5 - Economic Developments
- Created by: Becca Newman
- Created on: 18-06-19 15:27
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- Economic Developments
- The stabilisation of the currency
- August 1923 government collapsed and was replaced by Stresemann's coalition
- DVP, Centre Party, Socialists, DDP.
- Stresemann's priority was to bring inflation under control
- DVP, Centre Party, Socialists, DDP.
- Stresemann called off passive resiostance in the Ruhr in Spetember
- Led to the Beer Hall Putsch
- Meant that work could restart + government could stop having to pay workers who refused to work
- New Rentenmark currency was introduced
- 1 Rentenmark for 1 trillion old marks
- Insufficient gold reserves to back the currency - backed by mortgage on land
- Government kept a tight control on amount of money in circulation
- In August 1924 the Rentenmark became the Reichsmark backed by the gold reserve.
- This all happened under the direction Hjalmar Schacht
- In August 1924 the Rentenmark became the Reichsmark backed by the gold reserve.
- Government kept a tight control on amount of money in circulation
- Insufficient gold reserves to back the currency - backed by mortgage on land
- 1 Rentenmark for 1 trillion old marks
- Government cut expenditure - 300,000 civil servants lost their jobs; salaries were cut, taxes were raised.
- Over 6000 companies went bankrupt in 1924
- Those who had lost their savings in the inflation gained nothing from the new currency
- Over 6000 companies went bankrupt in 1924
- August 1923 government collapsed and was replaced by Stresemann's coalition
- The Reparations Issue + The Dawes Plan
- November 1923 Stresemann asked the Allies' Reparations committee for financial advice committee
- The American banker Charles Dawes acted as the committee's chairman
- Stresemann's government had fallen by this point but he remained foreign minister and got a lost of credit for his achievings.
- The American banker Charles Dawes acted as the committee's chairman
- Until 1929 the amount paid each year should be reduced
- Start by paying 1000 million marks - raised in annual increments over 5 years by 2500 million marks each year
- Germany would receive a loan of 800 million marks from USA to help start the plan
- Start by paying 1000 million marks - raised in annual increments over 5 years by 2500 million marks each year
- Stresemann didn't have faith in the plan but agreed to it
- 'National Opposition' (DNVP + other small right wing groups) attacked this compromise
- Wanted defiance of the Versailles Treaty
- In July 1924 the plan was agreed - with new loans the German economy could be rebuilt
- 1924-25 French left the Ruhr
- 'National Opposition' (DNVP + other small right wing groups) attacked this compromise
- November 1923 Stresemann asked the Allies' Reparations committee for financial advice committee
- The Extent of Economic Recovery
- Industry
- After 1924 Industrial output grew but didn't reach 1913 levels until 1929
- Economy shrank in 1928 + 1929
- By 1929 investment in new machinery and factories was falling
- Economy shrank in 1928 + 1929
- Chemical industry advances - production of artificial fertilisers; car + aeroplane industry developed
- There was massive population growth in the 20th century leading to a housing shortage
- In 1925 178,930 dwellings were built. In 1926 2015,793 new homes were built
- In 1924 new schemes of relief were created. Money was spent on welfare payments + health improvements
- In 1925 178,930 dwellings were built. In 1926 2015,793 new homes were built
- There was massive population growth in the 20th century leading to a housing shortage
- Compulsory Arbitration - an independent figure decides on a solution in disputes
- Less strikes thanks to this
- Republic gave max 8 hours of work per day + trade unions could be in work councils
- 1928 a small wage increase was granted to workers after a dispute
- Employers locked workers out + refused to pay the increase
- Workers were backed by the government + paid by the state
- Employers locked workers out + refused to pay the increase
- 1928 a small wage increase was granted to workers after a dispute
- 1927 - wages increased by 9%
- 1928 - rose by further 12%
- Republic gave max 8 hours of work per day + trade unions could be in work councils
- Less strikes thanks to this
- After 1924 Industrial output grew but didn't reach 1913 levels until 1929
- Limits to the Economic Recovery
- End of 1925 - unemployment reached 1 million; by March 1926 it was over 3 million.
- Due to public spending cuts - more people searching for work - companies reducing workforces
- Mining companies reduced workforces by 136,000 between 1922-25; reduced by another 56,000 between 1925-29.
- Due to public spending cuts - more people searching for work - companies reducing workforces
- The Mittelstand (middle-class) gained very little in this period
- By late 1920s industrial wages drew level with those of the middle class and sometimes exceeded them.
- End of 1925 - unemployment reached 1 million; by March 1926 it was over 3 million.
- Agriculture
- Farmers gained very little from economic recovery
- A worldwide agricultural depression kept food prices low
- Smaller farmers had made savings which had been wiped out by the depression
- 1923 - government made it easier for farmers to borrow money
- This increased their debt
- Taxes to pay for welfare benefits were seen as unfair for farmers
- To reduce pressure on farmers import tariffs were introduced + import controls + subsidies to farmers
- Taxes to pay for welfare benefits were seen as unfair for farmers
- This increased their debt
- 1925-26 there was a grin surplus + a price slump
- Late 1920s increase in bankruptcies among farmers
- 1928 small scale farmer riots ('farmers' revenge')
- Protest against foreclosures + low market prices
- 1928 small scale farmer riots ('farmers' revenge')
- Late 1920s increase in bankruptcies among farmers
- By 1929 German agricultural production was less than 3/4 of its pre-war levels
- Farmers gained very little from economic recovery
- Industry
- The Reparations Issue + The Young Plan
- Allied forces remained in occupation of the Rhineland + French woudn't remove their forces
- Stresemann agreed for Owen Young (American businessman) to head up a committe into reparations again
- Young Plan obliged Germany to continue paying reparations until 1988
- Germany required to pay £1.8 billion rather than £6.5 billion
- Britain + France agreed to remove their troops by June 1930
- Germany required to pay £1.8 billion rather than £6.5 billion
- Young Plan obliged Germany to continue paying reparations until 1988
- Stresemann agreed for Owen Young (American businessman) to head up a committe into reparations again
- Alfred Hugenberg (leader of DNVP) launched a campaign against the plan.
- Hitler supported it
- They drew up the 'freedom law' for national referendum - required the government to repudiate the guilt clause + demand immediate evacuation of occupied areas
- Any minister who signed the Versailles Treaty should be tried for treason
- Petition for this law got £4,135,000 signatures + was put to a referendum but the rejected.
- The support that it got showed the depth of support for right-wing nationalism
- Allied forces remained in occupation of the Rhineland + French woudn't remove their forces
- The stabilisation of the currency
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