POLITICAL AND ECONOMIC SITUATION IN GERMANY

20th CENTURY

On the early 20th century, Germany was a world leader in subject of industrialization. The development of progress towards industrial maturity led to a huge change in Germany's economic situation.

On the early 20th century, Germany was a world leader in subject of industrialization. The development of progress towards industrial maturity led to a huge change in Germany's economic situation.

Algeciras conference

It took place in 1906, and the parts involved were US, Britain, France, Germany and the Austro-Hungarian empire.

 

This was important to discuss about the importance that France was taking in Morocco and the relationship between this two countries. France wanted to impose a new agreement to close the frontiers for commerce, this was supported by Britain due to the agreement between itself and France, Germany wasn’t happy with the decision and took part only supported by the Austro-Hungarian empire. US appeared as a mediator to the issue and ,with its help, the sultan of Morocco divided the territory between France and Spain, leaving the task of superviewing by a Swiss supervisor.


 

This solution did not fit either Germany or Austro-Hungarian empire and it’s one of the keys to understand why WWI started.

Agadir crisis 1911

It’s  seen as one of the medium terms causes of World War One. Occurred in 1911 just four years after the First Moroccan Crisis. Another time events in North-africa was disabling european relationships.

 

Due to Algeciras conference, German politicians lost a lot of influence in Berlin while their place was taken by senior military figures. This caused the anger of the government in Germany, and decided to claim France better conditions in Morocco, this resulted in an agreement whereby Germany recognised the ‘special interests’ France had in Morocco while France agreed not to hinder Germany’s commercial and economic interests there.

 

This agreement did not work because every single country was more worried about particular interests than common, so at the end several disputes took place, making the relationships even worst that in the past, creating the perfect climate for a big war, as the WWI.

 

During these years Germany was an important country, but as it is mentioned before the government was including more and more militar people in it, this resulted in a very conflictive way of seeing things and it’s not weird discovering that Germany was involved in the majority of conflicts that appeared in the 20th century.

 

Economic talking Germany was in one of the most important moments of prosperity, this happened thanks to the fact that the population grew up considerably and the economy wat on the best point of all the times due to the increasing importance of the industrialization.

 

In 1913, Germany decided to dominate all European markets and in 1914, became one of the three largest exporters in the world.

World War I (1914-1918)

On August 1, 1914 the First World War breaks out and Germany launched itself in support of its ally the Austro-Hungarian Empire.

 

This war took 4 years  and it ended because Germany, on November 11, 1918, requested an agreement, ending the war with the victory of the allies, due to the fact that most of the countries that started the war gave up and it was an isolated Germany without sources, because of all the years of blockade, against all the allies. Germany had great losses because of the war and this defeat resulted in a revolution in which the Kaiser William II abdicated by proclaiming the Weimar Republic in 1918. The following years were characterised by great political and economic stability.

The fiduciary currency that was used all these years  was the papiermark. However, it behaved relatively well in the years 1918 and 1919. The price increase in Germany since the beginning of the war until the beginning of 1919 was 140%.


The hyperinflation crisis in Germany was an event that occurred from 1920 to 1923 following the implementation of the Treaty of Versailles, because Germany was forced to make a payment known as war reparations, this compulsory payment lead to the devaluation of the currency increasingly accelerated.


It was in 1923 when the situation became unsustainable. Germany failed to pay reparations imposed by the victorious countries, so a revanchist of France decided to invade the Rurh, one of the most productive regions, to force the German government to make its payments.


The economy recovered slowly at this time and mainly thanks to the stabilization of the currency and investments from the U. S. However, this investment of the United States became a  disaster when the 1929 crisis or the “29th crack" arrived.

 

The German economy depend heavily on U.S. short-term loans. Because of that, Germany was the most affected country in Europe by the crisis, suddenly seeing that its entire major source of funding had radically diminished or even disappeared.

 

In 1933 Nazi Germany began. In this period, Hitler's extermination policy, more known nowadays as Jewish holocaust, ended up with 6 millions of deaths.

World War II (1939-1945)

 

 

 

 

 

 

 

 

In 1933, the National Socialist Party of German Workers took control in Germany. Under this autocratic Nazi leadership, Germany fell into a totalitarian dictatorship. Although Hitler's power lasted only a decade, his anxiety of revenge and his obsession of making Germany an important country again, came with the Second World War.

 

During this period Germany it’s full of unemployment, unhappiness and poorness, that is why Hitler reached the power. The resentment and misery  lead to a democracy’s crisis, and all these issues explain why this war was not only  a political-economic nature, but also served to enforce strong racist laws.

 

After World War II, Germany experienced a periods of severe economic crisis. With the reconstruction efforts, country's economy and industry developed rapidly. This event is known as "German miracle".

Cold War (1947-1991)

After World War II, Germany, already defeated and devastated by war, became the first point of the Potsdam Conference. At the 1945 Potsdam Conference, the Allies divided Germany into four zones of military occupation: France to the southwest, Great Britain to the northwest, the United States to the south, and the Soviet Union to the east. Germany became the mainly state where cold war was developed, due to the differences between the allies and the Soviet Union.

 

This issue happened because the IIWW did not end with the signature of a treaty of peace, so all the countries involved were progressively deciding in order of particular interests and this developed various ways of doing things, with so many differences within them.

 

Since then, the social market economy has been the guiding principle of German economic policy.

The western allies used a coin, which was a reevaluated mark, to rescue the German economy, this kind of policy worked and it meant the uprising growth of the western part of Germany, on the other hand Soviets, decided to follow a policy in a more traditional way, closing frontiers, leaving Berlin with no sources at all, and not accepting changes, this resulted in a recession situation for the east part of Germany.

 

In 1949, the Federal Republic of Germany was founded. The GDR constitution comes into force and seals the division between the eastern and western parts. This one had the capital in Bonn and it’s main principle was to avoid totalitarianism.

 

In the east part Democratic Federal Republic was created, this had the capital in Pankow and its main government was composed by Marxist-Leninist party.

 The Berlin Wall 1961

 

 

The differences between the Allies and the Communists were very big, so they came to have two currencies, two political ideals and as a result two Germanies.

The poor Soviet economy and the growing economy of Berlin brought with it that many East Germans wanted to move to the other side, which led to the construction of a provisional wall.

 

This division lasted for 28 years, and it is known that around the 20% of population tried to move from one part to another without success(Usually from east to west due to the development of the 2nd one)

 

In 1961, official constructions of the wall were started. During the night of the 10th of november 1989 Germany became one again. It was a very important moment in Germany history, known as Wende (Change), it was a before and after in Germany’s society because it was interpreted as freedom.

German reunification 1991

After the fall of the Berlin Wall, it took 11 months for the Reunification of Germany. Since then german comunity celebrate this day on October the 3rd.

 

The German Democratic Republic joined the Federal Republic. One of the consequences was that the change of both currencies was advantageous in the GDR as it was possible to purchase products made in the Federal Republic for a lower price.

 

In the early 1990s, German foreign policy focused more on the development and planning of European integration than on fulfilling its obligations as a member of NATO in military  interventions. 

 

The existence of a unified Germany reintegrated into the European Economic Community facilitated negotiations between France and Germany for the creation of the European  Union and the establishment of the euro as the single currency, which culminated in the  siganture of the  Maastricht Treaty in February 1992.

Maastrich Treaty 1992

It was one of the most important steps in process of integration,officially know as the treaty of European Union, was signed by 12 countries, the parliament of each countries ratified the treaty, in some cases holding referendums. It has the basis in the Treaty of rome of 1957.

It created a common economic and monetary union, with a central banking system and common currency (euro). The European Central Bank (ECB) had one main objective: to maintain price stability, basically to safeguard the value of the euro. 

It also created a roadmap towards the introduction and implementation of the euro. This started with free movement of capital between the member states.

The stability and growth pact ,fomented by Germany in 1996, was basic to the agreement and consisted in a supervision of all fiscal policies and a sanction regime to avoid hyperinflation.

The acceptance of the euro by Helmut Kohl was so criticised in Germany due to the fact that the mark was going well after a long time of recession. Moreover, German people thought that it was another type of controlling again Germany, as had happened after all World Wars, even when the signature of the treaty would imply prosperity to Germany.

This agreement led also to environment issues, policing and social policy in which the countries aimed to increase cooperation and coordination.

Moreover, it establishes community policies in six new areas: trans-European networks, industrial policy, consumer protection, education 

and culture.

 

 
 
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