WEIMAR REPUBLIC ECONOMIC CRISIS Flashcards
Explain why the Weimar Republic was able to recover from economic crisis, 1924 to 1929. (12) Paragraph 1
P1: THE RENTENMARK (1923)
E1: Stresemann created a new state-owned bank, the Rentenbank. This issued a new currency called the Rentenmark. The supply of the new currency was strictly limited and the currency was tied to the price of Gold in Germany. This meant that the new currency had real value. Unlike the old currency, the people now trusted in this new currency. As the Rentenmark replaced the old currency, hyperinflation was brought to an end alongside international trade recovering, helping the industry to recover which began to ease the shortages of goods.
A1:Consequently, this was significant as it explains that the Weimar Republic was able to recover from economic crisis as a result of a new currency (the Rentenmark) allowing German currency and trade to recover significantly, also ending the shortages of goods.
Explain why the Weimar Republic was able to recover from economic crisis, 1924 to 1929. (12)
P2: THE DAWES PLAN (1924)
E2: In April 1924, Stresemann agreed to the ‘Dawes Plan’ - a plan put forward by an Allied committee led by the American banker, Charles G Dawes: reparations were temporarily halved to £50 million per year and U.S. banks would provide Germany with loans of $25 billion to help German industry recover. These US loans helped German industry to recover and enabled Germany to meet the reparations payments. As German industry were now able to pay the reparation payments, the French agreed to leave the Ruhr; industrial output doubled between 1923 and 1928. As output increased, international trade increased, and unemployment fell as industry was able to take-on more workers.
A2: Consequently, this was significant as it explains that the Weimar Republic was able to recover from economic crisis due to the Dawes Plan, which gave Germany the ability to meet reparation payments which allowed industry to recover.
Explain why the Weimar Republic was able to recover from economic crisis, 1924 to 1920. (12)
P3: THE YOUNG PLAN (1929)
E3: Five years later, Stresemann made further progress with reparations when he agreed to the ‘Young Plan’. Total reparation payments would be reduced from £6.6 billion to £2 billion and Germany was given an extra 59 years to pay the total debt. The government was now able to lower taxes, which enabled Germans to spend more. German industry flourished and more jobs were created. This was called a ‘virtuous cycle’ of economic growth. The Young Plan increased the confidence of Germans in the Weimar Republic. A vote, held in 1929, resulted in 35 million Germans (85%) voting in favour of the Young Plan.
A3: Consequently, this explains that the Weimar Republic was able to recover from economic crisis due to the Young Plan, which enabled a continuous cycle of economic growth in which the people of Germany trusted.
