Silvapages

Financial Problems

by Olivia Camusi

From 1919 to 1933, Germany’s Weimar Republic suffered many financial problems stemming from the Great Depression in the United States and the paying of reparations to France and other allied countries. To pay the reparations, the government went on a money printing spree in order to pay their debt and help with troubled times in their own country. This printing spree eventually led to inflation, with at one time a newspaper costing one billion German marks. Before inflation started, four marks would roughly be the same to one dollar, but, at the height of inflation in November of 1923 the ratio was over one billion marks to a dollar. The Great Depression in the United States only made the financial matters in Germany worse. Because of the worsening economic conditions in the United States, there was more pressure on Germany to continue paying their looming debt. Germany’s financial situation took a turn for the better after Gustav Stresemann became chancellor in September of 1923. During Stresemann’s short chancellorship, which lasted only a few months (after which he served as foreign minister), the German mark was replaced with the Rentenmark, which was backed with American gold. Germany’s finances further improved once the Dawes plan was announced in 1924. The Dawes Plan, created by American banker and politician Charles Dawes, set more realistic goals for Germany’s payments of war reparations. For example, instead of Germany paying at 1922’s payment rate of 2.5 billion, the plan set the 1924 payment at 60 million dollars, lowering the rate of money paid over a larger period of time.