Economy, 1918-33

Question 1

Weimar

What happened to the economy in 1918-23?

Answer 1

Period of rising inflation, worsened by the occupation of the Ruhr, which led to hyperinflation in 1923. Unemployment due to returning soldiers from war, and the end of war production meant that employers lowered wages in order to stay afloat. Savings were worth less, and people were less willing to buy as their wages were worth far less which hurt the economy.

Question 2

Social welfare measures after WW1

Answer 2

May 1920 - The Reich Pension Scheme supported 768,000 veterans, 420,000 widows and 190,000 parents of dead soldiers

February 1922 - The Labour Exchange Law meant retraining for returning soldiers so they could enter the labour force

July 1927 - Unemployment Insurance Law gave insurance to those out of work

Question 3

Weimar

Occupation of the Ruhr

Answer 3

• The London Ultimatum set reparations at 132 billion Gold marks in 1921
• In Jan 1923, Germany could not pay and on the 11th Jan French and Belguim forces occupied the Ruhr
• The Ruhr had coal and factories that were important for the German economy.
• The government ordered passive resistance and stopped reparations to France only
• Goods in Germany became scarce and expensive
• More money was printed to pay workers who were resisting and this fanned the flames of hyperinflation

Question 4

Weimar

Who was Gustav Stresemann?

• Party
• Appointment

Answer 4

• Gustav Stresemann was a member of the DVP
• He was appointed Chancellor in August 1923 at the worst of the hyperinflation crisis

Question 5

Weimar

Erfullungspolitik

Answer 5

Policy of Fullfillment implemented by Stresemann

• Foreign policy was key for this to work
• Stresemann wanted to improve post-war relations with the allied forces and the US to help improve the economy of Germany
• Included using US loans like the Dawes and Young plans and improving trade relations

Question 6

Weimar

When was the Dawes Plan agreed?

Answer 6

1924

Question 7

Weimar

What was the Dawes Plan?

Answer 7

• The Dawes Plan meant that Germany would have to pay 1 billion marks in the first year of this plan, and this would increase to 2.5 billion by the fifth year
• Germany were given 800 million marks to help stabilise the economy
• The allies would oversee the Reichsbank

Question 8

Weimar

When was the Young Plan agreed?

Answer 8

1929

Question 9

Weimar

What was the Young Plan?

Answer 9

• Reparations would be reduced to 121 billion marks to be paid over 59 years at an annual rate of the Dawes Plan
• Needed to further improve the German economy while lessening the burden of reparations

Question 10

Weimar

Cartelisation

Answer 10

• Another strategy used to stablise prices and the economy
• An example of this was IG Farben, which was a group of chemical cartels.
• Industry was producing 1/3 more in 1925 compared to 1913 and 2/3 more in 1930.
• Owner-worker disputes were common, over working conditions and owners trying to cut wages, so state arbitration was introduced in October 1923
• There were less disputes in 1926-7, showing some success in this respect.

Question 11

Weimar

Government spending

Answer 11

The government had subsidised many areas of industry, like grain and social welfare. This was funded by heavy borrowing and taxes.

Despite the economic recovery, people were paying less taxes than they used to be, because they were earning less money, so the government had to borrow more to compensate for the money lost through taxes.

Question 12

% of population on the lowest tax bracket 1913-28

Answer 12

1913 - 47%

1926 - 62%

1928 - 55%

People were earning less money in the 20s so they were paying less tax, and the government were getting less revenue as a result

Question 13

Weimar

Improving trade

Answer 13

• Another aspect of fullfillment

10th Sept 1926 - Germany enters the League of Nations

• Trade relations were hazy post-war due to bad feelings, and tarrifs were placed on Germany which hindered exports.
• However by 1926, exports was back to its 1913 levels, and was 34% higher in 1929

Question 14

Weimar

Treaty of Versailles

Answer 14

• Germany had to pay 132 billion gold marks
• Profits of the Saar Region go to France
• Colonies were lost and cannot trade with them

Question 15

What was the currency of Germany in 1918?

Answer 15

The Papiermark

Question 16

How did Stresemann deal with the hyperinflation crisis?

Answer 16

• Using US loans like the Dawes and Young Plans to pay reparations and stabilise the economy
• Using cartels to stabilise prices
• Recovering trade
• Recovering agriculture
• Government spending

Question 17

Exchange rate of USD to Marks in November 1923

Answer 17

1 USD = 4,210,500,000,000 marks (4.21 trillion)

Question 18

Hjalmar Schacht

Answer 18

Appointed as President of the Reichsbank in December 1923. He oversaw the temporary Rentenmark and the Reichsmark in August 1924

Question 19

Locarno Pact

Answer 19

Agreement made by Stresemann with Britain, France, Belgium and Italy. Signed in December 1925

• Germany would accept its western borders
• Improved diplomatic ties as a part of Erfullungspolitik

Question 20

How successful was Stresemann in his policies?

Answer 20

Successful:

• Improved ties with the European powers, for example the Locarno Pact and entering the League of Nations
• By 1926, exports was back to its 1913 levels, and was 34% higher in 1929
• Improved trade relations with the US

Failures:

• Despite his work, many people were still unemployed and had to rely on the Unemployment Insurance Law. This covered 17 million people.
• The 8-Hour working day had disappeared as people needed money
• Women took up jobs in the home with no regulated hours and were cheaper to employ, so men were less likely to get clerical jobs as they were more expensive

Question 21

When did Germany enter the League of Nations?

Answer 21

10th Sept 1926

Question 22

What happened to the economy in 1929?

Answer 22

The US economy crashed, and this resulted in banks not giving out foreign loans and recalling loans that it gave out. The US was the “world banker” and gave loans to many, including Germany.

Businesses sold fewer goods, so they had to let people go, increasing unemployment, therefore people spent less as they had less money, and businesses sold fewer goods as a result etc.

Question 23

Unemployment figures 1921-32

Answer 23

1921 – 346,000 (1.8%)

1928 - 1,391,000 (6.3%)

1932 - 5,603,000 (29.9%)

Clearly shows a rapid increase between 1928 (before the depression) and 1932 when the depression was at its worst, just before Hitler became Chancellor

Question 24

Was the Bruning Chancellory a success?

Answer 24

It involved an emergency decree to cut social welfare and other government spending, wage cuts and higher taxes. It brought deflation without devaluing the currency to avoid another inflation. It became clear that they could not pay reparations, so they agreed not pay them or interest on loans for a year at the Hoover Moratorium.

The Bruning policies did not work and deepened the recession. Industrial production fell, prices fell and exports fell all by around 50%. Unemployment also increased in 1930-32, showing that his policies did not alleviate this. His reliance on emergency decrees did not bring about any change

Question 25

How many laws did Bruning pass by decree vs through government?

Answer 25

109 laws by decree, and 29 were passed by the Reichstag between July 1930-32

Question 26

When was the Hoover Moratorium and what did it mean?

Answer 26

1st July 1931 – Germany did not have to pay reparations or interest on them for a year

Question 27

How successful was von Papen in easing the Depression?

Answer 27

von Papen had represented Germany at the Lausanne Conference which marked the point in which Germany stopped paying reparations. He also introduced tax concessions and subsidies for businesses. However between June and December 1932, unemployment still increased by around 500,000

Question 28

How successful was von Schleicher in easing the Depression?

Answer 28

Schleicher was given 500 million Reichmarks to create public works schemes but he had not put anything into place before the Nazis came into power. He also appointed a Reich Commissioner for employment to draw up these schemes. He was not able to make massive change in a small period of time.

Question 29

What was the effect of these failures of the Chancellors from 1930-32?

Answer 29

The coalition governments were unable to come to decisions and this led to a reliance on emergency powers. This made the system of government unpopular. The Chancellors were held responsible while Hindenburg remained popular. The governments unpopularity due to their incapability during the Depression contributed to the rise of the Nazi Party

Question 30

Effect of the First World War on living standards

Answer 30

Horses were sent to the from lines, so farming was increasingly difficult, and food was also sent to the soldiers, so **there was a lack of food on the domestic front.** Allied forces had blockaded ports which made this worse. 'Alternative foods' like K-Brot had to be introduced. **Infant mortality, stillbirths and malnutrition were high.** *90% of all children aged between 2-6 in one district in Berlin were malnourished. * Women had to work home-based jobs, with **unregulated hours**, like covering buttons with fabric, only getting paid for every 50 buttons completed. Children helped as well. **The 8-hour working day established by Ebert disappeared** as workers could not afford to press for it. This was the government the Weimar Coalition had to deal with.

Question 31

Cost of living stats as a % of 1928

Answer 31

1913 – 66% 1929 – 101% 1932 – 80% 1933 - 78%

Question 32

How did the government aid those in need?

Answer 32

Social welfare schemes like the Reich Pension Law

Question 33

Standard of housing

Answer 33

Many families lived in cramped housing with shared facilities.

Question 34

Housing in Berlin in 1925

Answer 34

There were 130,500 lodgers and 44,600 people who paid just for a bed without any other facilities. Children were expected to give up their bed for a lodger.