Economic Recovery (1924-29)

What was the "Hyperinflation Crisis" of 1923?

The essential context: Prices spiraled out of control after the Ruhr occupation, making the Mark worthless and destroying middle-class savings.

How did the Rentenmark (Nov 1923) restore trust?

It was a temporary currency with a strictly limited supply, backed by German land and industry.

What was the role of the Reichsbank (1924)?

It was an independent central bank that ensured the new Reichsmark stayed stable and was backed by gold reserves.

The Dawes Plan (1924) - Key Feature 1:

It lowered annual reparation payments to a level Germany could actually afford (1 billion Marks/year initially).

The Dawes Plan (1924) - Key Feature 2:

It secured 800 million gold marks in loans from US banks to kickstart German industry.

The Young Plan (1929) - Economic Impact:

It reduced the total reparations debt from £6.6 billion to £2 billion.

The Young Plan (1929) - Political Impact:

It was a victory for Stresemann but sparked a right-wing "Liberty Law" campaign by the Nazis and DNVP.

How did industrial production change by 1928?

It rose to levels higher than in 1913 (pre-WWI), proving the effectiveness of US loans.

Why was the recovery "fragile"?

Because it depended on short-term American loans that could be recalled at any time.

Impact on the Middle Class (Mittelstand):

They did not recover; their savings were gone, and they felt ignored compared to industrial workers.

Impact on Farmers:

A major weakness; global food prices fell, leading to a "farming crisis" and debt by 1927.

The Unemployment Insurance Act (1927):

A sign of recovery; it provided benefits for 16.4 million workers, funded by employer/employee contributions.

How did real wages change?

Between 1925 and 1928, real wages rose by 10%, making many workers supporters of the Weimar Republic.

Why did Stresemann end "Passive Resistance"?

To stop the government from paying strikers, which was the primary cause of hyperinflation.

What was the "Great Coalition"?

Stresemann's ability to unite the DVP, Center Party, and SPD to pass difficult economic laws.