The Stresemann Era
§ In August Gustav Stresemann came to power. He immediately offered to call off passive resistance and restart reparations if the French and Belgians would withdraw. Passive resistance was called off in September and Stresemann then immediately tackled hyperinflation.
§ Stresemann issued a new currency called the Rentenmark, which was based upon German land and not gold. The old marks could be exchanged for Rentenmarks at the very good rate of 300,000,000 to 1.
§ He then persuaded the Allies to agree to the Dawes Plan. This was a programme of loans from US bankers to help German economy to recover. 25 billion marks were invested in Germany in the next five years. The Dawes Plan also cut the amount of reparations Germany had to pay and extended the time they had to pay it.
§ With some economic recovery, some reparations were paid. With some reparations paid, the French and Belgians withdrew their troops from the Ruhr in 1925.
§ As relations between Germany and her neighbours improved, Stresemann signed the Locarno Pact.
The Locarno Pacts
§ The Locarno Pacts were signed in October 1925 by France, Belgium and Germany. They guaranteed the borders between France and Belgium and Germany. Britain and Italy signed as guarantors of the treaty.
§ A second set of agreements finalised arbitration treaties between Germany and France, Belgium, Czechoslovakia and Poland. These were intended to bring an end to the bitterness that had prevailed after the First World War.
§ A third section created mutual defence pacts between France and Poland and Czechoslovakia. These were intended as protection against any future German aggression.
Why were the Locarno Pacts important?
§ At the time they were seen as important steps in the process of Collective Security. There was talk of the 'spirit of Locarno', which seemed to offer the prospect of a Europe free from war. Locarno marked the re-emergence of Germany onto the European stage, thanks to the leadership of Stresemann.
§ In 1926 Germany was admitted to the League of Nations and became one of the Permanent Council Members. This was a major triumph for Stresemann.
======The recovery of Germany ======
§ Germany now appeared to have recovered from the effects of the war and the political unrest that had succeeded it. There was growing support from many Germans for the Weimar government, however, coalitions continued to come and go regularly and there was a new chancellor on average every twelve months.
§ There was increasing support for Democracy, from Germans who wanted their country run on democratic lines for the first time. Trade unions, worked with the biggest party, the Social Democrats, and were in most governments. In the later 1920s, under Stresemann’s recovery wages improved.
====Germany in the late 1920s ====
§ Businesses, which prospered again under the recovery programme. New industries, like cars, radios, telephones, aircraft as well as shipbuilding all did very well.
§ Artists enjoyed the new freedom from censorship, which Weimar offered after the heavy hand of the Kaiser. Film-makers, like Fritz Lang, and architects like Walter Gropius and the Bauhaus school, led the world.
§ Jazz clubs and cabarets did well as people spent the money they now had. Berlin became one of the most popular and freest cities in Europe.
§ Berlin had 120 newspapers and 40 theatres.
§ In 1929 the Young Plan reduced Germany’s reparations still further. The amount payable by Germany was reduced to 1,707,000,000 marks per year, of which only 660,000,000 had to be paid. The rest could be postponed for up to two years. Payments would gradually increase for thirty-six years and would end in 1988.
§ Because the payments under the Young Plan were less than Germany was making under the Dawes Plan, most people expected this to be a final settlement of the reparations problems.