Explain why the Weimar Republic experienced a period of recovery, 1923–29 (12)
The first cause of German recovery was the Dawes Plan of 1924, majorly reordering Germany’s reparation payments into staggered, feasible payments and thus encouraging further financial support from the USA. Reparations would begin at 1 billion marks for the first year, and would increase over a period of four to five years to 2.5 billion marks. Thereafter, the payments would be linked to Germany’s capacity to pay. Militarily, this stability had the consequence of French withdrawal from the Ruhr. Furthermore, the Dawes Plan included a US loan of 800 million gold marks, allowing Germany to borrow in the realm of $3 billion over the ensuing six years. These loans from US companies and banks allowed her to keep up with reparation payments, in addition to nurturing German industry.
However, the success of the Dawes plan was helped majorly by the introduction of the Rentenmark. This contributed to German stability, and its ensuing recovery, as the former German currency had lost all value in the hyperinflation of 1923. In November 1923, Stresemann, in order to stabilise the currency, introduced this new currency. This was a temporary measure with its value based on property values, and in the following year, the Rentenmark was converted into the Reichsmark, a new currency now backed with gold.
Economic and financial recovery was supported by improved relations abroad, which was a third reason for recovery. Stresemann fortified relations with Britain and France by ending passive resistance in the Ruhr and signing the Locarno Pact of 1925. The Pact also included Italy and Belgium and crucially guaranteed Germany’s frontiers with France, Belgium and Italy. In the following year, Stresemann took a major step by bringing Germany into the still young League of Nations. Germany was recognised as a Great Power and given a permanent seat on the League’s council alongside France and Britain. This, in turn spurned the fledgling German economy, encouraging further trade between these countries and greater economic investment in the country.
