Economic Change in Germany 1871-1990

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  • Economic Change in Germany 1871-1990
    • 1900-1918
      • "Second industrial revolution" from 1890s up to WWI
      • Germany becomes economic powerhouse in Europe
        • This ends when Germany's economy is crippled by WWI and later the treaty of versailles
          • Treaty of Versailles 1918- Germany to take full blame for the war and to pay 132 Billion marks in reparations
      • Pre-War, Germany led the way in electricity and petroleum, and were also world leading chemical manufacturers.
      • German Naval laws in 1898, 1900, 1906,1908 and 1912 which were championed by Kaiser Wilhelm II and Admiral Alfred Von Tripitz committed Germany to expanding her navy with the aim of rivalling that of the UK
        • Navy budget ran over into debt and resulted in an arms race between Britain and Germany
        • Also failed to achieve the goal of uniting the people of Germany and the SPD continued to gain support, becoming the largest Reichstag party by 1912.
          • Navy budget ran over into debt and resulted in an arms race between Britain and Germany
      • Agricultural output aided by the increase in poopulation
        • Increase in population from 56.4 million in 1900 to 64.9 million by 1910.
          • Created higher demand for agricultural produce.
    • Weimar Republic 1919-1933
      • Mass economic problems after WWI and Treaty of Versailles.
        • German economy aided by US and Dawes plan
          • New German currency the rentenmark and US financial stimulation resulted in a resurgence of German Industrial production
        • Wages increased every year from 1924-1929
        • New German currency the rentenmark and US financial stimulation resulted in a resurgence of German Industrial production
        • Agriculture continued to decline and agricultural production by 1928 was still only 3/4 of what it had been in 1913
        • Hyperinflation from 1923 onward. french and Belgian occupation of the Ruhr resulted in workers strikes and a decline in industrial production. To pay the striking workers, the government printed more money which led to hyperinflation.
          • By the end of 1923, 1 US dollar was equal to 4.2 trillion German marks
          • Both of these catastrophic economic events paved the way for the rise of the Nazis
      • Agriculture continued to decline and agricultural production by 1928 was still only 3/4 of what it had been in 1913
      • 1929 Stock market crash- Because of Germany's high levels of industrialization it was hit worse than France or Italy.
        • Both of these catastrophic economic events paved the way for the rise of the Nazis
    • Nazi Germany 1933-1945
      • Wall Street Crash in 1929 meant that US loans in Europe were wiped out, which caused mass unemployment in Germany as they were the European country which was most dependent on US loans.
        • This paved the way for political extremism.
          • September 1930- NSDAP made significant gains and a fear of political extremism led to the further withdrawl of US loans.
        • Worldwide economic downturn also resulted in mass decline in global exports, which Germany's economy was dependent on.
          • Factories closed down and unemployment rose by 2.1 million between 1929 and 1930. The peak of unemployment came in January 1932 at 6,000,000.
            • 1934- Schact's new plan causes a fall in unemplyment and a 40% increase in GNP in one year, with industrial production increasing by 60%.
              • Hjalmar Schact's new plan 1934- Comprehensive government control over all aspects of trade, tariffs and currency exchange to prevent excessive imports.
                • Bi lateral trade agreements with South East Europe, Yugoslavia, Romania etc.
                • New Currency- Reichsmark
                • Mefo Bills- Similar to credit notes whcih were upheld for 5 years with 4% interest per annum.
      • The Nazi Party exploited the suffering caused by the depression and began to establish their own charity fundraisers and soup kitchens. They were able to feed around 200 people per day in some areas in 1931.
      • Nazis managed to restrict inflation by restricting wages and spending.
      • A mass increase in state expenditure with the Reichsarebeitdienst resulted in a dramatic growth in employment.
        • Down to 2.1 million unemplyed by 1936 compared with 6 million in 1933.
          • However, figures were masked by the fact that women and Jews were expelled from their jobs, meaning that many were still actually unemployed.
      • Tariffs on imports protected domestic agriculture
      • Population increase causes housing crisis.
      • Nazi government focused far too heavily on rearmament and not enough on consumer products.
      • Balance of payments crisis 1934- Germany was importing more than they were exporting.
    • Post- War West Germany 1945-1991
      • Low paid "Gastarbeiters" migrated to Germany, often from Turkey, who did jobs that many Germans were unwilling to do.
      • Due to well developed trade relations and membership of the EEC, Germany became the economic superpower of Europe.
        • Post-war "Economic Miracle" - Massive economic boom in Germany during the 1950s.
          • Many would argue this was due to the help of Marshall aid, financial relief supplied by the USA in the post war period. Industry in Germany was expanded after it received 99 million dollars in aid.
      • German economy benefitted from the Korean war, as the US needed Germany to supply industrial goods such as vehicles and equipment.
      • 1973 Oil Crisis- OPEC trebled price of oil, as a reaction to the USA supplying the Israeli armed forces with weapons during the Yom Kippur war.
        • This led to an increase in the price of raw materials
        • To reduce oil prices, the west German government introduced "car free sundays" and speed limits on the autobahns.
          • This resulted in over 5% inflation and unemployment reaching 3,000,000.
    • 1871-1900
      • Considerable growth in 19th century due to worldwide economic prosperity.
      • Growth mainly centered around heavy industry such as steam engines and machine tools
        • Railway network increased six fold from 1845-1870, from 3,280 km of track to 19,575 km
      • Coal and iron exports into Austria-Hungary, the Netherlands, Belgium, France and Russia grew by over 70% from 1845 to 1860
      • Economic crisis from 1873-1890 slowed growth.
        • Germany ore reliant on imports.
      • Protectionist policies cause political divide and national liberals split

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