Strengths and Weaknesses of the Economy 1924-29 Flashcards
who was Hjalmar Schacht?
an internationally respected finance expert who was appointed by Stresemann as Special Currency commissioner
What was the rentenmark?
A new currency, accompanied by a new national bank, providing greater stability and introduced by Stresemann
How to Stresemann get the French to withdraw troops from the Ruhr?
By promising Germany’s former wartime enemies that it would resume paying reparations.
Secured help from former Allies in reparations
When was the Dawes Plan?
April 1924
Who set up the Dawes Plan?
American expert banker Charles Dawe
What changes to reparations did the Dawes Plan make? (3)
- Germany given more time to pay
- Reduced to 132 000 million marks
- More flexibility than instalments, G could pay what could over next 5 years
How much loans from the USA did the Dawes Plan secure?
800 million gold marks (over 4/5 reps)
When was the Young Plan?
1929, just before WSC and depression
Who set up the Young Plan?
Owen Young
What changes to Reparations did the Young Plan make?
- period for repayment extended to 1988
- negotiated rep instalments after 5yr mark from 2500mil marks to 2000 marks
- reps reduced to 1/4 original figure
What did the Young Plan persuade France to do?
Move their troops occupying the Rhineland out 5 years in advance, in return for acceptance of the Young Plan
Between 1924-31, how many homes were built?
2 million
German industry achieved economies of scale because of
the growing number of cartels
Businesses benefitted from lack of —– and more —— over workers
strike activity and more control
1924-29, exports rose by
40%
What did Vereinigte Stahlweeke do?
United aims of coal, steel and iron production to control 1/2 of Germany’s production
What company in Germany became 2nd largest manufacturing power in Europe?
IG Farben, chemicals giant
Industrial production was 33% more than in 1914 by what year
1938
What did generous welfare schemes entail?
Good pensions and sick benefits scheme
How low was unemployment by 1939
1.3 million
Wages rose by as much as 5 and 10% in what years?
1927 and 1928
How large was the compulsory unemployment insurance of 1937 for workers?
Covered 17mil workers, largest of kind in the world
Employers partly responsible and pay half
What in Germany attracted foreign investors?
Higher interest rates on short term loans in Germany than on long term loans in own countries
In 1938, industrial wages rose by how much?
12%
What act was passed for farmers?
Farmers insurance act
What helped increase investment in industry?
American loans
Heavy industry was revived to…
almost pre-war levels
what were state subsidies invested in?
public amenities
What did Bookbinder say about Germany’s manufacturing power?
‘2nd largest Manufacturing power behind the United States’
Name two of the reasons that the balance of trade in Germany was always in the red?
- German exports hindered by protective tariffs in many parts of the world
- Germany handicapped by loss of resources in territories such as Alsace-Lorraine
Focus on what badly affected the economy
rearmament
What two benefits for workers put pressure on economic expansion
intro of the 8hr working day and welfare benefits
What did Stresemann mean by ‘Germany is dancing on a volcano’
Underlying fundamental weaknesses were disguised by artificial prosperity
What two things were short-term tricks that put the govt into more debt?
Mefo Bills and deficit financing
Stresemann tightly controlled the…
expenditure and circulation of money
why couldn’t the govt fund welfare schemes in constitution
not have enough funds
-ve consequences of Germany’s dependency on USA loans
Humiliating and put G into more debt
Also made G more vulnerable to conditions of World Econ ‘when Europe sneezes, Germany catches a cold’
How much did Germany get in US loans between 1924-30
25 billion dollars
Post-1923, —- improved but —— erratic
economy improved but growth erratic
Post-1923, —- improved but —— erratic
economy improved but growth erratic
Rates of investment and saving were
discouraged
Why wouldn’t farmers buy new machinery
too in debt
What was the income per capita of farmer’s
44% the national average
How much of Germany did Farmers make up
1/3 so small income had big impact on spending power
What did Stresemann refuse imports of when world food prices increased
wheat and grain
Yield for farmers remained slow. In 1920s, agricultural production was only —– pre-war levels
75%, leading many farmers into voting Nazi- ‘Farmer’s revenge’
How much was Germany’s trade deficit?
Germany imported more than exported, by 1928 by 2.9 billion marks
When was the farmers downturn
1926
Cartels kept prices high, whereas competition would have…
lowered them, better for domestic production
By 1929, what happened to mid class wages? What did this lead to?
They drew level with industrial wages and over 1/2 mid class employees seeking unemployment benefits not qualify
big businesses were v reliant on…
govt funds
Overall rate of what was slow
industrial growth
unemployment levels didn’t go past
1.3 million
what was the period 1924-29 in Germany described as?
The Golden Age
How was Stresemann key to recovery (4)
- won favour w Allies
- helped with the Dawes and Young Plans
- ended hyperinflation via the Rentenmark
- appt of Schancht
What positives were there to the Golden age? (5)
- increased industrial production
- improved wages
- reduced unemployment levels
- regulated working hrs
- new welfare system
How was the ‘Golden Age’ a short-term fix?
If short-term credits recalled, parts of Econ would collapse
How did not everyone benefit from the Golden Age? (2)
- Agriculture suffered amidst low food prices, as did Mittelstand
- increased tension between employees and employers(resentment of employers)
When was there a recession in some areas
1927, economy sick beyond repair?
How was the state living beyond its means?
Constant budget deficits and increased welfare costs
1929 production was at ——levels but still slow growth
1913
What happened to the support of extremists during 1924-28?
Declined. Political calm. Mid-class liberal parties small but still govt instability.
Overall, judgement on extent of economic recovery 1924-29
Some prosperity and confidence from a superficially improved economy
BUT others were resentful about lost savings and insecure. Recovery fragile as bought on borrowed time and money.
