'Golden Age' (1924-28) Flashcards
Who was Stresemann and how did he affect the German economy?
The leader of the ‘great coalition’ government’ (Aug-Nov 1923).
Helped the German economy stabilise, and some sections to begin to grow and prosper.
How did Stresemann’s government help the economy?
- the ending of passive resistance of the Ruhr which reduced government spending on payments to workers on strike.
- Introduction of a new currency (Nov 1923) - the Rentenmark. The new currency was exchanged for thr old at rate of 1 rentenmark = 1 trillion marks. Currency backed by a mortgage on all industrial and agricultural land.
- Government kept tight control over the amount of money in circulation to stop inflation getting out of control again.
- Cut spending and raised taxes in order to reduce government debt.
What was the results of Stresemann’s changes?
Government debt reduced.
Confidence in currency restored.
Business confidence grew.
HOWEVER…
Not all companies thrived (those who relied heavily on credit went out of business).
Number of bankruptcies showed sharp increase in 1924.
People who lost savings in the hyperinflation gained nothing from the introduction of new currency.
How was the Dawes Plan created and why was it significant?
Long-term stabilisation of German economy dependent on a settlement on reparations.
Stresemann asked the Allies’ Reparations Committee to investigate how reparations could be resolved.
Under the chairmanship of American banker Charles Dawes, a committee of financial experts drew up an interim plan to reduce the burden of reparation payments - this resulted in the Dawes Plan (1924).
What did the Dawes Plan change about the reparation payments?
Total reparations bill remained unchanged but annual payments were reduced from 1924-29.
A loan of 800 million marks from USA would fund investment in German economy and therefore help stimulate economic growth. This enabled Germany to meet its reparation payments.
Allies took control over Germany’s banks and railways.
What positive impacts did the Dawes Plan have?
American loans that were a key part of Dawes Plan helped German economy to recover.
Plan led to the withdrawal of French and Belgian troops from the Ruhr (1924-25).
What opposition was there to the Dawes Plan?
‘national opposition’ of DNVP, the Nazi party, and other right-wing groups attacked government for agreeing to plan, arguing Germany should defy the unjust TOV and refuse any reparations.
How did Streseman view the Dawes Plan?
Believed Germany had no alternative, but privately he called it ‘no more than an economic armisitice’.
Reasons why there was economic recovery:
- Extensive foreign investment in industry
- Industry output grew
- Inflation low and currency stable
- Exports increased
- Advances in new industries
- Companies rationalised and became more efficient
- Fewer strikes as government introduced compulsory arbitration
- More mechanisation in agriculture
- Wages for industrial workers increased
Reasons why there wasn’t economic recovery:
- Unemployment problem (by 1926, 3 million people were out of work)
