Theme 3- Reacting to Economic Challenges 1918-1933

Question 1

Why was war debt a problem after the war?

Answer 1

The government had borrowed vast amount of money during the war- 150 billion because Germany assumed they would win the war and pay back the loans using reparations from Britain, France and Russia.

Question 2

What did the Inter-Allied Reparations Commission of 1921 set reparations at?

Answer 2

132 billion gold marks.

Question 3

Why did Germany suffer from a loss of income after the war?

Answer 3

They lost the Saar and Alsace-Lorraine which were rich in raw materials. Germany lost almost half of its iron ore deposits and coal production fell by 15%. International trade was also decreased after the war as many countries had vast war debts.

Question 4

How high was unemployment after the war?

Answer 4

In February 1919, there were 1.1 million unemployed people. This dropped by 50% by the second half of 1919 and was only 12,000 in 1922. However this was because wages fell so employers could afford to take on a large number of workers.

Question 5

How did Germany initially try to pay reparations and what were the effects of these strategies?

Answer 5

It started to print money to buy foreign currency to pay the reparations but this led to inflation so instead they tried to take a payment holiday from reparations. However this suggested that the German economy was too weak to repay its debts so major banks reduced investment in Germany causing the currency to devalue and inflation increased.

Question 6

What did France and Belgium do when Germany failed to make reparations payments?

Answer 6

They sent 60,000 troops to the Ruhr to seize the coal produced in the region.

Question 7

What was passive resistance and how did it contribute to hyperinflation?

Answer 7

German workers went on strike in the Ruhr to try and end the French and Belgian occupation. However, the government had to pay striking workers and they had to print even more money to do this leading to hyperinflation.

Question 8

Who suffered from hyperinflation?

Answer 8

The middle class lost all their savings as the currency became almost worthless and people on fixed incomes like pensioners suffered too.

Question 9

Who benefitted from hyperinflation?

Answer 9

Those with mortgages or other debt could repay them cheaply with inflated currency. Those with foreign currency (which retained its value) went on buying sprees, buying up factories, mines etc very cheaply.

Question 10

What were the social impacts of hyperinflation?

Answer 10

There was a lot of resentment between industrialists and workers as well as between city-dwellers and country people who blamed each other for their problems. Health conditions also worsened such as increased infant mortality and communicable diseases like tuberculosis spread more easily.

Question 11

What were the political impacts of hyperinflation?

Answer 11

People who lost all their savings and became impoverished became alienated from the republic and were more inclined to listen to political radicals in the late 1920s.

Question 12

What were Stresemann’s policies to end the hyperinflationary crisis?

Answer 12

• Fulfilment of the Allied demands for reparations.
• Deep cuts in public spending including slashing benefits and reducing the pay of civil servants by more than 50%.
• Introducing a new currency- the Rentenmark (temporary) and then the permanent Reichsmark.

Question 13

Were Stresemann’s policies successful?

Answer 13

Yes. The French occupation of the Ruhr ended in 1925, government spending reduced significantly and the value of the new currency was tightly controlled and remained stable, while the old mark was phased out.

Question 14

Were Stresemann’s policies popular?

Answer 14

No. He was only Chancellor for a few months because of how unpopular his policies were. He was criticised for cutting benefits for the poor and unemployed and the right-wing critics regarded fulfilment as a betrayal of Germany.

Question 15

How did Stresemann hope to undermine the Treaty of Versailles?

Answer 15

By encouraging US investment in Germany. They would then want to protect Germany’s economic growth, both to protect their investment and so Germany could become a major market for their goods. The USA would then oppose French demands for large reparations payments.

Question 16

What were the terms of the Dawes Plan?

Answer 16

• Germany received a loan of 800 million gold marks provided mainly by US business leaders.
• If paying reparations disrupted German economic stability, the USA had the right to allow Germany to take a payment holiday.
• The annual repayment amount would be reduced by 1929.
• Reparations would be over a longer period of time.

Question 17

How did the Dawes Plan solve Germany’s immediate reparation problems?

Answer 17

It established a system where Germany used US loans to pay France and Britain who then paid the USA the money they had borrowed from them for WW1.

Question 18

Why did industrial production double between 1923 and 1928?

Answer 18

Between 1924 and 1928, Germany received 16,000 million marks in US loans but only paid 7,000 million marks to Britain and France. The government invested the rest in industrial development.

Question 19

What else did the government invest in after the German GDP recovered to its 1913 level and tax revenues increased (as a result of the Dawes Plan)?

Answer 19

Public works schemes, urban housing, sports arenas, public swimming pools, opera houses etc.

Question 20

What was the problem with the Dawes Plan?

Answer 20

It meant that German economic success was very dependent on US loans. This mean the economic recovery was insecure as it wasn’t self-sustaining. If US money was withdrawn, the German economy would collapse and many German nationalists really opposed this dependence on the USA.

Question 21

How did women’s living standards change in Weimar Germany?

Answer 21

The increase of retailing and service jobs led to more opportunities for women in white collar roles. Throughout the 1920s, the number of women in the workforce expanded and single women could go further in education and professions than ever before. However, they often worked at low paid piece work and were most likely to be fired in hard times.

Question 22

How did the working class’ living standards change in Weimar Germany?

Answer 22

Workers earnings increased significantly from 1924 to 1929. Even in 1932, weekly wages were 30% higher than they had been in 1924. Welfare spending was 60% higher in 1929 than it had been in 1913. Legal changes imposed a maximum 8 hour working day which gave them more time for leisure.

Question 23

How did farmers’ living standards change in Weimar Germany?

Answer 23

Farmers suffered a severe fall in income from 1926 onwards and the price of agricultural products fell by 25% between 1927 and 1930. However, during the hyperinflation crisis they had easier access to food.

Question 24

How did the middle class’ living standards change?

Answer 24

They lost status and savings from war bonds, hyperinflation and collapse of banks during the Great Depression.

Question 25

How did housing and health change?

Answer 25

2.8 million new homes were built 1919-32 with 80% being state funded (at least partially). There were a shortage of houses in the early years- estimated 1 million more homes needed in 1923. Up until 1929, life expectancy increased but the effects of WW1 were serious in the early years (malnutrition, disease etc).

Question 26

In what ways did living standards affect the stability of the Weimar Republic?

Answer 26

Improved living standards of the working class would make them more likely to support the pro-Weimar SPD than the KPD. But the decrease in living standards of the middle class and farmers could lead to increased opposition if they turned to extreme right parties. But the economic stability of the Golden Years generally led to political stability.

Question 27

How did geography affect economic success for different people in the Golden Years?

Answer 27

Workers in cities benefitted a lot more than workers in the Ruhr where 16% of coalfields had been lost so they would suffer from declining production and unemployment. Workers in rural areas also suffered from agricultural crises where the price of food dropped substantially which meant their incomes fell. Workers in cities however were enjoying a pay rise of 37.5% between 1924-29.

Question 28

How did class affect economic success for different people in the Golden Years?

Answer 28

The working class benefitted more than the middle class. There was increased taxation for public works schemes between 1925 and 1929 but the majority of workers were in the lowest tax band (62% were in this band) so this disproportionately hit the middle class. White collar workers also didn’t benefit from the same pay rises as blue collar workers and they suffered from higher unemployment.

Question 29

How was industrial production affected in the Golden Years?

Answer 29

By 1928, German GDP had reached its 1913 value. By 1928, coal and steel production had reached the same level as 1913. By 1929, exports were 34% higher than in 1913. The chemical industry produced 1/3 more in 1925 than in 1913. The government was able to invest some of the US loans in indutrial development as only 7000 million marks out of 16,000 million marks in loans was paid in reparations to Britain and France.

Question 30

How many marks were in cirulation in 1923?

Answer 30

17,393,000 marks.

Question 31

Give an example as to the scale of hyperinflation.

Answer 31

In May 1922 a newspaper costs 1 mark. That newspaper costs 100,000 marks by September 1923 and then 700 billion marks by November 1923.

Question 32

What were the short term causes of the Great Depression?

Answer 32

The American stock market collapsed in 1929 which promted many US investors to withdraw their loans from Germany. The withdrawal of US loans caused several German banks to collapse- 5 major banks collapsed in 1931 meaning 50,000 businesses went bankrupt. Brüning’s attempt to deal with the Depression was to cut wages and raise taxes but these failed to boost the economy.

Question 33

What were the long term causes of the Great Depression?

Answer 33

Many German businesses didn’t want to invest in the German economy because of hyperinflation, forcing the government to rely on loans and deficit spending. Economic recovery in the 1920s was primarily based on US loans. The government had spent heavily throughout the 1920s to subsidise the economy and avoid tax rises. Disputes between employers and workers were increasing by 1928.

Question 34

What were the economic impacts of the Great Depression?

Answer 34

By 1932, unemployment was at 29.9% and exports had fallen by 50%. Wages fell by 14% and the price of goods fell by 50% by 1932. Industrial production also halved.

Question 35

What were the social impacts of the Great Depression?

Answer 35

Homelessness was high and the Berlin to Hamburg highway was filled with homeless, unemployed people moving to either city to find work. High unemployment and many familes suffered from chronic poverty. Both employed and unemployed people struggled to have enough money for food and other necessities.

Question 36

What were the political impacts of the Great Depression?

Answer 36

Extremist parties like the Nazis recieved a breaththrough in the vote in 1930 while right wing moderate parties lost a lot of support. The KPD also increased their percentage of the vote. However, the SPD was still the most popular party in the 1930 election and the ZP even gained support.

Question 37

What were Brüning’s aims and policies to deal with the Great Depression?

Answer 37

He wanted to allow the crisis to worsen to justify the complete cancellation of reparations. After the Hoover Moratorium of June 1931 suspended payments, Brüning didn’t increase public spending and he even imposed greater budget cuts and lowered wages to 1922 levels. This led to the Lausanne Conference which effectively abolished reparations but allowed the Nazis to gain a lot of support as the crisis was worsening.

Question 38

What public works schemes were introduced by Brüning, von Papen and von Schleicher?

Answer 38

Brüning initiated a public works scheme in 1931 focusing on road and canal construction. This was expanded by von Papen who increased the budget from RM167 million to RM302 million. He also gave tax cuts to firms who employed more workers. Von Schleicher established a RM500 million emergency fund to employ people to carry out repair work, road and canal maintenance and land improvement schemes.

Question 39

Why were the public works schemes unsucessful in saving Weimar?

Answer 39

The drop in unemployment was too little too late to restore faith in the system. The Nazis expanded these programmes further and took credit for their success in the first years of their government.