Golden Years Of The Weimar Republic, 1924-28 Flashcards
Who became Chancellor after the government of Cuno collapsed?
In August 1923, at the height of the hyperinflation crisis, the government of Cuno collaped and was replaced by a new coalition government led by Gustav Stresemann.
What was unique about Stresemann’s coalition?
It included parties from both the right and left. Stresemann’s own party, the DVP, shared power with the Centre Party, the Socialists and the DDP. Stresemann was only Chancellor for 103 days.
How was inflation brought under control by Stresemann?
- The end of passive resistance
- The issuing of a new currency
- Balancing the budget
What was the end of passive resistance?
Passive resistance against the occupation of the Ruhr was called off in September. This was highly unpopular and risky move, which led to unrest and the attempted Beer Hall Putsch but Stresemann believed that there was no 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 currency did Stresemann issue?
In November, a new currency called the Rentenmark was introduced to replaced the old and worthless Reichsmark. The new currency was exchanged for the old on the basis of one Rentenmark for one 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 the German gold reserve, which had to be maintained at 30% of the value of the Reichsmarks in circulation. All this happened under the direction of Hjalmar Schacht.
How was the budget balanced?
Stresemann’s government cut expenditure and raised taxes. The salaries of government employees were cut, 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. 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 Dawes plan?
Proposed April 1924, agreed July 1924. 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. Therefore, 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.
What was negotiated about reparations in the Dawes Plan?
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 more manageable. It recommended that:
- 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 German industrial performance.
- Germany should receive a large loan of 800 million marks from the USA to help get the plan started and to allow for heavy investment in German infrastructure.
How did Stresemann feel about the Dawes Plan?
Stresemann 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.
How was the Dawes Plan beneficial?
- 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 its own master.
How were foreign affairs dealt with and was the Locarno Pact of 1925?
In 1925, Stresemann signed the Locarno Treaty, agreeing to the loss of Alsace-Lorraine. In 1926, Germany was allowed to join the League of Nations. Germany had become a world power again.
How did the industry benefit in 1925?
By 1925, Germany appeared more stable and prosperous. 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 failing by 1929.
How many cartels were there by 1925?
By 1925, there were around 3000 such cartel arrangements in operation, including 90% of Germany’s coal and steel production. After 1925, Germany was allowed, under the terms of the Versailles Treaty, to protect its industries by introducing tariffs on imported foreign goods. Many firms also received state subsidies to enable them to survive. All of these practices reduced competition and propped up inefficient enterprises.
What advances were made and how was Germany prosperous?
- 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 too 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 housing, schools, municipal buildings, road and public works.
- Massive population growth had created an acute housing shortage in Germany by the early 20th 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.
How did workers favour during this time?
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 eight hours for a working day and had given trade unions the right to be part of work councils in factories and mines.
In 1928, a dispute over wages in the iron and steel industry 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 four weeks. In this dispute the workers were backed by the government and paid by the state. There were undoubtedly improvements in living standards for ordinary German workers, especially those who were backed by powerful trade unions. They benefitted 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%.
