How far did the Weimar economy recover after 1923?
3 Ways Germany Recovered Economically (1924–1928):
1. Dawes Plan and U.S. Loans
2. Industrial Growth
3. Currency Reform and Stability
3 Ways the Recovery Was Incomplete or Fragile:
1. Overdependence on U.S. Loans
2. Persistent Unemployment and Inequality
3. Reparations Still a Burden
1. Dawes Plan and U.S. Loans
- In 1924, the Dawes Plan was agreed. The USA loaned Germany 800 million gold marks (around $200 million) to kickstart the economy.
- This money helped Germany pay reparations and invest in infrastructure, such as railways, factories, and public buildings.
- Example: Loans helped big companies like IG Farben (a major chemical firm) expand, creating jobs.
2. Industrial Growth
- By 1928, industrial production was back to the same level as before World War I and even higher in some sectors.
- Example: Coal output increased from 275 million tons (1924) to 350 million tons (1928).
- Exports rose too — by 1926, Germany was again one of Europe’s top industrial exporters.
3. Currency Reform and Stability
- After hyperinflation in 1923, the government introduced the Rentenmark, followed by the Reichsmark in 1924.
- Example: The cost of a loaf of bread dropped from 200 billion marks in 1923 to a reasonable price under the new currency, restoring trust in money.
- Inflation was controlled, and prices became stable, helping both workers and businesses.
3 Ways the Recovery Was Incomplete or Fragile:
1. Overdependence on U.S. Loans
- Much of the recovery was built on short-term American loans.
- Example: By 1929, Germany owed the USA over $3 billion.
- When the Wall Street Crash happened in 1929, the U.S. demanded repayments, causing Germany’s economy to collapse again.
2. Persistent Unemployment and Inequality
- Even in the “Golden Years,” around 1.3 million people were unemployed in 1928.
- Farming and small businesses struggled — farmers were in debt due to falling food prices.
- Example: In 1928, farmers’ income was 44% below the national average.
3. Reparations Still a Burden
- The Dawes Plan did not cancel reparations; it only spread payments out.
- Many Germans still viewed reparations as a national humiliation.
- Example: In 1928, Germany still had to pay 2.5 billion gold marks annually, putting pressure on government spending.
