Problems in Germany 1919-1933

After World War Two, the Versailles Treaty was signed (June 28, 1919). It required Germany to accept
sole responsibility for the war; they had to disarm, make substantial territorial concessions and pay
reparations to certain countries (total reparations expected was 132,000,000,000 (132 billion) goldmarks
which was far more than the total German gold or foreign exchange). This created some serious
problems that resulted in Nazi influence.

Economic and financial problems

There were two major economic crises during this period.
In the early 1920s, inflation skyrocketed. The London Ultimatum of 1921 demanded that
reparations in gold or foreign currency be paid in annual installments of 2,000,000,000 (2 billion)
goldmarks plus 26 percent of the value of Germany's exports. The first payment was paid in full, but
devaluation of the mark immediately began. During the first half of 1921, the mark was about 60 to a
dollar. By December of 1922, it was 8000 to a dollar. In January 1923, French and Belgian troops
occupied the Ruhr valley, the industrial region of Germany, to ensure that the reparations would be paid
in goods because the Mark was nearly worthless and hyperinflation continued. The Dawes Plan,
introduced in August 1924, hoped to reverse this trend. The four main points of the Dawes Plan:

1. The Ruhr area was to be evacuated by Allied occupation troops.

2. Reparation payments would begin at one billion marks the first year, increasing to two
and a half billion marks annually after five years
3. The Reichsbank would be reorganized under Allied supervision.
4. The sources for the reparation money would include transportation, excise, and custom
taxes.

A new currency was issued, the Rentenmark, and it effectively stopped inflation.
However, the economy was stable for only five years before the Depression occurred. The
Weimar Republic was especially hard hit because of the lack of American loans coming in. Germany had
begun to rely on international aid in economic affairs and there was a larger demand to repay debts owed
to the United States. The unemployment rate rose to 30 %. Many Germans blamed this on the Weimar
Republic, as evidenced by parties on the left and right sides who wanted to get rid of the Republic
altogether.

Political problems:
There was trouble in the Weimar Republic before it was formed. A rebellion broke out in 1918,
similar to the revolution of 1917 in Russia. Unlike that revolution, however, the one in Germany was not
contolled by the Communists, but by Social Democrats. However, there was still fear because of the
Soviet connotations involved in a revolution. The Social Democrats ultimately succeeded because they
were extremely organized for the National Assembly Elections of January 19, 1919. A full-on revolution
never occurred because the monarchy fell and the Social Democrats were able to obtain the necessary
power.
After the Republic’s formation, it received criticism from both the left and the right sides. The
left believed that the Social Democrats betrayed the notion of the workers’ movement by preventing a
communist revolution. The right-wing extremists didn’t like the Republic and wanted an authoritarian
state. The people were politically divided from the beginning.
 Germany’s large cities suffered political violence from 1919 to 1924 between the left and the
right. The worst of the violence was between paramilitaries, the Freikorps, and Communist militia, the
Red Guards. The Kapp Putsch and the invasion of the Ruhr region were not successful in changing
anything about the Republic. The Munich Putsch, in 1923, led by Adolf Hitler, is also notable as further
pressure from the right, particularly the Nazi Party. It began the Nazi drive for power.
From 1923 to 1929, there was relatively little political unrest. Gustav Streseman began his time
as chancellor by issuing new currency. However, he sent the Freikorps in to settle a situation in Bavaria,
where the leader of the government there was encouraging people to ignore Berlin. This did not garner
much support from the Social Democrats.
Streseman’s death led to the fall of the Weimar Republic and further political instability. The
next four chancellors ruled by presidential decree instead of Parliamentary consultation. The Reichstag
general elections on 14 September 1930 resulted in an enormous political shift: 18.3% of the vote went to
the Nazis, five times the percentage compared to 1928. It was no longer possible to form a pro-republican
majority in the Reichstag. This encouraged the supporters of the Nazis to force their claim to power by
increasing organization of public demonstrations and paramilitary violence against rival paramilitary
groups. Hitler was sworn in as chancellor on January 30, 1933. The Reichstag Fire a month later was
used by Hitler to create enough fear to issue the Reichstag Fire Decree, which suspended constitutional
protection of civil liberties. On March 24, the Enabling Act was passed and gave Hitler complete power,
thus establishing his dictatorship.

Terms
Versailles Treaty- was one of the peace treaties at the end of World War I. It ended the state of war
between Germany and the Allied Powers. It was signed on 28 June 1919; laid sole responsibility for the
war on Germany; also limited armed and naval forces.
London Ultimatum- created by the Allies to require the German Reich to make obligatory reparation
payments of 132 billion gold marks in 66 annual installments, to hasten demilitarization as required by
the Versailles Peace Treaty of 1919, and to extradite a number of war criminals.
The Dawes Plan- was an attempt following World War I for the Triple Entente to collect war reparations
debt from Germany; after a huge demand from the Allies, Germany was unable to pay, so the United
States stepped in to aid them; this created a German dependence on the American economy.
Hyperinflation in Germany- after the London Ultimatum, the German mark was extremely devalued. The
total reparations demanded was 132,000,000,000 (132 billion) goldmarks which was far more than the
total German gold or foreign exchange. Eventually, a new currency was created and marks were used as
wallpaper in some instances. Reparations were used as a scapegoat even though it only accounted for
one-third of the German deficit.
Weimar Republic- is the name given by historians to the parliamentary republic established in 1919 in
Germany to replace the imperial form of government; In its 14 years the Weimar Republic was faced with
numerous problems, including hyperinflation, political extremists and their paramilitaries, and hostility
from the victors of the First World War.
The Kapp Putsch- was a 1920 coup attempt during the German revolution aimed at overthrowing the
Weimar Republic; it was based on opposition of the Versailles Treaty
The Munich Putsch- also known as the Beer Hall Putsch, was a failed attempt at revolution that occurred
between the evening of 8 November and the early afternoon of 9 November 1923; it was an attempt to
gain control of Bavaria, Munich, and Germany. Hitler’s involvement sent him to prison for eight months,
during which he wrote “Mein Kampf”.
The Occupation of Ruhr- between 1923 and 1925, by troops from France and Belgium, was a response to
the failure of the German Weimar Republic under Chancellor Cuno to pay reparations in the aftermath of
World War I.
Gustav Streseman- was the chancellor of the Weimar Republic from 1923 to 1929. He won the Nobel
Prize in 1926 and his first notable achievement was the Dawes Plan in 1923. However, he didn’t deal
firmly with the culprits of the Munich Putsch.
Freikorps- a paramilitary organization, some of whom were involved in the Kapp Putsch in an attempt to
overthrow the Weimar Republic
Reichstag Fire- was an arson attack on the Reichstag building in Berlin on 27 February 1933. The event is
seen as pivotal in the establishment of Nazi Germany. It was blamed on an unemployed communist and
was used by the Nazis to show that the communists were turning against the German government.
The Reichstag Fire Decree- issued by German President Paul von Hindenburg in direct response to the
Reichstag fire of 27 February 1933. The decree nullified many of the key civil liberties of German
citizens. With Nazis in powerful positions in the German government, the decree was used as the legal
basis of imprisonment of anyone considered to be opponents of the Nazis, and to suppress publications
not considered "friendly" to the Nazi cause.
The Enabling Act- was passed by Germany's Reichstag and signed by President Paul von Hindenburg on
March 23, 1933. It was the second major step, after the Reichstag Fire Decree, through which Chancellor
Adolf Hitler legally obtained plenary powers and established his dictatorship.

Analysis
What effect did the Versailles Treaty have on the economy of the Weimar Republic?
The Versailles Treaty called for Germany to take full responsibility for the war. This blame
required Germany to pay for the damages caused during the war. The total reparations demanded was
132,000,000,000 (132 billion) goldmarks, which was far more than the total German gold or foreign
exchange. This completely destroyed the German economy.
Prior to the Versailles Treaty, the economy was already pretty devastated. Without having to pay
for damages of other countries, Germany would have needed to recover from their own losses. The
Versailles Treated added insult to injury by demanding reparations. Eventually, the mark was so
devalued that the Ruhr region was occupied by French and Belgian troops to insure that money was paid
back in full. This resulted in "passive resistance," which meant that coal miners and railway workers
refused to obey any instructions by the occupation forces. Passive resistance further damaged the
economy and increasing the expense of imports.
However, reparations accounted for about one third of the German deficit from 1920 to 1923, the
government found reparations a convenient scapegoat. Other scapegoats included bankers and speculators
(particularly foreign). The inflation reached its peak by November 1923, but ended when a new currency
(the Rentenmark) was introduced. In order to make way for the new currency, banks "turned the marks
over to junk dealers by the ton" to be recycled as paper.