Topic 3: The economy of the Weimar Republic 1924-29
Economic Recovery
Traditional view: After the hyperinflation crisis, the introduction of the new currency (rentenmark)
and the measures brought about by the Dawes Plan ushered in 5 years of economic growth and
affluence. The period does stand out between the economic chaos of 1922-23 and the Great
Depression of 1929-33
The strengths of the German economy
Despite the loss of resources as a result of the TOV, heavy industry was able to recover
reasonably quickly and by 1928, production levels reached those of 1913.
This was the result of the use of more efficient methods of production, particularly in coal
mining and steel manufacture, and also because of increased investment
Foreign bankers were particularly attracted by Germany’s high interest rates
German industry also had the advantage of being able to lower costs because of the growing
numbers of cartels which had better purchasing power than smaller industries
Example of Cartel: IG Farben (chemical giant) became the largest manufacturing enterprise
in Europe, whilst Vereinigte Stahlwerke combined the coal, iron and steel interests of
Germany’s greatest industrial companies and grew to control nearly half of all production
1925-29: German exports rose by 40% and such economic progress brought social benefits
as well (interconnection between economic improvement and social benefits)
Hourly wages rates rose every year from 1924-30 and by as much as 5-10% in 1927 and 1928
The benefits of social welfare
Striking improvements in the provision of social welfare
Principles of a welfare state were written into the new Weimar Constitution and in the early
1920s generous pensions and sickness benefits were introduced
Approx. 40% of federal government expenditure went on war-related pensions to nvalids,
widows and orphans
In 1927, a compulsory unemployment insurance covering 17million workers was created,
which was the largest scheme of its kind in the world
State subsidies were provided for the construction of local amnesties such as parks, schools,
sports facilities and council housing
All these developments, alongside obvious signs of wealth (increasing no. of cars; growth of
cinema industry) supported the view that the W.R’s economy was enjoying boom conditions
However, social costs had economic implications
Although such measures strengthened support amongst many ordinary Germans, the
regime also suffered from exaggerated expectations
Welfare reforms affected the elite’s attitude to the Republic and the resulting high taxation
and comparative redistribution of resources away from the elite reinforced its suspicions of
the new democratic system
Economic Recovery
Traditional view: After the hyperinflation crisis, the introduction of the new currency (rentenmark)
and the measures brought about by the Dawes Plan ushered in 5 years of economic growth and
affluence. The period does stand out between the economic chaos of 1922-23 and the Great
Depression of 1929-33
The strengths of the German economy
Despite the loss of resources as a result of the TOV, heavy industry was able to recover
reasonably quickly and by 1928, production levels reached those of 1913.
This was the result of the use of more efficient methods of production, particularly in coal
mining and steel manufacture, and also because of increased investment
Foreign bankers were particularly attracted by Germany’s high interest rates
German industry also had the advantage of being able to lower costs because of the growing
numbers of cartels which had better purchasing power than smaller industries
Example of Cartel: IG Farben (chemical giant) became the largest manufacturing enterprise
in Europe, whilst Vereinigte Stahlwerke combined the coal, iron and steel interests of
Germany’s greatest industrial companies and grew to control nearly half of all production
1925-29: German exports rose by 40% and such economic progress brought social benefits
as well (interconnection between economic improvement and social benefits)
Hourly wages rates rose every year from 1924-30 and by as much as 5-10% in 1927 and 1928
The benefits of social welfare
Striking improvements in the provision of social welfare
Principles of a welfare state were written into the new Weimar Constitution and in the early
1920s generous pensions and sickness benefits were introduced
Approx. 40% of federal government expenditure went on war-related pensions to nvalids,
widows and orphans
In 1927, a compulsory unemployment insurance covering 17million workers was created,
which was the largest scheme of its kind in the world
State subsidies were provided for the construction of local amnesties such as parks, schools,
sports facilities and council housing
All these developments, alongside obvious signs of wealth (increasing no. of cars; growth of
cinema industry) supported the view that the W.R’s economy was enjoying boom conditions
However, social costs had economic implications
Although such measures strengthened support amongst many ordinary Germans, the
regime also suffered from exaggerated expectations
Welfare reforms affected the elite’s attitude to the Republic and the resulting high taxation
and comparative redistribution of resources away from the elite reinforced its suspicions of
the new democratic system
