2.1 - economical developments
Gustav Stresemann
- Party: DVP which was centre right
- Roles: chancellor 1923 and foreign minister 1923-1929
- His number one priority was the stabilization of the economy
Stabilization of the currency
- ending passive resistance which encouraged new relations
- issuing a new currency: the rentenmark in november 1923, this replaced the reichmark. the exchange rate was 1 rentenmark:1trillion reichmark
- Balancing the budget : expenditure was cut, taxes raised and 300,000 civil servants were let go.
- Stresemann stabilized the economy by introducing a new currency to abolish the old one.
Dawes plan
- it was an attempt to fix the reparation problem
- it was a temporary fix
- proposed on April 1924 and agreed in September 1924
- repayment stayed the same 1 billion marks for the first 5 years and 2.5 billion for the rest
- infinite amount of time to repay it
- loaned 800 million marks from the USA which couldn’t even pay for the first payment.
The Young Plan
- proposed on august 1929 agreed in January 1930
- amount was to be reduced by 20% Germany was to pay 2 billion marks per year, 2/3 of which could be postponed each year
- some thought it wasn’t a big enough reduction and postponement meant that they would constantly remain in debt
- payed over 59 years to end in 1988, but people were worried that the economy would never recover
- loans available by american, coordinated by JP Morgan, this meant that Germany became dependent on American success. This meant that the American depression would effect them heavily.
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To what extent did the economy recover?
- foreign investment as others gained confidence inn the country
- overall in 1924-28 the economy did improve
- improved industry
- standard of living increased and wages increased
- inflation kept low
- working class benefited
Limits
- not recovered from the war
- shortage of credit material based on the availability of loans
- uneven recovery chronologically and across different parts of the economy
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