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Germany And West Germany 1918 - 89 > Economic Development And Policies Weimar > Flashcards

Economic Development And Policies Weimar Flashcards

1
Q

Why were there severe shortages during WW1?

A
  • Hard to farm productively as all horses had been requisitioned for frontline
  • Food produced went to frontline
  • Allied blockades of ports stopped food from getting to frontline
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2
Q

What was common as a result of food shortages, what was this and how common was meat?

A
  • K-brot bread
  • Made from potatoes, oats + sometimes straw
  • Meat was possible only once a week
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3
Q

Give stats to show poor living standards in GER (malnutrition + infant mortality)

A
  • High infant mortality rates
  • In one district of Berlin, 90% of all children between 2 and 6 yrs were undernourished
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4
Q

In terms of social welfare, how did the gov try to deal with it and show how successful they were in doing this?

A
  • Retraining schemes set up for those who had fought in war
  • Loans to help those leaving army until they could find work
  • May 1920 –> Reich Pension Law: pension payments set up for wounded, widows + orphans
  • Number of people they were helping dropped between 1920 + 24, but they continued supporting 768,000 disabled veterans 420,000 war widows with children and 190,000 parents of dead soldiers
  • 10% of pop receiving federal welfare payments
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5
Q

However what economic problem meant that the standard of living only continued dropping and what were the consequences of this on different groups of people?

A
  • Inflation
  • Unemployment rose so people had to do badly paid jobs w/ long hrs
  • Women especially single parents had to do home-based work not judged on hours but by the’piece’ usually by working all day + night
  • By 1924, 8hr working day disappeared as workers could not afford to press it
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6
Q

What conditions did most families live in and what about the poorest?

A
  • Cramped housing w/ shared toilets + washing facilities
  • 1 room + no running water
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7
Q

In Berlin in 1925 how many people were lodgers and how many paid to sleep in a bed? What happened to children?

A
  • 130,500 lodgers
  • 44,600 to sleep in a bed
  • Children often expected to give bed to lodger
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8
Q

What did skilled workers and low-level clerical workers have to do, how did numbers of clerical workers, specifically male clerical workers change and why?

A
  • Spend all savings + claim benefit
  • Number of clerical workers expanded rapidly
  • Employers preferred female clerical workers as they could be paid less than men
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9
Q

Who were the only groups of people who did not suffer from hyperinflation and why?

A
  • Black marketers –> Bought property w/ few amenities + crammed tenants
  • Industrialists –> bought small businesses + exploited workers fearing the loss of their jobs
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10
Q

By Feb 1919 what percentage of workforce was unemployed and what is one of the reasons for this?

A
  • By Feb 1919 –> 7% unemployed
  • 6 mil soldiers left army
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11
Q

Between the second half of 1919 and 1922, what percentage had unemployment dropped by and what were two reasons for this?

A
  • Dropped by around 50%
  • Wage were very low in 1919 (half of what it had been in 1913) so employers could afford to take on large numbers of workers
  • Need for workers to transition industry from war to consumer production
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12
Q

What law was created in Feb 1922, what did it do and how did this aid employment levels?

A
  • Labour Exchange Law
  • Set up gov offices
  • Provided training + helped find work for unemployed
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13
Q

What laws were created in Feb 1924 to aid benefits?

A
  • Economic Enabling Law –> restructured unemployment benefits + set rates for employers’ contributions
  • Reich Social Welfare Law –> set up municipal welfare offices to administer all of different post-war benefits
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14
Q

What law was introduced in 1927 about unemployment insurance and what did it say?

A
  • Unemployment Insurance Law
  • Unemployment insurance to be beneficial to everyone out of work, not just those who are sick
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15
Q

What caused the runaway inflation of 1921 and as a result what agreement was made for a reduction in reparations?

A
  • Gov started to print money to buy foreign currency in order to pay reparations
  • Early 1922 –> Payment of 720 mil gold marks + 1450 mil gold marks in kind
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16
Q

Soon after this, why did Germany restart negotiations and how did this backfire on them?

A
  • They wanted to avoid introducing measures like increases in rail fares to raise tax so they restarted negotiation aiming to gain a ‘payment holiday’
  • This backfired as international investors lost faith in GER economy as a result of this request, which led to fall in value of mark
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17
Q

What did the Reparations Commission announce in December and how did this worsen Germany’s economy?

A
  • Announced Germany was in default, as it failed to make its payment
  • Confidence in economy dropped, causing greater inflation
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18
Q

What caused the French occupation of the Ruhr?

A
  • 132 billion marks needed to be paid off in equal instalments every year until 1987
  • In 1921, London Ultimatum of the Allies had decided the Ruhr would be taken over if payments were not met
  • In Jan 1923, they failed to pay full reparations
  • French invaded Ruhr Valley w/help of Belgian troops (60,000), as they believed Germany was bluffing and they could take coal produced instead (sent over mining engineers)
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19
Q

How did Germany respond to the invasion and how did France respond to this?

A
  • They stopped all reparations to France but continued w/ other Allies
  • French cut off Ruhr from rest of Germany w/ border patrolled by armed forces
  • Took control of postal + telegraph services
  • Used force
  • Brought in their own workers
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20
Q

What was the government telling the Ruhr workers and what did this result in?

A
  • They were told not to work for the French and put up ‘passive resistance’ eg. Working slowly, sabotage
  • When workers in Krupp steelworks did not take orders, French opened fire, killed 13 and wounded many more
  • In total, they killed 132 and expelled 150K from the Ruhr
  • 26 Sep 1923 –> Stopped passive resistance
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21
Q

Why was the Ruhr takeover such an issue?

A
  • Richest industrial area was no longer producing goods
  • Gov had to feed and house those who were expelled because of the ‘passive resistance’ they promoted
  • Had to pay striking workers (more inflation)
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22
Q

How did gov attempt to solve the weakened economy and what implications did this have?

A
  • Printing more banknotes
    Hyperinflation
  • Prices rose several times in a day
  • Workers paid twice in a day
  • Newspaper costing 1 mark in 1922 cost 100,000 marks in Sep 1923 and 700 bil marks by 17 Nov 1923
  • People became more reliant on bartering + black market (though eventually the supply wasn’t high enough for everyone so prices rose so high that only the rich could afford the black market)
  • Towns, regions and businesses issued their own Notgeld (emergency money)
  • Gov cut back on staff –> 750,000 federal + regional employees lost their jobs
  • All those on fixed payments suffered causing starvation eg. Pensioners
  • Well-off suffered as much as poor –> Head of von Lingans fam had to close the house and move to Berlin to work in offices of a factory
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23
Q

Between 1922 and 1923, what did the max mark note change to?

A
  • Jan 1922 –> 10,000 marks
  • Jan 1923 –> 100,000
  • Jul 1923 –> 20 mil
  • Nov 1923 –> 1 trillion
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24
Q

By 1918 how much did Germany owe and how was this related to the original figure they owed in 1914? (exclusive of Treaty of Versailles)
During this period how did price levels change?

A
  • Owed 150 billion marks
  • 3 times the amount in 1914
  • Prices rose by 200% from 1914 to 18
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25
Q

As money became worthless what did farmers refuse to do and what was the impact of this?

A
  • Refused to sell their products
  • Huge stocks and milk and meat built up
  • People in cities went hungry
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26
Q

What happened to the value of debts and savings and what was the impact of this?

A
  • Savings and debts became worthless
  • This meant the middle class (no savings) and the working class (no more debt) were practically equivalent now –> wealth gap gone
  • Middle class blamed democracy for their poverty
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27
Q

With what policy did Stresemann plan to end occupation of the Ruhr and what was this?

A
  • Fulfilment
  • End French occupation by meeting their terms
  • Use international sympathy that resulted from occupation to negotiate better deal
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28
Q

In what ways did Stresemann help end hyperinflation?

A
  • Initiated deep spending cuts to stop flooding economy w/ money –> included reducing pay of civil servants sometimes by more than 50%
  • Slashed benefits
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29
Q

How did Stresemann make money work and what was the reaction to the policies?

A
  • 15 Oct 1923 –> Rentenmark replaced the mark (same value as 1913 mark) temporarily, overseen by Hjalmar Schacht (president of Reichsbank in Dec) + amount of money that can be printed is limited
  • Mortgaged industrial + agricultural land to value of exactly 3.2 bil Rentenmark to keep currency stable
  • 17 Nov 1923 –> All forms of Notgeld banned after 22 Nov, which stabilised prices when they were exchanged for Rentenmark
  • People still objected to this as the Rentenmark still had such low value against one gold mark
  • 30 Aug 1924 –> Schacht also oversaw the change to Reichsmark
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30
Q

What stance did Stresemann take politically and what did he believe about war and the German economy?

A
  • Conservative nationalist
  • Supported war effort + devastated by loss
  • Put faith on global economics
  • Believed USA + GBR would be 2 dominant global powers, with GER as 3rd due to sophisticated economy
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31
Q

How did Stresemann plan to undermine the Treaty of Versailles and in what policy was this beginning to be seen?

A
  • Encourage US investment in German economy
  • This means US would be more willing to protect Germany’s economic growth
  • Therefore, US may stand between large reparation payments if it may cripple the German economy
  • Dawes Plan
32
Q

When was Dawes Plan launched and what was it?

A
  • 1 Sep 1924
  • Sum of 132 mil marks as confirmed in 1921
  • Annual payments would lower from 1000 mil to 2.5 mil across 5 yrs (until 1929) then varying levels
  • Sanctions for non-payments decided by Allies
  • 800 mil mark loan provided mainly by US business leaders to stabilise currency
  • US had right to allow GER a payment holiday –> reflected US’ desire to protect its own 800 mil mark loan
  • Allies maintained control of railways, Reichbank + customs
33
Q

What system did the Dawes Plan initiate?

A

A system whereby US loaned money to GER, who used this money to repay loans back to GBR + FRA, who also used this to return the money they had borrow ed back to US

34
Q

Between 1924 and 1928 how many marks did Germany receive in loans, how did they utilise this and give stats to show its impact

A
  • 16000 mil marks
  • 7 mil to FRA + GBR
  • Rest used on industrial development
  • Industrial production doubled between 1923 and 1928
  • Wages rose every year during this period
35
Q

Economically what were the late 20s like for GER?

A
  • By 1928, GDP had returned to 1913 levels
  • Gov tax revenues increased
  • Gov spending on public works schemes, urban housing, public swimming pools + opera houses
  • Increase in wages + welfare payments
36
Q

As a result of US’ increasing investment in GER, what did they do in 1928 and what did this lead to?

A
  • Benjamin Strong, chairman of US Federal Reserve demanded renegotiations of reparations
  • Young Plan
37
Q

Even though the economy grew in this period, what underlying problems were there? (LCABFJR)

A
  • Labour relations became extremely strained –> businesses trying to keep wages down, workers demanding pay rises
  • Cost of living increased
  • By 1928 Big firms resisting gov intervention after compulsory arbitration law in 1924 eg. Ruhr industrialists sacked 220,000 workers instead of accepting gov’s ruling on wages
  • Negative balance of trade for every year but 1926 as they struggled importing due to tariffs in USA, Britain tending to trade w/ empire + reparations and debt repayments
  • Farm production stagnated due to failure to modernise + loss of farming land in 1919 (cereal production down to below 20 mil tonnes every year except 1928 compared to 30 mil in 1913)
  • Not enough jobs –> increase from 1.2 in 1928 to 1.9 mil unemployed in 1929 (before Wall Street Crash)
  • Germany relied entirely on US money. If their money was withdrawn economy would crash
38
Q

When were negotiations for Young Plan , from when was it effective and what was it?

A
  • 1929 but effective from Jan 1930
  • Sum reduced to 37 mil marks
  • Annual payments across 58 yrs
  • Allied supervision discontinued
39
Q

By 1930 how much was received as a loan from USA and how much was actually paid in the end?

A
  • Loans received from USA –> between 1924 and 1930, $1500 mil given
  • In the end only 1/8 of the og sum was paid
40
Q

When and why were payments suspended for a year?

A
  • 1931 due to a general moratorium on debts
41
Q

When and what was the Lausanne Conference?

A
  • 1932
  • Final payment of 3,000 mil marks in 1935 decided
  • In the end it was never paid off
42
Q

What happened to small businesses and the number of bankruptcies in the early 1920s?

A
  • Small businesses collapsed
  • In 1924, more bankruptcies then previous 5 yrs altogether
43
Q

How did big businesses help the economy and give one example of the biggest of these

A
  • They formed cartels, whose fixed prices helped to stabilise the economy
  • IG Faben set up in 1925 which united various chemical-based cartels
  • Rebuilt with ‘time and motion’ thinking and mass production assembly lines
  • 1/3 more production by 1925 compared to 1913, which became 2/3 more by 1930
44
Q

What was one issue despite the recovery of business?

A

Strikes and lockouts were common even after state arbitration

45
Q

Why was it difficult for Germany to establish trade links?

A
  • Shift in trade worldwide after US policy of isolationism (remaining apart from interests of other groups) leading many countries to introduce tariffs on foreign goods
  • Germany suffered heavier tariffs because of the war
46
Q

What allowed Germany’s economy to return to normal and give an example showing this

A
  • Other countries needed the steel and chemicals Germany was producing
  • Admission to League of Nations
  • Stresemann’s foreign policies
  • German exports returned to 10 billion marks (1913 levels) and by 1929, they were 34% higher than this
47
Q

How was agriculture affected by the crisis?

A
  • Like businesses, big farms managed better whereas small farms were heavily indebted
  • Big landowners like President Hindenburg had political influence allowing them to stop farming reforms they didn’t like such as 1918 Reich Settlement Law (landowners should sell gov land to be redistributed among the poor)
  • Allowed them to press for high grain subsidies benefitting them
48
Q

How was economic recovery flawed? (SBTGI)

A
  • Gov spent heavily eg. subsidies on industry + grain production, spending on social welfare
  • This was funded by a lot of borrowing and taxation
  • However, taxation was much lower due to lower incomes so gov had to borrow more money to make up for this
  • Kept afloat by gov support eg. gov bank to provide federal + regional funding for as long as they could afford it
  • Industrial expansion and production damaged by constant disputes between business and workers
49
Q

Summarise the events of Wall Street Crash in USA:

A

1) Ordinary people are investing in stocks due to booming economy in America
2) Economy is increasing at such unsustainably high rate that stock market cannot keep up
3) Investment continues regardless of slowing production + increasing interest rates as stock market still increasing
4) Black Thursday (24th Oct 1929) –> People are selling shares at uncontrollable levels
5) Black Tuesday (29th Oct) –> $14 billion dollars of shares sold
6) Banks shut down, people’s items could be taken away due to high interest rates + stocks are worthless

50
Q

Why did the Wall Street Crash have such an huge impact on GER?

A
  • USA was no longer willing to bankroll GER
  • US banks + businesses began to demand the repayment of GER’s loans
51
Q

What was the impact of Wall Street Crash in GER?

A
  • Industrial production fell (1932 –> half of 1928 levels)
  • Unemployment rose from 1.9 mil in 1929 to the worst of 6.1 mil in Jan 1932
  • Wages fell by 20-30%
  • Price also fell
52
Q

What was the impact of unemployment on the public?

A
  • Loss of status
  • Sold possessions
  • Sharp fall in average income
  • Children scavenging for food + joining gangs
  • Found charity from churches
  • Homeless squatted in disused office buildings
  • Rise in male + female sex work
53
Q

What was the impact of no more US loans on industry?

A

In period 1929 to 1932:
- Industrial production dropped by 40%
- Similarly, trade fell by 55%
- Bankruptcies
- 50,000 firms closed
- 5 major banks closed

54
Q

What was the impact on agriculture?

A
  • Could not compete w/ much more efficient farms
  • Little chance of exporting food
  • Decline in domestic demand for food
  • Price of food dropped by 45%
55
Q

What was the issue with the welfare system during this period?

A
  • Based on an economy w/ high levels of growth
  • Only covered around 800,000 unemployed workers for a few months
  • As business profits + avg earnings fell, gov had less money to pay welfare bills
56
Q

Why did gov fail to cope with the Depression?

A
  • Could not make decisions/act quickly
  • President Hindenburg was more resistant to using emergency decree
57
Q

How did Hitler explain this failure and what did he believe had to be done? Why did this now appear more attractive to the public?

A
  • Imbalance of international power as GER could not trade its way out unlike USA + GBR
  • Rearm + take land in east by force
58
Q

What change did the depression cause to communist activity and how did this benefit the Nazi Party?

A
  • Communist activity levels rose
  • Communist Party organised rent strikes in poor areas where workers could not afford to pay landlords
  • Organised Red Front (paramilitary grp) defending whole sections of cities against police who wanted to evict workers/seize property
  • Middle class felt threatened and Nazi Party’s SA were the only ones who could stand up to Red Front
59
Q

From beginning of 1930 to 1932, by what percentage were civil servants’ and gov employees’ wages cut by?

A

About 20%

60
Q

What changes did Chancellor Bruning suggest, who rejected these and how were they put in place anyway?

A
  • Cuts in gov spending + wages
  • Higher taxes
  • Reichstag
  • Jul 1930 –> Hindenburg agreed with the policies so went back to gov by decree
61
Q

Why was devaluation of the currency avoided?

A
  • It may bring about inflation
  • This was feared after hyperinflation of 1923
62
Q

What kind of policies did Bruning adopt, what is this, why was it done, how and what were the problems with this approach?

A
  • Protectionist policies
  • Restricting imports from other countries
  • Protect national economy
  • By imposing taxes/restrictions on number of on imported goods
  • Countries may do the same thing on your exports
  • Puts up costs of goods which is unpopular w/ consumers
63
Q

What was the impact of Bruning’s policies on the economy and what was one benefit of it?

A
  • Brought about deflation
  • Huge increase in poverty
  • Made it clear to other countries that GER would not be able to meet reparations/repay loans
64
Q

As a result what agreement was made, when and what did it say?

A
  • 1 Jul 1931 –> Hoover Moratorium Agreement
  • Suspension of need for GER to pay back loans/interest on them for 1 yr
65
Q

Even after the moratorium, why did Bruning refuse to increase welfare spending and as a result, what did he further do?

A
  • He did not just want the suspension of reparations but its cancellation
  • Wanted to use crisis to abolish welfare state + destroy GER’s TUs
  • Imposed greater budget cuts
  • Passed decree lowering wages to 1927 levels
66
Q

Despite this what public works scheme did he initiate, when and what did he do in 1932?

A
  • 1931 –> Public works scheme focusing on road + canal construction
  • 1932 –> Expanded
67
Q

What different plans were suggested to lessen the recession, what did Bruning go for and how did this impact the recession?

A
  • Dec 1931 –> Leading German trade unionists suggested plan for job creation
  • Others suggested devaluing the mark
  • Bruning went for another emergency decree including wage + rent cuts, tax rises and no reparations to be paid in next yr
  • Only deepened the recession –> industrial production, prices + exports fell all by around 50% and unemployment rose to highest level ever in 1932
68
Q

Who was Bruning replaced by, when, what did this man introduce but why was it still hard to produce a coherent policy?

A
  • von Papen
  • Tax concessions + subsidies for new businesses to create new jobs
  • Gov was now caught up in political issues
69
Q

How did von Papen expand the initiative and when did he do this?

A
  • Increased budget from RM167 mil to RM302 mil
  • Sep 1932
70
Q

When did the chancellor change again, who was this, what did he do and what could he not do?

A
  • Dec 1932
  • von Schleicher
  • Appointed a Reich Commissioner to draw up a list of public works to be financed by gov in order to create jobs w/ budget of RM500 mil
  • Did not manage to put these in place before Nazis came to power
71
Q

Who was popular/unpopular because of the struggling economy and what did this lead to?

A
  • Hindenburg stayed popular
  • Chancellors + ministers held responsible for economy
  • Rise in popularity of extremist parties
72
Q

In what way did workers do well during the Weimar Republic?

A
  • Even in 1932, weekly wages around 30% higher than 1924 levels
  • Welfare spending 60% higher in 1929 than 1913
  • Position improved due to increased influence of SPD + TUs
73
Q

Give stats to show how the middle suffered during Weimar Republic

A
  • Middle class standard of living 25% lower than 1913 levels
  • Income of established members of middle class dropped by 60%
74
Q

In what ways were German farmers badly affected during the Weimar Republic?

A
  • Loss of farming land imposed by Treaty of Versailles
  • Tight regulations by gov capping prices that can be charged, limiting profits
75
Q

In what ways did the economic crisis aid farmers?

A
  • Inflation of early 1920s helped them pay of their debts
  • Food produced by farmers became very valuable during economic crisis
76
Q

From 1924 what happened to the value of produce of farmers and why?

A
  • Value lowered
  • Cheap imports of food
  • Mass unemployment meant Germans cut back on food purchases

Germany And West Germany 1918 - 89 (11 decks)

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