Economic Developments

Question 1

How did the government of the Kaiser Reich finance the war?

Answer 1

• decided against imposing new taxes or raising money by increasing taxation of the wealthy
• issues treasury bills and war loans

Question 2

How did the Kaiser Reich government ensure economic stability throughout the war?

Answer 2

government put more money into circulation abandoning the link between paper money and gold reserves

Question 3

How did the Kaiser Reich’s government when creating economic war plans effect the Weimar Republic?

Answer 3

• circulation of money increased from 2000 million in 1913 to 45,000 million by 1919
• National Debt (caused by treasury bills) grew from 5000 million to 144,000 million

Question 4

What did defeat in war mean for Germany’s economy?

Answer 4

• ended hopes of repaying its debts from annexations and reparations
• treaty of Versailles harsh terms = plundered industry and resources which largely impacted the economy

Question 5

Why did the Weimar Republic not want to use devaluation?

Answer 5

fear of political repercussions

Question 6

Why did Germany desperately need a thriving economy?

Answer 6

• to rebuild industry
• re-start trade
• maintain pay for civil servants
• meet the post-war demands for pension and welfare benefits
• pay compensation to those who lost land under ToV

Question 7

Why was allowing post-war inflation deemed wise?

Answer 7

stimulated economic activity and unemployment rates were relatively low - encouraging investment

Question 8

How did elites benefit from post-war inflation?

Answer 8

by taking short term loans from Germany’s central bank to expand their businesses & they could repay with the inflated currency

Question 9

What were some of the hopes/ social expectations that came with inflation?

Answer 9

• hope that the Allies would deem the ToV fine too harsh and lessen it
• fuelled right wing avoidance of paying taxes as a patriotic show of rejection for the ToV

Question 10

How much was the Treaty of Versailles reparations fine?

Answer 10

£6.6 billion

Question 11

When was the first instalment of the reparations paid by Germany?

Answer 11

1921

Question 12

What happened to the reparations payments by 1923?

Answer 12

Germany fell behind and missed a payment - this caused the French invasion of the Ruhr - after an extension request in 1922

Question 13

Why did France invade the Ruhr?

Answer 13

they were very sceptical of Germany’s financial problems due to the recent treat of Rapallo = economic cooperation with USSR

Question 14

How did the Chancellor of Germany respond to the French invasion of the Ruhr in regards to reparations?

Answer 14

Chancellor Cuno stopped all reparations payments and ordered a passive resistance policy in the Ruhr

Question 15

How did the Ruhr occupation worsen Germany’s economy?

Answer 15

• paying strike wages was a drain on gov money
• tax revenue lost from those whose businesses ceased and from workers’ who became unemployed
• Germany had to import coal that would usually come from the Ruhr
• Shortages of goods pushed inflation
• The value of the Mark collapsed

Question 16

What could the inflation be referred to as due to its severity?

Answer 16

Hyperinflation

Question 17

What was the consequence of hyperinflation?

Answer 17

• money became worthless
• workers had to be paid daily or multiple times a day due to constant increasing prices
• paper currency spent as fast as possible in order to avoid another surge
• food shortages

Question 18

Who negotiated the Dawes and Young Plans?

Answer 18

Stresemann

Question 19

Who was a key figure in the introduction of the new currency and dealing with inflation?

Answer 19

Hjalmar Schacht

Question 20

What was the new currency introduced in 1923?

Answer 20

Rentenmark

Question 21

What was different about the Rentenmark compared to the previous Mark?

Answer 21

backed by land and industrial resources rather than gold and its supply was strictly limited

Question 22

How were the government taking precautions against hyperinflation happening again?

Answer 22

• stopped offering credit to industry
• lending rates were controlled
• new taxes on individuals and companies
• reducing spending power

Question 23

How did Stresemann and Schacht’s policies help the economy?

Answer 23

• rapid growth in 1924 and 1925
• number of companies going bankrupt increased - faith in the Reichsbank returned
• inflation ceased to be a problem

Question 24

What event caused the formation of the Dawes Plan?

Answer 24

Stresemann requested the Allies to address repayment concerns through the Allies Reparations Committee

Question 25

What Plan was set up in 1924?

Answer 25

Dawes Plan

Question 26

What are the key aspects of the Dawes Plan?

Answer 26

- reparations £6.6 billion remained BUT amount to be payed each year reduced - immediate payment of 100 million Marks - large loan of 800 million marks from USA - sanctions for missed payments must be discussed before action

Question 27

What were the benefits of the Dawes Plan?

Answer 27

- acceptance of concerns from Allies - evacuation of French from the Ruhr - financial optimism

Question 28

What Plan was negotiated in 1929?

Answer 28

Young Plan (Dawes Plan 2.0 - renegotiated)

Question 29

What were the terms of the Young Plan?

Answer 29

- reduced the total reparations bill by 75% - reduced the annual payments by expanding the period of payments to 59 years - ended Allied supervision of German banking - provided determent of payments during economic crisis

Question 30

What are some key industrial developments?

Answer 30

- introduction of new technology - recovery of the heavy industry - advancements in the chemical industry (often the result of wartime research) - expansion of car, aeroplane, and electrical industry

Question 31

How was agriculture effected by the war?

Answer 31

suffered greatly due to the loss of 'unprotected rural labour' - fields left to women and old men due to conscription

Question 32

What was the most famous agriculture fail due to war?

Answer 32

turnip winter of 1916 - population reduced to living on traditional animal fodder - followed by a horrible harvest

Question 33

How was post-war agriculture different from the recovering indsutry?

Answer 33

it did not make the same resurgence - faced problems such as foreign imports and low prices caused by worldwide over-production

Question 34

What was the Law passed in 1919 in regards to agriculture space?

Answer 34

Reich Resettlement Law = provision for large estates to be redistributed among smaller farmers

Question 35

How did many farmers struggle economically?

Answer 35

By 1927-28 farmers were getting little if any return on the cost of running their farms, and yet they faced high tax demands and substantial rents or interest payments on mortgages

Question 36

What were the overall economic weaknesses by 1929?

Answer 36

- relied extensively on foreign credit (Dawes and Young Plan = US loans) - economic improvements were not universal (agriculture)