Core Note 17

Did social welfare reforms strengthen or weaken Germany 1924-28?

Introduction:

There were extensive social and cultural changes in Germany in these years, alongside political and economic changes:

• The Weimar Constitution gave German citizens more rights, freedom opportunities, and greater equality than they’d ever been allowed before → many embraced these opportunities with enthusiasm and innovation.

• However, others lamented the death of a way of life where roles, responsibilities and authority were clearly defined and society was rooted in traditional values.

This caused the Weimar years to bear witness to a conflict between those who challenged traditional values in the name of ‘modernity’ and those who resisted change to preserve stability and a ‘traditional’ German way of life.

Historian Peukert drew attention to this ‘crisis of classical modernity’ at the heart of the Weimar Republic.

Social Welfare Reforms 1924-27

●Imperial Germany had led the world in social reform in the 1880s, but the Weimar constitution improved this by incorporating basic social rights and the creation of a welfare state.

●Moreover, in the hopes of creating a more equal society, Erzberger aimed to offset the costs by implementing a series of progressive taxes, including raising taxes on capital and an increase in the highest income tax from 4% to 60%.

●Working conditions: Stinnes-Legien agreement - 15 Nov. 1918 Karl Legien, leader of the trade unions and Hugo Stinnes, leader of the industrial employers had made an agreement where trade unions made a commitment not to interfere with private ownership and the free market, in return for workers’ committees, an 8 hour working day and full legal recognition.

●As a result of Stinnes-Legien agreement, laws introduced restricting the working week to 48 hours and introducing state scheme for compulsory arbitration in strikes.

● In 1920, benefits and pensions for widows and the wounded were included in the 1920 welfare scheme and there was also the National Youth Welfare Law (1922).

●New national insurance code (1923-5) gave more standardised pensions and improved health insurance scheme provided by doctors and insurance funds.

●1924: Public Assistance system, which provided help to the poor and destitute, was modernised.

●1925: State accident insurance system, introduced by Bismarck to help those injured at work, extended to cover those suffering from occupational diseases e.g. in the chemical industry and mines.

●1927: National unemployment insurance system called the Unemployment Insurance Law introduced to provide benefits for the unemployed, financed by contributions from workers and employers. This created a system covering 17 million workers which offered benefit at 75% of pay for ¾ of the year → this was the largest scheme in the world.

● In addition, large state subsidies were provided for the construction of local amenities e.g. hospitals, parks, schools, sports facilities and especially social housing.

● Over 2 million houses were built between 1924 and 1931 - and a further 200,000 renovated - so that the figure of homelessness was reduced by 60% in the decade.

Problems with the Social Welfare Reforms:

For many Germans, welfare system over-promised and under-delivered

● Very expensive: in 1926, the state was supporting 800,000 disabled war veterans, 360,000 war widows and over 900,000 war orphans. This was in addition to old age persons and, after 1927, the cost of unemployment benefits.

● Welfare system also needed large and expensive bureaucracy to administer it.

● Taxes increased after 1924, but there was a limit to how much the better-off were prepared to shoulder the burden of welfare expenditure.

● This meant that those administering benefits at a local level used many devices to keep expenditure down.

● Means test: check on financial circumstances of benefit claimant to confirm eligibility for support.

● Means tests were tightened up, snoopers were used to check claimants weren’t cheating the system and there were increasing delays in paying benefits.

● Those in need of support, including large numbers of war veterans and their families, felt they were being humiliated and insulted by the welfare system, undermining their support for the Weimar Republic.

Living Standards and Lifestyles:

● Alongside the welfare reforms, the first quarter of the 20th century witnessed dramatic social changes in German family life.

● Population growth continued but rate declined and human cost of war significantly altered gender balance.

● Living standards of millions of Germans undoubtedly improved during the years 1924-8.

● Those in work, particularly those represented by powerful trade unions, were able to maintain living standards by negotiating wage increases.

● Those dependent on welfare benefits were less well off, and undoubtedly suffered hardships, but were prevented from falling into abject poverty by the welfare system.

● Business owners and salaried employees benefited from improved trading position for German companies at this time.

However, there were many exceptions to this rule:

● Those who had lost their savings during the hyperinflation crisis of 1923 were unable to regain comfortable lifestyles they’d once enjoyed.

● Farmers suffered from poor trading conditions and low prices, and their incomes were falling.

● Air of confidence exuded in cities such as Berlin wasn’t apparent across the whole country.