The Crisis of the Weimar Republic HST 332: Age of Dictators, Europe 1850-1914

The Crisis of the Weimar Republic Reparations and Hyperinflation Stabilization Global Depression

Impact of Treaty of Versailles

Reparations January 1920 - Treaty comes into force. January 1921 - Paris conference sets reparations amount. May 1921 - London Ultimatum. January 1923 - France and Belgium occupy the Ruhr to exact in-kind payments. German government declares “passive resistance.”

Hyperinflation

Impact of hyperinflation Domestic. Severe economic distortions. Middle class savings are wiped out. German exports become more competitive. International. Germany couldn’t make payments to Allies. Allies couldn’t repay war debt to USA.

Charles Dawes, 1865-1951 Born Marietta, Ohio; UC law school. Made fortune in utilities, banking. Active in GOP. General with AEF. 1920, first Director of the Budget. Charles Dawes

The Dawes Plan German budget (taxes and expenditures) is negotiated with the Allies. Allies appoint a “budget commissioner”. This official (Owen Young) must OK budget every year. Germans introduce new, stable, gold-based currency backed by a mortgage on national railroads. American banks make gold loan to German government.

Dawes Plan

Gustav Stresemann Business lobbyist and liberal politician before the Great War. “Republican from necessity” in 1918, founded liberal German Peoples Party. Chancellor in 1924, thereafter Foreign Minister. Policy of “Fulfillment”

Stabilization As long as American loans kept coming, Stresemann and the Republic had a chance to undertake a policy of normalization with the victor powers Parties that supported the Dawes Plan took a huge electoral hit in general election of 1928 When prices on the New York Stock Exchange collapsed, American banks could no longer make gold loans When the Depression spread to Germany, it was only a matter of time until the Republic collapsed