Category Archives: economics

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.

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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.

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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.

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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.

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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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by | 18 March 2024 · 5:20 am

Germany’s Territorial Losses at Versailles

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 118-120:

It is, of course, an established tradition of war that the loser pays the costs of defeat, but the terms of the proposed Versailles Treaty were severe, to say the least. Alsace and Lorraine were returned to France, something which had been a French aim during the war. German territory west of the Rhine was to be occupied by Allied troops for at least 15 years to ensure German compliance to the treaty – if Germany did comply, the occupation of Cologne would end after five years, Koblenz after ten years and Mainz after 15 years. The left bank of the Rhine and the right bank to a depth of 31 miles were to be permanently demilitarised. In this region no German arms or soldiers could be stationed. The aim of these clauses was to stop another unprovoked German invasion of Belgium and France.

The Saar, a rich coal mining region, would be governed for 15 years by a commission of the League of Nations. In that time, the Saar coal mines would be given to France, as compensation for the German destruction of French coal mines during the war. At the end of the 15-year period, the people of the Saar would decide, in a referendum, whether they wished to remain under League control, to unite with France or return to Germany. If the people chose the latter option, Germany would be allowed to buy back the mines from France. Belgium received Moresnet, Eupen and Malmédy, but the local populations there would be allowed a referendum to confirm or reject this change. A referendum was also offered to determine the fate of North Schleswig, which voted in favour of being transferred to Denmark.

Germany suffered even greater territorial losses in Eastern Europe. The newly constituted state of Poland included the industrially rich area of Upper Silesia, along with Posen and West Prussia – the latter including the so-called Polish Corridor, which controversially separated East Prussia from the rest of Germany. Poland was also given extensive trading rights in Danzig (Gdansk), which was now designated a Free City under League of Nations authority. Danzig was Poland’s natural seaport, but ethnically it was a German city and would remain a source of unrest between Germany and Poland during the inter-war years. In addition, the German port of Memel was detached from the Reich, but was not formally awarded to Lithuania until 1923.

German territorial losses under the Treaty as a whole amounted to 13 per cent of its European lands, together with six million of its people. If Germany had been allowed to unite with Austria, it would have lessened the blow of these European territorial losses. Both countries were favourable to the union, but no referendum was offered. The Allies decided instead to prohibit the union with Austria (Anschluss).

Germany’s European losses were paralleled by the sacrifices it was forced to make elsewhere. All overseas colonies under German control were redistributed under mandates issued by the League of Nations, but it was stipulated these mandates must not simply serve the interests of their guardians. When the German delegation protested the loss of its colonies, the Allies pointed out the native inhabitants of the German colonies were strongly opposed to being returned to German control.

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by | 13 March 2024 · 2:45 am

Germany’s Eastern Victory in WW1

From The Weimar Years: Rise and Fall 1918–1933, by Frank McDonough (Bloomsbury, 2023), Kindle pp. 21-22, 25-26:

Germany’s confident hopes of a swift victory were halted in September 1914 by British, Belgian, and French troops on the Marne River in France. From this point onwards, the war on the Western Front became a stalemate, with 8 million troops stretched along a 450-mile front from the North Sea to the Swiss border. Numerous attempts to break the deadlock turned into dogged struggles for mere yards of territory, with millions of lives lost and little ground gained. Barbed wire entanglements impeded the advance of competing armies and machine guns mowed down advancing troops. It was a struggle in which an average of 6,000 troops were killed every day.

The stalemate in the west contrasted sharply with the stunning victories of the German Army on the Eastern Front in 1914 and 1915, masterminded by General Paul von Hindenburg, the chief of the Supreme Army Command (Oberste Heeresleitung, OHL), and his brilliant Chief of Staff, the Quartermaster General, Erich Ludendorff. By the end of 1915, the Germans had driven the Russian armies back remorselessly over 250 miles. These stunning victories turned Hindenburg and Ludendorff into national heroes. As the war progressed, Kaiser Wilhelm proved incapable of effective leadership, which resulted in a power vacuum, filled by the military high command. In late August 1916, Germany became a de facto military dictatorship led by Hindenburg and Ludendorff, who were able, until the later stages of the war, to ignore the wishes of the parliamentary parties.

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On 19 July 1917, Erzberger introduced a resolution in the Reichstag for a ‘peace without annexations’, which was passed by 212 to 126 votes. It was the first major intervention by the Reichstag to oppose the war, but Kaiser Wilhelm refused to be bound by the Reichstag. Hindenburg and Ludendorff considered the resolution a ‘scrap of paper’ and ignored it. The blame for the political crisis was placed on Bethmann Hollweg, who had rightly been sceptical about unrestricted submarine warfare. He was forced to resign as Chancellor.

His replacement, Georg Michaelis, who took office on 13 July 1917, was the first German Chancellor who was not of noble birth. His background was in business, but his only previous minor political posts were as an undersecretary of state in the Prussian Treasury, and as the head of the Reich Grain Agency (Reichsgetreidestelle), the office responsible for the distribution of corn and wheat. The prime movers in the unexpected elevation of this inexperienced bureaucrat to the role of Chancellor were Hindenburg and Ludendorff, who felt he would do their bidding. True to form, Michaelis kept the Reichstag completely in the dark on matters of war and foreign relations. He was forced to resign on 1 November 1917 after his refusal to give support to Erzberger’s peace resolution led to the loss of a vote of confidence in the Reichstag.

In Eastern Europe, relentless German military pressure contributed to the abdication of the Russian Tsar Nicholas II in February 1917, which eventually led to the Bolsheviks under Vladimir Ilyich Lenin coming to power in November of that year. Lenin’s return to Russia was assisted by his sealed train being given permission to cross German territory – an incident in which Ludendorff played a key role.

After seizing power, Lenin and the Bolsheviks opened negotiations for a peace settlement with Germany. This resulted in the signing of the punitive Treaty of Brest-Litovsk on 3 March 1918, under which Russia lost possession of 34 per cent of its population, 54 per cent of its industry, including 89 per cent of its coalfields, and 26 per cent of its railways, and was also obliged to pay 6 billion marks in compensation for German losses. The Treaty completely contradicted the Peace Resolution of the Reichstag, which had pledged ‘peace without annexations’, yet the Reichstag deputies ratified the Treaty of Brest-Litovsk without suggesting any amendments.

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