The role of Government policies in economic change, 1871-1990

Bismarck, 1871-1890

Worked with Liberals and supported free trade

Introduction of protection, 1879

1879 ditched Liberals and free trade. Aligned with Conservatives he supported the introduction of protective tariffs

Several reasons for this

Slowdown in economic growth after 1873 reduced confidence in free trade

France, Russia, Austria adopted tariffs

German agriculture suffered from the importation of cheap wheat from the USA and Russia. Bismarck feared Germany reliant on foreign grain

Tariff increase revenue

1879 Protectionist Parties held majority in Reichstag

Higher tariffs meant higher bread prices, they protected German jobs

Wilhelmine Germany, 1890-1918

1890 Wilhelm II dismissed Bismarck

Wilhelm supported Weltpolitik- expanding Germany's empire and navy

Naval expansion- Tirpitz given task of expanding the navy. To gain Reichstag approval he created the Naval League- Supported by Krupp, iron and steel magnate. Had 300 000 members.

Pressure from League , Reichstag in 1898 and 1900 agreed to build a major fleet. This alienated the British and led to a naval race, as well as a large deficit!

FWW

Due to military necessity army leader intervened in all economic affairs

Govt Intervention: tried to ensure all contributed to WW1. War Ministry decided all men should be conscripted . 13 million called for service, a 5th of the population. Women were used in the workforce to substitute for men.

The War Raw Materials: exercised vast power directing labour, controlling the railways, introducing rationing and price controls and allocating resources to industries. The Auxiliary Services Act 1916 enabled the government to control labour of males 16-60. Germany still behind British production

Civilian morale- lack of food and fuel made life miserable. workers resented being forced to work long hours. Nov 1918, revolution broke out

Weimar Republic, 1919-1933

Coalition govts in early 1920's failed to tackle economic issues

Printed more money, increasing inflation

Hit Germans with savings hard, led to hyperinflation

Stresemann adopted new currency Rentenmark

Successful and economy revived

Drew up Dawes and Young Plan

WSC terrible economic consequences- reduced govt spending and increase in unemployment

Nazi economics, 1933-39

Hitler economy was about achieving racial and political goals

wanted lebensraum

wanted Wehrwirtschaft (defence economy)

conflicting economy -preparing for war and a reasonable standard of living for German people

Nazi war economy

Poor use of assets gained up to 1941

Hitler initially rejected a total war economy-e.g. rationing, limitation on consumer goods, as concerned for morale.

Economy directionless with competing agencies

1943 Goebbels called on self sacrifice to support total war to halt annihilation. While war production trebled between 1942-44. German productivity lower than that of the Allies.

Germany 1945-90

Marshall Plan

1948 Allied zones combined to form FRG

US Sec of state George Marshall announced USA would provide economic aid to Europe. FRG recieved 1.5 billion

Currency reform- introduced the Deutschmark. USSR's opposition to this led to the Berlin Blockade and the Allied airlifts.

Erhard

Economics minister - stripped away Nazi and Allied economic replaced with Free and Social Market- govt provided welfare to help vulnerable.

The Stabilisation LAW

1967 new Economics Minister Schiller supported the Law- gave the FRG the power to control economy in recession

Membership of the EEC

Began in 1951 with trade restrictions on coal and steel were dropped between Belgium, France, Italy, Luxembourg, the Netherlands and the FRG (the Six). Integration stepped forward as a result of the Treaty of Rome (1957) by which the 6 formed the EEC.

Benefits were: cheaper products through elimination of trade barriers.
savings achieved through common policies of agriculture and transport

Easier flow of labour around EEC

Later adopted a common currency and political union creating a single European State- although little progress pre-1990

Common Agricultural Policy

established 1962 to ensured agricultural policies were harmonious and transferred to the European Community. CAP was a compromise between FRG and France. West Germany would have access to French market, in exchange FRG would help pay French farmers.

1970's Chancellor Schmidt promoted co-operation in tackling common economic problems.
He established regular meetings between most important economic nations
He created the European Exchange Rate Mechanism (ERM) to promote monetary stability.

Kohl later privatised companies such as Lufthansa and VW as a way to reduce the states role in the economy