Why did Germany suffer economic and political
problems in 1923?
Economic Problems
The government borrowed massive amounts to finance the war as they believed
that it would be able to repay back all of the money it had borrowed due to the
belief that Germany would win the war and the allies would be made to pay them
reparations which would cover the cost of the loans. However, this did not
happen and thus it was Germany who had to pay reparations to the allies. The
government’s huge debt partly due to the rearmament and naval expansion
before the war further added to the huge national debt Germany faced.
The Treaty of Versailles’ policies furthered the economic crisis that crippled
Germany. The loss of land that was stated in the Treaty of Versailles meant tat
Germany lost exceptionally economically industrial areas such which did nothing
to help Germany’s economic state. Alsace-Lorraine, Eupen and Melmedy were
just a handful of areas that were handed over to allied countries. The Saar Basin
was to be under allied control for 15 years and France would gain control of its
coal mines. This was a further heavy economic loss for Germany. To increase the
economic strain on Germany the Versailles Treaty stated that Germanys only
outlet to the sea was to be given to Poland who many Germans saw as an inferior
race. Germany now lost all access to the sea which prevented them gaining any
form of revenue from the sea. A further consequence of the Treaty of Versailles
was that Poland was to be given land which led to the loss of around 2 million
people and a large amount of mineral wealth and a vast amount of tax revenue.
Germany was forced to give up her colonies to the allies and to surrender all
trading rights. This coupled with the other strenuous policies mentioned in the
Treaty of Versailles meant that Germany’s economic stability was shattered.
Germany having accepted responsibility to the war was to be made to pay for the
damage caused to the allies. There was no consideration for Germany’s people or
economic state and thus the allies written a blank cheque to Germany that they
would fill in when they had calculated the overall damages caused by Germany.
Due to the vast amount of debt and economic problems within Germany,
payments of reparations would often be paid in kind with gold, timber and coal.
On one such payment to France a cargo of timber telegraph poles did not arrive in
France. Due to this France clamped down on Germany harshly and occupied the
Ruhr with 100,000 French troops. This heavy industrial area was one of Germany’s
main economic areas of income and they could not afford to lose it.
Unable to resist the occupation by force due to troop reduction in the Treaty of
Versailles the German people resorted to passive resistance which was effectively
a general strike. Business men, civil servants and workers were called to take part
in passive resistance and anyone who did so would be compensated from public
funds. Such government spending at a time when revenue was low due to the
Ruhr Crisis was not a good. The government covered the gaping gap between
incomes and spending by simply printing more money which meant that any
confidence that was left in the mark was simply destroyed which led to currency
delirium/hyperinflation.
Political Problems
Workers blamed the government for hyperinflation due to them printing more
money to cover the gap between income and expenditure, which in theory it was.
Due to poor leadership during the hyperinflation crisis and the Ruhr Crisis the
middle classes became disillusioned mostly due to the fact that they were the
main losers of hyperinflation and thus lost confidence in the government and
were more susceptible to be swayed to support other more extreme parties such
as Hitler’s Nazi party.
The right were angry when Gustav Stressemann called off passive resistance and
saw this as a weakness, as if they had given in to the French. The Beer Hall Putsch
was in protest of the passive resistance being called off. Orders were issued for
the disbandment of the Freikorps its leaders refused and appealed to General
Luttwitz for support. He thus responded and called on President Ebert and
Defence Minister Noske to stop the programme of troop reductions. When Ebert
refused, Luttwitz ordered the Freikorp to march on Berlin and once again the
government fled Berlin to Stuttgart. Noske called upon the army to suppress this
putsch and they blatantly refused. General Von Seeckt told Noske “Reichswehr
does not fire on Reichswehr” As the government fled it asked all of Germany’s
workers to come out on general strike in order to outnumber the Freikorps.
In addition there was ongoing resentment due to the signing of the armistice and
thus the stab in the back myth. If the government didn’t sign the armistice they
would be occupied by the allies. Many members of the right believed that it was
the government’s fault that the war was lost and not the armies. Next the right
detestd the Treaty of Versaille and believed that they were being dictated to (a
dictated peace) which further increased the hatred of the government. The
resentment of government further increased more as many thought that they
could have taken a harder stance with the allies instead of accepting what the
allies said. The right fed of this resentment further due to what they thought as
the humiliating War Guilt Clause. In this the government accepted all
responsibility for the war which in itself left the right fealy disgraced and
betrayed. They fed off this to gain support more their motives and extreme
methods.