2. Golden Years 1924-28 Flashcards
How did Stresemann stabilise the currency in 1923?
-In August 1923, at the height of the hyperinflation crisis, the government of Cuno collapsed and was replaced by a new coalition led by Gustav Stresemann
-Stresemann’s coalition- the so called ‘great coalition’- was the first in the short history of the Weimar Republic to include parties from the left and right.
-Stresemann’s own party, the DVP, shared power with the centre party, the socialists and the DDP
-Stresemann, who was chancellor for a mere 103 days, took office at time when the Weimar Republic was in serious political and economic difficulty
-By the time he left office in November, the currency had been stabilised, inflation had been brought under control and attempts to overthrow the republic from both the left and right had ended in failure
-Stresemann’s priority was to bring inflation under control. This involved 3 key steps
What were the economic developments made by Stresemann?
-End of passive resistance
-The issuing of a new currency
-Balancing the budget
Why did Stresemann end passive resistance?
-Passive resistance against the occupation of the Ruhr was called off in September. This was a highly unpopular and risky move, which led to serious unrest and the attempted beer hall putsch in Munich.
-Stresemann calculated, however, that he had not alternative. Germany’s economy was beginning to grind to a halt and inflation was completely out of control
-Ending passive resistance, which meant that the government stopped paying workers who refused to work for the French, was an essential first step towards reducing government expenditure
What happened with the issuing of a new currency?
In November 1923, a new currency called the rentenmark was introduced to replace the old and worthless Reichsmark. The new currency was exchanged for the old on a basis of one rentenmark for a trillion old marks
-Since Germany did not have sufficient gold reserves to back the new currency, it was supported by a mortgage on all industrial and agricultural land
-Once the new currency was successfully launched, the government kept tight control over the amount of money in circulation in order to prevent inflation reappearing
-The old inflated marks were gradually cashed in and, in August 1924, the Rentenmark became the Reichsmark, backed by German gold reserve, which had to be maintained at 30% of the value of the Reichsmarks in circulation
-Inflation ceased to be a problem and the value of the new currency was established home and abroad. All this happened under the direction of Hjalmar Schadt
What happened with the balancing of the budget?
-Stresemann’s government cut expenditure and raised taxes. The salaries of government employees were cut, some 300,000 civil servants lost their jobs and taxes were raised for both individuals and companies
-As government debt began to fall, confidence was restored
-These changes made a considerable difference to the way that the German economy operated
-Well managed companies that were run prudently and were careful not to build up excessive debt continued to prosper
-Weaker companies that were heavily reliant on credit crumbled. The number of companies that went bankrupt in Germany rose from 233 in 1923 to over 6000 in 1924
-Moreover, those who had lost their savings in the collapse of the old currency did not gain anything from the introduction of a new currency
What was the reparations issue?
-The stabilisation of Germany’s economy was as much dependant on settling the reparations dispute as it was on domestic issues
-In November 1923, Stresemann asked the Allies’ reparations committee to set up a committee of financial experts to address Germany’s repayment concerns
-The USA had a vested interest in getting Germany back to a position where reparations could be made to France, because much of this money was then passed on to the USA to repay loans
How was the reparations issue fixed?
-The American banker Charles Dawes acted as the new committee’s chairman
-By the time the Dawes plan was finalised in April 1924, Stresemann’s government had fallen, but he remained as foreign secretary and took credit for much of what was achieved
-Although the Dawes plan confirmed the original figure of a total reparations payment of £6.6 billion (132,000 million gold marks), it made the payments manageable
What did the Dawes plan recommend for repayments?
-The amount paid each year by Germany should be reduced until 1929, when the situation would be reappraised. It proposed that Germany should re start reparations by paying 1000 million marks (a fraction of what had been expected before) and that this sum should be raised by annual increments over 5 years by 2500 million marks per year. After this, the sum paid should be related to Germany industrial performance
-Germany should receive a large loan of 800 million marks from the USA to help get the plan started and allow for heavy investment in German infrastructure
Why was there a debate in the Reichstag about the Dawes plan?
-Stresemann himself did not actually believe in the plan, privately referring to it as ‘no more than an economic armistice’, but he agreed to it as a way of securing foreign loans.
-The so-called ‘national opposition’ (mainly the DNVP, but also smaller right wing groups like the Nazi movement) bitterly attacked this policy of compromise, since they believed Germany should defy the unjust Versailles Treaty and refuse to pay reparations altogether
-However, the Dawes plan was eventually agreed and accepted by both Germany and the allies in July 1924
What were the benefits of the Dawes plan to Germany?
-The allies accepted that Germany’s problems with the payment of reparations were real
-Loans were granted, with which new machinery, factories, houses and jobs could be provided and the German economy rebuilt
-The French gradually left the Ruhr during 1924-25, once it became clear that Germany was going to restart paying reparations and the occupation could no longer be justified. Such measures contributed to German optimism that their country was once again it’s own master
What was the extent of economic recovery in industry generally?
-By 1925, Germany appeared more stable and prosperous. The combination of the new currency, the Dawes plan and Schacht’s work at the Reichsbank (where interest rates were kept high to attract foreign investment), helped improve Germany’s situation enormously
-American loans helped stimulate the economy.
-Industrial output grew after 1924 but did not reach 1913 levels until 1929. The extent of this boom should not be exaggerated. Growth rates were unsteady.
-The years 1924-25 and 1927 were good years, but the economy shrank in 1928 and 1929. Investment in new machinery and factories was falling by 1929
What was the impact on different industries of the Dawes plan?
-Advances were made in the chemical industry, such as the large scale production of artificial fertilisers. The car and aeroplane industries also developed, although cars were still to expensive for the average German
-The inflation rate was close to zero and living standards rose as wages began to increase from 1924. Loans helped to finance the building of houses, schools, municipal buildings, road and public works
-Massive population growth had created an acute housing shortage in Germany by the early twentieth century, and the overcrowding and insanitary conditions of working class city accommodation had been linked to political instability
-Consequently, state initiatives to provide affordable homes were of great importance for future stability.
-In 1925, 178,930 dwellings were built- over 70,000 more than in the previous year- and, in 1926, there were to be 205,793 more new homes
-Money was spent on welfare payments and health improvements and, in 1924, new schemes of relief were launched
What happened to the strikes in German industry in the years after the Dawes plan?
-The number of strikes in German industry declined in these years, partly because a new system of compulsory arbitration for settling industrial disputes was issued.
-However, employers felt that this system was biased in favour of the unions and resented the state’s interference in their affairs
-The Weimar Republic had already set a maximum of 8 hours for a working day and had given trade unions the right to be part of work councils in factories and mines
What happened in 1928 in the iron and steel industry?
-A dispute over wages in the Ruhr resulted in the arbitrator granting a small wage increase to the workers.
-The employers then refused to pay the increase and locked out the workers for 4 weeks.
-In this dispute the workers were backed by the government and paid by the state. There were undoubtably improvements in living standards for ordinary German workers, especially those who were backed by powerful trade unions
-They benefited from increases in the real value of wages in each year after 1924
-In 1927, real wages increased by 9% and, in 1928, they rose by a further 12%
What were the limits to the economic recovery?
-In a speech given shortly before his death in 1929, Gustav Stresemann warned, ‘the economic position is only flourishing on the surface. Germany is dancing on a volcano. If the short term loans are called in, a large section of our economy would collapse’
-Unemployment was a continuing problem in these years. By the end of 1925, unemployment had reached 1 million; by March 1926, it was over 3 million, although it did fall after that
-This was due partly to there being more people seeking work, partly to public spending cuts, but also to companies reducing their workforces income order to make efficiency savings
-The mining companies reduced their workforces by 136,000 between 1922 and 1925, and reduced them by another 56,000 between 1925 and 1929
Who did the Weimar ‘economic miracle’ not benefit?
-The mittlestand, the professional middle classes, gained very little in this so-called ‘golden age’
-Bankrupted by the hyperinflation of 1923, middle-class managers, clerks and bureaucrats did not benefit fully from improved economic climate
-White collar workers did not enjoy the wage rises of the industrial sector
-By the late 1920’s, industrial sector wages had drawn level with those of the middle class and in some cases exceeded them
What was the extent of economic recovery on agriculture?
-Farmers gained very little benefit from the economic recovery of these years. A worldwide agricultural depression kept food prices low and few farmers were able to make a profit on their land.
-During the inflation of the early 1920s, large landowners and farmers borrowed money to buy new machinery and improve their farms
-Smaller peasant farmers, however, tended to hoard money and their savings were wiped out by inflation
-After 1923, the government made it easier for farmers to borrow money, but this made matters worse. Farmers became saddled with debt at a time when prices were falling and they could not, therefore, keep up the repayments
-The increased taxes introduced to pay for welfare benefits of the unemployed and sick were regarded as an unfair burden on farmers’ plight by introducing high import tariffs on food products, import controls and subsidies to farmers, but these measures did not go far enough
-The plight of German farmers worsened due to a global grain surplus and price slump in 1925 and 1926. By the late 1920s, there was an increase in bankruptcies amongst farmers and many of them lost their land as the banks demanded repayments of loans
-In 1928, farmers initiated a series of small scale riots known as ‘farmers revenge’- in protest against foreclosures and low market prices
-By 1929, German agricultural production was at less than three quarters of it’s pre war levels
What were the key events in foreign policy 1924-30?
1924- Dawes plan
1925- Locarno pact
1926- Germany admitted to the League of Nations treaty of Berlin with the USSR allied forces withdraw from zone 1 of the Rhineland
1929- Young plan and allied withdrawal from zone 2 of the Rhineland
1930- Allied withdrawal from zone 3 of the Rhineland
What was agreed by all after 1919?
-That the treaty of Versailles was an unjust and dictated peace treaty, which denied Germany it’s rightful place among the great powers of Europe
-It also placed millions of Germans outside the territory of the Republic. Whichever government was in power during the years 1919-33, the foreign policy of the Weimar Republic was always based on one clear and simple aim- to revise the terms of the treaty of Versailles
-There were however, deep divisions between the parties on how this best be achieved
-The nationalist right consistently argued that Germany should reject the treaty and rebuild it’s military strength in preparation for a time when the country could regain lost territory and become a fully independent great power once again
What was Stresemann’s approach to revising the treaty of Versailles?
-It was a more pragmatic approach, known as the policy of fulfilment.
-This involved Germany cooperating with France, Great Britain, the USA and Italy on issues such as reparations payments and removing allied occupation forces from German territory
-Such cooperation, it was believed, would lead to more revision of the treaty than a confrontational approach
-Stresemann understood that French suspicion of Germany was the biggest obstacle in the way of securing revision in the treaty of Versailles and, therefore, he concentrated on finding ways to reassure France of Germany’s peaceful intentions
-This policy bore fruit in the Locarno pact of 1925
What was the Locarno pact, 1925?
-In October 1925, the Western European powers met, at Germany’s suggestion, at a conference in the Swiss city of Locarno. Stresemann was anxious to restore Germany’s position internationally and avoid any hostile alliance between Britain and France, particularly as the latter began to feel threatened by Germany’s industrial recovery
-France was suspicious of the move, but eventually agreed to attend, along with the USA, Britain and Italy, but not Russia
-The discussions led to the Rhineland pact and Arbitration treaties, usually known collectively as the Locarno pact, although they were finally signed in London on 1st December 1925
What was agreed under the Rhineland Pact?
-Germany, France and Belgium promised to respect the Western frontier, as drawn up at Versailles in 1919. This frontier was to be regarded as fixed and internationally guaranteed
-Germany agreed to keep it’s troops out of the Rhineland, as demanded at Versailles
-Britain and Italy promised to aid Germany, France or Belgium if any of these countries attacked it’s neighbours
What was agreed under the arbitration treaties?
-Germany agreed with France, Belgium, Poland and Czechoslovakia that any dispute between them should be settled by a conciliation committee to mediate discussions
-France signed treaties of ‘mutual guarantee’ with Poland and Czechoslovakia. These said that France would make sure Germany did not break the agreement above
What was also agreed in the Locarno pact?
-That any conflicts regarding the Western borders should be referred to the League of nation’s.
-In addition, France would not be permitted to cross into Germany should there be any dispute between Germany Poland or Czechoslovakia
Why was the Lacarno pact praised?
-The Lacarno pact was hailed as a major triumph in many quarters. It was the first time that Germany had recognised the Western border imposed at Versailles and accepted the loss of Alsace Lorraine to France and Eupen Malmedy to Belgium
-For the French, there was a guarantee of support from the British should there ever be another German attack, while for the Germans, it meant the 1923 occupation of the Ruhr could never be repeated
-The French agreed to withdraw the forces occupying the Rhineland and, although this was initially postponed in January 1925 because of Germany’s refusal to comply with the disarmament obligations obliged at Versailles, it was achieved over the next 5 years and without Stresemann giving any assurances that Germany would disarm.
-The city of cologne, for example, was evacuated by the French in 1926
What were some of the drawbacks of the Lacarno pact?
-Although the arbitration treaties with Poland and Czechoslovakia offered some guarantees, the Eastern borders were not recognised in the same way.
-For Germany, this left open the possibility of further revision of the Eastern borders at some stage in the future
What were Stresemann’s thoughts on Locarno?
-He regarded Locarno as his greatest achievement- and he was rewarded by Germany’s acceptance into the league of nation’s as a permanent member of the council and the Nobel peace prize in 1926
-Stresemann could take pride in the fact that he had established Germany’s position as an equal partner in diplomatic negotiations with the 3 major western powers- France, Britain and the USA
-Strategically, he had achieved a good deal with very little loss to Germany
-The German nationalist right, however, attacked Stresemann for appeasing the allies and giving too much away
What were the relations with the USSR like for Germany?
-After the revolutions of 1917 in Russia and 1918 in Germany, the two former enemies took very different political paths.
-Russia, later (1922) the USSR, became the world’s first communist state, in which the rights of the individual were subordinated to those of the state
-Germany adopted a democratic system of government, which guaranteed individual freedom
-Although there was a large communist party, which campaigned for close links with the USSR, most Germans were opposed to the communist political system
What were the similarities in the post war situation of Germany and the USSR?
-Both countries had been defeated in the war and had suffered from punitive peace treaties
-Both counties felt that existence of an independent Poland, supported by French guarantees, was a threat to their security. Poland also contained large German and Russian minorities
-Both Germany and Russia/USSR were treated as ‘outcast’ nations by the victorious powers and were not allowed to join the League of Nations
What was the treaty of Rapallo?
-In April 1922 Walther Rathenau negotiated the treaty of Rapallo between Germany and the USSR
What were the terms of the treaty of Rapallo?
-Germany and Russia resumed trade and economic cooperation
-Diplomatic relations between the 2 countries were restored
-All outstanding claims for compensation for war damage were dropped
-Germany was allowed to développer new weapons and train pilots in Russia, away from the scrutiny of the allied powers
What was the significance of the treaty of Rapallo?
-Although the treaty didn’t specify cooperation between Germany and Russia against Poland, this was clearly implied in the existence of the treaty
-For Germany, therefore, the treaty of Rapallo was an important but symbolic step away from it’s post war isolation
-However the allies, particularly France, were angered by this treaty, which showed Germany’s intention to get around the disarmament terms of treaty of Versailles and it’s refusal to accept it’s eastern frontier with Poland
What was the treaty of Berlin?
-In April 1926, Germany and the USSR renewed their earlier treaty in the treaty of Berlin. This added very little to the original treaty, except for the agreement that Germany would remain neutral if the USSR were to be involved in a war, as long as the USSR was not the aggressor
-This treaty was signed a year after the Lacarno pact and showed that, despite his agreement to guarantee Germany’s western frontiers, Stresemann had not abandoned his desire to secure a revision of Germany’s eastern frontiers
-In order to achieve this, a close friendship with the USSR was vital because the USSR would resist any border changes it didn’t agree with
What was the Kellogg-Briand pact?
-In 1928, Germany also signed the Kellogg-Briand pact with France and the USA, Frank Kellogg, the American Secretary of State, the Aristide Briand, the foreign minister of France, drew up an international agreement under which states would agree voluntarily to renounce the use of offensive wars to resolve disputes
-Germany was one of the the first states to sign, and was followed by many other countries.
-The pact had symbolic importance as an international agreement to avoid war, but its lack of any enforcement mechanism limited it’s effectiveness
What was the end of allied occupation?
-The removal of foreign forces from German soil was an aim shared by Germans of all parties. Stresemann’s policy of fulfilment secured this objective by 1930
-The French, concerned for their own security and suspicious of Germany’s willingness to comply with the treaty of Versailles, were the most reluctant of all the allied powers to withdraw occupying forces
-The withdrawal of forces was therefore, a step by step process, which involved both sides
-After the Dawes plan of 1924 and the Locarno pact of 1925 provided evidence of German willingness to cooperate with the allies, occupation forces were withdrawn from zone 1 of the Rhineland in 1926
-The allies also withdrew the IMCC from Germany in the same year
-Further progress, however, was dependant on a final settlement of the reparations issue
-Once the young plan had been agreed by Germany in 1929, the way was clear for the withdrawl of the remaining allied forces
-They were withdrawn from zone 2 in 1929 and from zone 3 in 1930, 5 years ahead of the schedule laid down in the treaty of Versailles
-Although Stresemann had died in 1929 before this process was completed, this success was largely due to his policies
What did social reforms between 1924-27 include?
1924: The public assistance system, which provided help to the poor and destitute, was modernised
1925: The state accident insurance system, introduced by Bismarck to help those injuries at work, was extended to cover those suffering from occupational diseases
1927: A national unemployment insurance system was introduced to provide benefits for the unemployed, financed by contributions from workers and employers
How did the social welfare reforms between 1924-27 do for Germans?
-It was an impressive list of reforms, but, for many Germans, the welfare system promised more than it delivered. It was also very expensive.
-In 1926, the state was supporting about 800,000 disabled war veterans, 360,000 war widows and over 900,000 war orphans. This was in addition to old age pensions and, after 1927, the cost of unemployment benefits
-The welfare system also needed a large and expensive bureaucracy to administer it. Taxes were increased after 1924, but there was no limit to how much the better off were prepared to shoulder the burden of welfare expenditure
-The result was that those administering benefits at a local level used many devices to keep expenditure down. Means tests were tightened up, snoopers were used to check that claimants weren’t cheating the system and there were increasing delays in paying benefits
-Those in need of support, including large numbers of war veterans and their families, felt they were being humiliated and insulted by the welfare system, undermining their support for the Weimar Republic
What were the living standards and lifestyles like in Germany in 1924-28?
-The living standards of millions of Germans undoubtedly improved during the years 1924-28. Those in work, particularly those represented by powerful trade unions, were able to maintain their living standards by negotiating wage increases.
-Those dependant on welfare benefits were less well off, and undoubtedly suffered some hardships, but they were prevented from falling into abject poverty by the welfare system
-Business owners and their salaried employees benefited from the improved trading position for German companies at this time. There were, however, many exceptions to this rule. Those who had lost their savings during the hyperinflation of 1923 were unable to regain the comfortable lifestyles they had once enjoyed
-Farmers suffered from poor trading conditions and low prices, and their incomes were falling. The air of confidence that was exuded in cities such as Berlin was not apparent across the whole country
-Social and cultural changes in Weimar Germany affected different groups in different ways
What were the ‘new women’ in Weimar Germany?
There was much talk in Weimar Germany about the ‘new woman’, who symbolised the way women’s lives had changed since the end of the war. She was portrayed as being free, independent, sexually liberated and increasingly visible in public life
