Then in 1923, Gustav Stresemann became chancellor for a brief time, and then he became foreign minister. One of Stresemann’s first acts as foreign minister was to end the policy of passive resistance in the Ruhr, which slashed government expenditure, this, along with the introduction of the rentenmark, helped Germany to recover economically. Ending passive resistance in the Ruhr also helped Germany to recover politically as it helped other countries to trust Germany again. This made it possible for Germany to negotiate payments of the reparations, which, until that point had been a drain on Germany’s economy. Other countries now trusting Germany again helped Stresemann to negotiate the Dawes plan in 1924 and the Young plan in 1929.
The Dawes Plan
The Dawes plan agreed that Germany should pay a lower amount of reparations. It also arranged loans to the German industry from US bankers. This cycle’s obvious flaw was that the money was just going round in a circle.
The Young plan was a negotiation of further reduction of the amount of reparation.
The Dawes Plan opened the way for lengthy diplomatic discussion with the Allied powers, which helped to bring about the Locarno Treaties in 1925 in which Germany, Belgium & France agreed to respect each other’s mutual borders. This did much to relieve international tensions, and the “Locarno honeymoon” brought Germany various advantages.
In 1928 Germany signed the Kellogg-Briand Pact; and in 1930 the Allies left the Rhineland. These various successes gained support for the Republic and there were general signs that the turbulent events of 1923 had provoked an active response among those who wished to protect German democracy.
Because Stresemann appeared to be helping Germany recover, votes for extreme parties, such as the Nazi party fell dramatically and people started to favour the republic. This was because people were starting to regain their faith in the German government.
Stresemann helped Germany recover economically by solving hyperinflation. He did this by cancelling the old mark and introducing a new currency called the rentenmark, which, being based on a mortgage of all land and industry to the value of 3200 million gold marks, was theoretically secure and quickly helped to stabilizese the economy. With his finance minister Stresemann negotiated the Dawes Plan which was a loan of 800 million Gold Marks, mostly from the USA banker Charles Dawes, which enabled Germany to initiate a general economic recovery and to pay annually in reparations only what she could reasonably afford. This was carried a stage further by the Young Plan of 1929 which reduced the reparations total from £6,600 million to £2000 million, to be paid in annual installments over 59 years. This effectively settled the reparations issue.
Due to these various measures the German economy rapidly recovered between 1924 & 1929. There was a boom in such industries as iron, steel, coal & chemicals. The gas and electricity industries were nationalized. Industrial cartels were established; real wages & production exceeded pre-war levels; working hours were shortened and social insurance was extended.
Germany’s economic prosperity also helped her to recover socially. It meant that more money could be spent on building new places for people to enjoy themselves. Stresemann also lifted much censorship so people were freer to say and do what they wanted. It became the jazz age and sexual freedom helped people in Germany to regain their faith in the German government. Germany’s economic recovery also meant that more people had jobs and money to spend on enjoying themselves and recovering socially. During the “golden years” German’s arts and culture flourished, people were allowed to print what they wanted. All different types of arts flourished, for example architecture.
However, as Stresemann had predicted, the German economy was “dancing on a volcano”. In the same year as Stresemann died, the Wall Street crash happened in America. This was because more people were selling their shares than were buying so prices fell, and the American economy collapsed. Up until this point, Germany had been using American loans to pay off the reparations, however, when the American economy collapsed, America started recalling all loans from countries it had lent money to, including Germany. This sent Germany into chaos as not only did they have to repay American loans, but also the allies were still demanding reparation payments, as they also needed to pay back loans to the USA.
The cycle of depression
Stresemann died of kidney failure in September 1929. Without his steadying influence the DVP and the Reichstag quickly slipped to the Right, where the charismatic figure of Adolf Hitler continued to wax noisily about the failings of the “November Traitors” and built up popular support through his spellbinding oratory.
In conclusion I think that the most important reason for Germany’s recovery from 1924 – 1929 was that Gustav Stresemann got other countries to trust Germany again. This meant that they leant Germany money and were more lenient with payments, which allowed Germany to recover economically. Germany’s economic recovery meant that more people were employed and had more money to spend on recovering socially.
