Gustav Streismann, elected chancellor of Germany in 1923, had several problems facing him. Due to their defeat in the First World War, Germany was forced to sign the treaty of Versailles, which was very unpopular. This resulted in problems as Germany was unable to keep to some of the treaty.
Germany’s economic problems in 1923 stemmed from the treaty of Versailles: one of the points of the treaty was that Germany had to pay reparations to France, Belgium and the United Kingdom as a payment for the allies’ loss in the war. However, the huge sum of 132000 million marks was practically impossible for Germany to pay, especially after the devastation of the First World War, when a lot of the ...view middle of the document...
This was the first step that helped Germany (and the Weimar republic) recover; the democratic Weimar government’s popularity had decreased because they were blamed for the hyperinflation.
Streismann next called off the state of passive resistance in the Ruhr because it meant that there was no German industry, and so the country could not prosper. The chancellor also promised to pay keep paying reparations to France. Although many Germans were angry about this, as they thought they should continue to resist the French occupiers, this meant that the French and Belgian forces left the Ruhr. Germany’s factories could therefore start manufacturing produce again, to build up the economy and stabilize it, effectively solving the occupation of the Ruhr.
After the First World War, Germany had completely lost its status of being a European and even international power. It had depleted arms; its army had been reduced to just 100000 men, it had no navy and a skeleton of its former air force. Because it was popularly believed to have caused the First World War, it had been dropped from the League of Nations completely and had absolutely lost the respect of other global powers and European countries. Streismann resolved this by initiating and signing the Locarno pact in 1925 with other European countries – Britain, France, Belgium, Italy and Germany all promised never to invade each other under any circumstances. This meant other countries trusted Germany more. In 1926, Germany once again joined the League of Nations, partly due to the success of the Locarno pact. This meant the Weimar republic and the people were more popular because they could once again have a say in European and global decisions. They had regained their status as a power. Streismann was awarded the Nobel peace prize in 1926 for this work.
However, due to his promise to keep paying reparations, Germany was facing huge payments in the years to come which would keep the country in poverty. Streismann finally solved this by creating two economic plans or pacts; the Dawes Plan in 1924 and the Young plan in 1926. The Dawes plan gave Germany a longer time to pay its reparation, which meant there was less stress on the economy and industry. The Young plan later on stated that the reparations were decreased from 132000 million marks to 37000 million. So, these plans gave Germany both longer to pay and less to pay. ...
