Syllabus Edition
First teaching 2016
Last exams 2025
Economic Recovery of the Weimar Republic, 1923-29 (Edexcel GCSE History)
Revision Note
Written by: Zoe Wade
Reviewed by: Bridgette Barrett
Timeline - Economic Recovery in Weimar Germany
How did Weimar’s Economy Recover by 1929? - Summary
When President Ebert chose Gustav Stresemann as chancellor in August 1923, the German economy crashed. The French invasion of the Ruhr had caused hyperinflation and the German currency, the mark, was worthless.
Stresemann was chancellor from August to November 1923. He made many decisions in an attempt to save Germany's economy. He brought inflation under control by implementing a new currency, the Rentenmark. Stresemann negotiated the Dawes (1924) and Young (1929) plans. This reduced Germany's reparations payments to the Allies.
Historians debate the success of Gustav Stresemann’s economic policies. Some historians argue that Stresemann saved Germany's economy. They state that his policies facilitated a ‘Golden Age' from 1923 to 1929. Living standards improved and Germany fulfilled its reparation payments. Other historians highlight that the Dawes and Young plans meant that Germany was reliant on American economic success. If the USA’s economy failed, it would trigger a depression in Germany. The Wall Street Crash in the USA in 1929 ultimately caused the downfall of the Weimar Republic. Some historians state that Stresemann could have minimised the impact of the Wall Street Crash on Germany by pursuing a different economic policy.
Who was Gustav Stresemann?
Gustav Stresemann became chancellor in August 1923
Stresemann was a nationalist
Initially, he did not like the Weimar Republic
After the assassination of Rathenau, Germany’s foreign minister, Streseman’s opinion of the government changed
He established the DVP (People’s Party), a moderate right political group
As chancellor, Stresemann had three aims for Germany:
Bring inflation under control
Regain Europe’s respect
Minimise the support for extremist parties
The Creation of the Rentenmark
Germany’s currency, the mark, was beyond saving:
The largest note was 100,000,000,000,000 (100 trillion) marks
The government believed there were 400.3 billion trillion marks in circulation
In November 1923, Stresemann created a new currency called the Rentenmark
One Rentenmark was the equivalent of a trillion marks
Stresemann established a new state-owned bank called the Rentenbank
The German public brought marks into the Rentenbank to transfer them into Rentenmarks
The Rentenmark was a gold standard currency
This means that the value of the Rentenmark matched the price of gold
European countries trusted gold standard currencies
In August 1924, the government created the Reichsbank to control the Rentenmark
The government renamed the Rentenmark the Reichsmark
The new currency allowed German businesses to trade with foreign countries
The Dawes Plan, 1924
Since 1919, Germany had been unable to meet the reparations payments stated in the Treaty of Versailles
Hyperinflation in 1923 led the Allies to consider reducing Germany’s reparation bill
The USA was in a position to help Germany
The USA experienced a boom in their economy. Britain and France were repaying their wartime loans. As a result, the USA had a surplus of money in their economy
Charles G. Dawes, an American banker, created a plan for Germany. The Dawes Plan stated:
The terms & impacts of the Dawes Plan
Terms of the Dawes Plan | Impact of the term |
The temporary reduction of reparations to £50 million a year | Reparations became more manageable The Allies trusted that Germany would meet their reparation payments Stresemann called off the passive resistance in the Ruhr and France agreed to leave |
A guarantee of US bank loans for German industry | The USA gave $25 billion to German industry from 1924-30 Germany’s industrial output increased by 50% between 1923 and 1928 The government achieved more income from trade |
Diagram of the Dawes Plan
Examiner Tips and Tricks
An exam question could ask you to explain to what extent Stresemann's policies recovered Germany's economy. Looking at the above flow diagram, it is clear how risky the Dawes Plan was. Britain, France and Germany were gambling their economies on the USA’s prosperity. Stresemann was aware of the dangers involved in accepting American loans. In 1929, Stresemann stated that Germany was “dancing on a volcano”. If the USA recalled the loans or experienced a depression, the ‘volcano’ would erupt and destroy the stability of Weimar Germany. Stresemann believed it was a risk worth taking to rebuild Germany’s economy. Some historians argue that it placed Germany at risk of another, more catastrophic economic crash.
How did Germans react to the Dawes Plan?
The Young Plan, 1929
The Allies believed that they could provide Germany with more help
In June 1929, the Allies established a committee to reduce Germany’s reparations further
An American banker called Owen Young led the committee
In August 1929, the committee agreed upon the Young Plan
The terms & impacts of the Young Plan
Terms of the Young Plan | Impact of the term |
Reduction of the total reparations bill from £6.6 billion to £2 billion | The government was able to lower taxes on German citizens Citizens could spend more, boosting German industry and creating more jobs This gave the government more money to spend |
The Allies extended the time that Germany had to repay their reparation debts. Reparations had to be fully repaid by 1988 | There was less pressure on Germany to pay off the reparations debt This improved relations between Germany and the Allies France decided to leave the Rhineland in 1930 |
The Young Plan created a favourable reaction in Germany
In 1929, 85% of voters were in favour of the Young Plan. This was roughly 35 million German citizens
Weimar’s insistence on fulfilling the reparations payments outraged Germany's extremist parties:
In his speeches, Hitler stated that Weimar's consent to the extension of the reparations deadline was ‘passing on the penalty to the unborn’
Examiner Tips and Tricks
Germany took 92 years to pay off their reparations debt. German Chancellor Angela Merkel made the final payment in October 2010. This is because the Weimar government ceased payments in 1931 and they were not resumed until 1953. An exam question may ask you to consider how harsh the Treaty of Versailles was. This is great evidence for the argument that, despite reductions under the Dawes and Young plans, the First World War reparations were unreasonably high for Germany.
The similarities & differences between the Dawes and Young Plans
Worked Example
Study Interpretations 1 and 2. They give different views about Stresemann's economic policies
What is the main difference between these views?
Explain your answer, using details from both interpretations
4 marks
Interpretation 1: An extract from The Weimar Republic 1919-1933 by historian Ruth Henig. It was published in 1998 While the economy of the Weimar Republic was undoubtedly growing in the mid-1920s, thanks largely to foreign capital, many sections of the German population felt strongly that they were not receiving their fair share of rewards. Indeed, considerable numbers of small businessmen and farmers believed that it was their increasing taxes and contributions to welfare schemes which were helping to increase the wages and living standards of workers in the cities while they were sliding further into poverty and facing rising debt. |
Interpretation 2: An extract from A History of Germany by William Carr. It was published in 1969 Chancellor Gustav Stresemann’s ‘hundred days’ as Chancellor marked a real turning point in the Republic’s history. He took office when the Republic was at its lowest ebb politically and economically but by the time the ‘great coalition’ collapsed in November 1923, the Republic was well on the road to recovery… confidence in the economy was restored, and reparations put on a realistic footing. |
Answers:
Interpretations 1 and 2 differ about the success of Stresemann’s economic policies. Interpretation 1 states that Stresemann’s policies only helped some German people (1). A quote that supports this is “many sections of the German population felt strongly that they were not receiving their fair share of rewards” (1).
Interpretation 2 believes that Stresemann’s economic policies benefitted all (1). A quote to support this is “confidence in the economy was restored, and reparations put on a realistic footing” (1).
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