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

£6.6 billion

Question 3

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

Answer 3

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 4

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

Answer 4

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

Question 5

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

Answer 5

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 6

Who suffered from hyperinflation?

Answer 6

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

Question 7

Who benefitted from hyperinflation?

Answer 7

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 8

What were the social impacts of hyperinflation?

Answer 8

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 9

What were the political impacts of hyperinflation?

Answer 9

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 10

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

Answer 10

• 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 11

Were Stresemann’s policies successful?

Answer 11

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 12

How did Stresemann hope to undermine the Treaty of Versailles?

Answer 12

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 13

What were the terms of the Dawes Plan?

Answer 13

• 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 14

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

Answer 14

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 15

Why did industrial production double between 1923 and 1928?

Answer 15

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 16

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 16

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

Question 17

What was the problem with the Dawes Plan?

Answer 17

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 18

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

Answer 18

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 19

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

Answer 19

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 20

How did farmers’ living standards change in Weimar Germany?

Answer 20

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 21

How did the middle class’ living standards change?

Answer 21

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

Question 22

How did housing and health change?

Answer 22

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 23

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

Answer 23

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 24

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

Answer 24

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 25

Give an example as to the scale of hyperinflation.

Answer 25

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 26

What were the short term causes of the Great Depression?

Answer 26

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 27

What were the long term causes of the Great Depression?

Answer 27

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 28

What were the economic impacts of the Great Depression?

Answer 28

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 29

What were the social impacts of the Great Depression?

Answer 29

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 30

What were the political impacts of the Great Depression?

Answer 30

Extremist parties like the Nazis received a breakthrough 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 31

Why were the public works schemes unsucessful in saving Weimar?

Answer 31

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.