Reasons for recovery 1923-29

• Stresemann, the new chancellor of Germany, played an important role in Germany's economic recover
• The retenmark and retenbank were set up in 1923 as a temporary solution to the hyperinflation. retenmark was tied to the price of gold to keep its value high
• In August 1924, the retenmark was replaced with the reichmark and hyperinflation was over
• The reichmark helped to recover jobs and businesses, however could not resolve the loss already occurred
• The 1924 Dawes plan was set up by US banker Charles Daws which made exceptions on reparations which had to be payed
• the Dawes plan:

  • Instalments reduced to 50 million a year
  • Loans from the US to help pay reparations to allies
• The Young plan was set up in 1929 by an American banker owen young
• Young plan:

  • Reparations reduced from 6.6 to 2 billion
  • Payment can be made until 1988
• The young plan was good as there were lower taxes for the people. However extremist parties like the Nazi Party condemned it, saying it gave burden to future generations
• By 1928, Germany's economy recovered from the WW1 state and industrial output has doubled. Employment and trade also increased
• While Germany's economic recovered, it still relied on US loans so was fragile. Extremist parties also continued to believe that Germany should not pay reparations at all
• The recovery of the economy increased the average wages and reduced strikes
• The recovery did not benefit everyone. Farmers went bankrupt due to the decline of farming and industrial workers were still underpaid