Economic

• Economic challenges

  Overspending

  · Lump and pensions for 2.5mil+ WWI veterans

  · 10% of German population was receiving federal welfare(benefits)

  · Regional poor relief distributed by the Landers

  External challenges

  · 150b marks in debt inherited from WWI

  · 132b marks in reparations(Treaty of Versailles)

  · Ruhr (industrial heartland) occupied by France

  Businesses

  · Passive resistance payments

  · Occupation of the Ruhr

  · Hyperinflation (changing products prices)

  Gustave Stresemann

  · Chancellor (Aug 1923) and part of DVP (RW), Used Article 48 frequently to make quick decisions
• Factors impacting economy the most

  Occupation of the Ruhr

  • Withheld against France, 1932

  Treaty of Versailles

  • Failing to comply could cause invasion, 1919

  Welfare

  • Had to exist and work (as a socialist gov)
• Rentenmark

  • Mark withdrawn for new currency Rentenmark(Oct 1923) temporarily, Reichsmark(Dec 1923)= permanent
  • Restored faith in German currency
  • Prices settled as ‘emergency money; settled for Rentenmark
  • Controlled wages, rents and prices, stabilising economy
  • Savings are worthless
  • Significant impact
• Foreign Policy

  • Dawes Plan (1924) 800m to German industry
  • Young Plan (1929), lower reparations from £6.6b to £2b until 1988
  • Acceptable foreign power, could loan & make trade agreements
  • Reparations more manageable and could rebuild the economy
  • Economic recovery based on loans
  • Risky if loans are called for
  • Moderate impact
• Business Cartels

  • 1924- businesses formed cartels w/ fixed prices to stabilise the economy
  • Organised cartels (I.G Farben, 1925)
  • Many factories rebuilt
  • 1925- chemical industry producing 1/3 more than in 1913
  • Businesses became more efficient and profitable
  • Dispute b/w business owners and workers
  • Owners trying to cut wages
  • Strikes and lockouts=common
  • Moderate impact
• Trade

  • Hard due to tariffs
  • Germany producing steel and chemicals
  • Germans admission to League of nations(1926)
  • 1929- exports 34% higher than in 1913
  • Still suffering due to Germany’s part in the war
  • Major impact
• Agriculture

  1/3 workers in agri

  Large landowners could block reforms

  1928- Reich Settlement Law, landowners sell land to gov to five to poorest tenants, stopped by President Hindenburg

  Big farms could invest in new machinery and farming techniques

  Benefitted those most with big farms

  Big farms managed better than small ones

  Wealthy landowners allowed to press for high grain subsidies

  Minor impact
• Gov spending

  • Gov spent heavily on industry & grain subsidies through borrowing
  • 1931- lowest tax band made up of 47% of taxpayers hit 62% in 1926, but was 55% in 1928
  • Went down in 1928, as more paid taxes
  • Gave gov their money back
  • New economy built on foreign loans
  • Kept afloat by gov support
  • Drop in productivity and increase in wages, dwindled gov’s money
  • Minor impact
• Economic policies/actions of Stresemann

  1923

  • Abandons passive resistance in Ruhr, stops printing money
  • Article 48: Rentenmark replaces mark, limit on printing money
  • Article 48: gov control waves and hours after disputes b/w employers and workers
  • Article 48: Anything but Rentenmark destroyed

  1924

  • Third Emergency Tax decree, sets how Rentenmark valued
  • Reichsmark before Dawes plan, reparations fixed on new currency

  1925

  • Locarno treaty, Germany accepts TofV borders & demilitarisation of Rhineland

  1926

  • Germany joined League of Nations
• Statistics (1923-31)

  • 1923- 17,000+ marks to $1
  • 1924-31- 2+ mil homes built
  • B/w 1950-1930- 2.5% GDP spent on reparations
  • 1928- real wages grew (12%, up 9% from 1924)
  • 1929- Agricultural output less than 75% 1913 levels
  • 1929- overall economic production above pre-war levels
  • 1929- 18% German bank deposits= foreign
  • 1930- 2x unemployment (3 mil), 1933- 6mil
  • Weimar years- unemployment never below 6%
• Summary of Weimar economy

  • Welfare- 10% population on welfare payments
  • Employment-30% unemployed
  • Autarky- 1924 Dawes Plan – US Loans ​
  • Armament- None –  ToV imposed by Allies​
  • Women in the economy- Professions- Women in Reichstag, economy, university- paid less
  • Jews in the economy- Part of German – Life, government, culture – accepted ​
  • Bug businesses- Taxed and lamented due to the Weimar’s socialist leanings.​
  • Small businesses- Disregarded – punished in the Hyperinflation + Wall Street Crash ​
  • Foreign loans- Dawes Plan 1924