A History of Germany 1918 - 2020. Mary Fulbrook

       Map 2.1 The Versailles settlement, 1919.

      From 1921 to summer 1923 governmental policies served to exacerbate Germany’s political and economic difficulties. Wirth’s government of 1921–2 pursued a so-called policy of fulfilment which, by attempting to fulfil Germany’s reparations obligation, served to demonstrate that the German economy was in fact too weak to pay reparations as envisaged. This coincided with the pursuit by the French of revisionist policies aimed at gaining control of the left bank of the Rhine and setting up a puppet state. Matters came to a head under the government of Wilhelm Cuno, from November 1922 to August 1923, which included the DVP while the SPD remained in opposition. In January 1923 the French and Belgians sent troops to ‘supervise’ production in the Ruhr, using the shortfall in German wood and coal deliveries to the French as a pretext. This military occupation of the Ruhr entailed the deployment of 100,000 men – equivalent to the total strength of the German Army. The Germans responded with a policy of ‘passive resistance’, ceasing economic production and refusing to cooperate with the occupation. The need to subsidize Germans in the now unproductive Ruhr was exceedingly detrimental to the German economy, and coincided with an extraordinary period of catastrophic inflation.

      While the roots of German inflation lay in the earlier financing of war by bonds and loans rather than taxation increases, its explosive growth was fuelled by, among other factors, the printing of paper money for the payment of reparations and for the financing of heavy social expenditure (on pensions, for example). This sent the value of money totally out of control. In the course of spring and summer 1923 the German Mark progressively became worthless. The American dollar was worth 4.2 Marks in July 1914; it had risen to 8.9 Marks in January 1919, 14 Marks by July 1919 and a peak of 64.8 Marks in January 1920. There was then a brief period of respite, but after January 1921 the snowball started rolling again. By July 1922 the dollar was worth 493.2 Marks; by January 1923 the figure was 17,972, and in an inflationary explosion the figures rose to 4.62 million Marks by August, 98.86 million Marks by September, 25,260 million Marks by October and an almost unimaginable 4,200,000 million Marks by 15 November 1923.⁷ Paper notes were simply stamped with a new increased value; people were paid their wages by the cartload; prices doubled and trebled several times a day, making shopping with money almost impossible; and the savings, hopes, plans, assumptions and aspirations of huge numbers of people were swept away in a chaotic whirlwind.

Those on fixed incomes and those dependent on money savings were of course hit the hardest. Even when the worst material impact was over, the psychological shock of the experience was to have longer-lasting effects, confirming a deep-seated dislike of democracy – which was thereafter equated with economic distress – and a heightened fear of the possible consequences of economic instability. A few groups and individuals were by contrast well-placed to benefit, and even to make a profit, from the inflation, such as the industrialist Hugo Stinnes.

      In the end the situation was brought under control by the short-lived government headed by Gustav Stresemann from August to November 1923. The policy of passive resistance in the Ruhr was terminated, easing the burden on the German economy and defusing international tension, while a currency reform introduced the Rentenmark and laid the foundations both of a more stable currency and of a reconsideration of the reparations question in the following year. At the same time, a number of putsch attempts, including communist-inspired uprisings in Saxony, Thuringia and Hamburg, were suppressed. One putsch attempt of this period – which was at the time but one among many – has gained particular historical notoriety. In Bavaria a number of nationalist groups were laying complex plans for a right-wing ‘march on Berlin’, copying the successful model of Mussolini’s fascist march on Rome of the previous year. One of the groups associated with these plans was the small party formed out of the earlier German Worker’s Party (DAP) led by Anton Drexler, now known as the National Socialist German Workers’ Party (NSDAP, or Nazi) under the leadership of Adolf Hitler. At the time relatively insignificant, the failed ‘Beer Hall Putsch’ of 8–9 November 1923 – which lost crucial support in high places at the last moment – gave Hitler and his associates considerable national publicity in the trial which ensued. Sentenced to a minimum of five years’ detention – of which he served less than a year, in relatively comfortable circumstances in Landsberg prison – Hitler took the opportunity to write the political diatribe entitled Mein Kampf and to ruminate on the future strategy of his party. In the meantime, however, from 1924 the Republic appeared to be recovering from its early turbulence and entering into a new period of stabilization on both the domestic and international fronts.

      Apparent Stabilization, 1924–1929

In November 1923 Gustav Stresemann became foreign minister. A member of the right-wing liberal DVP, Stresemann only gradually became committed to the Republic, intellectually rather than emotionally (as the German phrase Vernunftrepublikaner implied). Despite the frequent changes of governmental coalition during the Weimar Republic, Stresemann retained the position of foreign minister until his death in October 1929. During this period he made a major contribution to the stabilization of the Republic as far as foreign affairs were concerned – which, as it sadly turned out, was in the end not quite far enough.

      The Versailles Treaty had left a number of outstanding problems. It was clear after the catastrophes of 1923 that the issue of reparations would have to be reconsidered. In 1924 the Dawes Plan was adopted, which aided both German economic recovery and American expansionist economic policies. Essentially postponing a final settlement, this plan allowed Germany a breathing space before full reparations would be payable, with payment staggered over four years before reaching a maximum level in the fifth year. For Germany, it also meant considerable economic dependence on short-term loans from abroad, particularly from America. In the early phases only one-fifth would be paid from Germany’s own resources, while four-fifths were to come from international ‘start-up’ loans. Stresemann was quite clear about the difficulties this would entail for the weak German economy but felt that the potential benefits of normalization of relations with France in particular outweighed the obvious and serious economic problems involved.

      In July 1925 the Rhineland began to be cleared and French troops started to leave the Ruhr. After long negotiations, in October 1925, the Locarno Pact was signed by representatives of Germany, Belgium, Britain, France and Italy. France also signed separate agreements with Poland and Czechoslovakia. Locarno guaranteed the frontiers between Germany and France and between Germany and Belgium, and its parties mutually renounced the use of force or invasion of each other’s territory except in self-defence. Since the militarily emasculated Germany was in no position to use force, and since Locarno entailed further recognition of the validity of the Treaty of Versailles as well as appearing to favour good relations with Germany’s Western neighbours at the expense of relations with Russia, the agreement provoked highly hostile responses from both left- and right-wingers at home. On the other hand, Locarno appeared to mark the beginning of the re-entry of Germany into a community of nations seeking a framework for peace and security in Europe, and it paved the way for Germany’s entry into the League of Nations in September 1926.

Partly to reassure domestic opinion and partly to reaffirm Germany’s position vis-à-vis Russia, Stresemann concluded with Russia the Berlin Treaty of 1926. This confirmed the Rapallo Treaty of 1922, concluded when Walther Rathenau (who was assassinated after the treaty was signed) was foreign minister. Rapallo had reestablished diplomatic relations between