The Extent of Change in Foreign and Economic Policy, 1924 - 29

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The German economy: 1924 - 29

Positive points:

1. Under the Dawes Plan, the annual figure of reparations to be paid was reduced, the Reichsbank was reorganised, and Germany was to receive a large foreign loan of 800 million gold marks, predominantly financed by the USA. This enabled the economy to grow and the reconstruction of German industry to begin.

2. Germany's industry grew as production levels rose to above pre-war levels.

3. Taxes increased, which benefited the government as it meant they received more money.

4. In November 1923, Gustav Stresemann introduced the Rentenmark, a temporary currency to help combat hyperinflation.

5. Inflation decreased.

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The German economy: 1924 - 29

Positive points:

6. The welfare state: the principles of the welfare state had been written into the Constitution in 1919. In this period, it improved schools, roads and hospitals, and helped create over 2 million houses by 1929. Homelessness decreased by 60% in this period. By 1927, 17 million people were also protected from the event of unemployment.

7. The Young Plan of 1929 reduced the total reparations payment to be paid to 25% of what was set in 1921. What's more, the time period for which reparations were to be paid was extended, decreasing the likelihood of payment being fully implemented.

8. Overall, the prospects for economic growth made Germany a magnet for foreign investment until 1929. 

9. National income in Germany was 12% higher in 1928 than it was in 1919.

10. Between 1925 - 29, exports rose by 40%.

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The German economy: 1924 - 29

Negative points:

1. Germany became dependent on foreign loans, making her more liable to suffer from any problems that face the world economy, particularly that of the US.

2. The increasing taxes placed on the elites due to the welfare state caused them to feel alienated.

3. Unemployment stayed above 1.3 million.

4. Germany fell behind with world trade: few countries wanted to trade with a country that was struggling to rebuild itself. As a result, Germany had to import more than it exported, leading to trade deficit. This was worsened by the terms of the Treaty of Versailles, which saw Germany lose up to 20% of its industrial land, such as the Ruhr and the Rhineland. 

5. People wanted compensation for the loans they had taken out before hyperinflation. This ultimately kept the memory of hyperinflation alive.

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The German economy: 1924 - 29

Negative points:

6. The cost of welfare placed an increasing strain on the German economy.

7. The agricultural sector faced a surplus of grain stocks, and so prices fell dramatically. 

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Political Stability: 1924 - 29

Positive points:

1. There were no attempted coups or assassinations.

2. The extremist parties of Weimar Germany generally lost votes, suggesting more people began to support democracy.

3. The appointment of Hindenburg in 1925 as President made the Weimar Republic seem more respectable amongst the elites.

4. Generally, as everything else was stabilising, policies such as Article 48 and proportional representation, alongside coalitions, seemed more effective. 

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Political Stability: 1924 - 29

Negative points:

1. In the period 1924 - 29, there were 7 coalition governments, the longest lasting a period of 21 months.

2. Workable coalitions were limited, as few politicians were willing to adapt their policies and compromise to pass legislation. Consequently, many of the German people became more and more disgruntled with democracy as it became less and less ineffective.

3. The Z party moved to the right, suggesting a loss of faith in democracy.

4. The German people began to see democracy as a product of the constant bargaining between corrupt politicians and so support weakened.

5. The Federal government system meant that people voted for a party but not its representative. This resulted in a lack of close tie between the people in an area and their deputy.

6. Weimar lacked a charismatic leader to rally public support. 

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Political Stability: 1924 - 29

Negative points:

7. The Weimar government failed to educate the people of German how the Republic worked. Due to the general lack of understanding, people were often less tolerant.

8. The period saw an increase in the number of fringe parties. 

9. The 'stab in the back' myth remained a stigma that Weimar could not remove. 

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Stresemann and his aims for his Foreign Policy

Aims:

1. To solve the problem of reparations in a way that would benefit Germany.

2. To protect those Germans living outside of Germany's existing borders.

3. To readjust Germany's eastern borders and establish a union with Austria. 

Stresemann's aims and tactics were not popular with many right-wing parties, especially those of the DNVP, who believed opposition to the Treaty of Versailles should be absolute. 

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The Dawes Plan, January 1924

In September 1923, Stresemann called off 'passive resistance' in the Ruhr and agreed to continue paying reparations. In January 1924, the Dawes Plan was established. Under the Dawes Plan:

  • The annual reparations figure to be paid was reduced.
  • The German National Bank, the Reichsbank, was reorganised.
  • Germany was to receive a large foreign loan of 800 million gold marks, predominantly financed by the USA. The US wanted to see Britain and France repay their war debts, and so they hoped by aiding Germany financially, Germany would pay reparations to the Allies, which the Allies, in turn, would repay back to the USA.

(http://nigelgraves.co.uk/history/dawes.jpg)

  • The French promised to evacuate its troops from the Ruhr. 
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The Locarno Pact, 1925

Under the Locarno Pact:

  • The demilitarisation of the Rhineland was reorganised as permanent.
  • Germany signed a treaty of mutual guarantee of her Western borders, with Italy and Great Britain guaranteeing this agreement. 
  • A series of arbitration treaties were signed with Poland and Czechoslovakia. 

*Significantly, Stresemann did not recognise Germany's eastern borders and permanent. 

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The Treaty of Berlin, April 1926

In April 1922, Germany and the USSR signed the Treaty of Rapallo. However, Germany's involvement in the Locarno Pact of 1925 was viewed with suspicion within the Soviet Union.

Therefore, in April 1926, the two states signed the Treaty of Berlin, reaffirming the Treaty of Rapallo. This not only benefited the relations between the two countries but also encouraged the Allies to adopt a more sympathetic approach towards Germany through fear of the spread of Communism. 

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The League of Nations and the Kellogg-Briand Pact

In 1926, Germany was admitted to the League of Nations and granted a permanent seat on the Council. German could now use this position to influence the Allies and raise matters of particular interest. 

In 1928, 65 countries, including Germany, signed the Kellogg-Briand Pact, which was an international agreement to eliminate war. 

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The Young Plan, 1929

In 1929, the Young Plan was established:

  • The total reparations figure to be paid by Germany was reduced to 25% what was originally set in 1921.
  • The time period for which reparations were to be paid was extended, thus decreasing the likelihood of payment being fully implemented. 
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Foreign Policy - Arguments for Success

  • The Dawes Plan reduced the annual reparations figure to be paid, lessening the strain on the German economy. It also helped to improve relations and trade with the USA and make Germany's economic situation known on the international stage.
  • The Treaty of Berlin not only improved relations between the two states but also encouraged the Allies to adopt a more sympathetic approach towards Germany through fear of the spread of Communism. 
  • Germany's admittance into the League of Nations increased Stresemann's ability to influence the Allies and raise matters of German interest.
  • The Young Plan reduced the total reparations figure to 25% of what was set in 1921.
  • The evacuation of the Ruhr occurred by 1925, and the Rhineland by 1929.
  • Stresemann helped to transform Germany from a distrusted outcast to one actively involved in European diplomacy. 
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Foreign Policy - Arguments for Failure

  • The Weimar Republic still faced the main issues of Article 231, reparations and the 'stab in the back' myth.
  • Many people in Germany disagreed with the Young Plan as it confirmed that Germany still had to pay reparations. 
  • Many right wing supporters did not like the Locarno Pact, as they felt it only benefited the French.
  • Many disagreed with Germany's admittance into the League of Nations, who they saw simply as the enforcer of Versailles.
  • Stresemann's policies failed to gain the support of the silent majority of Germans. Many felt that the Weimar regime has failed to restore Germany's pride, and had not escaped the burden of the Treaty of Versailles. 
  • Stresemann's achievements were generally too subtle to be greeted enthusiastically by the majority. 
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