Section 2 - The Golden Age of the Weimar Republic, 1924-28

Question 1

How did Stresemann stabilise the currency?

Answer 1

• In August 1923, at the height of the hyperinflation crisis, the government of Cuno was replaced by a new coalition led by Gustav Stresemann - the ‘great coalition’.. It included parties from both the left and right. The DVP (stresemann’s own party) shared power with the Centre Party, the Socialists and the DDP.
• In the 103 days he was Chacellor, Stresemann stabilised the currency, brought inflation under control and controlled threats from the left and right.

Stresemann controlled inflation by:
- September. Ending passive resistance: Passive resistance of the Ruhr was called off which meant the government stopped paying workers who refused to work for the French. This reduced government expenditure.

• The issuing of a new currency: November. Rentenmark was introduced to replace the worthless Reichsmark. New currency exchanged for the old. This was supported by mortgage on land. The government now kept control over money in circulation to prevent inflation again. August 1924 - Rentenmark became Reichsmark.
• Balancing the budget: Cut expenditure and increased taxes. Salaries of government employees cut, civil servants lost jobs, taxes raised.

Question 2

What was the Dawes Plan?

Answer 2

• For the economy to be stabilised, the reparations dispute had to be settled.
• November 1923, Allies reparations committee asked by Stresemann to set up a committee to address Germany’s repayment concerns.
• The American banker, Charles Dawes was the committee’s chairman. He wanted Germany to pay reparations to France as much of this was passed onto the USA.
• Dawes plan confirmed the original £6.6 billion but made payments more manageable:
• Amount payed each year should be reduced until 1929. 1000 million marks a year, raised by annual increments of 2500 million. After this, payments should be equal to Germany’s industrial performance.
• Germany to receive a loan of 800 million marks from USA to start the plan and invest in infrastructure.

Benefits:
- Allies accepted repayment problems were real
- Loans meant machinery, factories, houses, jobs provided and economy rebuilt.
- French left the Ruhr in 1924/25 when it was clear Germany could pay reparations

Question 3

What was German industry like from 1924?

Answer 3

• Germany appeared more stable and prosperous.
• Dawes Plan and Schacht’s work (interest rates kept high to attract foreign investment) improved Germany’s situation.
• American loans stimulated the economy.
• Industrial output grew after 1924 but didn’t reach 1913 levels til 1929.
• Advancements made in chemical industry, e.g. artificial fertilisers.
• Car and aeroplane industry developed
• Inflation rate close to 0
• Living standards rose as wages increased.
• Loans financed housing, schools, etc.
• State initiatives to provide affordable homes due to over population
• Money spent on welfare and health improvements
• Number of strikes decreased due to compulsory arbitration. Trade unions could be part of work councils.