Economic Developments 1924-28

Stabilising the government

End passive resistance in the Ruhr:

Stresemann ordered that the government stop paying workers who refused to work in order to reduce government expenditure.

Introducing a new currency:

Stresemann introduced the Rentenmark that was worth one trillion marks. The government could now keep tight control over the amount of money in circulation, and old inflated marks would gradually be cashed in.

Balancing the Budget:

To cut expenditure further Stresemann raised taxes, cut the salaries of government employees and fired civil servants. Government debt declined and confidence in the Weimar Republic was restored.

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Reparations issue and the Dawes Plan

November 1923:

Stresemann asks the Allies Reparations Committee to discuss Germany's repayment concerns. The American banker Charles Dawes became the head of the committee.

The Dawes Plan:

The plan agreed that the amount paid by Germany each year would be reduced and Germany would recieve 800 million marks from the USA, to help them get back to a position where they could pay France. The loans that were granted allowed Germany to build up new machinery, factories, and housing as well as create new jobs.

French left the Ruhr:

Germany was now its own master once more.

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Industry, Agriculture and the Young Plan

Industry:

Industrial input grew in the years 1924-25.  There were advances in the chemical industry, car and aeroplane industries, and both living standards and wages increased.

Agriculture:

The agricultural industries gained little from the economic developments. A worldwide agricultural depression kept food prices down. Farmers lost their savings and their farms as they could not easily borrow money to pay off their debts.

The Young Plan:

Stresemann becomes Foreign Minister in 1925. He meets with American diplomat Owen Young and German economist Schacht to look over the reparations issue once again. It was agreed that Germany would continue to repay their debt until 1988 and the total bill would be reduced to £1.8 million instead of £6.6 million.

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