Reacting To Economic Challenges 1918-1932 Flashcards
What can you judge the strength/weakness of an economy on?
Trade
Inflation
Growth: GDP
Employment
Redistribution of wealth: class, welfare system, living standards
What was Germany;s economy like following WW1?
-high inflation
-poor living standards due to reparations
-lack of money and resources
-perceived as worthless
What were Germany’s 4 economic problems?
Debt : Germany debt = 144,000 million marks, currency lost over 1/3 pre war value
Industrial potential : Germany’s industry potential was severely crippled by loss of Saarland and Upper Silesia
Investment : Germany had little hope of attracting foreign investment when capital was in short supply
Reparations : total liability of £6,600 million, annual payments equivalent to 1/4 of all German exports
What were the positive elements of Germany’s economy after ww1?
-export trade increased
-unemployment fell sharply
-working class benefitted
Weimar’s post ww1 war debt
-1914-1918 government borrowed almost 150 billion marks, government raised around M7/M8 billion in taxes which was enough to pay interest of debt but not enough to reduce it
Weimar’s pose ww1 reparations
ToV forced Germany to pay reparations. Inter-Allied Reparations commission of 1921 set figure of £6,600 million. Germany could pay this back by sending goods such as coal
Weimar’s post ww1 loss of income
ToV meant Germany lost territory. German coal productions declined by more than 15%. Lost almost half of deposits of iron-ore. Economy = less profitable
Weimar post-ww1 unemployment
6 million soldiers left the army during 1919 = knock on effect for women who were sacke to allow returning soldiers jobs. February 1919 = 1.1 million without jobs.
Economic effects of hyper-inflation
-industrialists enjoyed cheap credit
-landowners and middle class house holders paid off their mortgages in inflated currency
-homeowners + pensioners = incomes evaporated by scale of inflation
Social effects of hyperinflation
-workers benefitted it middle class didn’t as inflation wiped out their savings
-health conditions plummeted, infant mortality rates increased, average lifespan declined, disease spread easily
Political effects of hyperinflation
-industrialists blamed workers for high wages
-everyone blamed civil servants
Who suffered from hyperinflation?
Middle class as their savings were wiped out. Working class benfitted
What was hyperinflation caused by?
Government printing more money in order to pay striking workers
What did hyperinflation cause?
Uprisings as groups wanted to take power from government, people could pay off loans, loss in savings
Problems from hyperinflation
-passive resistance was costing the government too much
-government spending too much money
-currency had become worthless
What were Stresemann’s solutions to the problems of hyperinflation?
-introduced policy of fulfilment
-initiated deep cuts in public spending
-introduce a new currency called the Rentenmark
What were the effects of the solutions to hyperinflation?
-German miners would return to work and provide French with the coal they demanded = Germany would make reparation payments.
-didn’t have to pay workers as much money = less reason to print money so economy is not flooded
-new currency was extremely successful as regular forms of trading and payment able to restart
What does ‘turmoil’ meaning?
Period of confusion or chaos
How can you judge how strong an economy is.
Growth rate of GDP
What features of Weimar economy could be considered turmoil/couldn’t?
-hyperinflation
-debt
Couldn’t = benefits to working class
What was Dawes plan and who suggested it?
Stresemann, it was an economic alliance with the USA = hoped would lead to reductions in economic bill.
What did Stresemann believe?
-germany would be 3rd power with a sophisticated economy
-Britain and France would be dominant powers due to economic strength
-USA would stand in the way of french demands for reparations
-Germany could not rely on military power to secure position in the world
How did Dawes plan transform Germany’s reparation payments?
-Germany received a loan of 800 million gold marks provided mainly by US business leaders
-annual repayment amount was reduced by 1929
-repayments allowed over a longer period of time to reduce annual reparations bills
How does Dawes plan work?
-USA gives loans to germany
-Germany pays reparations to Britain and France
-Britain and France repay war loans to the USA
What was the impact of Dawes plan?
-solved Germany’s immediate reparation problems
-by late 1920s, German GDP had recovered to its 1913 level and tax revenues were increasing = government used this money to invest in public work schemes, sports arena, public swimming pools etc
How can you measure living standards?
-employment statistics
-access to health care
-‘real’ wages
Positives of living standards
-2.8million homes were built in 1919-1932
-increase in retailing and service jobs
-number of women in workforce expanded
Negatives of living standards
-farmers suffered a severe fall in come from 1926 onwards
-depression years 1929-32 = high unemployment, falling wages, working class were hard hit
-effects of ww1 = malnutrition, infectious disease, war wounded
Positive aspects of the Weimar economy
-workers pay increase by 37.5% between 1924-9
-1925, chemical industry producing 1/3 more than 1913
Negative aspects of the Weimar economy
-1918 : 150 billion marks in debt
-1929 : 5.6 million unemployed
-decline in agricultural productivity and growth
Economic and social consequences of the depression
-decline in industrial production and agricultural prices
-collapse of 5 major banks in 1931 meant 50,000 businesses went bankrupt
-widespread poverty and homelessness creating dependence on charities
What was Bruning’s main priority?
End reparation payments and persuade Britain and France to drop their reparation demands
What was the Hoover Moratorium of June 1931?
Suspended payments so the German government had more money to spend
What was Bruning’s short term plan?
Allow crisis to deepen so he could ensure not just suspension but cancellation of reparations = greater budget cuts + passed a decree lowering wages to 1927 levels
What were the success of Bruning?
Despite commitment to public spending, initiated a small public works scheme in 1931 focusing on road and canal construction.
What was the success of Von Papen?
Expanded initiative further, increasing budget from RM 167 million to RM302 million in September 1932, emphasised indirect measures such as giving tax cuts to firms that employed new staff
Success of Von Schliecher?
Continued existing initiatives but believed direct intervention was necessary. = established a Rm 500 million emergency fund to employ people, carry out repairs works, road and canal maintenance
