History revision – German recovery 1924-25 (9)
Economic recovery
- By November 1923 the mark was no longer worth anything
The stabilisation of the currency
- Stresemann’s government accepted a new currency – the Rentenmark
o To be based on Gr’s agricultural property and industrial resources
- The currency was to be supervised by a special authority – the Rentenbank
o They issued a loan to the Reichsbank
- The Reichsbank could then issue Rentenmarks to the value of its loan holding
- Rentenmarks were valued at one gold mark each
- One dollar was now equal to 4.2 Rentenmarks
- The agrarian backing for the new currency was largely fictitious as land isn’t
convertible in the same way as gold however, Gr lacked enough gold to launch a new
bullion-backed currency
- The restricted amount of new currency available to the Reichsbank prevented inflation
- Government could no longer draw on unlimited currency credits but instead had to try
and balance their expenditure alongside their income
- Rentenmarks success was largely due to firmness of Luther, Finance Minister, and to
the financial skill of Currency Commissioner Schahct
- As a result of governments careful spending and fiscal policy, new currency quickly
stabilised
- August 1924 – Rentenmark converted back into Reichsmarks
The Dawes Plan
- Stable currency and Stresemann’s fulfilment programme provided a basis for
international negotiations
- New Fr government had also come in – important
o Edouard Herriot, replaced Poincare’s government, was facing his own financial
problems as a result of occupation of the Ruhr
More interested in conciliation than extortion
- Early 1924 – Inter-Allied Committee set up to examine problem of Gr financial stability
o Major concern was to establish scale of reparation payments that would prevent
the Reichsmark from destabilising once again
- Dawes Plan, while not reducing the overall reparations bill, proposed it should be paid
over a longer period of time
o Gr to pay £50 million for first 5 years
o Then payments rise to £125 million
- To ensure payments were made, creditor nations were given degree of control over
Gr’s central banking system, national railways
- However, alongside this came a US loan agreement
- Gr received twice as much from the Dawes Plan as it paid in reparations
Opposition:
- Many RW Gr’s opposed as they opposed reparations payments
- Others hated submitting to Allied control on banks and railways
o Invasion of Gr sovereignty
- DNVP said it was a ‘second Versailles’
Support:
Economic recovery
- By November 1923 the mark was no longer worth anything
The stabilisation of the currency
- Stresemann’s government accepted a new currency – the Rentenmark
o To be based on Gr’s agricultural property and industrial resources
- The currency was to be supervised by a special authority – the Rentenbank
o They issued a loan to the Reichsbank
- The Reichsbank could then issue Rentenmarks to the value of its loan holding
- Rentenmarks were valued at one gold mark each
- One dollar was now equal to 4.2 Rentenmarks
- The agrarian backing for the new currency was largely fictitious as land isn’t
convertible in the same way as gold however, Gr lacked enough gold to launch a new
bullion-backed currency
- The restricted amount of new currency available to the Reichsbank prevented inflation
- Government could no longer draw on unlimited currency credits but instead had to try
and balance their expenditure alongside their income
- Rentenmarks success was largely due to firmness of Luther, Finance Minister, and to
the financial skill of Currency Commissioner Schahct
- As a result of governments careful spending and fiscal policy, new currency quickly
stabilised
- August 1924 – Rentenmark converted back into Reichsmarks
The Dawes Plan
- Stable currency and Stresemann’s fulfilment programme provided a basis for
international negotiations
- New Fr government had also come in – important
o Edouard Herriot, replaced Poincare’s government, was facing his own financial
problems as a result of occupation of the Ruhr
More interested in conciliation than extortion
- Early 1924 – Inter-Allied Committee set up to examine problem of Gr financial stability
o Major concern was to establish scale of reparation payments that would prevent
the Reichsmark from destabilising once again
- Dawes Plan, while not reducing the overall reparations bill, proposed it should be paid
over a longer period of time
o Gr to pay £50 million for first 5 years
o Then payments rise to £125 million
- To ensure payments were made, creditor nations were given degree of control over
Gr’s central banking system, national railways
- However, alongside this came a US loan agreement
- Gr received twice as much from the Dawes Plan as it paid in reparations
Opposition:
- Many RW Gr’s opposed as they opposed reparations payments
- Others hated submitting to Allied control on banks and railways
o Invasion of Gr sovereignty
- DNVP said it was a ‘second Versailles’
Support:
