1.2.1

Economic Developments

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Stresemann and the Dawes Plan

Gustav Stresemann was German chancellor from 1923 to 1924 and later became the Foreign Minister. He helped improve the German economy through ending hyperinflation and negotiating deals to help Germany pay reparations.

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Stabilising the currency

  • The interim Rentenmark, which Stresemann had introduced to deal with hyperinflation, was replaced by the Reichsmark in 1924. Inflation was controlled by limiting the money supply and keeping interest rates quite high.
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The Dawes Plan

  • As foreign minister, Stresemann negotiated a financial deal with Charles Dawes from the United States of America.
    • Reparations would be 1,000 million marks, after five years it would rise the 2,500 million, and then at a varying levels according to Germany’s economic performance.
    • The allies maintained control of the railways, the Reichsbank and customs duties.
    • Germany was given an 800 million mark loan from the American banks to help stabilise the currency after the hyperinflation of 1923.
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Domestic hostility to the Dawes Plan

  • The German right wing were against war guilt and reparations. From their point of view, the Dawes Plan achieved nothing.
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Other economic agreements

  • The German economy was also being helped by international economic agreements. These included:
    • Franco-German agreements on potash and aluminium.
    • European cooperation on raw materials production.

Reparations and the Young Plan

The Young Plan, written in 1929 and adopted in 1930, reduced the amount of reparations Germany had to pay to the Allies.

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Motive behind the Young Plan

  • It became apparent that Germany was unwilling to pay the amount of reparations laid out in the Treaty of Versailles.
  • Whilst the Dawes Plan had helped Germany, it was not a permanent solution.
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Terms of the Young Plan

  • The Young Plan reduced the amount of reparations by 20%.
  • In theory, the reparations would continue until 1988.
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The Wall Street Crash

  • But the Young Plan could not come to fruition because of the Wall Street Crash in 1929.
  • This meant that the money which supported the plan was recalled.

Jump to other topics

1The Weimar Republic 1918-1933

2Nazi Germany 1933-1945

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