The Golden Age Of The Weimar Republic, 1924-28 - Economic Developments Flashcards
Why did Passive resistance against the occupation of the Ruhr end?
Stresemann calculated that he had no choice as Germany’s economy was beginning to come to a halt and inflation was out of control. Therefore ending passive resistance meant the government stopped paying workers who refused to work for the French, which was a key first step to reducing government expenditure
What did ending passive resistance lead to?
The attempted beer hall putsch in Munich
What was the new currency in Germany called?
Rentenmark
How was the Rentenmark supported?
By a mortgage on all agricultural and industrial land until August 1924 when the old inflated marks were cashed in, the rentenmark became the Reichmark and was backed by the German gold reserve, which had to be maintained at 30% of the value of the reichmarks in circulation
Who controlled the issuing of the Rentenmark?
Hjamlar Shcacht
How did the Stresemann’s government balance the budget?
They cut expenditures and raised taxes for companies and people, the salaries of government employees were cut and 300000 civil servants lost their jobs
How did companies and individuals fair after changes were made to the budget and changing to the Reichmark
- well managed companies continued to prosper
- those who had lost savings in the collapse of the old currency did not gain anything from the new currency
- weaker companies reliant on credit crumbled
- the number of companies that went bankrupt rose to over 6000 in 1924.
Who was Charles Dawes and what did he do?
He was an American banker who acted as the chairman of the Allies Reparations committee and was in charge of getting Germany to pay their remaining reparations of £6.6mn from the war in a managable way
What did Dawes Plan recommend?
- the amount paid each year by Germany should be reduced until 1929 - they should restart reparations by paying 1000 million marks and this should be raised annually by 2500 million/year
- Germany should receive a large loan of 800 million marks from the USA to get the plan started and to allow for lots of investment into German Infrastructure
How did the Germans view the Dawes Plan?
Stresemann saw the plan as an ‘economic armistice’ but agreed to it as a way of securing foreign loans however the DNVP and Nazi movement attacked this plan and thought Germany should defy the unjust Versailles treaty and refuse to pay any reparations altogether
What benefits did the Plan create?
After it was accepted by the allies and Germany in July 1924, it meant the allies accepted Germany’s problems with the repayments, the loans granted meant new machinery, factories, houses, jobs could be provided and the French left the Ruhr in 1924-25 after it was clear Germany would pay reparations
What advances were made to the German economic recovery goals after the Dawes Plan?
There were advances in the chemical industry such as artificial fertilisers, the inflation rate was close to zero, loans helped to fund housing, schools, roads etc, homes were more affordable and more were built to deal with population growth e.g. in 1925, 178,930 dwellings were built and in 1926 there were to be 205,793 more new homes, health improvements from welfare investments
What were the limits to the economic recovery?
- By the end of 1925, unemployment reached 1mn and by march 1926 this had risen to over 3mn as more people needed to seek work due to population growth. Therefore, population growth also leg to an increase in housing shortages.
- Companies reduced workforces in order to save more - the mining companies reduced from 136,000 from 1922-25 by another 56,000 in 1925-29
- the mittelstand gained very little and middle-class managers, clerks and bureaucrats didn’t benefit as they were bankrupted by hyperinflation
- white collar workers didn’t get the same wage rises as the industrial sector and in April 1928, there were a total of 183,371 white collar workers seeking employment
How did hyperinflation cause issues to farmers?
- After 1923, the government made it easier for farmers to borrow money however this made matters worse - farmers became torn with debt at a time when prices were falling so they couldn’t keep up with the repayments
- there was a global grain surplus in 1926 and a price slump
- by the late 1920s, there was an increase in bankruptcies amongst farmers and most lost land
What was the problem with Compulsory arbitration?
In 1928, a dispute over wages in iron and steel in the Ruhr resulted in the arbitrator granting a small wage to increase to the workers. The employers refused to pay this and locked out the workers for 4 weeks
Why was the ‘young plan’ introduced?
The French would not agree to withdraw allied forces from the Rhineland until a final settlement of the reparations issue was agreed
What did the ‘young plan’ demand?
It obliged Germany to pay reparations until 1988 however they were only required to pay £1.8bn instead of £6.5bn, foreign control over reparations was ended and therefore Britain and France agreed to withdraw troops from the Rhineland by June 1930
What was the problem with the young plan?
There was a nationalist campaign against it and they drew up a draft of a new law which required the government to repudiate the war-guilt clause of the Versailles treaty. It was led by Alfred Hugenburg, the DNVP leader, including Hitler and the Nazis which said the ‘freedom law’ should go to a referendum. Despite being rejected in the referendum, 13.8% of the electorate voted for the law showing in-depth support for the right-wing
What was the ‘freedom law’?
It required the government to repudiate the war-guilt clause of the Treaty of Versailles, to demand immediate evacuation of occupied areas and declared that any minister who signed a treaty that involved acceptance of war guilt should be trialed for treason
What was the impact of gustav stresemann?
He was responsible for bringing hyperinflation under control through the appointment of schacht and cooperated with the allies over the Dawes plan
How much did real wages increase by in 1927 and 1928 and who did this mainly help?
They increased by 9% in 1927 and a further 12% in 1928 which especially helped German workers back by powerful trade unions
Why did farmers launch the ‘farmer riot’ in 1928?
In protest against foreclosures and low market prices which were so bad that by 1929, agricultural production was less than 3/4 of its pre war levels
What is a cartel?
How did the German industry develop?
It underwent extensive ‘rationalisation’ as new management and production techniques were introduced and new machinery was used. After Germany had to hand over most of their materials after the First World War as forms of reparations, it enabled a new start, and with the help of American finance the big industrialists began to buy out or make coorperative agreements with smaller firms to form cartels
