Economic Developments - Stabilisation of the Currency

The stabilisation of the currency

• August 1923 - government of Cuno collapsed during the hyperinflation crisis - was replaced by a coalition led by Gustav Stresemann

• His coalition - ‘great coalition’ was the first in Weimar Republic to include partiesform both left and right

• When he started the Republic was in serious political and economic difficulty

• After he left office in November, the currency was stabilised, inflation under control and attempts to overthrow republic failed

The end of passive resistance in the Ruhr

• Was called of in September 1923

• Unpopular and risky move - was what resulted in the Beer Hall Putsch

• However Stresemann stated there was no alternative

• Ending this meant government stopped paying workers who weren’t working for the french

• Was an essential first step towards reducing government expenditure

The issuing of a new currency

• November 1923 - Rentenmark reduced - replacced old, worthless Reichsmark

• One Rentenmark = one trillion old marks

• Once currency was successfully launched, government kept tight control over amount of money in circulation to prevent another inflation crisis

• By August 1924 the Reichsmark was completely gone and Rentenmark in full effect

• Inflation ceased to be a problem

Balancing the budget

• Stresemann’s government cut expenditure and raised taxes

• Salaries of government employees cut, 300,000 civil servants lost their jobs

• Taxes raised for both individuals and companies

• Confidence restored as debt fell

• Weaker companies that relied on credit fell

• Bankruptcy rose to 6000 by 1924 - meant that only the well-managed companies survived

• Strengthened the operating of the Germany economy