Study Notes on the Recovery of Germany (1924-1929)

The Recovery of Germany 1924-1929

2.1 The Work of Gustav Stresemann at Home

  • Appointment:

    • President Ebert appointed Gustav Stresemann as Chancellor from August 1923 to November 1923.

    • Stresemann served as foreign minister from November 1923 to October 1929, which was his most impactful role.

  • Political Affiliation:

    • Stresemann was a member of the People’s Party (DVP), a moderate conservative party, holding a degree in political economy.

  • Grand Coalition:

    • The government was known as the ‘grand coalition’ as it represented a wide range of political opinions from left, center, and right while omitting extremes of Communism and extreme right wing.

    • Key parties in the Grand Coalition included:

    • Social Democratic Party (SPD): A moderate left-wing party.

    • Centre Party (Z): A center-right Catholic party.

    • German Democratic Party (DDP): A liberal party.

    • German People's Party (DVP): A center-right party.

  • Discussion Point:

    • Question: Why was it possible for a wide range of parties to work constructively together in 1923 when they were unable to do so before?

2.2 Immediate Actions of the Stresemann Government

  • Ending Passive Resistance:

    • The government ordered an end to passive resistance in the Ruhr, essential for swift economic and political recovery.

  • Goals of Stresemann's Government:

    • Sought to:

    • Restore the German economy.

    • Improve relations with other countries.

    • Implemented a policy of fulfillment, which involved accepting and fulfilling the Treaty of Versailles rather than resisting it.

  • Public Response:

    • While these policies garnered support from the majority of German citizens, they faced opposition:

      • Extreme Left Wing: Displeased with policy changes.

      • Extreme Right Wing: Outraged by the government's approach.

2.3 Solving the Economic Crisis

2.3.a Currency Reform

  • Need for a New Currency:

    • Germany required a new, stable currency to restore confidence and encourage investment.

    • Confidence in currency stability is vital for economic growth.

  • Implementation:

    • Stresemann utilized Article 48 of the constitution to introduce the Rentenmark due to the Reichstag not being in session in August 1923.

    • The Rentenmark was based on the value of agricultural land and property rather than gold reserves.

    • The Reichsbank was tasked with managing the currency, leading to the eventual introduction of the Reichsmark, which was based on gold holdings.

2.3.b Attracting Investment from the USA

  • Investment Necessity:

    • Attracting investment from American government and private investors was essential for reviving the German economy.

    • Stability in politics and currency was a prerequisite for attracting investment.

  • Dawes Plan Negotiation (1924):

    • Stresemann negotiated the Dawes Plan with U.S. banker and politician Charles Dawes, along with representatives from Britain, France, Belgium, and Italy.

    • Terms of the Dawes Plan:

    • French troops were to leave the Ruhr.

    • Reparations were reduced to 1 billion marks annually for five years, increasing to 2.5 billion marks annually as the economy improved.

    • The U.S. government would provide an 800 million mark loan to Germany and encourage U.S. firms to invest.

    • Allies would temporarily control German railways and share control of the German national bank.

2.4 Agreement and Impact of the Dawes Plan

  • Intended Impact on Germany:

    • French Troops Out: Withdrawal of French troops was significant for national sovereignty.

    • Reparations Reduced: The reduction made it more manageable for Germany to meet its obligations.

    • U.S. Loans: Loans facilitated economic recovery and growth.

    • Allied Supervision: Temporary control was a necessary compromise for rebuilding trust.

  • Reasons for U.S. Investment in Germany:

    • Loans were expected to be repaid with interest, creating a profitable investment.

    • A healthy German economy promised better trading opportunities for American businesses.

    • Investing in a recovering economy increased potential profits.

    • A robust German economy would allow for repayments of war loans to the U.S.

2.5 Economic and Political Impact of the Dawes Plan

  • Economic Recovery:

    • The German economy recovered rapidly, reaching pre-war levels by 1927, demonstrating remarkable growth.

    • Unemployment dropped significantly, increasing tax revenue.

    • Enhanced welfare provisions were made due to reduced needs, influenced by socialist policies.

    • Standard of living improved for many Germans, fueling economic growth.

  • Political Impact:

    • Rising living standards and economic stability led to a decrease in extreme right-wing electoral strength between 1924-1928, though Communist support remained relatively stable.

    • The Grand Coalition's collaboration showcased functional governance under the Weimar Constitution.

  • Cultural Changes:

    • The economic stabilization initiated a period known as the Golden Twenties characterized by:

    • Emergence of modernist art (Bauhaus).

    • Flourishing cabaret and jazz scenes.

    • Innovative cinema and theatre experiences.

    • Increased access to consumer goods in urban areas, though rural areas retained traditional values.

  • Political Continuity:

    • Between 1924 and 1929, the government saw only six different coalitions, indicating some stability.

    • Despite improvements, inherent weaknesses of the constitution remained unresolved.

2.6 The Young Plan (1929)

  • Follow-Up Meeting:

    • A meeting was held five years after the Dawes Plan, led by American financier Owen Young.

  • Terms of the Young Plan:

    • Total reparations were reduced from £6.6 billion to £1.85 billion, with payments scheduled over 59 years.

    • Confirmation that Allied troops would withdraw from the Rhineland by 1930, five years sooner than per the Treaty.

  • Public Approval:

    • The plan was presented for public approval in a referendum, garnering 86% support among voters.

    • Opposition from extreme right factions persisted, as they wanted total reparations cancellation.

  • Consequence of the Great Depression:

    • The plan ultimately became irrelevant with the onset of the Great Depression, leading to an economic crash and the cancellation of reparations by 1931.

2.7 Assessment of Stresemann’s Influence (1924-1929)

  • General Improvements:

    • As Germany's economy stabilized, social conditions improved, minimizing political violence.

    • No major political assassinations occurred between 1924 and 1929.

    • The Weimar government gained acceptance as citizens noted improvements, reducing support for extremist parties.

2.8 Stresemann’s Foreign Successes

  • Repairing International Relations:

    • Although only Chancellor briefly, Stresemann's tenure as foreign minister focused on repairing international relations, aiding Germany's economic recovery and boosting national pride.

  • Ending French Occupation of the Ruhr (1924-1925):

    • Ending passive resistance allowed for the French withdrawal from the Ruhr by 1925, although Allied troops remained in the Rhineland until 1935.

2.9 Locarno Treaties (1925)

  • Conference Participation:

    • Stresemann represented Germany at the Locarno Conference in Switzerland, aimed at confirming the borders established by the Treaty of Versailles.

  • Treaty Terms:

    • Agreements made for negotiation instead of aggression over disputes, notably:

    • Germany permanently accepted its western borders, including Alsace-Lorraine remaining French.

    • France agreed not to invade Germany again.

    • Allies would withdraw troops from the Rhineland by 1930.

    • Peaceful resolution of eastern border disputes through the League of Nations was agreed upon with Poland and Czechoslovakia.

  • General Sentiment:

    • The period after the treaties saw a surge of confidence among nations, known as the Locarno Honeymoon.

  • German Reactions:

    • Optimism regarding:

    • Reduction of military pressure from France.

    • Early troop withdrawals from the Rhineland.

    • Acceptance into the international community.

  • Nationalist Opposition:

    • German nationalists condemned the Locarno Treaties for effectively reaffirming the Treaty of Versailles, sparking outrage regarding territorial losses.

    • Renewed feelings of betrayal, known as the 'stab-in-the-back' myth.

2.10 Joining the League of Nations (1926)

  • Importance:

    • Germany received a seat on the Great Council, symbolizing a new role as a major world power alongside the US, UK, France, Italy, and Japan.

    • Confirmation of troop withdrawals from the Rhineland indicated improved international cooperation.

  • Public Response:

    • Many Germans welcomed this as a positive development, enhancing attitudes toward the Republic.

    • Continued nationalist resentment regarding the Treaty’s terms remained prevalent.

2.11 Kellogg-Briand Pact (1928)

  • Agreement Details:

    • An international treaty, drafted by US Secretary of State Kellogg and French Foreign Minister Briand.

    • Over 60 countries pledged not to use military power to resolve conflicts.

  • Significance for Germany:

    • While lacking mechanisms for enforcement, it fostered an atmosphere of hope for lasting peace.

    • Germany’s engagement symbolized its return to international diplomacy following the post-World War I isolation period.

2.12 Summary of Stresemann’s Achievements (1923-1929)

Economic Policy

  • Called off passive resistance in the Ruhr.

  • Introduced the Rentenmark (1923).

  • Launched the Dawes Plan (1924).

  • Established the Reichsmark (1924).

Foreign Policy

  • Signed the Locarno Treaties (1925).

  • Joined the League of Nations (1926).

  • Entered the Kellogg-Briand Pact (1928).

  • Proposed the Young Plan (1929).

  • Death of Stresemann:

    • Stresemann passed away in October 1929 at age 51 after enduring health issues. His death preceded the Wall Street Crash, ultimately leading to a catastrophic economic environment for Germany.

    • Historians debate the efficacy of his potential responses to the impending crisis had he lived longer.

2.13 Evaluations of the Weimar Republic's Recovery (1924-1929)

  • Positive Signs:

  • Warning Signs:

  • Essay Question:

    • Evaluate to what extent Stresemann's handling of the French invasion of the Ruhr was critical to the survival of the Weimar Republic between 1923 and 1929, utilizing knowledge of his economic policies and international strategies.