economic challenges

what were the economic challenges faced by germany?

• the occupation of the ruhr

• hyperinflation

what was the background information of the occupation of the ruhr ?

• the treaty of versailles forced germany to pay reparations of 6.6 billion pounds.

• germany failed to pay the reparations in time ( january 1923 )

what was the consequence ?

• french and belgium occupied the ruhr valley.

• they took what was owed to them in the form of raw materials and goods .

  ( this was considered legal under the treaty of versailles.)

how did the german government respond ?

they ordered the german workers to go on strike and not cooperate with the french.

what did this lead to?

hyperinflation.

what lead to it?

• since the german workers went on strike, the german economy collapsed.

• the government kept on printing banknotes which eventually made them worthless. ( printing more money caused the value of currency to decrease)

how were the germans suffering?

• prices of daily needs rose rapidly.

• the middle class germans lost the most. ( a middle class family who could’ve bought a house in 1921 with their savings, could not even purchase a loaf of bread in 1923.)

• personal savings were wiped out and unemployment was widespread.

what did the germans think?

• many opponents of the weimar government blamed the government for their suffering.

  ( since the weimar gov was the one who signed the treaty of versailles and agreed to the conditions. ) → they resented the weimar government for this.

what did the weimar government do to solve the problem?

• in november 1925, a councillor called GUSTAV STRESEMANN replaced the german mark with a new currency called the rentenmark.

• stresemann also negotiated the reorganisation of reparations through the DAWES PLAN in 1924 and the YOUNG PLAN in 1929.

what was the dawes plan?

• the plan removed the troops who were invading the ruhr.

• this was so the area could start production to generate money.

• in addition, the united states also loaned germany large sums of money to support its economy.

what was the young plan?

• the plan was intended to support germanys economy and ensure that germany could pay the reparations.

• it sought to reduce the reparation amounts and extend the repayment period.

  ( the plan had barely been put into effect when the great depression of 1920 began )

how did these plans benefit germany?

they allowed germany to stabilise their finances by reducing its debt.

hence, what was the period 1923-1929 often called?

the golden age of weimar.

( where economy recovered and democracy had a chance of taking root)

what did the germans think?

• majority→ thought that germany had averted the worst of the crisis years and had entered a new period of stability and success.

• others→ thought that the period of recovery only served to mark the major weaknesses that continued to plague the weimar government.