1924 to 1929: Problems solved?

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Gustav Stresemann, leader of the German Peoples’ Party, planned to solve Germany’s economic problems through international diplomacy and investment. Stresemann became Chancellor in 1923, supported by the Social Democrats. Stresemann wanted to deal with the problem of Germany’s reparations.

Negotiations with the USA led to Charles G. Dawes, an American banker, recommending a plan which became known as the Dawes Plan. Germany would pay less money in reparations every year to make the payments easier. In addition, the USA would lend Germany money to help put the country back on her feet.

Stresemann used this plan to stabilise the economy, introducing a new currency based on the value of all German land and assets. This new currency became known as the Rentenmark. By limiting the amount of credit and the amount of money in circulation, the economy was brought under control.

Stresemann’s government did not last long. The Social Democrats withdrew support when Adolf Hitler was given a light sentence for attempting to seize control of the government of the region of Bavaria (known as the Beer Hall Putsch).

Stresemann became foreign minister and attempted to improve relations with France and Belgium. His agreement with them was known as the Treaty of Locarno and it said that Germany, France and Belgium would respect each others’ borders, and that Germany would not send troops into the area bordering France known as the Rhineland. The treaty was signed in October 1925 and Germany was then allowed into the League of Nations. These steps increased Germany’s international trade.