The economy during Golden years

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  • Created by: Hannah
  • Created on: 25-05-13 10:10
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  • Economy during Golden Years
    • Rapid economic growth - Dawes Plan
      • investment from USA - short term growth against reparations
      • rescheduled payments - longer time to pay more efficient
      • created employment - chemical and public facilities [parks - libraries seen as state of the art]
      • increase in real wages improving situation for many workers
    • American connection
      • Mas-production and standardisation of patterns
      • Innovative techniques - 'Fordism'- US advertising helping to promote sales
        • No-where else in Europe really caught on with idea yet
      • German economy strong - BUT only if people bought or had money to buyvacuums and cars e.t.c
      • It was dynamic and idiosyncratic for Germany - market leaders in many goods BUT short term
    • Cartel System
      • Farben for example controlled more tan 400 firms
      • Article  165   "workers and employers are called upon to cooperate on equal footing"
        • government about promoting good worker relations
      • e.g. Tyssen & Krupp 1893          Siemens & AEG 1906
      • WAS EFFICIENT - good working environment
      • Was less about competition than sales
      • After 1923 government played active role in imposing compulsory arbitration over disputes
        • REDUCING number of strikes
        • Factory owners couldn't force lockout whereas workers couldnt go on strike until some agreement
      • THEREFORE industrial relations improved
    • External Credit
      • short term loans used to finance long term capital projects - film - electrical - industry
      • American investment post 1923 - BUT loaned Germans money they didn't have
      • Germany however vulnerable to fluctuations in US stock market - called back from 1917-8 with conditions worsening in US.
      • not stable - based on investment loans only for the short term - 'dancing on a volcano' TEMPORARY
    • Structural weaknesses of growth
      • 1928-9 capital goods rose in production 2% BUT consumer goods fell 3%
        • Increased capacity was not being met by demands
          • little exportation and not as many people buying within Germany
      • Cartels not  in an advantage because did not drive prices down and enlarge domestic market
        • Cartels didn't compete so prices high than otherwise would have been PROBLEMATIC
      • The increased production did not lead too enlarged trade.
        • Machinery - factories - capital goods were rejected by many countries as many regard Germany in   -ve post war light
      • limited consumer potential drove politicians and big businesses to rearmament
        • many people not have money / scared to use it - goods not being bought
      • leads to unemployment - hence consistent 2 million unemployed
    • Agriculture
      • Recession 1927
        • from 1927 increasingly hit by prices and producing too much food. Increasing numbers getting selves into debt
      • Agricultural investment more haphazard than industrial investment
      • 1928 - 1/3 of farmers running at a loss
      • Hugely affected by world wide competition and falling prices
      • Led to growth of extremist parties in rural areas. Community politically radicalised


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