Weimar Economy- Changing Fortunes 1919-1929

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Treaty of Versailles

  • Economy was at a low with a war debt of 144 billion gold marks- post war depression and economic dislocation
  • Made worse by Treaty of Versailles including:
  • Territory losses eg Alsace Lorraine to France, Rhineland demilitarised - led to a resource shortages
  • Colonial losses- German East Africa became British- again loss of resources
  • Reparations payments at £6.6 million to be paid at a rate of 20,000 million gm per year- decided at London Payment Plan May 1st 1921
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Ruhr Invasion

  • 11th January 60,000 French soldiers with Belgian support invaded Ruhr as Germany was not paying reparations under Cuno
  • Government used passive resistance against the invaders but still did not pay reparations
  • Led to a more unstable economy and hyperinflation resulted as Government was forced to pay those involved in passive resistance
  • Unemployment and prices now all increases, German currency collapsed and then so too did the economy
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Stresemann's Government

  • August 1923- new govt under Gustav Stresemann was created
  • Proposed ideas to recover economy included
  • Spet.1923 reparation payments to be resumed
  • Gold mark abolished replaced with Rentenmark
  • Balance the budget
  • Rentenbank (later Reichsbank) established with Hjalmar Schact as commissioner of currency
  • Passive resistance ended and paying workers went back to work
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Stresemann's Collapse, Golden Years, Dawes Plan, W

  • Nov. 1923 Stresemann's govt. collapsed and he then became foreign minister
  • Germany went through a period known as the "Golden Years" 1924-29- period of economic calm- INTERPRETATION: "a stagnation between two crises"
  • Germany now adopted a policy of fulfilment whereby they would become secured and strengthened 
  • Achieved by Stresemann through Dawes Plan of 1924
  • Committee for it produced their report in 1924 recommending French leave the Ruhr, reparations paid over a longer period of time, credit system to be set up to ease burden on Germany and Reichsbank was reorganised to not destabilise German currency, unemployment was reduced
  • Germany also became a member of LoN in 1928 through Treaty of Berlin
  • Also discussed through Chancellor Muller was the Young Plan- used when Dawes Plan ran out- not adopted until 1930
  • In October 1929 Wall Street stock exchange in USA collapsed- affected Germany as they were borrowing short term loans from USA
  • Weimar was now back to square one and they looked doomed forever
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