2.1 Stresemann and the Recovery of Germany Flashcards
What was the period of 1924-1929 known as?
The Golden Years
Who was Stresemann?
He was Chancellor in 1923 and led the ‘Great Coalition Government’. He became Foreign Secretary 4 months after becoming Chancellor.
How did Stresemann solve the problem in the Ruhr?
He called off passive resistance in September 1923.
It was an unpopular move but a necessary one.
How did Stresemann solve hyperinflation?
Rentenmark: He introduced a temporary new currency in November 1923. It was based upon a mortgage of all land and currency and was therefore secure. 1 trillion old marks = 1 Rentenmark.
The Reichsbank: In 1924 a new independent bank was handed control of the new currency. It helped to cement confidence in the new financial system
The Reichsmark: In 1924, the Reichsmark replaced the Rentenmark. It was the new permanent currency that Germany and other countries could rely on.
What was the Dawes Plan?
Britain had approached the USA in order to establish an international commission of financial experts to regulate any reparation problems.
The Dawes Plan in 1924 sprung from this commission. The key points were:
- The USA loaned Germany 800 million gold marks; it gave a boost to industry
- Reparation payments were lowers to 1,000 million marks for the first 5 years to make them more affordable. After this they would be 2,500 million marks
- The Allies agreed to review the payment over time and take into account Germany’s ability to pay.
- The French agreed to withdraw troops from the Ruhr. They also agreed that missed payments would be dealt with by all allies.
- The Allies were given some control over the Reichsbank and the railways in Germany.
What opposition was there to the Dawes Plan?
Some felt Germany was accepting blame for the war by continuing reparation payments.
Nationalists were furious at Germany being controlled by a foreign power.
What are the positives of the Dawes Plan?
- Opened the way for foreign capital to flood into Germany. Between 1924-30 loans of 25.5 billion marks were received into Germany, mainly from the USA.
- Much of this investment was used to boost industry and build factories. Industrial output doubled during 1923-29.
- Wages rose, the cost of living went down and the standard of living improved.
- Confidence in the economy was restored. The government was able to build new roads, schools and public buildings.
- The improvements in the economy meant that by 1927 laws could be introduced to allow people to claim unemployment benefit and ‘labour exchanges’ were set up to help people find work.
What are the negatives of the Dawes Plan?
- Germany was economically vulnerable as it relied heavily on US loans. The 1929 Wall Street Crash would show how vulnerable it was.
- The economic recovery did not affect everyone equally. Some were never able to fully recover (The Mittelstand or lower middle class).
- Farmers were affected by worldwide agricultural depression. They were unable to modernise because of a lack of profit and they continued to spiral into debt. By 1929, industrial production had returned to its pre-war levels but agricultural production was still 74% of its pre-war levels.
What was the Young Plan?
The Young Plan was another economic plan for Germany. They were still finding it hard to make reparation payments so they agreed the following:
- The total reparations bill was reduced to around $8 billion. This would allow Germany to reduce taxes and invest more heavily in German industry.
- The payments were to be made over 59 years at a rate of $473 million a year.
- Germany was only obliged to pay a third of the annual sum each year. It should pay the rest if it could afford to.
- The French would leave the Rhineland by 1930 - 5 years earlier than agreed.
What was the opposition to the Young Plan?
- Many in Germany still opposed the plan. Some nationalist groups were angry that Germany were continuing to pay reparations and it would hinder progress further down the line.
- Alfred Hugenberg, a media businessman, organised a petition against the plan and managed to get 4 million signatures. When a referendum was held in December 1929, only 14% voted against it.
There was British opposition. Two memorials (Thiepval and the Menin Gate) had only just been completed so there was still a lot of anti-German feeling.
- In the end the plan came to nothing. In 1929 the Wall Street Crash occurred in the US and America could not afford to loan money. In 1931 the German economy also crashed and the Allies agreed to suspend reparations.
What was the Locarno Pact of 1925?
This was a collection of treaties involving Germany, France, Belgium, Italy, Britain, Czechoslovakia and Poland.
Germany accepted its new western borders and the demilitarisation of the Rhineland. These countries also agreed not to start war with one another unless the terms of the agreement were broken or directed to by the League of Nations.
Germany agreed that Alsace-Lorraine would be French and in return the French agreed not to occupy the Ruhr again.
All parties agreed that Germany’s eastern borders could be settled through peaceful means.
What was the impact of the Locarno Pact?
The period of 1925-29 is called the Locarno Honeymoon.
Stresemann called the Pact a victory bcause peace in Europe was more likely. Germany was being treated as an equal
The Locarno Pact was signed by Germany voluntarily. It was a step towards the end of Germany’s bitterness towards the Allies.
Germany was now allowed into the League of Nations.
What were the negatives of the Locarno Pact?
Some nationalists were resentful and said that Germany was accepting the terms of the Treaty of Versailles, in relation to Germany’s borders.
How was acceptance into the League of Nations a positive for Germany?
In 1926, Germany joined the League of Nations. They were given a place on the Council which was important as they made the most important decisions.
It increased Germany’s confidence in the Weimar Government as they could see that their country was being accepted into the ‘international family’.
What are the negatives to Germany’s acceptance into the League of Nations?
Nationalists saw the League of Nations as a product of the hated Treaty of Versailles and so wanted Germany to have nothing to do with it
