main policies regarding the hyperinflationary crisis

Answer 16

Introduced the policy of fulfilment
Initiated deep cuts in spending
Introduced a new currency called the Rentenmark

Question 17

What was Streseman’s policy of fuldilment?

Answer 17

German miners returned to work - they German government would do what was asked of them at Versailles in an attempt to get the French out of Germany.

Question 18

Was Streseman’s policy of fulfilment successful?

Answer 18

It gained them sympathy which led to the US agreeing to loan them money and the French left Germany in 1925. This reduced hyperinflation as it meant the government could stop printing money to pay the workwers.

Question 19

What did Streseman do to reduce government spending?

Answer 19

He reduced the pay of civil servants by 50% and slashed benefits

Question 20

Explain the introduction of the Rentenmark

Answer 20

The government mortgaged industrial and agricultural land to the value of 3.2 billion Rentenmark and issued exactly that amount. It was a huge success - its value remained stable and the old mark was phased out so regular forms of trading and payment were able to continue.

Question 21

When was the reichmark introduced?

Answer 21

1924

Question 22

What were the three key points of the Dawes plan?

Answer 22

1. Germany received a loan of 800 million gold marks provided mainly by US business leaders.
2. If paying reparations disrupted German economic stability the USA had the right to allow Germany to take a payment holiday
3. repayments would be allowed over a longer period of time to reduce the annual reparations bill.

Question 23

Why did the right wing nationalists dislike Stresemann’s economic goals?

Answer 23

Because it was heavily reliant on the USA and they would have been disgusted at the idea of Germany being dependent on any other country to that extent.

Question 24

Which groups benefited the most in the 1920s?

Answer 24

Women and the industrial working class saw many improvements in their standard of living and those in debt were able to pay it off with inflated money.

Question 25

Which groups suffered most during the 1920s?

Answer 25

The middle classes who lost their savings and were subject for an increase in tax.

Question 26

How did the living standards affect the stability of the Weimar republic?

Answer 26

The economic stability of the golden years helped to provide political stability and a relatively stable economy leads to good living standards. Also, when people tend to have good living standards, extremist parties tend to get less support

Question 27

What were some economic consequences of the depression in germany

Answer 27

There was a huge decline in industrial production and agricultural prices.
Between 1929-32, exports fell by 55%
Half of all young people between 16 and 30 were unemployed - unemployment rose - 1.8 million in 1929, 5.6 million in 1932
collapse of 5 major banks in 1931 meant 50,000 businesses went backrupt

Question 28

What were some social effects of the great depression?

Answer 28

State benefits were reduced - 15% received nothing
Widespread poverty and homelessness created a dependence on charities and soup kitchens.

Question 29

What were the political effects of the great depression?

Answer 29

The NSDAP increased massively in popularity. In 1930, the SPD was still the most popular party and the centre party had actually increased in popularity.

Question 30

Outline the public works schemes of 1931-32

Answer 30

In 1931 Bruning introduced a public work scheme focusing on road and canal construction. This was expanded by Von Papen who also introduced more indirect measures. Schleicher continued there and established an emergency fund to employ more people. They were successful and by the end of 1932 unemployment was declining.

Question 31

Why were the public work schemes ultimately unsuccessful in saving the Weimar republic?

Answer 31

The drop in unemployment was too little too late to restore faith in the system. The Nazis expanded these further and claimed credit for their successes in the first years of their government

Question 32

What were Bruning’s main economic policies?

Answer 32

He wanted to end reparations, he used the economic crisis to persuade the Allies to suspend the payments. He refused to increase government spending - his short term plan was to allow the crisis to deepen so that he could ensure the cancellation of reparations. he wanted to abolish the welfare state and destroying Germany’s trade unions.
He implemented greater budget cut and passed a decree lowering wages to 1927 levels.