How stable were the Weimar Republic finances and economy between 1924 and 1929?

1. How stable were the Weimar Republic finances and economy between 1924 and 1929? Spades – Crosby - Ines

2. Aspects • Reparations • Inflation and Currency • Agriculture • Industry • Trade

3. Reparations • Post WWI German reparations as dictated by the Treaty of Versailles included a payment of 269b gold marks (approx. 100,000 metric tonnes of pure gold equal to 834b USD with today’s current rates). • Economists such as Keynes assert that payment of the reparations would have been economically impossible. • Foreign Minister Stresemann accepted the recommendations of the American Dawes Plan to settle the massive reparations issue.

4. Reparations were divided into “bonds” A,B and C where the majority was. “The Allies intended to collect only the A and B bonds, which totaled 50 billion marks, which was an amount that was slightly smaller than the 51 billion marks that the Germans had offered to pay.” • Germans defaulted so frequently on their payments that the French and British lowered the payments as an incentive to collect more frequently. Some analysts conclude that this was a strategy to lower their overall payment to a realistic rate.

5. Failure and incapability to fulfill this ridiculous payment ultimately led to the hyperinflation of their devalued Gold Mark. • 1929 Young Plan- Total sum was reduced by over 50% as many signatories of the Treaty of Versailles found this sum far too excessive. • Final payments made on Oct. 4, 2010 on the 20th anniversary of the German reunification.

6. Inflation and Currency • Government was somewhat responsible for not maintaining and enforcing regular checks on the value of their currency. • 1923- Hyperinflation of the German currency. Post WWI recession led to the rapid decline of the German Reichsmark due to the cost of war, constant pressure of the looming reparation demands and the feeble attempts to print more money to make more currency available to comply with budget deficits.

7. “Reichsmark” was replaced by the so-called “Rentenmark.” Without sufficient gold reserves to act as a safety net, the new currency was supported by the confidence of the agricultural and industrial sectors. • This new currency was rather weak and relied heavily on the good-will of other nations to accept it. • 1925- German national savings figure was estimated at 6.4 billion marks and in 1927, 7.6 billion marks. • Great Depression (1929-1935) “The Crash”  The Wall Street Crash magnified the effects of the already overwhelming debt facing Germany.

8. Industry and Agriculture • Claimed they were burdened by heavy social costs, rendered uncompetitive • German Railways, National Bank and many industries were therefore mortgaged as securities for the stable currency and the loans • IG Farben and United Steelworks = emergence of German industrial powers • 1927: Industrial figures up to par w/ 1917 stats • 1927: Steel and iron production increase 30% and 35% though thought it would decrease • Factories = new machinery • 1929: 33% more production than in 1913 • 1927: global agriculture price fell due to decrease demand, German farmers could not keep up

9. Trade • Overall dependence on imported goods while experiencing a decrease on exports • Net coal exports were 15m tons • Stunted in economic growth • Weak currency

10. Sauces • http://www.historyhome.co.uk/europe/weimar.htm#stresemann • http://en.wikipedia.org/wiki/World_War_I_reparations • http://books.google.com.ph/books?id=br62TG_FlvUC&pg=PA37&lpg=PA37&dq=German+agriculture+1924&source=bl&ots=hnL7fpzceD&sig=exizp3E5XlvLTByhRq4wspIYHYU&hl=en&sa=X&ei=8LGHT-OOGeqTiQevtbDLCQ&redir_esc=y#v=onepage&q=German%20agriculture%201924&f=false