The economy during Golden years
- 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
- Increased capacity was not being met by demands
- 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
- 1928-9 capital goods rose in production 2% BUT consumer goods fell 3%
- 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
- Recession 1927
- Rapid economic growth - Dawes Plan
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