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.
Compulsory arbitration:
Industrial disputes are often settled by arbitration, in which both sides agree to allow an independent figure, known as the arbitrator, decide on a solution; in Weimar Germany, arbitration was made compulsory by law.
Lock out:
An action by an employer
to stop workers doing their jobs
until they agree to the employer’s
terms and conditions
What was the employers problem with compulsory arbitration?
Employers felt that this system was biased in favour of the unions and resented the state’s interference in their affairs.
In 1928, a dispute over wages in the iron and steel industry in the Ruhr resulted in the arbitrator granting a small wage increase to the workers, why was this an issue?
The employers then refused to pay the increase and locked out the workers for four weeks. In this dispute the workers were backed by the government and paid by the state.
Although the economy was looking better in the golden age, what was the issue?
Unemployment was a continuing problem in these years. By the end of 1925, unemployment had reached one million; by March 1926, it was over three million, although it did fall after that. This
was due partly to there being more people seeking work, partly to public spending cuts, but also to companies reducing their workforces in order to make efficiency savings.
Who did the Weimar ‘economic miracle’ not benefit?
The Mittelstand, gained very little in this ‘golden age’. Bankrupted by the hyperinflation of 1923, middle-class managers, clerks and
bureaucrats did not benefit fully from the improved economic climate. White-collar workers did not enjoy the wage rises of the industrial sector. By the late
1920s, industrial sector wages had drawn level with those of the middle class – and in some cases exceeded them.
How did the economic recovery effect farmers and agricultural workers?
Very little benefit.
Global agricultural depression kept food prices low and few farmers could make profit. After 1923 farmers could borrow money easily but this made it worse due to having debts when prices were falling. Increased taxed to pay fro welfare benefits burdened farmers.
Farmers’ revenge:
In 1928, farmers initiated a series of small-scale riots in protest against foreclosures and low market prices.
Foreclosure:
Taking possession of mortgaged property when someone fails to keep up their repayments.
How did the Young Plan come about?
Allied forced remained in occupation of the Rhineland and the French would not agree to withdraw these forces unless and until a final settlement of the reparations issue had been agreed.
What was the Young Plan?
Obliged Germany to continue paying reparations until 1988. The total reparations bill was considerably reduced, Germany required to pay £1.8bn instead of £6.5bn but the annual payment increased.
What was the Right-wing reaction to the young plan?
The leader of
the right-wing DNVP, Alfred Hugenberg, launched a nationwide campaign
against the plan, which involved other conservative groups, including Adolf
Hitler and the Nazis. This campaign group drew up the draft of a law – the
so-called ‘freedom law’– which they demanded should be submitted to a
national referendum.
What early signs of support did Hitler have, as shown in the demand for a referendum over the young plan?
The fact that 5,825,000, or 13.8 per cent of the electorate, voted for
the ‘freedom Law’ was an indication of the depth of support for right-wing
nationalism. Moreover, Hitler’s leading role in the campaign, which was
financed by Hugenberg, enabled him to make a decisive breakthrough as a
national political figure.
