It's August 1923. Gustav Stresemann has just been appointed the new chancellor
and foreign secretary for Weimar Germany. Just three months later, in
November, Stresemann resigns as Chancellor, but
he remains Foreign Secretary. He hopes that by stabilising the economy and
regaining respect for Germany in foreign affairs, Germans will feel more
content with the Weimar Republic. In turn, he hopes this will lead to more support
for moderate parties and reduce support for extremists.
1923-29:
Stresemann's Strategy.
The first step in Stresemann's strategy is bringing an end
to hyperinflation, which he does through the establishment of the rentenmark. In
November 1923, he sets up a new, state-owned, bank, the Rentenbank. This
Bank issues a new currency: the rentenmark. The supply of this new
currency is strictly limited, and its value is tied to the price of gold.
Furthermore, the rentenmark is backed by German industrial plants and agricultural
land, meaning the currency has real value. In August 1924, the control of the
rentenmark is given to the Reichsbank, a newly independent National Bank. The
currency is renamed the Reichsmark, and is backed by Germany's gold reserves.
Finally, the German people can trust German money again and hyperinflation is
brought to an end. This makes way for Stresemann's next
work: the Dawes plan. In April 1924, Stresemann agrees to the Dawes plan.
The plan has come about as the Allies have asked an American Banker, Charles G
Dawes, to resolve Germany's non-payment of reparations. The plan involves
temporarily reducing reparations to £50 million per year. US banks are
to give huge loans to German industry. Between 1924 and 1930, these loans amount to 25 billion
dollars. Moreover Stresemann calls off passive resistance to the French
occupation of the Ruhr, and reluctantly they agree to leave. The German economy
begins to recover, benefiting both workers and the middle class. Between
1923 and 1928, industrial output doubles.
Employment, trade and income from taxation
also increase. The German people are reassured and the
Republic is strengthened again. However, extremists are furious at Germany
agreeing to pay reparations again, and also at the fact the recovery of Germany
is now dependent upon American loans. In 1929, further progress is made by Stresemann
with the Young Plan. The plan is put forward by committee headed by American
banker, Owen Young. The reparations debt is reduced from 6.6 billion
pounds to 2 billion pounds, and Germany is given a further 59 years to
pay it off, meaning the debt now stretches out until 1988. Annual
payments are to remain at 50 million pounds a year.
Lower reparations mean lower taxes for German people, thus public spending power
is released, giving a boost to the economy and consequently, to employment. A
referendum in 1929 sees 35 million Germans vote in favour of the Young Plan,
which is around 85% of voters. And, in 1930, the French agreed to leave the
Rhineland. However, not only does Stresemann oversee major economic
improvement, but he also oversees a recovery and Foreign Relations, the first
step in which is the Locarno Pact. On the 1st of December 1925, the Locarno Pact
is signed. It's a treaty between Germany, Britain, France, Italy and Belgium, and it
has been agreed on equal terms with Germany, rather than imposed. Under the
treaty, Germany accepts its new, 1919, border with France and France promises
peace with Germany. Moreover, the Rhineland is to be
permanently demilitarised and five powers agreed open talks with Germany
about joining the League of Nations. This makes war in Europe much less
likely. And, in 1926, Stresemann is awarded the Nobel Peace Prize. Germany's
treatment as an equal sees a boost in German confidence in moderate parties
and the Weimar government. The next important step is the German entry into
the League of Nations. At the end of the First World War, the Allies had founded
the League of Nations. They're a body who discuss ways to solve the world's
problems without resorting to war. In September 1926,
Stresemann successfully persuades the other powers to accept Germany as a
member. They're given a place on the League of Nations Council, who make the
most important decisions of the league. This is a further boost to moderate
parties in Germany. The final piece instrument strategy for foreign
relations is the Kellogg-Briand Pact. In August 1928, Germany and 61 other
countries sign the Kellogg-Briand Pact. It's a promise not to use war to achieve
foreign policy aims and is the work of two French and US foreign ministers. It
shows that Germany is now included in the main powers, not dictated by them, and
this further improves support for the Weimar government by removing the
hardships of everyday people. Through improving Germany's world status Stresemann
had successfully reduced support for extremists. In May 1924, extremists
held 40% of seats and moderates 50%. By May 1928, extremists held 28% and
moderates 58% - a dramatic improvement for Stresemann. Furthermore,
in 1925, President Ebert had died and was replaced by Paul von Hindenburg, a former
field marshal of the Kaiser's army. This had served to reassure the middle
classes and had given the Republic a strong figurehead, further strengthening
the Weimar government. However, this stabilisation is rapidly undone. And, on
the 3rd of October 1929, Stresemann dies of a heart attack. Within a month, the
Wall Street Crash occurs and the Great Depression means Germany is thrown back
into hard times.
1923-29: Stresemann's Strategy.
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