However only a degree of stability was established during this period. Political stability was partly due to foreign loans which kept Germany afloat due to the large amounts of money owed in reparations. The Weimar republic's greatest weakness was its failure to establish lasting political stability. I. Kershaw once said that, “a stable coalition is an oxymoron”. Germany's prosperity after 1924 was financed for the most part by borrowed money. The basic weakness was that the government was using short term loans to fund long term projects. As the great depression set in on October 1929 the United States recalled there short term loans to Germany, and the German economy began to collapse. This caused a lot of problems for Germany as now they had no money to rebuild there still broken economy, and they still had to pay off the large sums in reparations. Support for the Weimar government was lost and several other political groups emerged such as the right wing Nazi's who were now gaining support. Therefore it can be seen that much of the stability during this time was a facade for what the government wanted the people.
By 1929, economically Germany had achieved a degree of stability. The economy prospered and was a time which saw Germany become the European centre of music, film, art and literature. The Dawes Plan in 1924 gave Germany some security and it marked the start of a period of impressive economic growth. US banker Charles Dawes headed the Plan which gave Germany a better chance to control their economy and still pay the large sums off in reparations. This lead to a two year moratorium on reparation repayments, with the repayments to be made over a longer period. Foreign loans gave Germany the jump start they needed to have a sound economic and financial footing. Chancellor Gustav Stresemann ended hyperinflation which the introduction of the new currency, rentenmark, a currency based on the value of the land. which lead to rapid growth in industry. Industry was restructured and modernised, with coal, iron and steel production surpassing pre war figures and exports doubled. The economy recovered so quickly because Germany's territory has not been a battleground in war and therefore there was no need for costly reconstruction meaning that their industry remained unscathed. Inflation, even though it caused chaos and hardship helped recovery by allowing industrialists to expand and allowed Germany's goods to sell cheaply. The loss of coal resources led to development of 'Lignite' (brown coal) and greater use of electricity. Scientific improvements in steel industry led to cheaper, better quality steel which led to ship building expanding and mass production methods. These factors to a certain degree helped Germany up to 1929 to attain stability economically.
However the Economic stability during this period had its flaws. Germany's well-being was dependent on and vulnerable to' the investment whims of foreign capital.' The large amounts borrowed from America meant that the economy could not possibly be stable when it was tied so tightly to external forces beyond her control. The “recovery of Germanys economy was only 'a false image of prosperity' Layton. Germany, “lived on borrowed money... If a crisis ever hit us... We are not only militarily disarmed, we are also financially disarmed,” (Gustav Stresemann). Although the money did go a long way to restructure German industry and the industrial boom, the main weakness was that the country was using short-term loans to fund long term projects. As well as this Germany never had a favourable trade, with the cost of the imports being higher than the exports. In 1928, before the great depression, the economy started to experience serious problems. There was a decline in the flow of foreign investment as money moved out of Europe and into the New York stock market which was booming at the time. Interests rates rose in an attempt to attract foreign investment and this contributed to a fall-off in the level of economic activity. As a consequence production slowed and unemployment rose. On October 1929 the New York stock market collapsed and the United States began its slide into economic depression. American banks recalled there short term loans to Germany, and the German economy began to collapse. The Great depression triggered large scale unemployment, severe social hardship and political instability. It affected all classes. Starvation was wide spread, living conditions deteriorated, social instability was common and business came to a grinding hault. During this period support was lost for the Weimar Republic and the right wing Nazi Party emerged.
Socially in the period up to 1929, Germany had achieved a state of stability. As the economy improved, more people were required to work which lead to increases in employment and standards of living. More money was pumped into public works, housing, transport and social welfare which lead to vast improvements in these areas. The Stinnes-Legien agreement between big business and workers unions gave the unions legal recognition and brought in an 8 hour working day. Legion agreed to no strikes as long as Stinne's fulfilled his side of the agreement, workers also gained an arbitration system which protected their rights. People went back to work due to Chancellor Gustav Stresemann ending the dispute in the Ruhr. Wages increases and trade unions gained a new importance and their memberships soared. By 1929 6 million workers were in trade unions. Article 161 of the Weimar constitution stated that, “the Reich shall organise a comprehensive system of social insurance.”This led to improved social welfare with more money being put into pensions for orphans and widows. With this, confidence, creative determination and cultural renaissance was gained which lead to Germany becoming the European centre of music, film, art and literature. Germany during this period can be referred to as 'avant garde' which represents the pushing of the boundaries of what is accepted as the status quo. These factors enabled Germany to be afloat financially in what can be known as the golden era.
However social stability was built on bad foundations. With the large sums owed in borrowed money social classes were hit hard. All classes were effected by the Great Depression as it put a strangle hold on the government and business came to a halt. There was large scale unemployment levels and living conditions deteriorated as a consequence. No money was left to rebuild the economy so unemployment continued to drop and at the beginning of 1929 there were one and a half million people unemployed and by the end of 29 there were 3 million unemployed. Suddenly people started to resent the Weimar government and several political groups emerged. The hard won prosperity of the mid-1920s was gone and it was in these conditions that the extremist parties like the Nazis and the communists prospered. Therefore there was only a certain degree of stability socially in the period up to 1929.
Therefore to a certain degree Germany had reached a state of Political, economic and social stability by 1929. However it was due to events such as the Great Depression in 1929 and the large sums owed in borrowed money caused large scale chaoses by the end of 1929.