Category Archives: economics

by | 30 April 2024 · 5:41 pm

Austrian-German Banking Crisis, 1931

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 575-576:

The bungled fiasco of the German–Austrian Customs Union led directly to the Austrian banking crisis. On 13 May, the Creditanstalt, the largest and most respected Austrian bank, suddenly declared bankruptcy, sending shock-waves through world financial markets. Jittery creditors everywhere withdrew funds. The bank’s initial losses amounted to 828 million Austrian schillings. During May, Austria’s foreign-currency reserves fell by 850 million schillings. Otto Ender, the Austrian Chancellor, was forced to put together a government-backed financial rescue plan by buying up 100 million schillings’ worth of Creditanstalt stock. Support in this rescue package was given by the powerful Rothschild banking family of Austria, and on 16 June the Bank of England provided a sizeable loan to the Austrian government to assist with the plan.

The Austrian banking crisis had a domino effect, with the panic-selling of the stock of German banks soon following. In early June, the Reichsbank announced it had suffered the withdrawal of 1 billion Reichsmarks since the Creditanstalt collapse, with foreign deposits falling by 25 per cent. The German government was now having great difficulty in raising foreign loans to service its huge public-spending deficit, and the Reichsmark was falling on currency markets. On 5 June, Brüning issued the Second Emergency Decree for the Protection of the Economy and Finances, which brought in reductions in welfare benefits, wage cuts for all public-sector employees, plus a ‘crisis’ tax, levied on better-paid white-collar workers, and increases in sales taxes on sugar and imported oil. The one concession to organised labour was a promise of 200 million Reichsmarks for the funding of public works. This new decree was accompanied by a blunt declaration from Brüning that ‘the limit of privations which we can impose on the German people had been reached’, and he further warned that Germany could not make the reparations payments due in 1931 under the Young Plan.

On 7 June, Heinrich Brüning, accompanied by Julius Curtius, the German Foreign Minister, met with Ramsay MacDonald, at Chequers, the British Prime Minister’s picturesque country retreat. The purpose of the visit was for a ‘mutual exchange of views’. Also present was Montagu Norman, the Governor of the Bank of England, who expressed dissatisfaction with Brüning’s announcement of his intention to suspend reparations payments. In response, Brüning explained his declaration was really a warning of what would happen if the issue of Germany’s payments for 1931 was not urgently addressed. The friendly meeting only yielded the release of a joint statement, which laid stress on ‘the difficulties of the existing position in Germany and the need for alleviation’.

The US President, Herbert Hoover, was following European economic affairs closely, and he fully appreciated the impact the financial collapse of German banks would have on American creditors. The magnanimous proposal by Hoover of a payments moratorium was initially opposed by the French government, Germany’s principal reparations creditor, but was finally accepted, on 6 July, with the condition that the German government spent the one-year saving on reparations for domestic rather than military purposes. The Hoover Moratorium really marked the beginning of the end of German reparations payments, which were never resumed.

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by | 28 April 2024 · 1:12 pm

Weimar Elections of 1930

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 552-554:

Given the horrors that followed, it now seems impossible to understand why German people of their own free will could vote in such large numbers for a party pledged to destroy democracy. In Dresden, Victor Klemperer, an academic at Dresden University, wrote in his diary: ‘107 National Socialists. What a humiliation! How close are we to civil war!’ In contrast, the Nobel Prize-winning physicist Albert Einstein told the Jewish Telegraphic Agency there was no reason for despair over Hitler’s strong showing in the national elections because ‘it was only a symptom, not necessarily of anti-Jewish hatred, but was caused by unemployment and economic misery within the ranks of misguided youth’.

It seems 24 per cent of NSDAP voters were voting in an election for the first time, many of them young people and pensioners, 22 per cent of new NSDAP voters had previously voted for the DNVP, with 18 per cent moving from the middle-class liberal parties, and 14 per cent from the Social Democrats. In sum, the biggest movement of voters to the NSDAP came from the middle-class conservative and liberal parties, and the party received the least swing votes from the KPD and Zentrum. There was also a strong reluctance to vote NSDAP in the big cities with large working-class industrial workers.

The most impressive gains for the NSDAP were in Protestant rural areas, especially those of northern and eastern Germany stretching from Schleswig-Holstein to East Prussia. The party performed very well in large northern states such as Pomerania, Mecklenburg, Hanover, Brunswick and Oldenburg, and achieved comparable results in predominantly Protestant Franconia and Hesse-Nassau. Voting support in these areas came primarily from elements of the lower middle class: small shopkeepers, farmers, self-employed tradespeople such as builders, plumbers, electricians and joiners, but there was also an upswing of support from middle-class white-collar workers, lower civil servants, teachers and university students. It was these who would represent the party’s core voters during its rise to power, but the NSDAP was not simply a ‘middle-class protest party,’ as was once thought. It is now clear Hitler’s party was able to gain support from all sections of society in a way the other political parties could not.

It was not, as is often supposed, primarily economic misery that drove voters to the NSDAP. Hitler’s campaign had focused on the failure of the Weimar political system to solve Germany’s problems, and this issue seems to have struck a far stronger chord with voters than the state of the economy. There was a growing loss of confidence in the Weimar political system, which made the decision to vote for a party that was not tainted by involvement in that system much easier. An editorial in the Frankfurter Zeitung spoke of an ‘election of embitterment’ in which voters expressed deep disaffection with ‘the methods of governing or rather non-governing’ of parliamentary government.

Hitler’s dramatic election breakthrough had a devastating impact abroad. There was a large withdrawal of gold and foreign currency from the Reichsbank, and a sharp fall in German stocks on international markets. Even larger German banks were shaken by the wave of panic selling. Julius Curtius, the Foreign Minister, who was in Geneva while the League of Nations was in session, reported when he heard the results: ‘the mood was one of the greatest alarm’. The world now started taking much greater interest in Adolf Hitler.

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by | 8 April 2024 · 5:15 am

Russo-German Rearmament, 1926

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 417-419:

The year ended dramatically with another domestic political crisis, revolving once again around the activities of the Reichswehr. It began on 3 December, when the Manchester Guardian published an article by its Berlin correspondent, Frederick Voigt, on the clandestine connection between the Reichswehr and the Soviet government, headlined ‘Cargoes of Munitions from Russia to Germany’. The article gave details of an agreement between the Junkers Company and the Soviet government to build factories for the manufacture of military aircraft. Details of this plan fell into the hands of Voigt, who also discovered plans for the building of chemical plants in the Soviet Union that would manufacture poison gas for both countries. Voigt further revealed that a Soviet cargo ship loaded with ammunition and weapons had sunk in the Baltic, en-route to Germany. A second article by Voigt, published on 6 December, with the headline ‘Berlin Military Transactions’, gave details about the building of a Junkers plant in Moscow, which was intended to manufacture 100 aeroplanes for German use. It was clear Seeckt had sanctioned these plans, and officers of the Reichswehr had travelled to Russia on false passports to disguise their identities.

On 9 December, the Social Democratic newspaper Vorwärts printed these startling revelations, under the headline: ‘Soviet Grenades for German Guns’. The Social Democrats were given further damaging information about German secret rearmament: in the harbour of Stettin, local stevedores had observed freighters bringing in artillery shells from Russia for delivery to the Reichswehr. These workers admitted they were given extra money in return for a promise of secrecy. On 16 December, Philipp Scheidemann, a prominent Social Democratic member of the Reichstag, used parliamentary exemption from prosecution to deliver a devastating speech outlining details of the Russo-German secret rearmament, during which he called for the resignation of Otto Gessler, the Defence Minister. Right-wing nationalists called Scheidemann ‘a traitor’ and walked out of the debating chamber. Of course, the allegations made by Scheidemann were not new, but the effect of revealing them in a Reichstag debate raised the political temperature to boiling point.

The Social Democrats called on the Chancellor, Wilhelm Marx, to immediately remove Gessler as the Defence Minister and reform the Reichswehr. Failure to act would compel them to withdraw their support from the government. On 17 December, the day after Scheidemann’s incendiary speech, the Social Democrats tabled a vote of no confidence against the Marx government, which was carried by a vote of 249 to 171, with the DNVP surprisingly voting for the motion because they were determined to join the next government.

The third Marx cabinet resigned on 18 December, but agreed to Hindenburg’s request to stay on in a caretaker capacity until a new government was formed. For the third year running, Germans celebrated Christmas with another government crisis. Once again, it would not be resolved until the New Year.

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by | 2 April 2024 · 8:23 am

New Reichsmarks and Elections, 1924

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 341-343:

Whilst the Allied Control inspection was in progress in the autumn of 1924, there was a huge shake-up in German currency. On 11 October, the Reichsmark (RM) was introduced, as part of the Dawes Plan [to pay war reparations under the Versailles Treaty], as a permanent replacement for the interim currency, the Rentenmark, which had restored economic stability, and the old Papiermark, which had collapsed under the weight of hyperinflation. The denominations of Reichsmarks came in lower-value coins and banknotes of 5M, 10RM, 20RM, 50RM, 100RM and 1,000RM. Each Reichsmark was divided into 100 Reichspfennigs. Germany finally had a stable currency once again, guaranteed by the independent Reichsbank. The Reichsmark remained the German currency until it was replaced by the Deutsche Mark on 23 June 1948, which itself was succeeded by the Euro in 2002.

…

The German national election took place on 7 December 1924. Voter turnout was 78.8 per cent. The parties who had supported the Dawes Plan did well. The party gaining the most seats was the SPD, which won 131 seats, a gain of 31 from May 1924, with a popular vote of 26 per cent (7.88 million), up 5.5 per cent. The middle-class parties made smaller gains. The DVP, led by Gustav Stresemann, won 51 seats, up from 45, and polled 3.05 million votes, or 10.1 per cent of the electorate, an increase of 0.99 per cent since May. Zentrum won 69 seats, up from 65, polling 13.6 per cent overall (4.11 million), only up by a narrow 0.22 per cent since May. The DDP improved its position slightly, winning 32 seats, up from 28, taking 6.3 per cent of the popular vote (1.91 million), an increase of 0.6 per cent. The big electoral surprise was the performance of the nationalist DNVP, which improved its position, winning 103 seats, an increase of eight from May, taking 20.5 per cent of the popular vote (6.20 million), an increase of just 1 per cent.

The two other parties who had opposed the Dawes Plan, the Communists and the National Socialists, performed poorly. The KPD won 45 seats, a loss of 17 seats since May, polling 8.9 per cent of votes (2.7 million), down 3.7 per cent. The National Socialist Freedom Party (NSFP), led by Ludendorff, won 14 seats, down 18 on May, polling a total vote of 3 per cent (907, 242), down by 3.55 per cent. The mediocre performance of these extreme parties was proof of the change that had come over the economy since the May election. The gradual consolidation of economic affairs was clearly impacting on voting behaviour. Inflation was now under control and unemployment was falling. This meant the working classes and the lower middle class were much better off than they had been six months earlier. In these circumstances, the parties of the extreme Right and Left seemed much less attractive.

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by | 27 March 2024 · 2:27 pm

Revolts Left, Right, and Rhenish, 1923

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 289-291:

The Munich Beer Hall Putsch is the most notorious event in the early history of Hitler and the National Socialist Party (NSDAP). It was hurriedly planned, bungled in execution, and resulted in humiliating failure. Because of what came later it has been elevated to the status of a monumental event, when in fact what occurred was a small, localised revolt, confined to Munich, which lasted a few hours. It failed because Hitler had allowed his party to become a purely paramilitary organisation involved in an ill-defined conspiracy with disparate Bavarian right-wing politicians. Hitler, who had never been brought into the heart of Kahr’s conspiracy, had whipped up his own supporters into a frenzy only to find that he had already been deserted by his supposed co-conspirators before he ever arrived at the Bürgerbräukeller.

Gustav Stresemann gave a speech on 11 November 1923 in which he reflected on the recent events in Munich, admitting that ‘Germany is now confronted with the demand for a dictatorship’, but he stressed that anyone thinking a dictatorship would improve matters was making a ‘great mistake’. The recent attempt by Hitler to bring about a dictatorship via a beer hall in Munich would have brought no help to the German people. Stresemann was most ‘deeply shaken’ by the involvement of Ludendorff in Hitler’s attempted coup. Stresemann thought a ‘destructive force’ such as Hitler’s movement represented could never have provided competent government for Germany, even if he had succeeded.

At the same time as the left-wing revolt in central Germany and the right-wing struggle in Bavaria were going on, a much more dangerous threat to the territorial unity of the Weimar Republic had erupted in the Rhineland. In the occupied area, separatist associations and parties flourished, primarily under the patronage of the French occupying authorities. The Reich government was powerless to intervene, as it was prohibited from using the Reichswehr in the demilitarised Rhineland under the terms of the Treaty of Versailles.

The leading figure in the Rhineland separatist movement was Hans Dorten, the wealthy owner of a porcelain company, who created the Rhenish People’s Union (Volksvereinigung), which demanded a Rhenish republic as an autonomous state within the Reich, but his opponents suspected his real aim was an independent Rhenish republic. In the occupied Ruhr the separatist movement also flourished, with various groups sprouting up, including the Rhenish Republic People’s Party and the Rhenish Independence League. Separatists armed themselves, held demonstrations, occupied town halls, and called for the foundation of an autonomous Rhenish republic. Some of their supporters even advocated the full integration of the Rhineland into France. After the end of passive resistance, separatist demonstrations broke out in several Rhineland cities. On 21 October, separatists led by Leo Deckers captured the City Hall in Aachen, and proclaimed a Free and Independent Rhenish Republic. This so-called Rhenish Republic was based in three areas: North (Lower Rhine), South (Upper and Middle Rhine) and the Ruhr, but it received little support from the local population.

The French gave the impression in many places they supported the separatists. The military authorities thought a Rhineland buffer state would offer additional security from a future German invasion, and there is no doubt the French provided arms and offered military security for separatist demonstrations. This was especially true in the Bavarian Palatinate, where the French General Georges de Metz, was in command. He encouraged the local state parliament to proclaim the Palatinate’s independence on 24 October. On 26 October, Paul Tirard, the French High Commissioner, announced the separatists were also in effective control of Koblenz, but it had been recaptured with French military support.

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by | 26 March 2024 · 4:30 am

Weimar-Soviet Rapprochement

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 229-230, 232:

The Treaty of Rapallo, signed on 16 April, was the first of Germany’s major diplomatic surprises of the inter-war period. The agreement was not the result, as is often supposed, of a spur-of-the-moment flight of inspiration by Rathenau, but resulted from painstaking secret diplomacy by the German Foreign Ministry, led by Maltzan, which had already resulted in the signing of a Russo-German trade agreement on 6 May 1921, and had also led to the formal diplomatic recognition of the Soviet government by the German government.

The Treaty of Rapallo was called a ‘treaty of friendship’, with both signatories agreeing to improve trade relations by offering each other ‘most favoured’ trading status, re-establishing normal diplomatic relations, and renouncing reparations claims against each other. The German government also agreed to waive indemnities and losses sustained by German citizens due to the abolition of private property in Soviet Russia. The treaty did not contain any secret military provisions, but secret military cooperation did develop in the years following.

The agreement came as a huge surprise to the British and French governments. Their first reactions were a combination of anger and fear. The agreement between Europe’s two political outcasts was viewed by the Western Allies as a potential menace to the European balance of power. The French government’s response was particularly bitter. Poincaré voiced his objections plainly in a speech on 24 April, in his home town of Bar-le-Duc. He declared the treaty a provocation and reiterated his determination to ensure the complete fulfilment of the provisions of the Treaty of Versailles by Germany. He also warned that if the Allies could not agree how to secure their treaty rights and reparations payments, then the French government would resort to unilateral action against Germany.

The British government was also deeply alarmed. Lloyd George had been trying to create an alliance of the non-socialist countries to force Soviet Russia to recognise the debts incurred by the deposed Tsarist regime before the 1917 Bolshevik Revolution. The release of Soviet Russia from the diplomatic ghetto gave him no pleasure whatsoever. Lloyd George had also been trying to restrain Poincaré from taking unilateral military action by occupying the Ruhr, and he thought the Treaty would only serve to gain support in France for military action.

…

A belief commonly held among the Allies was that the treaty contained secret military clauses. Both the German and Soviet governments denied this, publishing the treaty in full to pour icy water on this accusation. Yet soon after the signing of the Treaty of Rapallo, Seeckt did conclude a secret agreement with the Russian Army general staff. To conceal secret German military training and rearmament, Seeckt was granted generous funds from the German government to set up the Society for the Encouragement of Commercial Enterprises (GEFU). Under cover of this organisation, he negotiated opportunities for German military training in the use of tanks and aircraft in Soviet Russia. This led to the later creation between 1929 and 1933 of the secret Kama Tank school near Kazan, in the Soviet Union, which trained Germans in the use of modern tanks, and the Lipetsk Fighter-Pilot school, in Lipetsk, also in the Soviet Union which trained German pilots. In return, Russian officers gained valuable training in military strategy from their German counterparts. The Russian military were also commissioned to manufacture artillery ammunition, planes, and poison gas for Germany. These secret military training arrangements and armaments supply deals remained in effect throughout the Weimar years.

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by | 25 March 2024 · 5:28 am

Weimar Inflation, 1921–22

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 218-219, 238, 242:

The Weimar Republic would have undoubtedly been helped by having a stable economy, but instead it was fragile, with a rate of growth well below that of its major competitors. German growth from 1913 to 1929 was 0.3 per cent, compared to 1.4 per cent in the UK and 2.2 per cent in the USA. The state of the German budget in 1921 made grim reading. The accumulated government debt was over 400 billion marks. The government had to also bear the cost of food and wage subsidies to deal with rising inflation. The Weimar government refused to cut expenditure or to raise taxes to deal with the deficit. This kept people in jobs. Unemployment in 1921 was at a record low of 0.9 per cent.

In response to rising prices, the German government simply printed money, which only served to push prices up still further. The rising cost of living was already causing industrial unrest in the Ruhr, in the autumn of 1921, and led to bread riots. There were also severe shortages of food in shops. Prices of basic goods rocketed by 40 per cent in the last three months of 1921. Inflation was worst for those on fixed incomes, as it was gradually wiping out their savings and reducing their real spending power. This affected even previously affluent pensioners and those with investments, usually people in solid salaried middle-class occupations such as academics, civil servants, and lawyers. War widows, disabled war veterans and those on welfare on fixed benefits also suffered greatly from the rise in the cost of living.

It would be wrong, however, to think that inflation was bad for everyone. Industrial workers, supported by strong unions, saw their working hours decrease, but their wages increase, often in line with inflation. Big industry also did very well, with industrial production increasing by 20 per cent in 1921–22. The rich industrialists – among them Hugo Stinnes, the richest of them all – grew much richer during the era of high inflation and spent their money on material assets, especially property and new machinery. They also had access to foreign currency loans at low interest rates, and because of inflation interest payments on these were reducing week by week.

…

Meanwhile, Germany’s reparations payment difficulties continued. During July, prices inside Germany rose by 50 per cent, which was then accepted as the beginning of the hyperinflation period. A litre of milk had cost 7 marks in April 1922, but rose to 16 marks in August, and then to 26 marks by mid-September. The prices of other basic goods rose in a comparable manner. The German government response to rising inflation was to continue printing money, with the number of marks in circulation rising from 35 billion in 1919 to 200 billion in 1922.

Hyperinflation led in turn to a dizzying fall in the value of the German mark, which the Reichsbank, lacking gold and foreign currency reserves, was powerless to stop. On 29 July, the mark hit a new low of 650 to 1 US$. The German government claimed this fall in the value of German currency was linked to the demand by the Allies for cash reparations payments. State and local authorities began to issue money tokens called Notgeld [’emergency money’] to replace payments in worthless paper marks.

…

On 14 August [1922], the Conference on Reparations ended without any agreement on Germany’s request for a further payment holiday. On the next day, the German government once more defaulted on its reparations payments, claiming it could not afford to pay. The downward tumble of the mark continued. On 24 August, it plummeted to a new all-time low of US$2,000 to 1 mark [sic; should be 2000 marks to 1 US$!], or 9,000 to the British pound. On 31 August, the Allied Reparations Commission decided to grant Germany an exceptional six-month moratorium on reparations payments.

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by | 24 March 2024 · 4:43 am

Weimar’s 1921 Communist Uprising

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 194-196:

In the midst of this bitter diplomatic crisis [over reparations], the German government was faced with a fresh wave of violent clashes between the Prussian Security Police (Schutzpolizei), and communist revolutionaries allied to the United Communist Workers’ Party of Germany (KAPD), and the KPD between 17 March and 1 April. The province of Saxony in central Germany was at the centre of these clashes, which were at their worst in Halle, Leuna, Hamburg, Merseburg, and Mansfeld. They became known as the March Action (März Aktion).

The Communists had been buoyed up by performing exceptionally well in elections to the Prussian State Parliament on 20 February 1920, in which the VKPD [Vereinigte Kommunistische Partei Deutschlands] had performed particularly well in central Germany which led party activists to lead a wave of strikes and street clashes with the police. This prompted Otto Hörsing, the Social Democratic Minister-President of Saxony, and Carl Severing, the Social Democratic Prussian Minister of the Interior, to send in a strong contingent of armed Prussian security police to restore order.

The Communists were led by Max Hölz of the VKPD, who had no coordinated plan for what the left-wing rebels were seeking to achieve. He put together a force of 2,500 armed men, mostly aged between 18 and 45. Hölz was something of a communist folk hero, who had been a leader of a ‘Red Army’ in Vogtland, near the Czech border, during the aftermath of the Kapp Putsch in the previous year. In his memoirs, Hölz claimed the workers were far from in a revolutionary mood when he arrived. It was the brutality of the police that had forced the workers to take up arms and adopt guerrilla tactics, he added.

On 18 March, the communist daily newspaper Die Rote Fahne called on the workers to arm themselves. The Communists were able to equip the rebels with guns and ammunition. The rebels engaged in a wave of arson, looting, bank robberies and bomb attacks on public buildings and factories, during which the VKPD leadership increasingly lost control of the armed workers. The SPD and the USPD both issued a joint appeal to the workers of the industrial region of central Germany. This offered some criticism of the high-handed police action, but claimed the so-called revolutionaries had then behaved like criminals and thugs. They called on workers not to support calls for an insurrection or a general strike.

On 24 March, President Ebert declared a non-military state of emergency for Saxony and Hamburg, using his emergency powers under Article 48 of the Weimar Constitution. Outdoor meetings, demonstrations and Communist newspapers were banned. In an act of desperation, the Communist leadership called for a general strike, but this failed to materialise. By 1 April, the police had successfully put down the revolt without needing to call on the Reichswehr for help. The police confiscated 1,346 rifles, 34 machine guns and 10,000 rounds of ammunition from the rebels. According to the Prussian official figures, 34 police officers were killed and 67 wounded, with 145 rebels and civilians killed, and a further 51 wounded. Some brutal atrocities occured towards the end of the conflict. On 29 March, in Gröbers, near Halle, 11 police officers were brutally tortured, killed and mutilated, while at the Leuna Works, the police maltreated prisoners, and forced rebels to sing ‘Deutschland, Deutschland, über Alles’.

The ‘March Action’ did not remotely threaten even the local Prussian government. It proved to be the final rising of the radical left-wing during the Weimar years. Neither a general strike nor a mass revolt by the working class happened. The immediate consequences for the VKPD and KPD were disastrous. The violent clashes seemed to confirm the ‘dictatorial’ leadership of the party was out of touch with ordinary working class people. Within weeks, 200,000 members had left the KPD.

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by | 22 March 2024 · 5:43 am

Aftermath of the 1920 Kapp Putsch

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 168-170:

The Kapp Putsch may have been a bungled fiasco, but it made possible a victory of immense importance for right-wing counterrevolutionary elements in Bavaria. On the night of 13–14 March, General Alfred von Möhl, the commander of the armed forces in the Munich area, after hearing news of Kapp’s coup in Berlin, decided to launch one of his own, supported by a local paramilitary self-defence militia, known as the Home Guard (Einwohnerwehr). Möhl informed Johannes Hoffmann (SPD), the Prime Minister of Bavaria, that he could not guarantee the safety of his government unless it transferred power to the Army. Hoffmann hurriedly assembled his cabinet in the early hours of 14 March, urging the rejection of the general’s ultimatum. Most of his ministers shrank from such a course of action. Instead, they supported a proposal by Ernst Müller-Meiningen, the DDP leader, who suggested the right-wing nationalist Dr Gustav Ritter von Kahr, the government president of Upper Bavaria and a member of the pro-monarchist BVP, should take over.

Deprived of political or military support, Hoffmann was unceremoniously driven from office. On 16 March, Kahr was elected as the Prime Minister of Bavaria in a vote in the Bavarian Assembly. The Social Democrats refused to participate in Kahr’s right-wing conservative government, and would never again hold power in Bavaria during the Weimar years. Under Kahr, Bavaria became a conspiratorial, anti-Republican ‘cell of order’ (Ordnungszelle). Kahr immediately issued a decree to curtail the immigration of ‘Eastern Jews’ to Bavaria, and he actively encouraged antisemitism. Captain Hermann Ehrhardt, whose naval brigade had played a key role in the Kapp Putsch, immediately found a safe haven in Munich, where he established a new secret society called Organisation Consul (OC), whose main purpose was to murder leading supporters and politicians in the Weimar Republic.

Adolf Hitler was now in the perfect place to establish a new anti-democratic, nationalistic, antisemitic party. On 20 February, the German Workers’ Party (DAP), led by Anton Drexler, changed its name to the National Socialist German Workers’ Party (Nationalsozialistische Deutsche Arbeiterpartei, NSDAP). Members of the party, contrary to widespread belief, did not initially call themselves Nazis but rather National Socialists (Nationalsozialisten), but their opponents used the term, and the name stuck.

On 24 February, the first large meeting of the newly named NSDAP took place in the first-floor hall of the Hofbräuhaus, before a crowd of 2,000 people. This day was commemorated by the party as Founding Day, and became the location of an annual speech by Adolf Hitler. At the meeting, Hitler was given the task by Drexler of reading out the 25 points of the NSDAP party programme, which he declared ‘unalterable’. The main authors of the programme were Hitler and Drexler, with some economic ideas from Gottfried Feder added. They were remarkably like those being advanced by many other nationalist right-wing parties at the time. The party’s most notable gimmick was to combine nationalist and antisemitic ideas with anti-capitalist and so-called ‘socialist’ measures. This novel combination allowed the NSDAP a banner under which workers could shelter along with conservative middle- and upper-class groups, thereby acting as a bulwark against communist revolution at home and offering the possibility of restoring German military power abroad.

The ‘national’ elements of the party programme included promises to revise the Treaty of Versailles, to unite German-speakers into an expanded Greater German Reich, which would exclude Jews from German citizenship rights, treat them as foreigners and halt future Jewish immigration. The ‘socialist’ parts of the party platform included pledges to nationalise trusts, abolish land rents, restrict interest on loans, introduce profit-sharing in industry, promised the nationalisation of big business, to open large department stores to small traders, confiscate profits made by industry during the war, and create a People’s Army. The anti-capitalist elements of the party programme appeared to spell the end of interest-bearing loans and clearly threatened the existence of banks.

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by | 19 March 2024 · 6:52 am

Weimar Republic’s Versailles Millstone

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 126-127, 147-149:

On 28 June 1919, the Treaty of Versailles was signed, exactly five years after the assassination of the Archduke Franz Ferdinand, the spark that led to the outbreak of the First World War. It was signed in the Hall of Mirrors of the Palace of Versailles where 48 years before the German Empire had been proclaimed. The treaty was ratified by a vote in the German National Assembly by 209 to 116 on 9 July. The politicians who signed the treaty on behalf of Germany were the Social Democrat Hermann Müller, and Johannes Bell of Zentrum.

The Treaty of Versailles was a staggering blow to the Weimar Republic. Instead of using their power to assist the embryonic democracy in Germany, the Allies treated its leaders as no different from Kaiser Wilhelm. Hatred towards those who had signed the treaty spread widely in the population, especially on the nationalist Right. The myth of the ‘stab in the back’ now made rapid headway. The leaders of German democracy were depicted by the Right as cowards and traitors under the umbrella term the ‘November Criminals’ and were blamed by the public for all the misfortunes that followed.

There was a huge contrast between the political and economic distress of the Weimar years and the vibrant culture of the period. Yet what is now routinely called ‘Weimar culture’ is by no means the posthumous glorification of a world destroyed. Many aspects of Weimar culture really were years ahead of their time. That culture not only encompassed film, literature, modern art, architecture, design, literature, drama, poetry, and cabaret, but also displayed path-breaking attitudes towards sexuality.

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On 12 December, the leading British economist John Maynard Keynes launched a blistering attack on the Treaty of Versailles in his best-selling book The Economic Consequences of The Peace. Keynes, who became the most influential economist of the twentieth century, had attended the Paris Peace Conference, as a senior delegate of the British Treasury, but he was so appalled by the injustice the Germans had suffered in the Treaty of Versailles that he had resigned in despair, on 7 June 1919. His book was full of flashing insights and indignation, which laid out clearly the economic crisis facing Europe by explaining what the Treaty had failed to do, and what the consequences would be. Keynes pulled no punches and upset many people. He famously described the Versailles Treaty as a ‘Carthaginian Peace’ – a peace that has the intention of crushing the defeated enemy.

Keynes further argued that the Allies, blinded by self-interest, were determined to punish rather than to rehabilitate Germany. The Versailles Treaty offered nothing to make Germany a ‘good neighbour’, and had conceded far too much to the vengeful spirit of the French government, which wanted to keep Germany weak. It imposed impossible terms on Germany which would soon plunge Europe into economic chaos. The demand for reparations was way beyond what Germany could afford to pay. Keynes also warned the territorial provisions of Versailles would lead to future foreign policy disputes. He blamed the ‘idealist’ US President, Woodrow Wilson, whom he described as a ‘blind and deaf Don Quixote’, for being unable to produce a peace settlement based on his Fourteen Points, which it had been promised during the Armistice negotiations would give Germany a ‘just peace’ with no ‘punitive damages’.

Keynes predicted the economic demands on Germany would cause high inflation and economic stagnation, which would spread throughout Europe. The Treaty of Versailles had to be modified, not just for the sake of Germany, but for the benefit of the world economy. It would damage the conditions for economic recovery and sow the seeds for another world war. In his persuasively argued and deeply influential book, Keynes laid the foundation for the failure of the American Senate to ratify the Treaty of Versailles, and he also helped to create a climate of public opinion in which Germany’s demands for a revision of the terms of the treaty met with a sympathetic response, especially in Britain. Here was sowed the seeds of the policy of appeasement.

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