Economy

• Treasury bills were used to finance war. They put more money into circulation abandoning the link between paper money and gold reserves. They did this expecting to pay them back after victory. In 1919, the mark was worth 20% less than pre-war.
• National debt grew from 5,000 million to 144,000 million marks.
• Under the Treaty of Versailles, colonies were lost, coal mines of Saar were given to France and reparations made it even harder to recover.
• The new welfare state also made it harder to recover.
• 1920-22 saw a growing economy. Some inflation was considered good to kickstart the economy as businesses could take loans and repay with inflated money. It led to foreign investments and unemployment dropped to 1.8% (was 17% in Britain).
• Many saw reparations were crippling as they would need to export but did not have good international relations. They were only 2% of annual budget. Fulfilment was followed in hopes allies would go easier on them.
• In January 1923, reparations fell behind. They tried to negotiate a period of non-payment and more loans - the Treaty of Rapollo stopped this.
• France invaded the Ruhr. Workers followed passive resistance but they had to carry on paying workers, leading to hyperinflation. By November the rate of inflation 4,420 billion and 2,000 printers were working per day.
• The Rentenmark was introduced with a limited supply. They stopped offering landings to industry and taxed the people more. They used money to pay for things such as post offices and railways. However, it was not a total success as it caused 6,000 companies to go bankrupt.
• Under the 1924 Dawes Plan: amount payed each year was reduced, they would pay in proportion to industry performance and an 800 million mark loan from USA. This led to new machinery, jobs, houses, etc... the French left the Ruhr and in 1926, inflation dropped below zero.
• Under the 1929 Young Plan, reparations were reduced by 75% and given 59 years to pay it.
• From 1914, industry was mobilised to accommodate for warn and formed 200 war material corporations.
• Purchasing company was set up to maintain trade with other countries.
• Pre-war Germany relied heavily on imports however this led to flourishing of science and technology providing more self-sufficiency.
• The 1916 British blockade caused Germany to suffer and by 1919, industry was only a third of what it was in 1913.
• (Industry) 1920-22: growth. 1923: steep decline. 1927-29: regrowth.
• The German economy only grew 4% 1913-29, USA grew 70%. Unemployment was at 3 million in 1929.
• Coal production was at 79% of pre-war and steel at 86% in 1927.
• Key industrial developments included: now there were 3,000 cartels, chemical companies thrived and helped for weapons, car and aeroplane industry expanded and electrical industries continued pre-war expansion.
• Agriculture suffered a lot during the war as many had to leave farms to fight and it was left to the old men and women.
• Poor harvest during war and they were faced with the turnip winter.
• Worldwide overproduction and cheap foreign product meant agriculture couldn't make the same recovery as industry.
• By 1927-28, farmers were getting little to no profit due to cost of running their farms, higher taxes and having to pay their mortgages.