German Reparation Issue

Table of Content

1. Introduction

2. The Versailles Peace Treaty

3. Economic Issues
3.1 Occupation of the Ruhr, Passive Resistance and Hyperinflation
3.2 Dawes Plan & Young Plan
3.3 World Economic Crisis and the End of Reparations

4. Political Issues
4.1 Conferences of Rapallo and Locarno
4.2 “Erfüllungspolitik” and Revisionism

5. Conclusion

Abbreviation & Definitions

Map of Weimar Republic

Bibliography

1. Introduction

The period of the Weimar Republic is one of the most piquant chapters in German his- tory. Apart from the tyrannical Nazi regime it might be the most elaborated fraction of Germany’s modern history. The reason appears in retrospective: the stormy times of the Weimar Republic provided the ground, from which the Third Reich took of. The Wei- mar Republic and German revisionist tendencies originated in Versailles. The Allies’ goodwill imbued there could have led to a potential pleasing result in from of a real and just peace treaty. A new area in international relations in form of the League of Nations suffered from the beginning of the talks under the national interests of the allied nations. One result of the spoilt peace conference shall be subject of this paper: The question of reparation, linked to the so-called war guild clause caused from the proclamation of the Weimar Republic powerful political problems in domestic and foreign policy of the young German democracy. Simultaneously it sparked an internal struggle, which in the end led to the dissolving of the so hopeful spring of Germany’s first democratic republic - eventually persuading into Europe’s catastrophe in form of the Third Reich. Thus, I want to elaborate in the following chapters, how the so-called “Reparation- sproblem” influenced German domestic and foreign policy, and how this particular sec- tion of the Versailles Peace Treaty interfered in the economic, social, and political deci- sion making process. From the present day’s perspective it is hardly questionable, why Hitler followed the weakened and unhealthy Weimar Republic. Therefore it shall be part of the following discussion if this occurrence was inevitable in the course of Europe’s history.

The devoted reader might be aware, that most of the domestic contemporary literature is more or less heavily biased by national and nationalistic attitude. Even politicians like Stresemann, widely perceived as skilled, cautious, and co-operative, followed their aim of restoration of Germany in the 1914’s setting, but in a rather pragmatic way¹.

2. The Versailles Peace Treaty

The Weimar Republic was confronted with political problems in its foreign affairs, which became a domestic factor from its beginnings. Already before the proclamation of the new republic by Philip Scheidemann on November 9, 1918, and despite the revolutionary situation Karl Marx had predicted², the German conservative elite, bu- reaucracy and military preserved a imperial traditions. They were rather less influenced and dependent on democratic processes³. Though, in this state of affairs nobody was longer willing to defend the Emperor’s stance, neither on the fronts, nor in the domestic affairs. This was simply caused through the fact, that the domestic population did not sustain any harm by the war⁴. When it came to the cease-fire agreement German soldier fought still wide outside the German territory. WINKLER argues that Germany got con- sciously rid of the monarchical system in expectation of a just and equal peace⁵. Hence, the peace suffered from a myth spread by military authorities in the last days of the war⁶. The so-called “Dolchsto ß legende”, later used by far right parties, explicitly by the NSDAP and Hitler⁷ in their elector campaigns, explained to the population and its elite the loss of the war rather through the revolutionary agitation of communist groups in Germany, but not through stalemates on the fronts. Thus, the republic suffered from its proclamation under negative connotations.

However, the Peace Conference in Versailles - on the very place where Bismarck had proclaimed the second German Empire only in 1871 - plotted several regulations, in- tended to be favourable to the future development of the international political order, but corrupting Germany’s fundamentally positive and democratic attitude. It took two cabinets until Germany signed the conditions of Versailles. This could hardly take wo n- der, despite the fact, that the Reich lost 13,1 % of its territory (see also map in the an- nex). This was paralleled by a decrease of 10 % in population, 14,6 % in agricultural terrain, 14,5 % in iron ore and 26 % in its coal mines. Some of the demands had to be accomplished in other than financial means. This implied the deliverance of raw materi- als and finished products, like locomotives, etc⁸. In addition to that all ships with more than 1.600 tonnes and quarter of its fishery fled had to hand over. Due to that Germany lost practically the complete merchants fled - one of the largest in these days⁹. Consid- ering the inconveniences the remaining colonial powers had to face in the second half of the century, Germany - although passionately debated - got rid of its few and never beneficial colonies¹⁰. What proved to be even more controversial was the question of the war guild clause, determined in Article 231 of the Treaty, blaming solely Germany for any aggressive action, hidden diplomacy, etc¹¹. The young and fragile democracy was faced with a set of problems. The first government under Scheidemann resigned because of its refusal of the Treaty. Some members of the German delegation in Ver- sailles which finally signed the Treaty were later assassinated, so Matthias Erzberger (Minister of Finance) in 1921 and Walter Rathenau (Foreign Minister) in 1922. This made the appearing radicalisation of the society evident and visible. The interbreeding of economical and political issues should determine the volatile future of the democratic experiment of the Weimar Republic¹².

3. Economic Issues

It proved to be extremely difficult for the Weimar Republic to meet the varying expec- tations of the Allies despite the losses of territories of high economic value and the sim- ple fact, that Germany’s economy had been adjusted to exclusive war production. Only in 1921 a Reparations Commission without any participation of Germany set the debts of Germany to an enormity of 132 billions Goldmark (323 billion US dollar in present value). According to Keynes this was 3 times more than Germany could bear. The so- called “London Ultimatum” was presented to Germany on May 5, 1921, and charged it with a yearly payment of 2 billions Goldmark, and additionally with 26 % of the annual exports. In the case the payments would not accomplished the Allies threaded with an occupation of the Ruhr area. Strange enough this was the last remaining centre of Ger- many’s heavy industry and therefore source of the reparation payments¹³.

3.1 Occupation of the Ruhr, Passive Resistance and Hyperinflation

Despite the weak economy the fast changing cabinets were not able to meet the repara- tion propositions of the Allies, especially of France already in January 1923. Thus French and Belgian troops occupied the Ruhr area, which meant in particular, that all economic production of the area were absorbed by the Allies for their reparation re- quests. Further foreign troops practically violated German sovereign rights the very first time. Consequently, the German government announced in the demilitarised area the so- called “Ruhrkampf”. With means of Passive Resistance officials and civil servants were ordered to refrain from any actions commanded by the French authorities, i.e. export of commodities, etc. In the result most of the companies and institutions were took over by the French military authorities. Striking employees were arrested or expelled from the

Ruhr area. The support of the workers and civil servants in the area and the loss of ex- pected tax income from the region drained the public budget by 40 millions Goldmark each day. In other words one month of Passive Resistance cost the state half of the an- nual reparations rate. The government’s resistance lasted for nine months, until a new chancellor Gustav Stresemann was appointed. He was willing to abandon this way of resistance and to move forward in making concessions towards the Allies while proving that Germany, though willing, is not able to meet the Allies’ demands. However, his short living cabinet could not prevent Germany from falling in the worst inflation - or better an incredible hyperinflation¹⁴ - it ever had witnessed¹⁵. Stresemann’s more influ- ential era should begin in the following 6 years, when he became Foreign Minister in several cabinets.

[...]

¹ Kissinger (1994), p. 283.

² Marx/Engels (1872)

³ Böckenförde (1998), p. 43.

⁴ Winkler (2000), p. 375.

⁵ Idem, p. 378.

⁶ Ludendorff (1919), p. 618.

⁷ Hitler (1925), p. 275.

⁸ Schacht (1931), p. 22.

⁹ Walter (1998), p. 143-144..

¹⁰ Lindequist (1914), p. 424: Colonies and the colonial commitment of Germany were never more than a prestige object.

¹¹ Schacht (1931), p. 14; Stresemann (1926a), p. 332-333; Weber (1919a), p. 381.

¹² Bracher (1960), p. 392.

¹³ Walter (1998), p. 146.

¹⁴ Terminology, theory and definition, see Müller/Kohler (1994), p. 1603-1607.

¹⁵ Walter (1998), p. 147.