Germany: Key Topic 2 - The German Recovery, 1924-29
Currency changes: 1923 and 1924. Gustav Stresemann Foreign
Gustav Stresemann Domestic work/successes:
In November 1923, Stresemann introduced a new temporary currency known as the
Rentenmark - this was based upon agriculture and industries. Stresemann needed to Policies:
stabilize the value of the currency ( in the same month one US dollar was equivalent to 4.2
trillion marks) due to the 1923 hyperinflation crisis where the German Mark was worthless.
Dawes Plan: 1924
This amount of money was closely controlled however, since the currency was based
upon agriculture and industries, with 15% of Germany’s agriculture taken away from them This plan was implemented because Stresemann believed that Germany’s economy would not
due to the Treaty of Versailles and the French occupying the Ruhr (80% of coal, iron and recover until the reparations issue was solved and this issue was signed between Germany and The Locarno Pact: 1925
steel manufactured here - highest industrial producing city) the value was not strong and the Allies.
could fluctuate. Stresemann also set up a state-owned bank, the Rentenbank, to start The Locarno pact was signed on the 1st of December 1925 by
distributing the new currency. - US banks gave loans to German industry and businesses worth 800 million marks and between Britain, France, Germany, Italy and Belgium. Germany agreed
1924-30 the US had loaned Germany $25 million. to accept its new western borders with France and France
Because of the temporary currency, in 1924 the Reichsmark was issued to replace the promised peace with Germany. All the countries involved in
Rentenmark, with this new permanent currency backed by German gold reserves. In also - Reparations to be lowered to £50 million per year - significant decrease from previous annual the Locarno Pact agreed to avoid military force except in self-
in 1924, a new independent national bank – the Reichsbank – was handed control of the payments. Including the Allies having agreed to review the reparation payment rate to take defence. This provided important reassurance for France and
new currency. These measures restored faith in Germany’s financial system and were vital account of Germany’s ability to pay and that any missed payments would be dealt with by the Germany - made sure the occupation of the Ruhr would not
in allowing Germany’s economy to grow stronger. The currency changes were trusted in Allies together. occur again. The Locarno Pact marked Germany’s return to
Germany and abroad. the European international scene and began a period of co-
- The French agreed to withdraw troops from the Ruhr (1925). operation between Germany, France, and Britain. It
He also promised to swap the currency notes for shares in German land or industry if the significantly improved Germany’s international relations.
currency failed. Positive effect: This gave the German people confidence in the new - The Dawes Plan reassured the Allies that they would get their reparation payments.
currency. Effects of the Locarno Pact:
League of Nations:
2 effects of the Dawes Plan: 1- Improvement in Germany’s Europeans standings and
2 effects of the currency changes: relations - restores their status as an equal European power.
This peace organization
1- Stabilized economy: Reduced tensions between France and Germany, shown as a
1 - Stabilization of the German economy: was formed at the end of
WW1. It allowed countries stable and strong country again.
Stresemann used some of the money that had been borrowed to build new factories, houses, to discuss peace without
Gold reserves - a more tangible asset that wasn’t going to fluctuate. This made the new schools, and roads. This meant more jobs, with German’s earning more money. Some American using violence - this idea 2- Backlash from nationalistic groups: Nationalistic parties
currency restore confidence in the financial system (1 US dollar was now equivalent to 4.2 companies e.g., Ford and Gillette built factories in Germany too which also created more jobs. came from one of US and right-wing extremists deeply opposed the accepting of
German marks). This allowed businesses to start working normally again without the fear This meant that people earned more money which meant they had more money to spend, president Wilson 14 points the western borders by the Treaty of Versailles as it still
of hyperinflation and citizens raiding their shops because they couldn’t afford it. ‘ increasing industrial output - industrial output doubled between 1923-28 (passing pre-WW1 for the treaty. In September blamed them for the war and erased their victory of the
levels). People became more content as Germany was being rebuilt again. Also allowed for of 1926, Stresemann
Franco-Prussian war of 1871 - humiliating. Betrayal -
2. Increase in both domestic and international confidence in Germany’s financial system: economic stability because it reassured the Allies they would get their reparation payments and persuaded the other great
powers to allow Germany territorial losses which belonged to their people.
their Allies agreed to review the reparation payment rate in account of Germany’s ability to pay.
Stresemann’s successful introduction of the Rentenmark and Reichsmark reassured not to join the league of
only the German people but also foreign investors and governments. They were now seen nations - partly because of
2- Political Backlash created towards the German Government:
to have a strong and stable currency which improved Germany’s international relations.
the Locarno pact.This
membership was
The Kellogg - Briand Pact: 1928
Trust = vital to secure loans from abroad such as the Dawes Plan with the US in 1924 Some Germans (particularly the extreme political parties) criticised the government for agreeing important as they made
which provided further financial aid and support for the country - helping them with to the Dawes Plan as they felt Germany was accepting blame for the war by continuing to pay important decisions
reparation payments = allowed economic growth = making it possible for Germany to regarding international 62 countries signed the Kellogg-Briand Pact in August 1928. The
the reparations including that the Allies still having control over Germany, as they were also
recover after the crisis. affairs. This increased pact aimed to prevent future wars by getting the countries to
given some control of the Reichsbank and the Germany railways. Some Germans also stated
many Germans confidence promise that they would not use war to achieve their foreign
that Germany’s economy was only surviving because it relied on American loans and this
in the Weimar Republic policy aims. This pact showed a clear improvement in Germany’s
reliance made the economy vulnerable to future instability, as seen in the US Wall Street Crash
Youngs Plan 1929: and Great Depression of 1929 when Germany's economy crippled from having to return the
and increased its relations with other countries. Germany had been excluded from
Despite the Dawes Plan, the German government still found it difficult to pay the popularity, as they felt like negotiations relating to the Treaty of Versailles but was now
money they borrowed from the Dawes plan immediately. they were accepted in an
reparation payments and 5 year later, Stresemann agreed to the Young Plan. The plan included among the main powers again. This pact gave the
“international” family. Germany public more confidence that the moderate political
included:
1- Economic improvement: Reduction = allowed German government to lower taxes on public = parties could be trusted to make Germany strong again.
- Total reparations bill reduced to £2 billion. 1- International Standing:
- Germany was given another 59 years to pay (until 1988)
boosted economic growth = further stimulated economic growth. 2 effects: Germany's membership at
- The French agreed to leave the Rhineland by June 1930 (5 years earlier than originally the League confirmed their 1- Improvement in Germany’s international relations
2- Nationalistic Opposition: Some German nationalists were angry that Germany still had to pay
agreed). league to the “great
reparations - humiliation and accepted blame for reparations. They felt that the lengthy schedule power” status and 2- Dissatisfaction of many Germans who hated the Treaty of
would have an impact on the speed at which Germany could progress as a nation and prevent Stresemann used his Versailles (especially right-wing nationalist) as it did not change
The reduction in the yearly payments allowed the government to reduce taxes on ordinary
Germany for reclaiming its place as a major power. Hitler = ‘passing on the punishment to the position in the League to the harsh terms of the treaty like territorial loss and military.
German people = led to an increase in the public’s spending = boosted German industry
unborn’. Nationalists = laid groundwork for political instability ang growing influence of extremist negotiate terms in the
which created more jobs = increase people’s ability to spend money which then led to an
movements. Young Plan.
increase in employment opportunities again.
However, when In the end the Young Plan came to nothing due to the US Wall Street Crash of 1929, 2- Deepened divisions: =
A lot of support: a referendum was held in December 1929, allowing people to vote for or symbol of the hated Treaty
when America not only expected Germany to continue to repay their reparations but also return the
reject the Young Plan, 35 million Germans voted in support of it (about 85%) of the of Versailles - they wanted
money they borrowed from the Dawes Plan.
population. nothing to do with it.
Betrayal.
Currency changes: 1923 and 1924. Gustav Stresemann Foreign
Gustav Stresemann Domestic work/successes:
In November 1923, Stresemann introduced a new temporary currency known as the
Rentenmark - this was based upon agriculture and industries. Stresemann needed to Policies:
stabilize the value of the currency ( in the same month one US dollar was equivalent to 4.2
trillion marks) due to the 1923 hyperinflation crisis where the German Mark was worthless.
Dawes Plan: 1924
This amount of money was closely controlled however, since the currency was based
upon agriculture and industries, with 15% of Germany’s agriculture taken away from them This plan was implemented because Stresemann believed that Germany’s economy would not
due to the Treaty of Versailles and the French occupying the Ruhr (80% of coal, iron and recover until the reparations issue was solved and this issue was signed between Germany and The Locarno Pact: 1925
steel manufactured here - highest industrial producing city) the value was not strong and the Allies.
could fluctuate. Stresemann also set up a state-owned bank, the Rentenbank, to start The Locarno pact was signed on the 1st of December 1925 by
distributing the new currency. - US banks gave loans to German industry and businesses worth 800 million marks and between Britain, France, Germany, Italy and Belgium. Germany agreed
1924-30 the US had loaned Germany $25 million. to accept its new western borders with France and France
Because of the temporary currency, in 1924 the Reichsmark was issued to replace the promised peace with Germany. All the countries involved in
Rentenmark, with this new permanent currency backed by German gold reserves. In also - Reparations to be lowered to £50 million per year - significant decrease from previous annual the Locarno Pact agreed to avoid military force except in self-
in 1924, a new independent national bank – the Reichsbank – was handed control of the payments. Including the Allies having agreed to review the reparation payment rate to take defence. This provided important reassurance for France and
new currency. These measures restored faith in Germany’s financial system and were vital account of Germany’s ability to pay and that any missed payments would be dealt with by the Germany - made sure the occupation of the Ruhr would not
in allowing Germany’s economy to grow stronger. The currency changes were trusted in Allies together. occur again. The Locarno Pact marked Germany’s return to
Germany and abroad. the European international scene and began a period of co-
- The French agreed to withdraw troops from the Ruhr (1925). operation between Germany, France, and Britain. It
He also promised to swap the currency notes for shares in German land or industry if the significantly improved Germany’s international relations.
currency failed. Positive effect: This gave the German people confidence in the new - The Dawes Plan reassured the Allies that they would get their reparation payments.
currency. Effects of the Locarno Pact:
League of Nations:
2 effects of the Dawes Plan: 1- Improvement in Germany’s Europeans standings and
2 effects of the currency changes: relations - restores their status as an equal European power.
This peace organization
1- Stabilized economy: Reduced tensions between France and Germany, shown as a
1 - Stabilization of the German economy: was formed at the end of
WW1. It allowed countries stable and strong country again.
Stresemann used some of the money that had been borrowed to build new factories, houses, to discuss peace without
Gold reserves - a more tangible asset that wasn’t going to fluctuate. This made the new schools, and roads. This meant more jobs, with German’s earning more money. Some American using violence - this idea 2- Backlash from nationalistic groups: Nationalistic parties
currency restore confidence in the financial system (1 US dollar was now equivalent to 4.2 companies e.g., Ford and Gillette built factories in Germany too which also created more jobs. came from one of US and right-wing extremists deeply opposed the accepting of
German marks). This allowed businesses to start working normally again without the fear This meant that people earned more money which meant they had more money to spend, president Wilson 14 points the western borders by the Treaty of Versailles as it still
of hyperinflation and citizens raiding their shops because they couldn’t afford it. ‘ increasing industrial output - industrial output doubled between 1923-28 (passing pre-WW1 for the treaty. In September blamed them for the war and erased their victory of the
levels). People became more content as Germany was being rebuilt again. Also allowed for of 1926, Stresemann
Franco-Prussian war of 1871 - humiliating. Betrayal -
2. Increase in both domestic and international confidence in Germany’s financial system: economic stability because it reassured the Allies they would get their reparation payments and persuaded the other great
powers to allow Germany territorial losses which belonged to their people.
their Allies agreed to review the reparation payment rate in account of Germany’s ability to pay.
Stresemann’s successful introduction of the Rentenmark and Reichsmark reassured not to join the league of
only the German people but also foreign investors and governments. They were now seen nations - partly because of
2- Political Backlash created towards the German Government:
to have a strong and stable currency which improved Germany’s international relations.
the Locarno pact.This
membership was
The Kellogg - Briand Pact: 1928
Trust = vital to secure loans from abroad such as the Dawes Plan with the US in 1924 Some Germans (particularly the extreme political parties) criticised the government for agreeing important as they made
which provided further financial aid and support for the country - helping them with to the Dawes Plan as they felt Germany was accepting blame for the war by continuing to pay important decisions
reparation payments = allowed economic growth = making it possible for Germany to regarding international 62 countries signed the Kellogg-Briand Pact in August 1928. The
the reparations including that the Allies still having control over Germany, as they were also
recover after the crisis. affairs. This increased pact aimed to prevent future wars by getting the countries to
given some control of the Reichsbank and the Germany railways. Some Germans also stated
many Germans confidence promise that they would not use war to achieve their foreign
that Germany’s economy was only surviving because it relied on American loans and this
in the Weimar Republic policy aims. This pact showed a clear improvement in Germany’s
reliance made the economy vulnerable to future instability, as seen in the US Wall Street Crash
Youngs Plan 1929: and Great Depression of 1929 when Germany's economy crippled from having to return the
and increased its relations with other countries. Germany had been excluded from
Despite the Dawes Plan, the German government still found it difficult to pay the popularity, as they felt like negotiations relating to the Treaty of Versailles but was now
money they borrowed from the Dawes plan immediately. they were accepted in an
reparation payments and 5 year later, Stresemann agreed to the Young Plan. The plan included among the main powers again. This pact gave the
“international” family. Germany public more confidence that the moderate political
included:
1- Economic improvement: Reduction = allowed German government to lower taxes on public = parties could be trusted to make Germany strong again.
- Total reparations bill reduced to £2 billion. 1- International Standing:
- Germany was given another 59 years to pay (until 1988)
boosted economic growth = further stimulated economic growth. 2 effects: Germany's membership at
- The French agreed to leave the Rhineland by June 1930 (5 years earlier than originally the League confirmed their 1- Improvement in Germany’s international relations
2- Nationalistic Opposition: Some German nationalists were angry that Germany still had to pay
agreed). league to the “great
reparations - humiliation and accepted blame for reparations. They felt that the lengthy schedule power” status and 2- Dissatisfaction of many Germans who hated the Treaty of
would have an impact on the speed at which Germany could progress as a nation and prevent Stresemann used his Versailles (especially right-wing nationalist) as it did not change
The reduction in the yearly payments allowed the government to reduce taxes on ordinary
Germany for reclaiming its place as a major power. Hitler = ‘passing on the punishment to the position in the League to the harsh terms of the treaty like territorial loss and military.
German people = led to an increase in the public’s spending = boosted German industry
unborn’. Nationalists = laid groundwork for political instability ang growing influence of extremist negotiate terms in the
which created more jobs = increase people’s ability to spend money which then led to an
movements. Young Plan.
increase in employment opportunities again.
However, when In the end the Young Plan came to nothing due to the US Wall Street Crash of 1929, 2- Deepened divisions: =
A lot of support: a referendum was held in December 1929, allowing people to vote for or symbol of the hated Treaty
when America not only expected Germany to continue to repay their reparations but also return the
reject the Young Plan, 35 million Germans voted in support of it (about 85%) of the of Versailles - they wanted
money they borrowed from the Dawes Plan.
population. nothing to do with it.
Betrayal.
