Gustav Stresemann and the Stabilisation of Germany

This section focuses on Gustav Stresemann and the Stabilisation of Weimar Germany from1924-1929. By 1923, the Weimar Republic was on the brink of collapse due to economic turmoil, political instability, and social unrest. The country had been crippled by hyperinflation, the French occupation of the Ruhr, and widespread discontent among the German people. Many feared that Germany might descend into revolution or dictatorship.

However, the years 1924-1929 saw a remarkable recovery, often referred to as the 'Golden Age' of the Weimar Republic. This turnaround was largely due to the leadership of Gustav Stresemann, a skilled politician who served as Chancellor in 1923 and then as Foreign Minister from 1923 to 1929. Stresemann’s policies restored economic stability, improved Germany’s international reputation, and reduced political extremism, at least temporarily.

Stresemann’s Domestic Policies

During Stresemann’s brief Chancellorship (August – November 1923), his main priority was to stabilise the German economy. He took several key actions:

Ending Hyperinflation: The Introduction of the Rentenmark (1923)

• By late 1923, hyperinflation had destroyed confidence in the German currency, with money becoming practically worthless.
• Stresemann scrapped the old, worthless mark and introduced a new temporary currency, the Rentenmark, which was backed by German industrial and agricultural assets rather than gold.
• Confidence in the economy was restored, and inflation was brought under control.
• In 1924, the Reichsmark was introduced as a permanent currency, replacing the Rentenmark.

The Dawes Plan (1924): Foreign Loans and Reduced Reparations

• Stresemann negotiated with the Allies to restructure Germany’s reparation payments, which had been a major burden on the economy.
• The Dawes Plan, agreed in 1924, introduced:
  • Annual reparations payments that were more manageable.
  • Loans from the USA (around 800 million marks), which helped to rebuild German industry.
  • The withdrawal of French and Belgian troops from the Ruhr, allowing production to resume.
• As a result, industrial output increased, and unemployment fell.

Economic Growth and Industrial Boom

• The Dawes Plan and US loans helped Germany recover faster than expected.
• Between 1924 and 1929, Germany’s exports, wages, and standard of living improved.
• New public works programmes built roads, schools, and housing, creating jobs.
• By 1928, Germany’s industrial production had reached pre-war levels.

Social Reforms and Improvements

• Wages rose, and workers gained more rights, such as unemployment benefits and a 40-hour working week.
• The government built over 2 million new homes, reducing homelessness.
• Cultural life flourished, with Berlin becoming a centre for art, music, and literature.

Stresemann’s Foreign Policy

As Foreign Minister (1923-1929), Stresemann worked to improve Germany’s international standing and ease the harsh conditions of the Treaty of Versailles. His diplomacy led to several key agreements:

The Locarno Pact (1925): Peace with the West

• In 1925, Stresemann signed the Locarno Pact with Britain, France, Belgium, and Italy.
• Germany accepted its western borders (with France and Belgium) but did not recognise its eastern borders (with Poland and Czechoslovakia), leaving open the possibility of future territorial revisions.
• France agreed to withdraw from the Rhineland, reducing tensions.
• The agreement was hailed as a major success, as it showed that Germany was becoming a respected member of the international community again.

Germany Joins the League of Nations (1926)

• As a result of the Locarno Pact, Germany was invited to join the League of Nations in 1926.
• This was a huge diplomatic success—Germany was now seen as an equal on the world stage, rather than a defeated nation.
• Stresemann used Germany’s position in the League to argue against Versailles, particularly regarding territorial losses and disarmament.

The Kellogg-Briand Pact (1928): Rejecting War

• In 1928, Germany signed the Kellogg-Briand Pact, alongside 64 other nations, agreeing to renounce war as a means of resolving disputes.
• Although the pact was largely symbolic, it reinforced Germany’s commitment to peace.

The Young Plan (1929): Further Reduction in Reparations

• By 1929, Germany was paying less than half the reparations originally demanded in 1921.
• The Young Plan further reduced reparations and extended payments until 1988.
• The plan was controversial—some Germans (especially right-wing nationalists) argued that Germany should not pay anything at all.

How Successful Was Stresemann?

Achievements (1924-1929):

✅ Economic Recovery: The economy stabilised and industry boomed.
✅Political Stability: Extremist parties lost support as living conditions improved.
✅International Respect: Germany was no longer isolated and was accepted as an equal by other European powers.
✅Cultural Growth: Germany experienced a golden age of arts, film, and theatre.

Limitations and Problems:

❌ Dependent on US Loans: The recovery was built on American loans, which could be withdrawn at any time (as happened in 1929).
❌Still Hated Versailles: Many Germans resented that Stresemann had not completely overturned the Treaty of Versailles.
❌Opposition from Extremists:

• The right (e.g. Nazis) accused Stresemann of being a traitor for cooperating with Britain and France.
• The left (e.g. Communists) believed he was not radical enough in helping workers.

The Sudden End of Stability: The Wall Street Crash (1929)

• Stresemann died in October 1929, just weeks before the Wall Street Crash.
• The US stock market collapsed, leading to the Great Depression.
• American banks demanded repayment of their loans, crippling Germany’s economy.
• The economic crisis destroyed many of Stresemann’s achievements, leading to:
  • Mass unemployment (over 6 million by 1932).
  • Bankrupt businesses and factories closing down.
  • A loss of faith in democracy, paving the way for the rise of the Nazis.

Conclusion

Gustav Stresemann was arguably Weimar Germany’s most effective politician. His leadership rescued Germany from the brink of collapse, stabilised the economy, and restored Germany’s international standing. However, his success was fragile as it depended on US loans, which vanished after 1929.