Weimar Economy 1923-1929

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  • Weimar Economy 1923-1929
    • Hyper-Inflation
      • The Rentenmark
        • On the 15th of October 1923, by Decree, Stresemann withdrew the mark and introduced the Rentenmark.
          • The decree also put a limit on how much money could be printed
        • On the 17th of November Stresemann issued a decree banning the use of emergency money after November 22nd
        • Overseen by Halmar Schacht
          • He became President of the Reichsbank in Dec 1923
        • The change restored faith in the German currency both at home and abroad
        • Those who had savings objected because it had such a low value against one gold Mark.
      • The Government used emergency decrees to control rents, wages and prices which helped to stabilise the currency.
      • Schacht also helped to oversee the change to the Reichsmark (RM) in August 1924.
    • Foreign Policy
      • See notes on Stresemann and Foreign Policy
    • Business
      • In the early 1920s, many small businesses collapsed
      • In 1924, there were more bankruptcies than in the previous 5 years combined
      • They remaining businesses formed cartels to fix prices and help stabilise the economy
        • Biggest was I.G. Farben which was set up in 1925
          • United several chemical based cartels which made everything from dynamite to fertiliser.
      • Many factories were rebuilt to include new mass production methodfs
      • In 1925, the chemical industry was producing one-third more than it was in 1913, and almost two thirds more by 1930
      • Significant levels of dispute between workers and business owns during the Weimar period
        • Workers pressed for better conditions as owners tried to cut wages
        • Strikes and lockouts were common
          • Fewer between 1926 and 1927 with economic prosperity but they never went away
        • In October 1923, a state arbitration was set up to try and create a neutral way for the two sides to negotiate
          • It gave the Government control over wages and working hours
          • Between 1929 and 1929, over 60000 cases were taken to the case.
          • Before 1924, they generally favoured the employers, but after that they made compromise rulings for both sides
          • In 1928, the Ruhr industrialists refused to accept a compromise and locked the workers out. In the end the elite offered the compromise themselves
        • These disputes harmed the industrial sector of the economy and drove wages up and productivity down.
    • Trade Recovery
      • Germany initially suffered from several heavy tariffs set up after American isolationism
      • However, Germany was producing steel and chemicals which other countries desperately needed
      • With German admission to the LoN, and other international agreements, German exports began to rise
        • 1926 - Back to 1913 levels of 10 billion marks
        • 1929 - Exports were 34% higher than in 1913
    • Agriculture
      • In the 1920s, between a third and a quarter of all works were agricultural workers
      • Bigger farmers faired better than the smaller ones during the early Weimar years
      • Most were heavily in debt and could not afford to pay interest in the loans or their taxes
      • 1918 Reich Settlement Law
        • This would make landowners sell land to the Government
        • Landowners would block the selling by stringing out negotiations
      • Influence of wealthy landowns also allowed thme to press for high grain subsidies which benefited those with big farms
    • Government Spending
      • The economy was build on foreign loans
      • All funded through borrowing and taxation
        • 1913 - Lowest tax band made up of 47%
          • 1925 - 62%
          • 1928 - 55%
      • Spending
        • Also spent heavily on social welfare and housing
        • Spent heavily on subsidies for industry and agriculture
      • Most ordinary people were not as well off
      • Kept afloat by Government spending

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