Economic recovery
The end of hyperinflation
Gustav Stresemann, Chancellor of the Weimar Republic
Stresemann鈥檚 single greatest achievement as In the Weimar Republic, the Chancellor was the head of the government, appointed by the President. was to end Very rapid and high increase in the level of prices, combined with a fall in the value of money.. He did this in just three months by:
- Calling off the 鈥To resist something by not cooperating, or refusing to follow instructions without using violence.鈥 of German workers in the The main industrial area of Germany.. This helped Germany鈥檚 economy because goods were back in production and the Government could stop printing money to pay striking workers.
- Promising to begin Monetary compensation from an individual, group or state to compensate victims. payments again. This persuaded France and Belgium to end the occupation of the Ruhr by 1925.
- Introducing a new currency called the Rentenmark. This stabilised prices as only a limited number were printed meaning money rose in value. This helped to restore confidence in the German economy.
- Reducing the amount of money the government spent (700,000 government employees lost their jobs) so that its budget When a government spends more money than it collects in taxes. reduced.
Gustav Stresemann's Nobel Peace Prize speech
Renegotiating reparations
The payment of reparations, which had caused the hyperinflation crisis in the first place, had to resume, but Stresemann鈥檚 decisive actions in the autumn of 1923 gained Germany the sympathy of the During World War One, from 1917, the Allies were Great Britain, France, Russia, Italy, Japan and the USA. In World War Two the Allies initially included France, Poland and the UK but they were joined by USSR and USA. France was defeated in 1940 and further nations joined the group. However, Italy and Japan were enemies.. They agreed to renegotiate payments and this led to two new repayment plans in the next five years:
| The Dawes Plan | The Young Plan | |
| Date | 1924 | 1929 |
| Amount of reparations to be paid | Stayed the same overall (50 billion Marks) but Germany only had to pay one billion Marks per year for the first five years and 2.5 billion per year after that | Reduced the total amount by 20 per cent. Germany was to pay two billion Marks per year, two thirds of which could be postponed each year if necessary |
| Amount of time | Replaced by the Young Plan in 1929 | 59 years, with payments to end in 1988 |
| Loans made available to Germany | Germany was loaned 800 million Marks from the USA. These loans would later cause problems when they were recalled by America following the Wall Street Crash | US banks would continue to loan Germany money, coordinated by J P Morgan, one of the world鈥檚 leading bankers |
| Date | |
| The Dawes Plan | 1924 |
| The Young Plan | 1929 |
| Amount of reparations to be paid | |
| The Dawes Plan | Stayed the same overall (50 billion Marks) but Germany only had to pay one billion Marks per year for the first five years and 2.5 billion per year after that |
| The Young Plan | Reduced the total amount by 20 per cent. Germany was to pay two billion Marks per year, two thirds of which could be postponed each year if necessary |
| Amount of time | |
| The Dawes Plan | Replaced by the Young Plan in 1929 |
| The Young Plan | 59 years, with payments to end in 1988 |
| Loans made available to Germany | |
| The Dawes Plan | Germany was loaned 800 million Marks from the USA. These loans would later cause problems when they were recalled by America following the Wall Street Crash |
| The Young Plan | US banks would continue to loan Germany money, coordinated by J P Morgan, one of the world鈥檚 leading bankers |
Did the Weimar economy really recover?
The years 1924 to 1929 have been referred to as Weimar鈥檚 鈥楪olden Years鈥, but historians disagree as to just how much the German economy recovered from the effects of World War One and hyperinflation.
| Signs of recovery | Signs of continued weakness |
| By 1928 industrial production levels were higher than those of 1913 (before World War One) | But...Agricultural production did not recover to its pre-war levels |
| Between 1925 and 1929 exports (sending goods or services abroad) rose by 40 per cent | But...Germany spent more on imports than it earned from exports, so they were losing money every year |
| Hourly wages rose every year from 1924 to 1929 and by 10 per cent in 1928 alone | But...Unemployment did not fall below 1.3 million and in 1929 increased to 1.9 million |
| IG Farben, a German chemical manufacturing company, became the largest industrial company in Europe | But...German industry became dependent upon loans from the USA |
| Generous pension, health and unemployment insurance schemes were introduced from 1927 | But...The government ended up spending more than it received in taxes and so continued to run deficits from 1925 onwards |
| Signs of recovery | By 1928 industrial production levels were higher than those of 1913 (before World War One) |
|---|---|
| Signs of continued weakness | But...Agricultural production did not recover to its pre-war levels |
| Signs of recovery | Between 1925 and 1929 exports (sending goods or services abroad) rose by 40 per cent |
|---|---|
| Signs of continued weakness | But...Germany spent more on imports than it earned from exports, so they were losing money every year |
| Signs of recovery | Hourly wages rose every year from 1924 to 1929 and by 10 per cent in 1928 alone |
|---|---|
| Signs of continued weakness | But...Unemployment did not fall below 1.3 million and in 1929 increased to 1.9 million |
| Signs of recovery | IG Farben, a German chemical manufacturing company, became the largest industrial company in Europe |
|---|---|
| Signs of continued weakness | But...German industry became dependent upon loans from the USA |
| Signs of recovery | Generous pension, health and unemployment insurance schemes were introduced from 1927 |
|---|---|
| Signs of continued weakness | But...The government ended up spending more than it received in taxes and so continued to run deficits from 1925 onwards |