Germany’s post World War One experience was turbulent, but by 1925 Weimar had achieved temporary stability. However, weaknesses in its constitution meant it was always vulnerable to a new crisis.
Stresemann’s single greatest achievement as Chancellor was to end hyperinflation. He did this in just three months by:
The payment of reparations, which had caused the hyperinflation crisis in the first place, had to resume, but Stresemann’s decisive actions in the autumn of 1923 gained Germany the sympathy of the Allies. They agreed to renegotiate payments and this led to two new repayment plans in the next five years:
|The Dawes Plan||The Young Plan|
|Date||1924||1929|
|Amount of reparations to be paid||Stayed the same overall (50 billion Marks) but Germany only had to pay one billion Marks per year for the first five years and 2.5 billion per year after that||Reduced the total amount by 20 per cent. Germany was to pay two billion Marks per year, two thirds of which could be postponed each year if necessary|
|Amount of time||Replaced by the Young Plan in 1929||59 years, with payments to end in 1988|
|Loans made available to Germany||Germany was loaned 800 million Marks from the USA. These loans would later cause problems when they were recalled by America following the Wall Street Crash||US banks would continue to loan Germany money, coordinated by J P Morgan, one of the world’s leading bankers|
The years 1924 to 1929 have been referred to as Weimar’s ‘Golden Years’, but historians disagree as to just how much the German economy recovered from the effects of World War One and hyperinflation.
|Signs of recovery||Signs of continued weakness|
|By 1928 industrial production levels were higher than those of 1913 (before World War One)||But...Agricultural production did not recover to its pre-war levels|
|Between 1925 and 1929 exports (sending goods or services abroad) rose by 40 per cent||But...Germany spent more on imports than it earned from exports, so they were losing money every year|
|Hourly wages rose every year from 1924 to 1929 and by 10 per cent in 1928 alone||But...Unemployment did not fall below 1.3 million and in 1929 increased to 1.9 million|
|IG Farben, a German chemical manufacturing company, became the largest industrial company in Europe||But...German industry became dependent upon loans from the USA|
|Generous pension, health and unemployment insurance schemes were introduced from 1927||But...The government ended up spending more than it received in taxes and so continued to run deficits from 1925 onwards|