Recovery of the Weimar Republic : Impact of Streseman (Rentenmark (The…
Recovery of the Weimar Republic : Impact of Streseman
The hyperinflation of 1923 had destroyed to value of the German mark.
In November 1923, Stresemann introduced a temporary currency called the Rentenmark, this was to restore confidence in the German currency.
The new currency was issued in limited amounts and was based on property values rather than gold reserves.
Gradually this currency restored the confidence of the German people.
In the following year, the Rentenmark was converted into the Reichsmark, a new currency now backed by gold reserves.
Dawes and young plan
Stresemann realised Germany couldn't afford the reparations payment and persuaded the British, French and Americans to change the payment terms through the DAWES PLAN.
The plan was agreed in August 1924
It was named after the US vice president Charles Dawes, who played a leading role in setting up the Plan.
The main points of the plan are:
Reparation payments would begin at 1 billion marks for the first year and would increase over a period of four years to 2.5 billion marks per year. These payments were far more sensible and manageable and were based upon Germany's capacity to pay
The Ruhr area was to be evacuated by Allied occupation troops. This was carried out in 1925
The German Reichsbank would be reorganised under Allied supervision
The USA would give loans to Germany to help its economic recovery
Although Germany was able to meet reparations payment schedule introduced by the Dawes Plan, the German government regularly complained about the level of payments.
In 1929, the Allied reparations Committee asked US banker Owen Young to investigate and he came up with a new plan for payments.
The reparations figure was reduced from £6,600 million to £1,850 million.
The length of time Germany had to pay was extended to 59 years with payments at an average of 2.05 billion marks per year.
This was a considerable achievement for Stresemann, but it was severly criticised by right-wing politicians such as Alfred Hugenburg and Adolf Hitler, who objected to any further payment of reparations.
The Dawes plan also aimed to boost the German economy through US loans, beginning with a loan of 800 million marks.
Over the next six years, USA companies and banks gave loans of nearly US$3,000 million, which not only helped the economic recovery, but also enabled Germany to meet the reparations payment .
Stesemann wanted to improve relations with France and Britain, partly in order to restore Germany's international reputation but also to gain their co-operation in reducing the worst features of the Treaty of Versailles, especially in reparations.
Stresesmann realised France needed to feel secure in order to co-operate over changes in the Versailles peace treaty
In 1925 Germany signed the Locarno Pact with Britain, France, Belgium and Italy.
This agreement meant the countries agreed to keep existing borders between Germany, Belgium and France
The Locarno pact marked Germany's return to the European international scene and began a period of co-operation between Germany, France and Britain sometimes described as 'Locarno honeymoon'
League of nations
In order for the Locarno Pact to come into operation Germany had to become a member of the League of Nations, an international organisation established in 1920 to try and maintain peace.
In September 1926, Germany was given a permanent seat on the Council of the League of Nations
This confirmed Germany's return to Great Power status and gained considerable prestige for Stesemann.
It was a bold move on his part because many Germans regarded the League as the guardian of the hated Treaty of Versailles.
Stresemann used Germany's position in the League to bring about the Young Plan
In 1928 Germany signed the Kellogg Briand Pact along with 64 other nations
It was agreed that they would keep their armies for self defence and solve all international disputes 'by peaceful means'.
The pact showed further improved relations between the USA and the leading European nations and fully confirmed that Germany was once again one of these leading nations.