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A Period of Relative Stability - The Dawes Plan and the Creation of Economic Stability.

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Introduction

A Period of Relative Stability The Dawes Plan and the Creation of Economic Stability The Ending of Hyperinflation In November of 1923, months of chaos for the German people was ended with the introduction of the Rentenmark. The Rentenmark was issued with an exchange rate of 4.2RM to the Dollar, making each Rentenmark worth 50,000 Million Marks effectively putting an end to hyperinflation. The Rentenmark was the brainchild of Chancellor Gustav Stresemann's finance minister Hans Luther. To avoid a repeat of the hyperinflation crisis, Luther only allowed a very limited amount of the new currency to be printed as well as introducing a policy of deflation. Luther's deflation policy revolved around the reduction of Government expenditure via the mass redundancies in the civil service and vast reductions in welfare payments. In addition to the creation of the new currency, Luther also created a new state bank, the Rentenbank (Reichbank after 1924) and appointed the conservative economist Hjalmar Schacht as the currency commissioner. Schacht, the former head of the National Bank of Germany, was in charge of instigating the Rentenmark and introducing the new, gold based Reichmark. He was well known for his pro-monarchy and anti-democratic stances, and later played a major role in Hitler's Third Reich. One of the major effects that hyperinflation had on the Germany economy was that all fixed rate bank and savings accounts lost nearly all of their value. The majority of these accounts had been held by the middle-classes, who consequently lost their life savings. These sometimes massive losses led to demands for compensation being issued and the creation of a special interest party to champion the cause. The Government accepted the need for some compensation, but claimed that it was impossible to pay claims in full. In order to deal with the claims, a lottery was established to decide the order of repayments, and the maximum amount of compensation that could be paid was limited to 15% of the original value. ...read more.

Middle

Between 1919 and the Golden Age, there was little change in the attitudes of the intelligentsia, the elite and the Reichswehr. The industrialists and businessmen, most of whom were already deeply conservative, tended even more towards the right with many supporting the DNVP and a few supporting the NSDAP, mainly as a result of the unsuccessful Ruhr lockout and the welfare legislation. The leaders of the Reichswehr and the landowners, in particular the Prussian Junkers, all of whom were traditionally right-wing became even more so in response to the loss of influence and lack of authoritarianism. The civil servants, judges and some teachers especially in Universities also moved towards the right. To counter this exodus, a number of teachers, churchmen and newspaper editors and writers attempted to stir up a pro-democratic attitude in the general populace. The overall move to the right in the pillars of Weimar society showed clearly that the German Republic was failing many of it's most influential inhabitants, undermining the arguments for the Golden Age. Possibly the single most important act in the undermining of the Golden Age concept was the election of the Prussian Junker, Field Marshal Paul von Hindenburg as president of the German Republic. Following the death of the President Ebert of the SPD in 1924 elections were held. In the first round of these the results were as follows: First Round 29th March 1925 Votes (Millions) Candidate (Party) Votes (%) 10.8 Jarres (DVP) 39 7.8 Braun (SPD) 28 4.0 Marx (Z) 14 1.9 Thaelmann (KPD) 7 1.6 Hellpach (DDP) 6 1.0 Held (BVP) 4 0.2 Ludendorff (Volk) 1 Due to the fact that none of the candidates held a majority, a second round of voting was held on the 26th of April. For the second round, the SPD candidate, Braun, withdrew encouraging SPD members to vote for the Centrum's Marx aiming to unite the left, however the KPD's leader Ernst Thaelmann refused to stand down. ...read more.

Conclusion

Stresemann: Good European or Great German? Since the end of the Second World War, the true intentions of Gustav Stresemann have been debated many times, however the ultimate question remains was Stresemann aiming to help Europe or restore Germany to her pre-war glory? In the post-war period, many historians opted for the former, using Stresemann's support for Locarno, the Treaty of Berlin and policy of fulfilment (later called Stresemannpolitik by the NSDAP) as major steps in the path to a new and co-operative Europe. In contrast to this, current historical thinking and evidence supports Stresemann's nationalist aims. Evidence for this includes Stresemann's awareness of Seeckt's rearmament policy and a letter to Crown Prince Wilhelm Hohenzollern, the son of Kaiser Wilhelm the Second of Germany, which outlines Stesemann's underlying policies. The letter runs: "In my opinion there are three great tasks that confront German policy in the more immediate future - In the first place the solution of the Reparations question in a sense tolerable for Germany, and the assurance of peace, which is an essential premise for the recovery of our strength. Secondly, the protection of Germans abroad, those 10 to 12 millions of our kindred who now live under a foreign yoke in foreign lands. The third great task is the readjustment of our eastern frontiers; the recovery of Danzig, the Polish corridor, and a correction of the frontier in Upper Silesia... The most important thing for the first task of German policy mentioned above is, the liberation of German soil from any occupying force. We must get the stranglehold off our neck." This source clearly shows that Stresemann was determined to free the Rhineland from Allied occupation, remove the reparations burden, redefine Germany's eastern borders and allow those Germany who had be exiled from Germany by Versailles to return. As a basis for a foreign policy, it is clearly highly nationalistic and many historians have pointed out similarities between the Stresemann policy and the Hitler foreign policy (with the obvious exception of Lebensraum). ?? ?? ?? ?? 9 Theme 2 1 ...read more.

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