In August 1923, during the Ruhr occupation, President Ebert appointed Gustav Stresemann as his new chancellor and foreign secretary. Stresemann gave up the Chancellorship in 1924, but remained foreign secretary until 1929. During this time he was supported by moderate parties on both the left and right. This support helped him pass measures which bought recovery to the Weimar Republic.
1. CURRENCY REFORM
First he abolished the existing currency and set up a new one- the Retenmark. These changes increased confidence in Germany at home and abroad.
2. The Dawes Plan 1924
In April 1924, Stresemann agreed the Dawes Plan.
This addressed the issue that Germany couldn’t afford its reparation payments. Charles Dawes, an American banker, had been asked by the Allies to resolve Germany’s non payment. Under his plan:
- annual payments were reduced to an affordable level.
- It was agreed that American banks would invest in Germany industry.
This package made the Allies (especially France) feel better as they knew they would be getting some of the repayments from Germany. Stresemann had called off Passive Resistance (the strike) in the Ruhr by German workers. In return, the French agreed to leave the Ruhr.
This improved Germany’s economy by:
Industrial output doubled during the 1923-9 period, fuelled by American loans
Imports and exports increased
Employment went up
Government income from taxation improved.
Most Germans are feeling reassured (better) about the Weimar Government.
However, there were some drawbacks. The extreme parties hated Versailles and were furious that Germany had again agreed to pay reparations.
Also the economic recovery was entirely dependent on American loans.
The Young Plan, 1929
Stresemann made further progress with reparations 5 years later when, in the last year of his life, he agreed to the Young Plan.
The Young Plan reduced the total reparations debt from £6.6 million to £2 million.
Germany was given another 59 years to pay.
- It reduced the annual amount the government had to pay
- This made it possible to lower taxes
- This, in turn, released spending power, which boosted German industry and employment
Most saw this as a success for Stresemann. However there were still drawbacks. The annual payments were £50 000 per year. Furthermore it stretched out until 1988. How many generations of Germans were going to have to pay for WWI?
The Locarno Pact, 1925
Stresemann also made progress in international affairs.
In 1925 he signed the Locarno Pact. This was a treaty between Germany, Britain, France, Italy and Belgium.
- Germany agreed to keep its new 1919 border with France and Belgium.
In return Germany got:
- the last Allied troops left the Rhineland
- France promised peace with Germany
- the powers agreed to open talks about German membership pf the League of Nations.
Stresemann saw this as a triumph; Germany was being treated as an equal, not being dictated to.
Of course some resented that the HATED Versailles borders had been confirmed.