At the Cannes Conference (January 1922) the Allies searched for common ground on reparations, a security pact, and Lloyd George’s scheme for a grand economic conference including Soviet Russia. But the French chamber rebelled, and Briand was replaced as prime minister by the wartime president, Poincaré. A hard-headed lawyer from Lorraine, Poincaré was determined to relieve France’s triple crisis without sacrificing its treaty rights. He approached London for a security pact, only to learn that the British were not willing to guarantee the Rhenish demilitarized zone and demanded French concessions on reparations in return. In June a conference of international bankers in Paris recommended loans to stabilize the German mark, but only if Germany were granted a long moratorium on reparations. (Meanwhile, the U.S. Congress created the World War Foreign Debt Commission to pressure the Allies to fund their war debts.) The grand economic conference promoted by Lloyd George was held at Genoa in April and May 1922 and was the first to bring German and Russian delegations together with the Allies on a status of equality. But the Soviets refused to recognize the tsarist regime’s prewar debts and then shocked the Allies by signing the Treaty of Rapallo (April 16) with Germany, an innocuous document (providing for annulment of past claims and restoration of diplomatic relations) that nonetheless appeared to signal an unholy alliance between the two European outcasts. (Innocuous or not, Rathenau was assassinated by German rightists on June 24; Erzberger, signer of the Armistice, had also been murdered in 1921.) French representatives also bargained directly with the Ruhr magnates late in 1922, hoping for a coal-for-iron exchange and market-sharing, but the German price was evacuation of the Rhineland and substantial revision of the Treaty of Versailles. Meanwhile, the German mark tumbled to 7,500 to the dollar in December. Poincaré concluded that only force would break the deadlock. As he told the Belgians in July, “I will propose a short moratorium subject to guarantees. If England refuses I will act alone. The German industrialists conspire to destroy the mark. They hope to ruin France.”

The new German Cabinet of Wilhelm Cuno made a desperate appeal to the United States. Secretary of State Hughes responded on December 29 with an offer to convene a committee of experts to study means of stabilizing the mark, but he held out no hope that the United States might relent on war debts. When the Reparations Commission declared that Germany had defaulted on its 1922 timber deliveries (Britain dissenting), Poincaré had his mandate to take sanctions. On January 11, 1923, French and Belgian troops began to occupy the Ruhr. If the Germans submitted peacefully, the Ruhr would constitute a “productive guarantee,” generating coal and receipts for France and giving her a valuable bargaining chip. If the Germans resisted, the French might take whatever measures seemed fit, up to and including political change in the Rhineland.

German workers protested the occupation of the Ruhr with an immense sitdown strike that proprietors and the government quickly joined. Berlin supported this passive resistance with unemployment relief that, in seeking to prove that the hated French could not “mine coal with bayonets,” completed the destruction of the German currency. The railroads, mines, factories, and public services in the Ruhr and Rhineland ground to a halt. Poincaré steeled his will and dispatched French engineers and workers to revive the Rhine-Ruhr complex through the Inter-Allied Control Commission for Factories and Mines (MICUM) and a Franco-Belgian directorate for the railroads. The Allied Rhineland Commission (Britain dissenting) seized all executive, legislative, and judicial power in the occupied territories, expelled 16,000 uncooperative German officials (and more than 100,000 persons in all), and sequestered all German government property, energy resources, and transportation. France began covertly subsidizing separatist agitation. The Ruhr adventure thus became an economic war of attrition with stakes potentially as high as in a shooting war. If France retreated, the Treaty of Versailles was as good as dead; if Germany collapsed, the Rhineland might be lost.

The paper mark reached 4,000,000 to the dollar in August, and the Reich treasury was at the end of its tether. Business in non-occupied Germany was choking, and social unrest was spreading. Bavarian rightists called for war or separatism, while the Communist Party made gains in the cities. Gustav Stresemann, the conservative, business-oriented politician who replaced Cuno, finally ended passive resistance in September 1923 “to preserve the life of the nation and the state.” But Poincaré, instead of naming his terms to Germany, apparently threw away the victory and accepted, after nine months’ delay, Hughes’s invitation to form a committee of experts. Poincaré’s inaction baffled contemporaries, but in fact he had little to gain from dealing with Berlin. Only Britain and the United States could cancel France’s war debts, stabilize the mark with loans to fund reparations, and offer security pacts or legitimize an autonomous Rhenish state, while only the Ruhr magnates could satisfy French industrial needs. So Poincaré ordered his Ruhr army commander to negotiate directly with Thyssen, Stinnes, Krupp, and their colleagues for the MICUM Accords (November 23) under which German industry went back to work, while he himself saw to the mandate of the international committee of experts.

Poincaré’s plans misfired, however, for by the time the committee of experts began its deliberations at the turn of 1924, France’s dearly purchased leverage had eroded and Germany had begun to recover. Troops expelled Communists from the governments of Saxony and Thuringia, a Communist putsch in Hamburg misfired, and Bavarian police quashed the Nazi putsch led by Adolf Hitler and Ludendorff. Hjalmar Schacht, recently appointed president of the Reichsbank, halted the inflation with a temporary currency called the Rentenmark, and on New Year’s Day 1924 the president of the Bank of England, Montagu Norman, extended a 500,000,000 gold mark credit to back a new German mark. In October 1923, meanwhile, rowdy bands supported by the French occupation began to seize public buildings from Aachen to Speyer and to proclaim a Rhineland Republic. These separatists had no support from the population or from genuine Rhenish notables like the mayor of Cologne, Konrad Adenauer, and their actions only further discredited French policy in the eyes of Britain. By January the separatists had been driven out or murdered by fellow Germans. Finally, the French franc also succumbed to the pressure it had been under since the war. Poincaré tried austerity measures, but a new collapse in March forced him to borrow $89,000,000 from J.P. Morgan, Jr., of New York to stabilize the exchange rate. All these blows to France’s position told in the report of the committee of experts under American Charles G. Dawes, released in April 1924. It called for a grand loan to Germany and the resumption of reparations payments, but made the latter contingent on French withdrawal from the Ruhr and restoration of German economic unity. Jacques Seydoux, an economist in France’s foreign ministry, had predicted this outcome as early as November 1923: “There is no use hiding the fact that we have entered on the path of the ‘financial reconstruction of Europe.’ We will not deal with Germany as conqueror to vanquished; rather the Germans and Frenchmen will sit on the same bench before the United States and other lending countries.” On May 11, 1924, the French electorate defeated Poincaré in favour of the Cartel des Gauches (a leftist coalition) under Édouard Herriot, who favoured a policy of accommodation with Germany.