Gustav Stresemann

Gustav Stresemann hyperinflation

The hyperinflation experienced by Germany was among the worst cases of monetary devaluation ever recorded. In 1923 hyperinflation reached its peak in Germany, almost causing a collapse of not only the German economy but its society as well.

Fig. 1: Gustav Stresemann

Germany was failing to make reparation payments in time. This led to France's occupation of the Ruhr, one of Germany's key industrial zones. Stresemann made it his mission to rescue Germany from the economic turmoil. To do so, Germany would have to concentrate all of its political might on rebuilding its economy.

With the French occupation of the Ruhr, the German economy was further destabilised. Rebuilding the German economy would need cordial relations with Germany's neighbours, especially France.

Fig. 2: Occupation of the Ruhr

As a first step, Stresemann introduced a new currency into the German system, the Rentenmark. The novelty of the Rentenmark was that it gave German citizens a currency that was worth something. This new currency would also soon become worthless if the German government did not act and find a solution.

Stresemann decided that it was time to negotiate with France. As a sign of good faith, he called off the passive resistance in Ruhr. Stresemann promised that Germany would make reparation payments..

Germany was not the only one suffering economically. France was too, and France was dependent on German reparations to keep its own economy running. To make sure that both economies survived, the Allied Reparations Commission called on the American diplomat Charles Dawes to think of a solution. The Dawes Plan was signed on 16 August 1924 in Paris.

Fig. 3: Charles Dawes

Thanks to Stresemann's persuasion, the French loosened their grip on Ruhr, accepted the Dawes Plan, and fully withdrew from Ruhr in August 1925.

This was how the Dawes Plan worked:

1. The U.S. lent Germany money which built up the German economy.
2. Germany used increased tax revenues to pay back France in reparation money.
3. France paid the U.S. back for the money the U.S. had lent France during WWI.
4. Repeat.

Thanks to the Dawes Plan, the Rentenmark was replaced by the gold-backed Reichsmark and Germany was able to stabilise its economy and end hyperinflation in Germany. This ushered in a period known as the Golden Age of the Weimar Republic or the Golden Twenties. During this time, Germany's economy flourished and liberal values became more mainstream within Germany.

Gustav Stresemann foreign policy

Gustav Stresemann was among other German politicians who detested the Treaty of Versailles and spoke out about it. Although it was thanks to Stresemann's efforts that Germany was able to get back on its feet as a functioning economy, Stresemann was very much aware of the devastation the Treaty of Versailles had brought on his country. He knew better than most that the only relief from the harsh terms of the treaty was to prove Germany was now a changed country.

From a glance, Gustav Stresemann's greatest achievement wasn't just solving the hyperinflation crisis in Germany but his greatest achievement was in how he solved the hyperinflation crisis. Stresemann's real strength lay in foreign affairs.

His primary foreign policy was simple: get the French and the Belgians out of the Ruhr! This was simpler said than done. To do so, Germany would have to appease the French. Giving his word that Germany would recover economically and pay the French their share in reparations was the first step in proving that Germany was going to make sure its responsibilities were met.

This elevated the country's status in the eyes of many. With Germany's cooperation in the Dawes Plan, it became evident that Stresemann was true to his word. Thanks to Stresemann's achievements in his foreign policy, by August 1925, the French and Belgian forces left the Ruhr.

It was evident to France that Stresemann was trustworthy. He had kept his promise to France, which in turn began warm relations between Stresemann and the French Foreign Minister, Aristide Briand. This warming relationship between Germany and France was soon symbolised by the Pact of Locarno of 1925, which did the following:

1. Improved relations between Germany and France (with Belgium) by pledging peace between the two countries and guaranteeing that France would never occupy German territory again;
2. Germany accepted its new borders with France and Belgium as drawn up under the Treaty of Versailles;
3. The Rhineland would be permanently demilitarised;
4. Germany's admission to the League of Nations would be considered.

Fig. 4: Rhineland, Germany's main industrial region

Thanks to Gustav Stresemann's efforts, not only were the points of the Pact of Locarno successfully implemented, but in 1926, Germany became a member of the League of Nations. No longer was Germany seen as the loser of the First World War, but as an equal among the European Nations.

For his efforts, Stresemann shared the Nobel Peace Prize with Aristide Briand.

Fig. 5: Aristide Briand

Gustav Stresemann Nobel Prize

Gustav Stresemann and his colleague, Aristide Briand, Foreign Minister of France, shared the Nobel Peace Prize in 1926 for having successfully begun cordial relations between the two countries. The start of reconciliation between France and Germany was established by the Pact of Locarno. Negotiated in the Swiss town of Locarno in 1925 and signed in London that year, the pact was a combination of several treaties that guaranteed peace in Western Europe.

Fig. 6: Gustav Stresemann and Aristide Briand, two Foreign Ministers meet in 1926

Gustav Stresemann achievements

Gustav Stresemann's policies were among the key factors that contributed to relatively stable late 1920s not only in the Weimar Republic but the whole Europe. His main achievements can be summarised in the list below:

• stabilizing German economy (hyperinflation) by implementation of the Dawes Plan in (1924)

• improving relationship with Germany's neighbours through the Locarno Treaties (1925)

• Nobel Prize (1926) for promoting peace and reconciliation between France and Germany

• bringing Weimar Republic back to international community

• improving relations with the Soviet Union (Treaty of Berlin)