Economy 1924-29

Question 1

What was economically positive about the Weimar economy

Answer 1

• Golden years of economic prosperity compared to previous and future years

Question 2

What was economically negative about the Weimar economy?

Answer 2

• Wall St Crash + worldwide depression
  
  • Fundamental weaknesses with the Weimar economy before the crash
    ‘golden years’- depend on each German person
    1919-23- Hyperinflation

Question 3

What positive economic things happened between 1924-29?

Answer 3

• New currency and foreign loans led to greater confidence and reconstruction
  
  • Dawes Plan stimulated capital investment, currency stability and economic growth
  • Significant public housing programme ie 33 times more spent in 1929 than 1913
  • Welfare state was extended which benefitted the working class

Question 4

What negative economic things happened between 1924-29?

Answer 4

• Collapse in food prices in 1922, widespread rural poverty
  
  • Industrial unrest increased: 1924-32, 76000 taken to arbitration, 1928 Ruhr lockouts, 1929-30 unemployment insurance contribution battle
  • 1928: unemployment 3m, 15% workforce
  • Nationalistic resentment remained over reparations
  • Heavy dependence on foreign loans- Stresemann 1926 ‘Germany is dancing on a volcano’
  • Welfare state alienated powerful groups such as the elite and Mittlestand eg 40% govt expenditure went on war related pensions
  • Although economy improved after 1923, growth was erratic ie 1926 there was a downturn

Question 5

What is deficit financing?

Answer 5

Where the government spends more money than it receives in order to expand the economy. The resultant expansion should then improve tax revenues which would help restore the government’s finances.

Question 6

What is a budget deficit?

Answer 6

When the government’s expenditure (on welfare, defence, interest payments etc.) is lower than its income (from taxes, tariffs etc.)

Question 7

What is reflation?

Answer 7

Policy to counteract deflation. These policies are designed to stimulate economic growth, especially by government spending money to boost demand leading to increased jobs, higher wages and rising prices.

Question 8

What is a balance of trade deficit?

Answer 8

When the value of a country’s exports is lower than the value of the country’s imports. This may mean that imports have to be obtained by using up currency reserves, and essentially means the country is losing money.

Question 9

What is deflation?

Answer 9

Where prices fall. This happens during a slump or depression when there is a fall in production and a rise in unemployment.

Question 10

What are direct taxes?

Answer 10

Taxes paid by workers/investors in money to the government, for example, income tax. These taxes are usually more progressive, hitting richer people more.

Question 11

What are currency reserves?

Answer 11

The money held by a government. This could be in the form of gold (normally the safest form of money) or in a foreign currency, ideally with high confidence like the pound or dollar. If this amount is large, it encourages confidence in the country’s economy.

Question 12

What is a budget surplus?

Answer 12

When the government’s income (from taxes, tariffs etc.) is lower than its expenditure (on welfare, defence, interest payments etc.)

Question 13

What are Real Wages?

Answer 13

A relative term, used to show how wages relate to prices. It is an indication of how much a worker can buy with his/her wages.

Question 14

What are indirect taxes?

Answer 14

Taxes paid indirectly to the government, for example taxes on goods. These taxes are usually more regressive, that is they hit poorer people comparatively more.

Question 15

What is Inflation?

Answer 15

Where prices go up. A small amount may be beneficial to an economy as it suggests profit increase and may encourage further investment.

Question 16

What are Tariffs?

Answer 16

Taxes places on imported goods. This may serve to raise government revenue or discriminate against imports by making them more expensive.

Question 17

What is National Debt?

Answer 17

The accumulated annual budget deficits. The total amount of money owed by a country.

Question 18

What is Gross National Product (GNP)?

Answer 18

The annual monetary value of all goods produced in a country, that is the value of all goods and services. If this is increasing, it suggests a healthy, growing economy.

Question 19

What is National Income?

Answer 19

Similar to GNP, but instead is a measure of the overall income of all people in a country. If this is increasing it suggests people are becoming better off.

Question 20

What were signs of strength and stability in Germany’s economic recovery between 1924-29?

Answer 20

Rentenmark + reinforcement of industrial and agricultural economy + resources

Deflationary policies

Prosperity and confidence remained for many

Welfare state extended and working class made gains

Inflation over in 1924

1929: production levels were back to 1913 levels

Better than 1919-23 period of hyperinflation

Question 21

What were signs of underlying weakness in Germany’s economic recovery between 1924-29?

Answer 21

Unsteady economic growth-> Germany falling behind the rest of the world

Growing trade deficit

Agricultural prices falling from 1927

Unemployment stayed above 1 million

World surplus of grain, prices fell dramatically

Economic recovery fuelled by short term loans from foreign countries

Welfare state extension alienating powerful groups in elite

Question 22

What are economic strengths between 1924-29?

Answer 22

Inflation much lower than in the 1919-23 period.

New currency and foreign loans led to greater confidence & reconstruction.

The Dawes Plan stimulated capital investment, currency stability and economic growth.

Public housing programme saw 33x more spent on housing in 1929 than in 1913.

The welfare state was expanded at the benefit of the working classes.

Question 23

What are economic weaknesses between 1924-29?

Answer 23

Collapse in food prices in 1922 created widespread rural poverty.

Industrial unrest increased; 1924-32 saw 76 thousand cases taken to arbitration, there were lockouts in the Ruhr in 1928 and between 1929-30 there was a battle over unemployment insurance contributions.

In 1928, unemployment hit 3 million (15%)

Nationalistic resentment over reparations remained.

Heavy dependence on foreign loans - as Stresemann said in 1926, “Germany is dancing on the volcano”.

Welfare state alienated powerful groups such as the elite and mittelstand; 40% of expenditure was on war pensions.

The economy did improve after the 1923 hyperinflation disaster but growth was erratic and there was a downturn in 1926.

Question 24

What were Conservative views on the economy?

Answer 24

• State subsidies and redistribution of wealth was harmful to economic growth
  
  • Wage increases led to unproductivity due to trade unions and state arbitration strengths
  • Profits and investment income were therefore lowered, low internal investment, lower growth
    High unemployment

Question 25

What were Left wing views on the economy?

Answer 25

- Limited economic performance was as a result of lack of entrepreneurial attitude and inadequate investment from the industrial elite Low productivity caused by government subsidies

Question 26

How much did real weekly wages (On average) increase by between 1925-32?

Answer 26

10%

Question 27

What is a statistic on the amount of days lost due to strikes?

Answer 27

20 million days of work were lost to strikes in 1928, but only 400 thousand were lost in 1929 (and 1930).

Question 28

What is a statistic on the budget deficit?

Answer 28

In 1923, the budgetary deficit was 23% of GDP. It had fallen to 1% in 1931, and <0.5% in 1924.

Question 29

How much was unemployment in 1932?

Answer 29

30%

Question 30

How much did foreign loans provide between 1924-31?

Answer 30

8 billion marks more than the reparation costs

Question 31

What is a statistic on GDP growth?

Answer 31

Germany's GDP grew a total of 6% between 1913 and 1929. The USA, for comparison, grew 65% and the UK grew 23%.

Question 32

What was the problems with the unemployment insurance policy?

Answer 32

The unemployment insurance, introduced in 1927, was only viable if there were less than 800 thousand unemployed people; come the crisis in 1928 when 3 million people were out of work, the government was forced the raise the levy BUT since SPD were in government at the time they tried to make it more progressive and employers/wealthy individuals felt the brunt of the increase. The problem was groups of both employees and employers refused to cooperate with eachother in light of the increase, and overall productivity dropped.

Question 33

What were international reasons for why the economy didn't recover between 1924-29?

Answer 33

- Treaty of Versailles - World economy - World export market

Question 34

Why did the Treaty of Versailles mean the economy didn't recover between 1924-29?

Answer 34

Dawes Plan helped Germany cope with reparation demands BUT main result was German reliance on American loans, which backfired in 1929 when American stock market collapsed and loans were recalled

Question 35

Why did the World Economy mean the economy didn't recover between 1924-29?

Answer 35

1925, Germany's industrial production was 95% of its 1913 level, Britain was 86%, France was 114% (only small improvement). Growth in European countries was slow partly because it was booming elsewhere-> American profited from the war, 1925 production level was 148% its 1913 level and Japan's was 222%

Question 36

Why did the World export market mean the economy didn't recover between 1924-29?

Answer 36

1920's conditions were not favourable for an export economy (traditionally Germany's) New competitors like Japan were undercutting prices and traditional markets were lost + Export market was shrinking due to Europe wide fall in population

Question 37

What were domestic reasons for why the economy didn't recover between 1924-29?

Answer 37

Industrial production Worker's wages + welfare state Trade

Question 38

Why did Industrial production mean the economy didn't recover between 1924-29?

Answer 38

fluctuating figures, barely exceeded pre war levels by 1929. Attempts to modernise industrial production methods with American style technology ie Coal and car industries. Steel was more resistant to change. When successful, led to problem of long term unemployment, more productivity means less workers needed

Question 39

Why did worker's wages + Welfare state mean the economy didn't recover between 1924-29?

Answer 39

inflation benefitted big businesses, and when it ended, industry became less tolerant of obligations to workers. Germany's workforce had become too expensive compared to other countries, employers frustrating with losing profit to wages + welfare schemes ie Unemployment insurance scheme 1927. Social expenditure doubled (x2) from 1913 to late 1920s, going to war related pensions

Question 40

Why did Trade mean the economy didn't recover between 1924-29?

Answer 40

higher wages meant higher prices for goods, less attractive to foreign and domestic customers. Cartels agreed to keep prices high, therefore shortage of foreign trade. 1929, Germany increased production for foreign trade but no market for these exports. Industrialists wanted guaranteed market, made them supportive of rearmament, enabling them to sell their goods to the government, paving way for alliance between Nazi's and big industry in 1930s.

Question 41

Why is there a debate on if 1924-29 were 'golden years' of economic prosperity disrupted by the Wall St Crash and worldwide depression, which would've secured Weimar Republic's future OR there were some successes but there were fundamental weaknesses with the Weimar economy before the 1929 crash

Answer 41

- Signs of economic doom before the American collapse, with high degree of instability + low growth rates - Deteriorating worker and employer relations, tensions created by extension of the welfare state - Not a uniform recovery, but positive change for many Germans-> by 1929 Germany became world's second industrial power behind USA