WEIMAR – RECOVERY 1923-9
How secure was the economic recovery?
Germany’s situation:
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1923: Stresemann becomes Chancellor
Set end to passive resistance and hyperinflation
Fulfilment policy
Rentenmark  Reichsmark
Era of considerable economic advance
 Dawes Plan (1924): extend repayment period, reparations rearranged ,
American loans
 Production and consumption
 New industries
 Reduced working hours
 Balance of trade
However, recovery was susceptible to crisis:
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Compared internationally: economy not flourishing enough
Growth unstable
Cartelisation monopoly prices
Revaluation compensation and higher wages, comparatively low
production rate
Rationalisation introduction of assembly-line work unemployment
Agricultural Crisis: bad harvest + international grain surplus  falling
prices  “Farmer’s revenge”
Loans high interest rates, high budget deficit
High domestic spending
 Economic performance mixed but unstable already before Wall Street
Crash 1929
However, dependent on American loans
Who is responsible?
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state living beyond its means  too much spending
wages increased unrelated to productivity
thus, low profits, slow growth
“sick economy”
 Lack of entrepreneurial attitude, inadequate investment
 Government subsidies and cartelisationlow productivity
 shortage of skilled labour and lack of confidence
Did the Weimar welfare state strengthen or weaken the regime?
 Constitutional welfare state
 Advance in social services (domestic spending) hospitals, schools...
 Federal government expenditure financing pensions for war-related
citizens (2.5 mio people)
 1927 major unemployment insurance law introduced for ca. 1-2 mio
unemployed
  regime suffered from high expectations
 Reality: 700 000 unemployed citizens could be paid
 Elite questions regime, too due to high taxation and redistribution
 Arbitration caused resentment of employers
 Over-strained welfare state
Sources: John Hite/ Chris Hinton (eds.): Weimar and Nazi Germany, London
(John Rurray) 2000.
http://www.bpb.de/geschichte/nationalsozialismus/