2. Recovery of Germany 1924-29

Gustav Stresemann

Chancellor in 1923 and foreign minister (1923-29) of the Weimar Republic, largely responsible for restoring Germany’s international status after WW1

Stresemann’s politics

• Leads the ‘Great coalition’ and spends 4 months as chancellor

  • The Great coalition are the moderate parties that make them stable.

  • Only 6 coalition governments from 1924-28

• Becomes foreign minister until October 1929 (when he dies)

• No political assassinations

• support for extremist parties falls 

  • Nazi party only has 12 seats in the Reichstag in 1928

• However, none of the weaknesses of the Weimar constitution is addressed in the period (proportional representation especially)

Rentenmark (economic)

• November 1923

• Temporary currency

• Value is based on Industry and Agricultural work of Germany

• Tightly controls the amount of money printed

• Stresemann promises shares of land and industry in Germany if the Rentenmark failed

• German people got their confidence restored

Reichsbank (economic)

• 1924

• New Reichsbank is set up to control the currency. The reichsmark (the permanent currency) is introduced

• Everything Stresemann does are vital to restore faith and help Germany’s economy to grow stronger. 

Issue of reparations

• Stresemann believed this issue had to be solved

• He decided to accept the treaty of Versailles and renegotiate the reparations with allies, and aimed to improve relations with Great Britain and France. 

• However, this was not a popular policy because the German people hated the Treaty of Versailles

• Great Britain and France had a lot to gain from Germany’s economic stability as all the economies in Europe were linked

Dawes Plan (1924)

• U.S. loaned 800 million marks to Germany, massively boosting German economy

• Reduces annual amount to 1000 million marks for 5 years

• Reparations rescheduled to march Germany’s ability to pay

Effect of Dawes Plan

• Helps restore Germany’s economy and encouraged further loans and foreign investments: 25 billion marks in 6 years

  • Industrial recovery and increased trade 

  • Industrial output doubles. And returns to the pre-1914 levels 

  • Wages rise, cost of living falls, the government builds road, schools, public buildings etc. 

  • Unemployment benefit introduced 

• Germany’s economy becomes tied to the World economy 

  • Over reliant on American loans so recovery is quite superficial 

  • Stresemann famously said that Germany was ‘dancing on a volcano’di

  • By 1927, signs of economic growth was slowing and agricultural (farming) industries were struggling 

• Nationalists attacked Weimar Republic for accepting the Treaty of Versailles and negotiating with Great Britain and France because they believed Germany should not pay reparations

Young Plan (1929)

• Reduced reparations to £2 billion (from £6.6 billion)

• Payments extended to 59 years

• Germany only had to pay ⅓ of the annual amount (473 million dollars)

• France agrees to leave Rhineland earlier in 1930 (5 years earlier than it was supposed to)

Effects of the young plan

• Uses the funds to cut taxes and invest money to boost industry 

  • aimed to create more jobs 

  • But no time to take effect because of the Wall Street crash at the end of 1929 

• Nationalist opposition 

  • Alfred Hugenberg got an anti-young plan petition which got 4 million signatures

  • Do not want to pay reparations, especially for 59 years. 

  • But only 14% vote against the young plan in referendum

Locarno treaty

• 1925

• focused on Germany’s borders

  • Germany accepts the Western borders, which reassured France

  • Germany accepts that Alsace Lorraine is French 

• Agreement to avoid war. 

• Renegotiates the Eastern borders peacefully through the League of Nations 

Effects of Locarno treaty

• Peace in Europe more likely (‘Locarno honeymoon’)

  • Stresemann is awarded the Nobel peace prize

  • shows how significant European nations viewed the Locarno pact

• German pride is restored: treated as an equal and there is hope for a change in the Eastern border, allowing them to regain some territory 

• Nationalists very resentful especially for accepted treaty of Versailles and borders 

League of Nations

• 1926

• Hugely symbolic 

• partly a direct result of the Locarno pact 

• Germany is given a place on the League of Nations council where most of the important decisions were made.

Effects of League of Nations

• Restored confidence, popularity and pride for many in the Weimar republic

• Germany is now seen as an equal and respected and accepted into the ‘international family’

• BUT many still hated and resented Germany;s involvement with the League of Nations due to the treaty of Versailles. 

  • Some see the League of Nations as an extension of the Treaty of Versailles

Kellogg-Briand Pact

• 62 countries with the aim to prevent war

• countries agreed to use diplomacy, not military to solve disputes

• includes America which is significant because

  • America was isolationist 

Significance of Kellogg-Briand Pact

• reinforces Germany as a major World nation

• Weimar Republic is respected and seen as stable

• German trust Weimar moderate parties to restore Germany’s honor and strength

Economic and Social Recovery

• 1927: Unemployment benefits introduced

• 1928: Industrial production returned to the levels in 1913

• However recovery was dependent on the U.S.