5 - economics developments

Question 1

when was and what happened at the height of hyperinflation?

Answer 1

August 1923
Cuno government collapsed - replaced with Stresemanns ‘Great Coalition’ - by time Stresemann left office, currency stabilised and inflation under control

Question 2

what was the end of passive resistance?

Answer 2

• called of in September
• unpopular, lead to unrest and Beer Hall Putsch
• essential to reduced government expenditure
• Stresemann calculated no alternative

Question 3

what was the new currency?

Answer 3

• November - Rentenmark to replace worthless Reichsmark (one to one million)
• supported by mortgage on all industrial and agricultural land
• direction of Hjalmar Schacht
• August 1924 - Rentenmark became Reichsmark
• tight control over money circulation

Question 4

how was the budget balanced?

Answer 4

• cut expenditure and raised taxes
• those who lost savings didn’t gain
• salaries cut
• 300,000 civil servants lost jobs
• taxes raised for individuals and companies

Question 5

what did Stresemann ask in November 1923?

Answer 5

asked Allies Reparation Committee to set up committee of financial experts to address repayment concerns

Question 6

what was the Dawes plan?

Answer 6

-finalised April 1924
-confirmed reparations payment £6.6 billion, made payments more manageable
-amount paid each year reduced, Germany receive loan 800 million marks from USA
Reichstag debate:
Stresemann didn’t believe in it but agreed due to foreign loans
‘national opposition’ believed Germany should defy Treaty of Versailles

Question 7

what were the benefits of the Dawes plan?

Answer 7

Allies accepted Germanys problems with payments were real, loans granted, French left Ruhr (1924-25 - occupation no longer justified)

Question 8

how did Germany seem more stable and prosperous?

Answer 8

• Dawes plan, new currency, Schnacht’s work at Reichsbank
• American loans stimulated economy
• industrial output grew after 1924 (didn’t reach 1913 levels until after 1929)

Question 9

how did industry develop?

Answer 9

• advances in chemical industry
• cars + aeroplanes developed (still too expensive for average German)
• inflation close to zero
• loans helped finance public works
• state initiatives to provide affordable homes (great importance for future stability)
• living standards and wages rose

Question 10

how did agriculture develop?

Answer 10

• strikes declined (compulsory arbitration farmers)
• gained little (food prices low)
• debt

Question 11

what were limits to economic recovery?

Answer 11

• unemployment

- didn’t benefit mittelstand

Question 12

who made the Young plan?

Answer 12

International Committee headed by American business man Owen Young - met in Paris 1929

Question 13

what did the Young plan entail?

Answer 13

• obliged Germany to pay reparations until 1988, total bill reduced (to £1.8 billion), annual payment increased
• responsibility to pay solely on German gov.
• Britain + France agreed to withdraw all troops from Rhineland by June 1930

Question 14

what did the Young plan lead to in Germany?

Answer 14

• inflamed nationalists opinion
• DNVP leader launched campaign against plan, with other groups including Nazis - drew up draft of ‘freedom law’ (defeated in Reichstag)