stabalisation of currency

stabilisation of currency

• august 1923, gov of cuno collapsed replaced by new coalition led by Gustav stresemen, “great coalition”, first in history of weimar to include parties from left n right

• stresmen own party DVP share power w centre, socialists and DDP

• stresmen chancellor for 103 days, took office at time no serious political difficulty

• by time left, currency = stabilised, inflation under control, attempts to overthrow by left n right = fail

• stressmen priority = brining inflation under control, 3 steps- end passive resistance, new currency and balance budget

End of passive resistance

• passive resistance vs ruhr called off in sep

• unpopular and risky move, led to serious unrest and beer hall putsch

• stressmen calculated he had no alternative, G economy start to grind to halt, inflation out of control

• ending PR = gov x paying workers who refuse to work for F, essential first step to reducing gov expenditure.

Issuing new currency

• Nov= new currency “Rentenmark” introduced to replace “Reichsmark”

• exchanged for old on basis of one Rentenmark for one trillion old ones

• G x suffiecent gold reserves to back new currency, sup by mortgage on all industrial n agricultural land

• new launch= gov tight control over amount in circulation to prevent inflation

• old eventuallly cashed in, August 1924= rentenmark=reichmarks, back by gold reserves, maintained at 30% of value of reichmark around

• inflation ceased to be problem, happened under direction of Schacht

Balancing the budget

• gov cut expenditure and raised tax, salaries of gov employees cut, 30,000 civil servants lost jobs, tax raised for indiv and comp

• gov debt fall= confidence restore

• changes = considerable difference to way G economy operated

• well-managed comp run prudently and careful not to build debt

• walker comp rely on credit crumbled

• bankrupt comp rose from 233 -1923 too over 600-1924

• those lost savings in collapse of old currency didnt gain anything from new.