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Recovery of Germany


The work of Stressemann

  • Introduced a new currency and scrapped the old, worthless one
  • Made Germany part of the League of Nations, which made them seem less like the enemy and on a friendlier note with the rest of the European countries
  • Relieved unrest (slightly)
  • US loans, which brought money into the German economy
  • Called off passive resistance in the Ruhr (which was absolutely destroying the economy)

Rentenmark

The old currency was worth nothing, due to hyperinflation. So, the government collected this and replaced it with the Rentenmark. This eased the effects of the inflation.
  • Government altered policies in regards to printing of money
  • They stopped offering credit to industry (had led to widespread speculation and therefore inflation)
  • Limited the money in circulation to what the economy was actually worth
  • Borrowing of money slowed and so the circulation of money returned to 'normal' levels.
  • In August, 1924, the Rentenmark was replaced by the Reichsmark, which was to be the more permanent currency.

Effects of this: Companies that had relied on credit before went bankrupt. Those that were well-organised and well-run flourished. While this meant that more companies were going bankrupt, it also meant that the economy was becoming more efficient.

Dawes and Young Plan

Young plan: - 1924 1929
Dawes plan: - 1928  April, 1924

The Dawes Plan was the first of a few American loans to Germany, under the man Charles Dawes.This allowed them to pay the reparations they were meant to pay in 1923. In April, 1924, huge loans were made to the German economy, so more money was flowing into the country. However, this also meant that the German economy was completely reliant on the US economy, and if it collapsed, Germany's would, too.

The Young Plan was set up in 1929. This loan had to be paid back in one third per year, more, if it did not endanger Germany's economy. The British thought the Americans were being far too generous, as they were still feeling the effects of WW1. This Plan was unofficially adopted before the Wall Street Crash.

Because of American money,the German economy was able to stabilise itself after 1923. However, when the Wall Street Crash struck, they went back to square 1 - everything collapsed. While this was a massive disadvantage to the Weimar Republic, it did help Hitler win the popularity to eventually manipulate the system to allow him to come to power in 1933. Because of these loans, Germany was also now able to pay reparations, so the French and Belgians withdrew their troops from the Ruhr.

League of Nations

It was Stressemann's idea to join the League of Nations. He was convinced that this would re-integrate Germany back into Europe and reduce the hostility between countries. This worked, and Germany was put on the council with other large European powers such as Britain and France. They joined in 1926, where its power as a leading nation was recognized once again.

Locarno Treaty

The Locarno treaty was signed in 1925 and guaranteed Germany's frontiers with France (west) but it did not say anything about the Eastern onces. Stressemann did not want to guarantee this, but he was worried that the USSR / Russia might feel threatened by this. This meant smaller Eastern european nations, such as Czecslovakia and Poland, did not have military protection from any invasions. France stepped in for them.

This treaty was what let Germany into the League of Nations. However, as soon as Hitler came into power,  he re-introduced troops into the Rhineland, therefore tearing up the Treaty.

Kellog-Briand pact

The Americans were determined not to get involved in another World War. As a result, the Kellog-Briand pact was created. This outlawed war as a means of resolving a conflict. It said the military should not be used except in cases of 'self defence'. However, this was not defined, and the countries really had no way of enforcing the treaty anyway, so it was largely ignored. This was signed in Paris, 1928.

The failure of the Pact became clear when Japan invaded Manchuria. They had signed the pact, but there was nothing that could be done without starting a major war all over again. There were so many loopholes because of the pact's ambiguity that each party could interpret it as he desired and as was convenient.
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