The 'Golden Age'- Economic developments. Flashcards
The ruhr crisis led to the formation of a government led by who?
Gustav Stresemann, supported by the SPD, Centre and DDP.
When did Stresemann’s government collapse and who took over?
November 1923, replaced by Wilhelm Marx of the Centre Party.
What role did Stresemann remain as until his death in 1929?
Foreign minister, continued in office.
How long was Stresemann chancellor for?
103 days
What was Stresemann’s main goal and what steps did he use to accomplish this?
Bring inflation under control.
-End of passive resistance
-Issuing a new currency
-Balancing the budget
What step in Stresemann’s plan caused tension?
The end of passive resistance, this is where they stopped paying workers who refused to work for the French. This led to serious unrest and the attempted beer haul pustch.
What new currency did Stresemann introduce?
Rentenmark, to replace the worthless Reichsmark.
What was the Reichsmark to Rentenmark exchange rate?
One rentenmark for one trillion old marks.
How did the government fund the new Rentenmark currency?
They did not have sufficient gold reserves, it was supported by a mortgage on all industrial and agricultural land.
What happened after they introduced the Rentenmark?
The government kept tight control over the amount of money in circulation to prevent regulation. In August 1924 it became the Rentenmark backed by the German gold reserve, which had to stay at 30% of the value of Reichsmarks in circulation. Inflation stopped being a problem.
Who directed the release and control of the Rentenmark?
Hjamalar Schacht.
To stabilise the economy, what did Stresemann do regarding job?
Salaries of some government employees were cut.
300,000 civil servants lost their jobs and taxes were for both individuals and companies.
How many companies went bankrupt in 1924?
It raised from 233 in 1923 to 6000 in 1924.
How did the Dawes Plan come about?
Stresemann asked the Allies’ Reparations Committee to set up a committee of financial experts to address Germany’s repayment concerns. American banker Charles Dawes acted as the new committee’s chairman.
Why did the USA care so much about Germany repaying their reparations?
The US had an especially vested interest in getting Germany to a position where they payed the reparations to France as most of this money was then passed on to the USA to repay loans.
What did the Dawes plan consist of?
Confirmed the original figure of £6.6 billion, it also recommended that:
-The amount paid annually should be reduced until 1929, then reappraised.
-Start by paying 1000 million marks a year which will raise every five years by 2500 million marks per year . Then the sum should be related to German industrial performance that year.
-Germany would receive a loan of 800 million marks from USA to help get the plan started.
Why was there a heated debate about the Dawes Plan in Reichstag?
-Stresemann did not believe in it, calling it ‘no more than an economic armistice’, but agreed it would secured foreign loans
-DNVP and right-wing groups attacked this policy of compromise, since they believed Germany defy Versailles Treaty and refuse reparations entirely.
Benefits to Germany from the Dawes Plan?
-Allies accepted that Germany’s problems with the payment of reparations were real.
-Loans were granted with which new machinery, factories, house, and jobs could be provided and the German economy rebuilt.
Economic armistice:
Typically in a conflict situation, an armistice is a temporary agreement to suspend action; a truce.
Cartel:
Groups of companies in the same industries, which combined together to fix prices and protect profits; cartels reduced competition but allowed more of the profits to be reinvested.
What industries developed in the golden age?
Advances were made in the chemical industry, such as the large-scale production of artificial fertilisers. The car and aeroplane industries also developed, although cars were still too expensive for the average German.
What was inflation and living standards like in 1924?
The inflation rate was close to zero and living standards rose as wages began to increase from 1924.
What helped finance building of housing, schools, municipal buildings, road and public works?
Loans
What was the affect of massive population growth on housing?
Acute housing shortage in Germany by the early twentieth century, and the overcrowding and insanitary conditions of working-class city accommodation had been linked to political instability. State initiatives to provide affordable homes were of great importance for future
stability. In 1925, 178,930 dwellings were built – over 70,000 more than in the previous year – and, in 1926, there were to be 205,793 more new homes.