Economic and social policy 1924-1929
The economic and social policies in 1924-1929 included:
- Foreign Investments.
- Social Welfare
Between 1924-1929, there was a deficit in the German economy:
- This was because the govt was spending more money than they were making.
- In addition, trade suffered as Germany was importing more goods than exporting them.
- The govt borrowed money from foreign countries, to fund its spending.
- This would not last forever, and was made worse during the Wall Street Crash in October 1929.
There was economic growth in this period, industry:
- This was because prices were steady, as a result of the introduction of the new Rentenmark.
- This allowed Germany's currency to be stabilised following hyperinflation.
- There was an increase in the growth of German industry, whilst agriculture was still declining.
- However, German industry was falling behind the rest of the world.
The govt increasing social welfare spending:
- This mainly benefited the workers.
- For example, compulsory unemployment insurance was introduced, in 1927.
- This covered 17 million workers.
- This was the largest scheme of its kind in the world.
- There was a further increase in conditions for workers.
- This was because trade unions had successfully increase wages for workers.
- These changes were resented by employers, so in order to save money, they fired workers.
- This caused unemployment to rise.
Strengths of the economic and social policies
The economic and social policies were successful because:
- There was a new currency, called the Rentenmark, was stable.
- It was introduced to deal with hyperinflation.
- The economy grew by foreign investments.
- E.g. Nearly 5 billion dollars was invested into Germany.
- As trade unions succeeded in improving wages and the increase in social welfare spending, workers' conditions improved.
- Exports were getting stronger:
- It increased by 40% from 1925 to 1929.
Weaknesses of the economic and social problems
On the other hand, the economic and social policies of 1924-1929 had its weaknesses:
- Agriculture was still in decline.
- Due to the increased wages, unemployment increased and employers cut spending.
- This led to many workers being laid off.
- Although it had helped Germany's economy, Germany was dependent on the foreign investments and foreign economy.
- Public spending was much higher than the govt's income.
- This led to a deficit, which was paid for by money invested from other countries.
- Even though exports increased, imports did also.
- E.g. in 1927-28, Germany were importing more than they were exporting.