Sunday, 18 January 2015

German Economy After 1st World War


The global economic crisis is connected in Germany inevitably with a name, that of Chancellor Heinrich Brüning. The estimated in his party as a financial expert center politicians joined in 1930 the successor Hermann Müller after the grand coalition had failed because of the issues of unemployment. In him the hopes of saving the country were put out of the crisis.

As of March 30, Brüning then led his government, with the aim to rehabilitate the ailing state budget and end the war reparations. Brüning government was appointed by President Paul von Hindenburg, as it was the parties no longer possible to form capable of governing majorities.

By the emergency powers of the Constitutional Article 48 and Article 25, the dissolution of the Reichstag, Hindenburg secured the capacity to act presidential government.
With his so-called deflation policy Bruning policy of the American was quite the opposite.

Content of his policies have included the following measures:

As in the US, the salaries of public employees were also reduced in Germany. However, in Brüning they suffered with 25% compared to the US, where the salaries of federal employees decreased by only 15%, much higher.
Similarly, an increase in the income tax was carried out by Brüning government. Thus income were taxed by more than 8,000 Reichsmark by 5% more than usual.

Saving measures in the field of unemployment - the costs were reduced from 1821 million marks to 721 million Reichsmarks - and an increase in unemployment contributions from 3.5% to 4.5% are also indicative of the policy, such as the introduction of a Single tax of 10% ,
The restoration of the kingdom of Finance, the Brüning the end of 1930 drastically operation should reassure foreign investors and further minimize the possibility of further borrowing open.

In fact, succeeded to the Registrar to cut government spending compared to the previous year by 19% in fiscal 1931, but declined in the same period, the revenue due to the still high unemployment rate by as much as 20%, which does nothing for the success of the policy Brünings less than a disaster meant.

Another problem posed still to be paid reparations. On 03.12.1930 it was the so-called Young Plan, which to pay the remaining debt totaling 113.9 billion Reichsmarks in 59 annual installments until 1988, stipulated adopted by the Reichstag.

The account of the austerity high unemployment and the great misery in the population should demonstrate the Allies that the payment of the reparations were still not possible. Some throw Brüning even a conscious policy, which should lead to an increase in unemployment before.

The aim of being able to stop the payments of reparations finally was achieved on the Lausanne reparations, which was held from June 16 to July 9, 1932. A final payment of 3 billion Reichsmark was nevertheless required.

With the end of the Lausanne Conference the crucial bondage fell for the German economic policy, there was even more subdued optimism in the population, which was reflected in a significant investment recovery. This was a crucial factor in Germany's path out of the crisis in any case.