Figure 1.-- Germany was the industrial powerhouse of Europe, but living standards even before World War I were below both American and Britain. Unlike America, German workers did not have cars, but used bicycles to get to work. . Relatively few Germans could afford cars. Cars were mostly the preserve of upper-middle class and upper-class families. And as a result there were far fewer cars in Germany and a much smaller automobile industry. (This would have significant consequences in World War II.) Socialist parties dominated the Weimar Republic, but in fact few major social changes occurred and Germany remained a a class-bound society. Here we see the car of a wealthy family which hired a chaufer to drive the car. (It is likely that the mother could not even drive.) We see a little boy of about 4 years of age in the driver's seat of the car wearing a white sailor suit and white long stockings with the Wascshknopf or stocking button sewn onto the top of a long stocking so that the hose supporter on a Strapsleibchen could be fastened to it. The picture has been cropped but we can see the white shorts and white long stockings of an older brother who is also probably wearing a white sailor suit. The parents of a wealthy family have obviously set up this photo for a humorous shot of their little boy who already may have shown an interest in cars. White sailor suits with long stockings were considered dressy outfits for boys in Germany in the 1920s-30s as old as 12-13 years of age.

Few democratic governments have faced such turbulent economic times and political challenges as the Weimar Republic. The Weimar Republic emerged out of the defeat of the German Army when the Allies reinforced by the Americans launched the war-winnning 100 Days Offensive. The German people who only a few months earlier had experiebed victory in the East now were faced with defeat. (Rightist parties were to claim after the War that the German Army was not defeated in the field, but stabbed in the back by Socialists--some of whom were Jews.) The Allied naval blockade had already severly reduced food supplies. The most needy part of the population was nearing starvation. The first challenge was Communist revolution in Berlin, Munich, and other areas. The name Weimar Republic comes from the fact that it was not safe to establish the Government in Berlin. The Allies in the Versailles Peace Treaty forced substantial reparations on a defeated Germany, but did not occupy the country. The reparations are today seen as a serious miscalculation, although it has to be pointed out that it was the kind of hard peace that Germany forced upon the countries it had defeated. Germany also lost territory under the Versailles Treaty, but retained its industrial centers. Historians and economists still debate the impact of the reparations. It is clear that the reparations weakened German finances. It is also clear that German chancellors manipulated reparations payments to force a revision of the Versailles Treaty. Weimar officials claimed that they could no longer afford the reparations payments. The Government defaulted on some payments. The Allies, especially the French were intent on receiving the payments needed to repair the massive war damage. French and Belgian troops occupied the Ruhr--Germany's industrial heart. They took control of most mining and manufacturing companies (January 1923). The Germans called strikes to prevent the Allies from benefitting economically. The Government incouraged passive resistance to the occupation. The strikes lasted 8 months and were extremely damaging to the German economy. The strike meant that goods were not produced for both the domestic economy and to export. The French, became increasingly frustrated. There were incidents where strikers were shot. They also arrested and exiled strike leaders. who began to kill and exile protestors. The most serious impact of the crisis was on Germany itself. The German Government supported the strikes, primarily by paying benefits to the strikers. Government income was sharply reduced by the strike at the same time that expenditures were increased by the benefits paid by strikers. The Government accomplished this by printing currency givng rise to hyperinflation. The inflation was fed by the facts that as a result of the strike there were fewer goods produced. Germans soon found that the Mark was worthless. As a result, the savings of the middle-class were destroyed. This significantly undercut moderate support for the new Republic. It is a pheomenon that haunts German politics and explains why German Governments are more financially responsible than many other European Governments. The United States stepped in to support the Weimar Republic with the Dawes Plan which provided the huges loans which in effect financed the reparations payments (1924). It was the beginning of a foreign debt burden that successive German Governments saddled Germany to pay the reparations. What followed were the Weimar Golden Years (1924-29), but even during this period, growth rates were not impressive. The United States offered further support wuith the Young Plan (1929). The Wall Street Crash (October 1929) changed the politucal dynamic. The United States wanted the loans paid bavk to support its reeling economy and refused to make further loans. Chancellor Heinrich Brüning adopted an austerity program (1930-32) which fed the political radicalism that brought Hitler and the NAZIs to power and a renewed effort to dominate Europe militarily.

Weimar Democracy

Few democratic governments have faced such turbulent economic times and political challenges as the Weimar Republic. And few have faced such detrmibned opposition by strongly based totalitarian parties fundamentally opposed to democracy--parties of both the extreme fight and left.

Defeat in World War I

The Weimar Republic emerged out of the defeat of the German Army when the Allies reinforced by the Americans launched the war-winnning 100 Days Offensive. The German people who only a few months earlier had experiebed victory in the East now were faced with defeat. (Rightist parties were to claim after the War that the German Army was not defeated in the field, but stabbed in the back by Socialists--some of whom were Jews.) The Allied naval blockade had already severly reduced food supplies. The most needy part of the population was nearing starvation.

Communist Revolution

The first challenge was Communist revolution in Berlin, Munich, and other areas. The name Weimar Republic comes from the fact that it was not safe to establish the Government in Berlin.

Reparations

The Allies in the Versailles Peace Treaty forced substantial reparations on a defeated Germany, but did not occupy the country. The reparations are today seen as a serious miscalculation, although it has to be pointed out that it was the kind of hard peace that Germany forced upon the countries it had defeated. Historians and economists still debate the impact of the reparations. It is clear that the reparations weakened German finances. The real damage to the German economy, however was done by the efforts of German Government to use the reparations issue to force a revision of the Versailles Treaty.

Revising the Versailles Treaty

It is also clear that German chancellors manipulated reparations payments to force a revision of the Versailles Treaty. This became a primary goal of most German politicans, even those of the democratic parties. This refflected adeep-seated oposition among the German people to the Treaty. Weimar officials claimed that they could no longer afford the reparations payments. The adverse impact of the reparations were not a severe as generally believed. Much of the reparations payments were financed by the Americans. What did affect Germany were the policies of the German Government to avoid paying the reparations. The Government defaulted on some payments. The Allies, especially the French were intent on receiving the payments needed to repair the massive war damage. French and Belgian troops occupied the Ruhr--Germany's industrial heart. They took control of most mining and manufacturing companies (January 1923). The Germans called strikes to prevent the Allies from benefitting economically. The Government incouraged passive resistance to the occupation. The strikes lasted 8 months and were extremely damaging to the German economy. The strike meant that goods were not produced for both the domestic economy and to export. The French, became increasingly frustrated. There were incidents where strikers were shot. They also arrested and exiled strike leaders. who began to kill and exile protestors.

Territory

Germany also lost territory under the Versailles Treaty, but retained its industrial centers. Versailles set the borderes in the West. It was different in the East where the League of Nations played a role in determining the border. Versailles established the borders for Czechoslovakia and created the Polish Corridor, but much of the rest of the border was set by referenda.

Hyper Inflation

The Germans suffered from inflation during the War. Freed from the contraints of the gold standard, inflation became a serious priblem. The British managed the situation reasonably, the Germans did not. And this contunued after the War, in part, but not only because of the reparations. The most serious impact of the reparations crisis was on Germany itself. The German Government supported the strikes, primarily by paying benefits to the strikers. Government income was sharply reduced by the strike at the same time that expenditures were increased by the benefits paid by strikers. The Government accomplished this by printing currency givng rise to hyperinflation. The inflation was fed by the facts that as a result of the strike there were fewer goods produced. The Government had to devalue the Mark (1921 and 1922). The hyperinflation began (1923). The Goverment decided to print money to pay coal miners for passive resistance. This meant they couls continue the strike that was denying the coal to the Allies. The British and French were demanding payments in goods such as coal rather than inflated Marks. The French occupied the Rhur in an attemot to ensure coal deliveries. The results were staggering. The Mark fell from 90 to the U.S. dollar (Spring 1921) to 330 to the dollar (Summer 1921) and 7,400 (December 1922). Germans soon found that the Mark was worthless. Many Germans thought it could not go much lower. They were wrong. Ultimately the Mark reach Zimbabean levels -- 4.2 trillion to the dollar (October 1923). As a result, the savings of the middle-class were destroyed. This significantly undercut moderate support for the new Republic. It is a pheomenon that haunts German politics to this day. It explains why German Governments are more financially responsible than many other European Governments, especially the countries in southern Europe.

American Support

The United States stepped in to support the Weimar Republic with the Dawes Plan which provided the huges loans which in effect financed the reparations payments (1924). It was the beginning of a foreign debt burden that successive German Governments saddled Germany to pay the reparations. What followed were the Weimar Golden Years (1924-29), but even during this period, growth rates were not impressive. The United States offered further support with the Young Plan (1929).

Western Companies

American investments in Europe were relatitively limited before World War I. The War significantly weakened the economy of the belligerant countries. Unlike World War II, Germany or most of Frasnce was not occupied and there were no significant strategic bombing campaign. Even so, the economic damage was significant and this created opportunities for American companies to commit badly needed capital as well as profitably utlize its technology. The Americam investments ptovided a boosdt to the badly weakened European countries. Companies like Ford workded out deals with the Soviet Union (which was at first a NAZI ally). Invesments were also made in Italy. Several American companies were involved in Germany. This activirty began during the Weimar years which mean that the investments were in place when the NAZI seized control. They managed to continue to operate during the NAZI years which eventually caused conflict with the U.S. Government after Hitler launched World War II. American industry of course played a major role in winning World War II. Several of the compasnies involved were at first conflicted, seeking to protect their assetts and operations in Germany and other Axis countries.

The Depression

The Wall Street Crash (October 1929) changed the politucal dynamic. The United States wanted the loans paid bavk to support its reeling economy and refused to make further loans. Chancellor Heinrich Brüning adopted an austerity program (1930-32) which fed the political radicalism that brought Hitler and the NAZIs to power and a renewed effort to dominate Europe militarily.

Created: 7:59 AM 3/26/2011
Last updated: 7:21 AM 1/27/2017