Economic Development in Germany after the First World War - Essay Example

ECONOMIC DEVELOPMENT IN GERMANY AFTER THE FIRST WORLD WAR Affiliation ECONOMIC DEVELOPMENT IN GERMANY AFTER THE FIRST WORLD WAR (BETWEEN 1919 AND 1933) Germany’s economy particularly writhed following the First World War in comparison to some other countries like France and the United Kingdom who recuperated relatively fast. This was because of the treaty known as the Treaty of Versailles which obligated Germany to emolument what was called reparations to the allies. It was because of these many reparations, deprived economic infrastructure and the political pressure that happened in Weimar Republic that were accountable for the melancholy of the economy. This paper talks about the hyperinflation and unemployment in Weimer Germany that finally occasioned into a lost value of the Reich mark (Wixforth, 2002). Instantaneously after the First World War, Germany began making efforts of recuperating from their effects of war through social expenditure. The Germany government commenced projects that involved enhancing the transport sector, starting gas works and also trying to revolutionize their power plants. This was an attempt to lessen the escalation in the rate of joblessness which was becoming worse to the country’s economy (Huefner & Woergoetter, 2008). The working class in German got greater political and social representation in the society. Those people, who came from humble backgrounds, for example those in the army, were promoted in their jobs and they started earning better wages. There was equally an explosion in trade unionism in German. The socialist and trade union movements in Germany became much stronger than they were in 1914. These unions no longer concentrated in banning strikes among their employees but they also adjudicated for peace so that there would be no repeat of the war that had resulted in the loss of millions of families as well as leaving most of the men who had taken part in the war wounded. The social spending subsequently started growing with the government using 65 marks for each inhabitant by 1925 as compared to the expenditure of 20.5 marks in the year 1913. By the year 1929, the government’s expenses were more than one hundred marks per inhabitant. The German government took control over banks and they literally controlled the money that flowed in and out of the banks. The government also took control over foreign trade as well as the manufacture and sale of food. The production and sale of armaments was equally put under the government control. Maximum prices for various goods were set by the government so as to raise more revenue to meet its ever increasing demands. Apart from all these, the franchise enterprise was extended. This was also geared towards the raising of the necessary revenue for government use. Due to the development in the spending on social welfare and plummeting earnings there was an upsurge in financial inconsistencies within the country. This prompted in a collapse of the municipal funding in 1930 alleged to have been instigated by liability yet it was actually caused by orthodox budgets. It was very problematic for both the legislators and municipal officials to yield the financial situation to customariness (Gross, 2012). To make the economic situation even worse, the proceeds taxes for the country began to worsen with an evident descent of about 25% from the year 1913 when entire incomes from taxes were 53%. The government after observing the reduction in revenue tax started relying on state business and property tax for financial earnings. Moreover, the government also budged part of their focus on earnings fashioned by the municipal possessions such as the power plants of electricity (Huefner & Woergoetter, 2008). The German government also suffered from shortages of raw materials. The international community had shunned German as a result of the First World War. Germans lacked the funds to even buy fuel. Due to the lack of funds, the German government was compelled to forbid its citizens from driving cars. This means that the government would not have fuel expenses as the people had been forced not to use cars. As a result of the lack of funds, German would also not buy the raw materials that it required for its industrial purposes. The major problem was that overseas countries had placed shielding tariffs on Germany goods and that is one of the reasons why Germany could not make reparation disbursements despite its economic glitches. The compensation charges would most possibly have become practicable if Germany was permitted to sell goods to overseas countries even at comparatively small prices (Wolf, Schulze, & Heinemeyer, 2011). There were economic chaos in German after the first world war as German was reduced in size and compelled to pay substantial reparations to make good the effects of the war. The treaty of Versailles required Germany to ship to France 9% to 15% of its production as reparations between the year 1920 and 1928, 8% in 1929 and 4% in 1930. German was equally required to buy 500,000 tons of coal per month each and every month (Redruth School, 2006). This was a result of the agreement between German and Poland on Upper Silea in 1922. This idea of protective tariffs on Germany’s goods deteriorated the monetary situation in the country and since they still had reparation expenditures, they started printing great amounts of money which elevated inflation in the country. Following this, all foreign financiers started withdrawing their markets from Germany, leaving the country’s economy subsiding. This was the moment when Hitler took benefit of the economic situation and started intensifying in supremacy, finally making the Germans believe that the Jews were the origin of the radical decrease in Germany’s economic state. German developed specific tariffs that largely affected cross-border trade. These types of tariffs selectively penalized certain cross-border trade. Unstable political systems in German evoked an economic crisis. The rise of the economic situation in Germany caused a severe rise in tariff levels. These tariffs were intended to generate income for the Germany government. German began to make excessive use of non-tariff barriers. It used non-discriminatory railway tariffs. It also employed the use of licences and quotations. The use of non-tariff barriers was an important aspect of trade in Germany especially after 1930. German also made attempts to prohibit import. This was an advance towards the maintenance of the little resources that it had left in its country. It would not afford to lose even a little amount of this in the import activities to other countries. The quotas of German were reduced over time and they were never fixed. They were flexible in nature. The end of the First World War saw a change in the working environments in German. Women started working, something that had been previously considered a unique preserve of the men. Women had never been allowed to seek paid employment and their work was limited to their domestic chores. The women began to work in factories and abandoned domestic duties. This led to a heightened demand by women for their independence as well as emancipation since they had been for long been subjugated by the men and treated as inferior beings to the men. This period also saw the rise of feminist movements that all advocated for the rights of women. There was a call for equality among the genders even in the economic fields. The economic shift in German saw both men and women participating in the country’s economic activities. German adopted the system of a planned economy and the state was given a huge role to play in the economy. The state started taking more seriously the economic matters. They had lost a lot of revenue and labour during the war and they needed to regain the same. The only way that they would have done this was by controlling efficiently the economic activities of the nation. There were advances in in medicine as well as technology. Sophisticated technology was established in order to deal with the economic difficulties that the country was facing as a result of the war. The cost during the war for German was close to forty billion. The German economy had severely suffered during the war. The workforce in German was not physically fit enough to work as hard as required. This means that the German economy did not have the required labour. There was an extreme food shortage. The labour force was not healthy enough to perform its duties. This was also one of the reasons for the decline of the German economy. Millions of men who form the largest percentage of the workforce had been killed during the people. The people who now worked were ill-trained and would not perform their duties efficiently. The machinery that the Germans were using for their production work became obsolete. It would not work efficiently to enhance the economic situation that the country was facing. It was even worse that the German government did not have the required resources to buy new machinery. German faced a moment of low economic growth due to all these factors. There was mass unemployment among its population and the people were not even able to meet their basic needs. As a result of this, Germany was no longer considered to be economically stable in the world. The allied blockade in Germany was also on the rise. Firms instigated to cut back considerably. Industrialized manufacture demolished by 1932, it was 40% of the level that it had been indicated in the year 1929. A lot of the banks in German went out of corporate. The unemployment of people made the tax revenues to the government to reduce. Unemployment benefits were no longer offered to people who were unemployed (Gross, 2012). This is unlike previously when the German government would afford to give the unemployed people various benefits. This is because the government would no longer afford to do so. The Nazis regime and communists government however took advantage of this to thrive. The government spending rates were cut so as to keep inflation under control. This was also done in order to maintain the competitiveness of the German exports. References Gross, S. (2012). Selling Germany in south-eastern Europe: Economic uncertainty, commercial information and the Leipzig trade fair 1920-40. Contemporary European History, 21(1), 19-39. Huefner, F., & Woergoetter, A. (2008). Germanys healthier economy. Organisation for Economic Cooperation and Development. The OECD Observer, (267), 11-12. Redruth School, (2006). German attitudes to defeat in 1918and the treaty of Versailles. Retrieved at http://www.johndclare.net/Weimar1_Redruth.htm The seeds of evil: The rise of Hitler. Retrieved at http://www.schoolshistory.org.uk/ASLevel_History/week3_impactofwar.htm Wixforth, H. (2002). The economic consequences of the First World War. Contemporary European History, 11(3), 477-488. Wolf, N., Schulze, M., & Heinemeyer, H. (2011). On the economic consequences of the peace: Trade and borders after Versailles. The Journal of Economic History, 71(4), 915-949. Read More