Gustav Streismann, elected chancellor of Germany in 1923, had several problems facing him. Due to their defeat in the First World War, Germany was forced to sign the treaty of Versailles, which was very unpopular. This resulted in problems as Germany was unable to keep to some of the treaty.

Germany’s economic problems in 1923 stemmed from the treaty of Versailles: one of the points of the treaty was that Germany had to pay reparations to France, Belgium and the United Kingdom as a payment for the allies’ loss in the war. However, the huge sum of 132000 million marks was practically impossible for Germany to pay, especially after the devastation of the First World War, when a lot of the country’s money had been spent on industry, making war materials. France and Belgium saw this as a refusal to keep to the terms of the treaty; they therefore invaded the Ruhr (the part of Germany where its industries were) to take the money by force. The Germans could not resist this invasion physically as their arms had been dramatically reduced by the treaty of Versailles. Instead, they fought back by passive resistance and refused to work for their occupiers. But, as they weren’t working, they didn’t get paid – so the Weimar government began to print millions of marks to keep up their payment. Consequently, the German economy spiralled into massive hyperinflation – in November 1928, one egg cost 80000 million German marks. Workers’ wages simply could not keep up with the rate of inflation.

One of the ways Streismann helped Germany to recover from this economic crisis was to introduce a new currency called the rentenmark. The old German marks were recalled and burnt. This brought inflation under control and the new currency was quickly accepted by the German people and made the economy more stable. People could once again receive wages and be able to pay for their sustenance and rent; money once again had value. This was the first step that helped Germany (and the Weimar republic) recover; the democratic Weimar government’s popularity had decreased because they were blamed for the hyperinflation.

Streismann next called off the state of passive resistance in the Ruhr because it meant that there was no German industry, and so the country could not prosper. The chancellor also promised to pay keep paying reparations to France. Although many Germans were angry about this, as they thought they should continue to resist the French occupiers, this meant that the French and Belgian forces left the Ruhr. Germany’s factories could therefore start manufacturing produce again, to build up the economy and stabilize it, effectively solving the occupation of the Ruhr.

After the First World War, Germany had completely lost its status of being a European and even international power. It had depleted arms; its army had been reduced to just 100000 men, it had no navy and a skeleton of its former air force. Because it was popularly believed to have caused the First World War, it had been dropped from the League of Nations completely and had absolutely lost the respect of other global powers and European countries. Streismann resolved this by initiating and signing the Locarno pact in 1925 with other European countries – Britain, France, Belgium, Italy and Germany all promised never to invade each other under any circumstances. This meant other countries trusted Germany more. In 1926, Germany once again joined the League of Nations, partly due to the success of the Locarno pact. This meant the Weimar republic and the people were more popular because they could once again have a say in European and global decisions. They had regained their status as a power. Streismann was awarded the Nobel peace prize in 1926 for this work.

However, due to his promise to keep paying reparations, Germany was facing huge payments in the years to come which would keep the country in poverty. Streismann finally solved this by creating two economic plans or pacts; the Dawes Plan in 1924 and the Young plan in 1926. The Dawes plan gave Germany a longer time to pay its reparation, which meant there was less stress on the economy and industry. The Young plan later on stated that the reparations were decreased from 132000 million marks to 37000 million. So, these plans gave Germany both longer to pay and less to pay. This solved the problem of huge reparations which the country would be unable to pay.

Finally, even after the introduction of the rentenmark and the resumption of industry, Germany’s economy was still unstable. Many firms had become bankrupt and out of business during the economic crisis, which meant that there was less industry in Germany which would contribute to their inability to pay reparations; also, there wasn’t enough money to pay for facilities such as health care, schools and infrastructure. Streismann solved this by entering an agreement with America in which Germany would obtain huge loans; this meant US firms set up branches in Germany, which helped sustain international relations and also Germany once again had a thriving economy.

However, although Streismann had effectively helped Germany recover, some of his policies had negative results and did not help Germany to recover completely – they did not set a strong foundation for a good economy. The way he dealt with the French occupation in the Ruhr meant that right wing supporters claimed it was a sign of a weak government and increased the unpopularity of the Weimar republic. The introduction of the rentenmark meant that people who had lost savings weren’t compensated and also blamed the Weimar republic. The signing of the Locarno pact and the League of Nations was also unpopular in some cases; a lot of people believed that Germany should have spent time rebuilding its army instead of international relations. Biggest of all, under the new economy, Germany was now reliant on huge loans from America. If America’s economy collapsed, Germany’s would also on a much bigger scale; and the country would be back to the economic crisis in 1923. This did happen later on – and indeed, America’s Wall Street crash caused colossal problems and was a reason for Hitler’s eventual election.

In conclusion, Streismann helped Germany recover in the years 1923 – 1929 effectively. By introducing the rentenmark, continuing reparations and signing pacts (such as the Locarno pact, the Dawes plan and the Young Plan) that involved other countries, he brought hyperinflation under control, stabilized the economy, rebuilt some popularity for the Weimar republic, and improved international relations. However, these weren’t entirely reliable, but in the short term, they solved Germany’s problems. They were the only available path at the time.