What Difficulties Were Experienced By The German — страница 2

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difficult economic period of the decade for Germany and one of the most devastating inflationary crisis ever. Some of the causes of the inflation were due to the amount of money being borrowed from the Reichsbank. As already stated this resulted in higher prices, but a deprecation of currency. (decline in value) Also Allied reparation demands depressed the exchange rate and raised import and domestic prices which again increased the supply of money. Another factor could be seen to have resulted from the wage increases beginning in 1918 due to social unrest and trade union power. As prices soared the value of the mark decreased so much the 2000 printing presses were continually making money everyday. The German people began to exchange goods for goods and big industries started

using their own currency, which had more worth than the mark. The end of 1923 put methods into place to combat inflation, the end to passive resistance in the Ruhr and the creation of a new currency the rentenmark. This was valued at one pre-war gold mark or one trillion marks. To make sure inflation did not start again a limit of 3.2 million rentenmarks was set. The Dawes plan in April 1923 also helped in the stabilisation progress as it reformed the reparation payments to one billion rentenmarks and an annual payment linked to price goods like sugar and coal. By August 1924 the Reichsbank became independent of the government and the reichsmark was introduced. This was equal to the rentenmark but backed by gold instead of mortgaged land. The currency and the Dawes reforms helped

to stop the Great Inflation and from 1924 to 1929 the economy started to grow. These years have been termed the ?Golden Years?. Production of industry steadily grew and there became a focus on rationalism, the use of technical advances and more efficient use of labour energy and materials or organisation of production. This led to outside investors lending heavily to to the German government which helped stimulate the growth of the industry. However a lot of this credit was based on short term loans which the government put into long term projects. If investors asked for a sudden withdrawal the economy would be thrown into a crisis. So as Derek Aldcroft writes ?Germany was living on borrowed time.? (Aldcroft p60) This could be seen when in 1929 foreign banks called in their loans

due to problems in their reparation payments. This was an indication of what was going to happen in the years of the Great Depression. Therefore it can be shown the German economy was in difficulties from start to finish of the decade. This was due to the crippling cost of the war, the displacement of its people namely the homecoming soldiers, and also in restarting the growth of production in areas such as industry and agriculture. This was impeded by the huge reparation debts. Their failure to address this (although who could?) in turn pushed upon them the period of hyperinflation. From this they had to try and instil stability, which to some extent they succeeded but only to head into the next dark period of the Great Depression. BibliographyD. Aldcroft, ?The European Economy

1914-1990?, (Routledge 1990) H.J. Braum, ?The German Economy in the Twentieth Century,? (Routledge 1992) K. Hardach, ?The Political Economy of Germany in the Twentieth Century, ? (University of California Press 1980)