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Examine the extent on which stability and Prosperity in Germany between 1925-1929 were dependent on foreign loans??

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Introduction

Examine the extent on which stability and Prosperity in Germany between 1925-1929 were dependent on foreign loans?? Until this day, many historians have argued and questioned whether Germany during the years 1925-1929, were in reality going through a period of stability and prosperity, and who or what caused this great revival? Undoubtedly, there are many different motives which arguably were all significant in the revitalization of the German economy, but how influential where the foreign loans in the development of the other factors, and the stability of the German Economy?? To examine closely the extend of which stability and Prosperity were dependent on foreign loans, we must see what effects the loans had on the economy and politics. Firstly, foreign loans were mainly from the US, given to Germany as aid from hyperinflation and the Treaty of Versailles's reparations. The end of 1923 saw Germany suffering from an insolvent economy, high unemployment and mass poverty. The International community was sympathetic to Germany's predicament and under the direction of Stresemann, Germany appealed to foreign powers to help resolve their financial difficulties. The chief contributor to Germany's complications was the United States; in total they gave an estimated $1,293 million, 90% of the $1,430 million received. ...read more.

Middle

This loan was chaired by Owen D. Young; the head of American General Electric Company, and also a member of the Dawes committee. Like the Dawes committee it was concluded that Germany should be given greater flexibility in her re-payments of the reparations, in order to do this; considerable sums needed to be invested into the German economy. The sums that Germany would pay to the allied forces grew from 1700 million marks to 2400 million marks and would then continue to be re-paid at a reducing rate until the sum had been paid in full. Similar to the Dawes Plan, the Young Plan provided Germany with a certain degree of stability. The facility to re-organise finances provided the Germany economy with the continual capability to expand, develop and improve. Henceforth, employment rose and wages accordingly. Economic conditions in before 1924 were horrific in comparison to the affluence being experienced as a result of loans initiated by Young and Dawes. Many people argue that foreign loans also helped stability in the Government. By 1925, unemployment was less than 5% of the labour workforce, wages were rising consistently and economy overall was growing. People started to realise that the Weimar Government was doing the nation good and less people got involved in extreme right and left wing parties. ...read more.

Conclusion

It was through this method that Germany came to flourish and make the transition from volatility to stability. Although I have wrote about Germany being stable and prosperous within the years 1935-29, many historians have argued that in fact the economy was not stable, and foreign loans "masked" the real position of vulnerability and susceptibility. For example, Coalition Governments makes it unstable and shows no two parties can agree on domestic and foreign policies. In addition, there were 7 Governments within 1924-30, so no long term decision could have been made because they were only in power for less than a year, and the moderate political groups did not commit in a parliamentary democratic Government e.g. the Centre party slightly right wing or the SPD were fighting for working class revolution but were in a parliamentary democracy. Furthermore economically, the revival was built on unstable foundations and created a false image of prosperity. They were much too dependent on foreign loans, which showed in 1929 when America called for their loan back due to the Wall Street Crash, and there were still some fields in recession such as agriculture or the balance of trade. Stresemann quoted "dancing on volcano" and Puekett quoted "Deceptive stability", both agreeing that Germany from the outside looked stable and prosperous, but under really was in apprehension. ...read more.

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