Challenges and recovery 1923-29

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  • Created on: 01-06-16 17:42

Munich Putsch

In November 1923, Hitler and the SA raided a beer hall in Munich and captured two leaders of Bavaria.

They wanted to persuade them to support a Nazi takeover. The leaders escaped and the revolution was defeated.

Hitler was arrested and put on trial. He was sentenced to 5 years in prison but only served 9 months during which he wrote his autobiography, Mein Kampf.

Hitler was convinced the Bavarian leaders would support the putsch as they were plotting against the Weimar government and it was right wing. 

The timing was best as well as the Weimar was increasingly unpopular due to hyperinflation and calling off of passive resistance.

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'The Golden Years'

September 1923 - Stressmann told workers in Ruhr to return, created Rentenmark to make a stable currency

1924 - Stressmann accepted the US Dawes plan

1925 - French troups left the Ruhr 

October 1925 - Agreed to Locarno treaty, west agreed but east disagreed 

1926 - Germany joined leauge of nations

1928 - Germany was one of 65 countries to sign the Kellogg-Briand pact - meant no one would use violence to settle disputes 

1929 - US agreed to replace young plan and dawes plan - reparations reduced to 3/4 of original amont, given 59 years to repay them

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Invasion of the Ruhr

In January 1923, French troops occupied the Ruhr industrial area of Germany because Germany was unable to pay the first repartation payment.

The Weimar Republic ws powerless to do anything although German workers in the Ruhr used passive resistance by refusing to work for the French and factories came to a standtill. 

The german workers set some of the factories on fire and sabotaged the pumps in some mines so they flooded and could not be worked. 

There was numerous clashes with the French troops and a number of strikers were shot.

Weimars popularity temporarily increased but the whole invasion had serious effects on the German economy. This led to hyperinflation.

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Build up to hyperinflation

  • Germany were unable to make first reparation payment as they didn't have the industrial land
  • They asked for extra time on the payment
  • France refused and marched into the Ruhr determined to get paid
  • The Ruhr provided Germany with coal, iron and steel. France occupied here as it was full of natural resources and money was made here so it's direct payment
  • Germans responded using passive resistance. 
  • Positives of invasion: united Germans against French, Strikers were heroes
  • Negatives of invasion : fewer goods produced, no income
  • It led to political ruin and economic disaster 
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Significance of Stressman

Stressmann was responsible for numerous agreements, to deal with Germany's problems. He stabalised the currency with a temporary Rentenmark in November 1923 - value based on mortgage of Germanys entire industrial and agricultural resources. 

Stressmann greatly improved relations with Britain and France by ending the passive resistance in the Ruhr and signing the Locarno Treaties of 1925. This was the 'Locarno honeymoon.' Also Stressmann was awarded with the nobel peace prize in 1926.

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Entry in to League of Nations

Germany became recognised as a great power and was given a permenant seat in the Leaugue of Nations. This means they were recovering and on their way to being a stable country.

The only way the Locarno Treaty to come into effect was to join. 

September 1926, Germany got a permenant seat in the League of Nations. This position was used to bring in the 'Young plan.'

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Hyperinflation

First world war: in 1919 - 4 marks to dollar. The government print more money to pay the reparations. Later in 1919 - 9 marks to dollar.

Weimar government 1919-1922: faced with shortages and having to pay more money so printed more. January 1921 - 61 marks to dollar, July 1922 - 493 marks to dollar.

French occupation of Ruhr: unability to pay reparations so printed more money. January 1923 -  17,972 marks to dollar.

Passive resistance: government lost money from loss of Ruhr, had to pay striking miners so printed more money. Novemeber 1923 - 4.2 billion marks to dollar.

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Introduction of Rentenmark

The introduction of the Rentenmark was highly significant, it allowed the currency to stabilise and supported by the Dawes Plan it stood a good chance of not succumbing to inflationary pressures as had previously happened. The new Rentenmark was valued at 1 Rentenmark to One Trillion old marks (no typographical error there). The Rentenmark was exchangeable for bonds in land and industrial plant – in other words they were worth something. Inflation ceased to be a problem, the German people accepted the value of the new currency and businesses accepted it as being of worth.

The stability of the new currency couldn’t be taken for granted however and a range of new fiscal measures were implemented that would keep inflation and the exchange rate at acceptable levels. For example, the government opted to stop offering credit to industry as this had led to widespread speculation and consequently inflation. Borrowing therefore slowed and the circulation of money returned to ‘normal’ levels. Similarly the government altered the policy with regards the printing of money. Previously the government had increased the amount of money being printed as inflation had risen, this had simply led to prices rising even more rapidly. Now the government decided that the amount of money in circulation would be strictly limited to the real worth of economy.

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Dawes and Young Plan

Dawes plan: annual German repayments reduced to a more affordable level and the US gave bank loans to German industry, boosting their economy. These payments were better than the Treaty of Versailles as it matched Germanys capacity to pay and was a gradual increase of pay. Disliked by German nationalists - 'a second versailles'

Young plan: set a timescale of 59 years for repayment. It reduced the payment from 2500 million marks/year to 2000 million marks/year. France agreed to evacuate the Rhineland by June 1930 (5 years early). Again German nationalists disliked this plan.

Dawes Plan 1924

Young Plan 1929

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