Section C: The recovery of the Republic 1924-29

The work of Stresemann

1. Gustav Stresemann became Chancellor and Foreign Secretary in August 1923.

2. He stopped passive resistance.

3. November 1923, Stresemann set up a new state-owned bank, the Rentenbank and issued a new currency, the Rentenmark. Its value was tied to the price of gold, the notes were severely limited and were backed by German industrial plants and agricultural lands.

4. In August 1924, a newly independent bank, the Reichsback was given control of the new currency, renamed the Reichsmark, and its value was backed by Germany’s gold reserves.

5. In November he resumed the repayment of reparations.

6. These actions ended the problem of hyperinflation.

The Dawes Plan, 1924

1. Charles G. Dawes, an American banker, had been asked by the allies to resolve Germany’s non-payment of reparations.

2. April 1924 it was agreed that reparations would be temporarily reduced to £50 million a year.

3. US banks agreed to give loans to German industry. They loaned $25 billion between 1924 and 1930. These loans could be recalled at any time.

4. The French also agreed to leave the Ruhr.

5. Industrial output increased passing pre-world war levels.

6. Employment, trade and income from taxation increased.

The Young Plan, 1929

1. Set up by the Allies, headed by an American banker called Owen Young.

2. Reduced the total reparations debt from £6.6 billion to £2 billion

3. Germany was given a further 59 years to pay (until 1988)

4. Lower reparations payments allowed the government to lower taxes on ordinary German people

5. Lower taxes meant more public spending power – boosted German industry and created more jobs

6. The French agreed to leave the Rhineland in 1930.

7. Hitler criticised this as ‘passing on the penalty to the unborn.’

8. The Wall Street Crash meant most of the benefits of the Young Plan didn’t have time to make an impact.

The Locarno Pact, 1925

1. On 1st December 1925, Stresemann signed the Locarno Pact – a treaty between Germany, Britain, France, Italy and Belgium

2. Germany accepted its new 1919 border with France, and France promised peace with Germany

3. Germany and the Allies agreed that the Rhineland would be permanently demilitarised

4. The five powers agreed to open talk about German membership of the League of Nations

5. Seen as a success because war in Europe was less likely, Germany was being treated as an equal and it increased the confidence of many Germans in the moderate political parties

6. It was criticised by German nationalists because it confirmed the hated Versailles borders

The League of Nations

1. Germany was initially excluded but in September 1926, Stresemann persuaded the other great powers to accept Germany as a member

2. Germany was given a place on the League of Nations Council, which took the most important decisions of the League

The Kellogg-Briand Pact

1. In August 1928, Germany, USA and 60 other countries signed the Kellogg-Briand Pact.

2. The pact promised that states would not use war to achieve foreign policy aims

3. The USA was not in the League of Nations and saw this as way that the country could assist peace

4. Showed that Germany was amongst the main powers, not dictated to by them

5. Showed that the Weimar Republic was respected, and boosted its public prestige

6. But did nothing to remove the hated terms of the Treaty of Versailles.