ECONOMIC DEVELOPMENT POLICIES 1918-89: A – LEVEL HISTORY
ROUTE G
Why was the economy so bad in 1918?
WEIMAR
•government spent all of its gold reserves on war
•solution was to print more money
•July 1914 over 6,300 million marks in circulation; by the end of 1918 this had
increased to just over 33 ,000 million
•end of war 150 printing firms with 2,000 printing presses running day and
night to make new banknotes
•wages and savings lost value, prices rose
•businesses suffered, people lost their jobs
•when war ended, so did production of war good such as ammunition
•farm production had dropped by around 20% and industrial input halved
•black market developed
•strikes and political unrest also caused problems economically
How can the economy be split into phases in Weimar?
WEIMAR
•economic crisis and government response 1918-23
•golden years (policies for recovery) 1924-1928
•great depression and its impact 1928-1932
Why was social welfare a crisis in the first phase of the Weimar
economy?
WEIMAR
Government had set up retraining schemes for those who had fought in the
war which provided loans to those leaving the army needing work. Also set up
pension payments for the wounded, widows and orphans. Weimar
government was liberal so care was important.
Both federal and Lander govs provided layers of support- social welfare
programmes from different groups.
1920 there was 1,537,000 disabled veterans and 1,945,000 survivors not
classed as disabled. Government looked after them.
1924, government was still supporting 768,000 disabled veterans, 420,000
war widows with 1,020,000 children and 190,000 parents of dead soldiers.
10% of the population were receiving federal welfare payments.
,Why was debt and reparations such a crisis for the government after
1918?
WEIMAR
Borrowed heavily during the war, by 1918 it owed 150 billion marks (3x that
of 1914).
Reparations then put the government in even deeper debt.
How did the government attempt to deal with the debt crisis post
WW1?
WEIMAR
At first the government tried to meet payments and carried on borrowing and
printing money.
1921 onwards, entangled in negotiations with the allies about how much it
should pay, how much it could pay and when payments should be made.
(allies, especially France, felt Germany was trying to avoid payments at all)
Until 1924 reparations were paid in kind for example with coal, wood and
railway carriages.
Why was the Ruhr a crisis for the government 1918 onwards?
WEIMAR
January 1923, Germany failed to deliver reparation payments in full.
When it fell behind in 1921, the London Ultimatum of Allies had said payments
should be met or allies would occupy the Ruhr which was vital to economy
because of coal and industries.
1923, French invaded Ruhr with aid of Belgian troops
How did the government attempt to solve the Crisis in the Ruhr in
1923?
WEIMAR
Government instantly stopped all reparation payments to France (but not to
other allies), told German officials not to accept orders from non-Germans and
urged the workers in the Ruhr to passive resistance.
French replied by cutting the Ruhr off from the rest of Germany by setting up
a border, patrolled by armed forces and taking control of the postal and
, telegraph services. They tried to solve resistance by using force or bringing in
their own workers.
Neither France or Germany benefited.
1923, new German coalition government called for a stop to passive
resistance tactics and began negotiations with the French.
Why was Hyperinflation a crisis?
WEIMAR
Prices were going up several times a day
A newspaper that cost 1 mark on 1st May 1922 cost 100,000 marks by 1st
September 1923 and 700 billion marks by 17th November that year.
People lost their faith in money and began to rely increasingly on the black
market but as it became more popular only the rich could afford to 'buy' on it.
Towns, regions and even businesses began to issue their own Notgeld or
'emergency money'.
All those on fixed payments, including social welfare suffered as the payments
lost their value
About 750,000 federal and regional government employees lost their jobs
How did a change of government help the crisis' that happened post
WW1?
WEIMAR
Gustav Stresemann became chancellor (leader of the DVP)
•emergency decree of 10th August gave his government powers that included
postponing Reichstag meetings and governing by decree if necessary
•emergency decrees avoided tying up decision making in the Reichstag
•government could act more rapidly and decisively than any coalition in the
past
What solution did Stresemann have to make money work again?
WEIMAR
•the almost worthless mark was withdrawn and the Rentenmark took its place
in October 1923 (people who still had savings objected this)
•'emergency money' was banned
•Schacht became president of the Reichsbank in December 1923
ROUTE G
Why was the economy so bad in 1918?
WEIMAR
•government spent all of its gold reserves on war
•solution was to print more money
•July 1914 over 6,300 million marks in circulation; by the end of 1918 this had
increased to just over 33 ,000 million
•end of war 150 printing firms with 2,000 printing presses running day and
night to make new banknotes
•wages and savings lost value, prices rose
•businesses suffered, people lost their jobs
•when war ended, so did production of war good such as ammunition
•farm production had dropped by around 20% and industrial input halved
•black market developed
•strikes and political unrest also caused problems economically
How can the economy be split into phases in Weimar?
WEIMAR
•economic crisis and government response 1918-23
•golden years (policies for recovery) 1924-1928
•great depression and its impact 1928-1932
Why was social welfare a crisis in the first phase of the Weimar
economy?
WEIMAR
Government had set up retraining schemes for those who had fought in the
war which provided loans to those leaving the army needing work. Also set up
pension payments for the wounded, widows and orphans. Weimar
government was liberal so care was important.
Both federal and Lander govs provided layers of support- social welfare
programmes from different groups.
1920 there was 1,537,000 disabled veterans and 1,945,000 survivors not
classed as disabled. Government looked after them.
1924, government was still supporting 768,000 disabled veterans, 420,000
war widows with 1,020,000 children and 190,000 parents of dead soldiers.
10% of the population were receiving federal welfare payments.
,Why was debt and reparations such a crisis for the government after
1918?
WEIMAR
Borrowed heavily during the war, by 1918 it owed 150 billion marks (3x that
of 1914).
Reparations then put the government in even deeper debt.
How did the government attempt to deal with the debt crisis post
WW1?
WEIMAR
At first the government tried to meet payments and carried on borrowing and
printing money.
1921 onwards, entangled in negotiations with the allies about how much it
should pay, how much it could pay and when payments should be made.
(allies, especially France, felt Germany was trying to avoid payments at all)
Until 1924 reparations were paid in kind for example with coal, wood and
railway carriages.
Why was the Ruhr a crisis for the government 1918 onwards?
WEIMAR
January 1923, Germany failed to deliver reparation payments in full.
When it fell behind in 1921, the London Ultimatum of Allies had said payments
should be met or allies would occupy the Ruhr which was vital to economy
because of coal and industries.
1923, French invaded Ruhr with aid of Belgian troops
How did the government attempt to solve the Crisis in the Ruhr in
1923?
WEIMAR
Government instantly stopped all reparation payments to France (but not to
other allies), told German officials not to accept orders from non-Germans and
urged the workers in the Ruhr to passive resistance.
French replied by cutting the Ruhr off from the rest of Germany by setting up
a border, patrolled by armed forces and taking control of the postal and
, telegraph services. They tried to solve resistance by using force or bringing in
their own workers.
Neither France or Germany benefited.
1923, new German coalition government called for a stop to passive
resistance tactics and began negotiations with the French.
Why was Hyperinflation a crisis?
WEIMAR
Prices were going up several times a day
A newspaper that cost 1 mark on 1st May 1922 cost 100,000 marks by 1st
September 1923 and 700 billion marks by 17th November that year.
People lost their faith in money and began to rely increasingly on the black
market but as it became more popular only the rich could afford to 'buy' on it.
Towns, regions and even businesses began to issue their own Notgeld or
'emergency money'.
All those on fixed payments, including social welfare suffered as the payments
lost their value
About 750,000 federal and regional government employees lost their jobs
How did a change of government help the crisis' that happened post
WW1?
WEIMAR
Gustav Stresemann became chancellor (leader of the DVP)
•emergency decree of 10th August gave his government powers that included
postponing Reichstag meetings and governing by decree if necessary
•emergency decrees avoided tying up decision making in the Reichstag
•government could act more rapidly and decisively than any coalition in the
past
What solution did Stresemann have to make money work again?
WEIMAR
•the almost worthless mark was withdrawn and the Rentenmark took its place
in October 1923 (people who still had savings objected this)
•'emergency money' was banned
•Schacht became president of the Reichsbank in December 1923
