History of germany

Two plans and a pact: 1924-1929

From the lowest point in Germany's postwar economic and political chaos, in November 1923, the country makes a remarkable recovery over the next six years - largely thanks to the energy and diplomatic skills of Gustav Stresemann, who as foreign minister achieves a new level of cooperation between Germany and her wartime enemies.

The first success is the acceptance of the Dawes Plan, put forward by a committee under the chairmanship of a US financier, Charles G. Dawes, and accepted by Germany in August 1924. The plan temporarily defuses the controversial issue of Germany'sreparations, by providing US loans to ease the situation and placing the system of payments under international control. 

In the same month the trauma of runaway inflation is forcefully solved. The national bank (the Reichsbank) is made an independent institution and introduces a new unit of currency, the Reichsmark. For those who still have any devalued currency to change, the rate is one new mark for a trillion of the old.

Germany's international relations are further improved by the Locarno Pact, signed in 1925 with Belgium, France, Great Britain and Italy. This is in effect a new European peace treaty, with guarantees of international boundaries and with Germany now an equal and willing partner (in contrast to the duress involved in the treaty of Versailles). In the following year Germany joins theLeague of Nations, with a permanent seat on the council. 
The third in this sequence of agreements is the Young Plan, devised in 1929 by a committee chaired by an American lawyer, Owen D. Young. Its primary purpose is to establish the total amount of the reparations to be paid by Germany. The figure fixed upon is too high to please many in Germany, but in accepting it Stresemann secures a highly significant concession. The Allies will withdraw their occupying forces from the Rhineland in June 1930, five years ahead of the scheduled date.

With this much accomplished, Germany should be well placed to advance in prosperity and to take her natural place as the major power at the heart of Europe. 

The past few years have already seen great strides in national prosperity, hastened by generous foreign investment and loans in the new mood of international cooperation. But in this very year, the world economy is about to deal Germany a blow from which she will not recover until after another disastrous war.

In October 1929 the stock market crashes in New York, triggering a world-wide depression. Nowhere does it hit harder than in the newly recovered Germany. As foreign money is withdrawn, businesses crash, wages are slashed, unemployment soars. Coming a mere six years after the horrors of inflation, this is a situation in which extremist parties are certain to flourish - on both left and right of the political spectrum.