Reasons for economic recovery

  • Created by: MiaKaria
  • Created on: 30-05-19 16:37
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  • Reasons for economic recovery
    • Rentenmark
      • Nov 1923- Sress set up new state owned bank, Rentenbank which issued new currency - Rentenmark
        • Aug 1924 - new independent bank, Reischbank, given control of the new currency
          • renamed it Reischmark
          • was backed by German gold reserves
          • now trusted at home and abroad (trade) and hyperinflationat an end
      • supply of notes strictly limited
      • Value tied to price of gold and backed by industrial plants and agricultural land. Currency had real value
    • Dawes Plan 1924
      • reparations temporarily reduced (£50 mil a yr)
      • US bank agreed to give loans to German industry
        • Bad as relying on loans and extremist parties won't like this
        • Fragile economic recovery depended on American loans
      • Industrial output doubled (1923-28) passing pre-war standards
      • employment, trade and income from taxation increased
      • Extremist  parties angry G. had agreed to pay reparations
    • Young Plan (1929)
      • created by another American
      • reduced total reparation debt from 6.6bil to 2bil
        • given extra 59 years to pay
        • lower reparations allowed gov. to reduce tax on people
          • meant people had more public spending power
            • this boosted industry and created more jobs and the jobs boosted public spending power which again boosted industry and employment
              • Virtuos cycle of economic growth
      • annual payments still high and now stretched until 1988
      • French agreed to leave Rhineland (1930)
      • Increased confidence of Germans
    • Recovery in foreign relations
      • Locarno pact, 1925
        • signed 1 Dec, was a treaty between Germany, Britain, France, Belgium, Italy
          • agreed on equal terms, not like diktat (G had a say)
        • G. accepted new 1919 border w. France
          • France promised peace w G.
        • agreed Rhineland would be permanently demilitarised
          • extremist parties not happy - G. given up land
        • five powers agreed to open talks about G.becoming member of League of N.
        • made war in EU less likely
        • G. treated as an equal
          • boosted prestige of W/R
            • boosted confidence of G. people in moderate parties
  • Stresemann wanted to fix economy, foreign affairs and increase prestige


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