Under Stresemann, American loans poured in making Germany prosperous. The German government borrowed money to pay reparations and build sport stadiums, theatres and swimming pools as well as improve social services. In 1923, industrial production had fallen to half its pre-war level. However, by 1927, it had recovered to well above the pre-war level. Unemployment fell to below a million for the first time since the war. The middle classes benefited with consumer spending up by 20% in 1926. Life seemed freer, more modern, and more exciting.
Adapted from William Shirer’s book, ‘The Rise and Fall of the Third Reich’, 1960. Shirer was an American journalist who came to Europe for the first time in 1925. He reported from various German cities. In this extract from his internationally bestselling book, he describes the impact that American investment had on Germany after the First World War.
From 1924 to 1929, German governments borrowed millions. These loans were dangerous because they were often used for luxuries and non-essentials. German factories had also relied on these loans but could not sell enough to repay them. Eventually many businesses failed and, as a result, this created unemployment. The short-sightedness of such a policy was incredible.
Adapted from ‘Account Settled’ by Hjalmar Schacht, 1948. Schacht was an economist and President of the German National Bank. He successfully introduced the Rentenmark in 1923 but resigned in 1930 in opposition to borrowing American money under the Young Plan. He became Hitler’s Economics Minister but was replaced in 1937.