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Information sheet 1
1923 - The “Not So Golden Years”
Recap
By 1923 the Weimar Republic was facing a series of crises.
The Treaty of Versailles (1919) stated that the German government had to pay
reparations (compensation for the damage caused during the First World War).
The reparations bill was set at £6,600 million. The Weimar Republic found it
extremely difficult to keep up with payments to the Allies as Germany was
experiencing inflation and the value of the mark was declining rapidly. As the
Republic could not keep up with reparation payments to the Allies, French and
Belgian troops marched into and occupied a heavily industrialised part of
Germany - the Ruhr - in January 1923. They seized raw materials, such as coal,
as payment.
The Weimar Republic could do little to stop the occupation of the Ruhr as
Germany was a defeated power that was struggling to bring stability and
maintain order amongst its own citizens. To add to these problems the German
army had been drastically reduced after the First World War and the occupation
of the Ruhr was seen by the Allies as being legal under the terms of the Treaty of
Versailles, which the Weimar Government had agreed to and signed in 1919.
German workers in the Ruhr responded to the occupation in the only way that
they thought possible: by following a policy of passive resistance. They refused
to work for, or communicate with, the French and Belgian occupiers. This caused
further problems for the Weimar Government as they now lost the raw materials
and goods that the Ruhr usually produced. The government felt that the only way
that they could pay for passive resistance and the lack of goods being produced
was to print more money to cover costs.
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The printing of more money did not help the situation, however. Inflation had
been occurring in Germany for many years, but now the situation spiralled out of
control. By printing money that it should not have had, the government caused
the value of money to fall drastically and the price of goods to rise at an alarming
rate. This is called hyperinflation. As a result of hyperinflation, money became
virtually worthless as 1923 progressed. Many people lost their life savings and
pensions. At the height of the crisis the cost of goods was going up weekly, then
hourly, then by the minute. More money was printed to enable people to meet the
rising costs, but this only made the situation worse and the value of money fell
even further.
The middle classes were worst affected by the crisis as savings and businesses
were destroyed. The poorer classes were badly affected too, but they had less to
lose. Wages and unemployment benefit actually rose as hyperinflation took hold,
although the amounts never quite matched the inflation rates. Some people even
found that debts had been wiped out and that they could barter for goods that
they needed. The rich were also generally less affected than the middle classes
as they had investments abroad, owned land and had valuables that provided at
least some form of security.
In September the Chancellor of Germany, Gustav Stresemann, made a
decision to ask the workers in the Ruhr to call off passive resistance. This
angered many Germans who believed that he had given in to the Allies and
betrayed the German people. The policy did however help to improve the
economic situation within Germany, together with the introduction of a temporary
currency, the Rentenmark. Worthless banknotes were recalled and destroyed,
helping to control the amount of currency in circulation. This in turn reduced
inflation and helped to stabilise the economy. In 1924 a new, permanent currency
was introduced – the Reichsmark.
On 9 November 1923, when hyperinflation was at its height, Adolf Hitler’s Nazi
Party attempted to stage a revolution in Munich. They hoped that the
dissatisfaction with the Government’s handling of economic crisis would aid their
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cause. In order to gain initial support Hitler and 600 Stormtroopers marched to a
Beer Hall in Bavaria where Gustav Kahr, head of the Bavarian government, was
addressing a group of businessmen. Kahr headed a right wing government and
Hitler was sure that he would support his attempted revolution. Kahr did not
seem to be persuaded by Hitler’s argument for revolution however, and upon
leaving the Beer Hall he, or his followers, alerted the authorities. The police and
army in Bavaria were ordered to stop Hitler entering Munich, which they did.
Sixteen Nazis were killed and Hitler was arrested and sent to prison.
The attempted takeover (Putsch) by Hitler illustrates the hatred that some
extremist parties held for the Weimar Government and its policies. And, although
the putsch was stopped it illustrates the Weimar Republic’s potential weaknesses
at this time.
Notes:
Question for discussion:
Why has 1923 been seen as a crisis year for the Weimar Republic?
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