The lottery in Weimar
Germany’s Weimar Republic was born of defeat, revolution, and civil war. It was plagued by political violence but distinguished by cosmopolitan culture that influenced both Europe and the wider world.
On October 28, 1918, the sailors at the Kiel naval base mutinied, and on November 8 the Independent Socialist Kurt Eisner declared Bavaria a republic. On the following day the chancellor, Prince Maximilian von Baden, resigned in favor of the Social Democrat leader Friedrich Ebert and announced the abdication of the emperor William II. That same day, November 9, the Social Democrat Philipp Scheidemann proclaimed all of Germany a republic. Two days later, on November 11, Germany concluded the armistice that ended World War I.
The new republic was soon under pressure from both left and right. Left-wing socialists and Marxist “Spartacists,” led by Karl Liebknecht and Rosa Luxemburg, fomented strikes and founded Workers’ and Soldiers’ Councils like those in the U.S.S.R., but on January 15, 1919, both revolutionaries were arrested and brutally killed. On the right, meanwhile, ex-officers and others formed the paramilitary Freikorps. In the event, it was from the right that the deadliest challenges came.
Elections to a constitutional convention, or assembly, were held on January 19, 1919. They gave the Social Democrats 163 seats, the Catholic Centre Party 89, and the new and progressive Democratic Party 75; other parties won smaller numbers of seats. These three groups were like-minded enough to form a coalition and powerful enough—for the present—to dominate the new republic. Their rivals on the right were the old conservatives (now called the National People’s Party), with 42 seats, and the new People’s Party, with 21. On the left, the Independent Socialists had 22 seats.
The National Assembly met on February 6, 1919, at Weimar on the Ilm River. The choice of venue was only partly a tribute to the city’s historic associations with Goethe, Schiller, and Herder; the main concern was to avoid the danger of violence in Berlin. Not until the spring of 1920 did the new republic’s Parliament (still called the Reichstag, or “Imperial Diet”) meet in the German capital. By then, the name Weimar Republic had stuck.
Its constitution, completed on July 31, 1919, was the most modern and democratic imaginable, based on universal suffrage, proportional representation, and referenda. But it was a flimsy cap over a political volcano.
The first sign of trouble, in March 1920, was an attempted monarchist coup d’état. It failed, but the elections that followed in June marked a defeat for the republicans. The centrist Democrats lost almost two-thirds of their strength and the Social Democrats almost half of theirs. The right-wing parties and the left-wing Independent Socialists, plus various splinter groups, made heavy gains. The Weimar coalition no longer had a majority. Within the Parliament, the extremists had triumphed. Outside it, violence was on the increase.
On August 26, 1921, two ex-officers shot and killed Matthias Erzberger, a Catholic Centre Party deputy who had negotiated the peace terms. On June 24, 1922, three right-wing students shot dead Walther Rathenau, the newly appointed foreign minister, who was Jewish. On November 8–9, 1923, an extremist group staged an abortive putsch in Munich. The conspirators included Hermann Göring and Adolf Hitler.
Racked by economic problems, shaken by internal crises and shifting alliances, reviled by the far left and the far right, successive centrist governments struggled ahead for another 10 years. Although politically precarious, the Weimar Republic nonetheless witnessed and helped to foster an extraordinary explosion of creative talent, notably in the arts.
Wassily Kandinsky and Max Ernst in painting, Bruno Walter in music, Bertolt Brecht and Max Reinhardt in the theater, Walter Gropius in architecture, Albert Einstein in physics, Erwin Panofsky in art history, Ernst Cassirer in philosophy, Paul Tillich in theology, Wolfgang Köhler in psychology, Fritz Lang in films—all these became household names, partly because every one of them took refuge abroad after Hitler came to power in 1933.
All, in their various ways, were part of the cosmopolitan “Modern movement” that pervaded the whole of Europe. Kandinsky was a typical example. Born in Russia, he learned a great deal from French Fauves such as André Derain and Henri Matisse, then settled in Munich, where he developed his own characteristic style. German Expressionist theater and cinema, likewise, drew inspiration from abroad, in particular from Henrik Ibsen and August Strindberg. Germany was equally influenced by Austrians: Sigmund Freud in psychiatry, Hugo von Hofmannsthal and Arthur Schnitzler in the theater, and Karl Kraus in the press. In architecture the clean, functional lines of Gropius’ Bauhaus school found imitators throughout Europe.
Like all such phenomena, the Modern movement was not wholly novel. Many of its practitioners and their artifacts had predated or coincided with World War I. Even Filippo Tommaso Marinetti’s Futurism, so dominant in 1920s Italy, was a relic of the prewar past.
But the mood after 1918 was no longer so euphoric as at the beginning of the century. Before the war, the French novelist André Gide and the German poet Rainer Maria Rilke had exchanged letters in leisurely French like two survivors from the 18th century. After it, following a six-year silence, Rilke wrote of “the crumbling of a world,” and both complained of the complications caused by passports and frontier formalities, looking back nostalgically to the carefree “journeys of long ago.”
The postwar world, as seen by writers and other artists, had the fragmentary, disillusioned quality of T.S. Eliot’s The Waste Land, published in 1922. It was self-conscious and introspective, as in Luigi Pirandello’s 1921 play Six Characters in Search of an Author. It was more open to the unconscious, as in Dada and Surrealism. It was more aware of man’s dark fears and instincts, as in Franz Kafka’s The Trial (1925) and The Castle (1926). It was more responsive to the appeal of “the primitive,” whether in African sculpture or in jazz—the quintessential art of the 1920s, which also influenced mainstream music, notably in the Austrian composer Ernst Krenek’s 1927 opera Jonny spielt auf (“Johnny Strikes up the Band”).
No less pervasive, however, was the brittle hedonism typified by the gossip-column antics of the “Bright Young Things.” They were not wholly isolated. Already in 1918 Thomas Mann had published his Reflections by an Unpolitical Man; this was a mental label thankfully worn by many who, after the rigors of war, were eager to pursue private happiness, whether in metropolitan society or in placid suburbia. The Europe of Weimar also was the Europe of the detective story and the crossword puzzle. Both were analgesics at a time of political uncertainty and economic disquiet.
The impact of the slump
Economically, Europe emerged from World War I much weakened, partly by the purchases that had had to be made in the United States. Even in 1914 the United States had been the world’s leading economic power. By 1918 profits had enabled it to invest more than $9 billion abroad, compared with $2.5 billion before the war. The Allies, meanwhile, had used up much of the capital they had invested in the United States and had accumulated large public debts, many of them to the U.S. Treasury.
American financial dominance and European debt overshadowed economic relations in the first decade after the war. The debts included those owed by the Allies to each other, especially to Britain, as well as those owed, especially by Britain, to the United States. A third baneful factor was reparations, the financial penalties imposed on Germany by the Treaty of Versailles.
Keynes described reparations as morally detestable, politically foolish, and economically nonsensical. Winston Churchill called them “a sad story of complicated idiocy.” Essentially, they meant demanding from Germany either goods—which would have dislocated industry in the recipient countries—or money. This the Germans could obtain only by contracting vast and almost unrepayable loans in the United States—to whom the European recipients of reparations promptly returned much of the cash in an effort to settle their own transatlantic debts.
In April 1921 the Allied Reparations Committee set Germany’s reparations bill at 132 billion gold marks, to be increased later if the Germans proved able to pay more. The first installment of one billion gold marks was due by the end of May.
Understandably resentful, the Germans wavered between two possible responses: refusal to pay, as urged by ultra-nationalists and some industrialists, and the so-called Erfüllungspolitik, or “policy of fulfillment,” advocated by Rathenau and Stresemann. They proposed to meet initial demands for reparations so as to reestablish trust and then negotiate for better terms. This was the policy adopted by the Weimar Republic.
Even so, Germany paid the first tranche only in August 1921, in response to a threat to occupy the Ruhr, and the money had to come from a bank loan raised in London. Thereafter, it paid in kind but not in cash, until at the beginning of 1923 it announced that payments must cease. The French and the Belgians, backed by Italy but opposed by the United States and Britain, thereupon occupied the whole of the Ruhr.
With the German government’s connivance, Ruhr industrialists and workers brought production to a virtual halt, and the Treasury printed a reckless flood of paper money. By 1924 the mark was almost worthless, enriching speculators and owners of real property but ruining rentier savers and others on fixed incomes. This removed an important stabilizer from German society, making it all the easier for extremism to triumph in the Nazi victory 10 years later.
For the moment, however, the Allies formed a committee of financial experts, chaired by the American Charles G. Dawes, to find a lasting solution to the reparations problem. It proposed, and the governments accepted, a two-year moratorium, the return of the Ruhr to Germany, a foreign loan of 800 million marks, and a new rate for reparation payments: 1–2.5 billion gold marks annually, which continued for five years. In 1929 a further committee, chaired by Owen D. Young, revised the Dawes Plan. Germany was to have a new loan of 1.2 billion marks and to spread reparations over the next 59 years. Although the German Parliament and people (by referendum) reluctantly agreed to the Young Plan, reparations finally ceased in 1932.
Germany’s was an extreme case, but it was not the only European country to suffer after World War I. The Allies also experienced inflation and were saddled with debts. While the United States was willing in the long run to write off the political debts of reparations, it would not do the same with the commercial debts contracted by Britain, Italy, and France: one by one, they had to sign agreements to pay.
Despite these obligations, Europe in the 1920s enjoyed a modicum of the economic growth that was so rapid and spectacular in the United States. In 1913, Britain’s income had been £2.021 billion. By 1921, it had fallen to £1.804 billion; but by 1929 it had risen again, this time to £2.319 billion. The corresponding figures for France (in 1938 francs) were 328 billion, 250 billion, and 453 billion. Even Germany, whose 1914 income had been 45.7 billion gold marks, had recovered enough by 1931 to be earning 57.5 billion.
Yet postwar prosperity was precarious. The American boom was a speculative affair. Fueled by optimism, production was soaring. To shift the accumulating goods, customers were urged to buy on credit or to borrow from the banks, which thereby earned large profits. The stock market was riding high. But at any sign of a credit squeeze or a loss of confidence, everything was likely to collapse. Demand would fall, goods would pile up, and prices would plummet. This was precisely what happened on “Black Tuesday,” October 24, 1929, the day of the Wall Street crash.
Its first foreign victims were in Latin America, which was dependent on the American market for selling raw materials. Europe was not affected immediately; American loans and investments there dwindled only slowly. By 1931, however, the flow of capital had virtually ceased, and direct investment dried up in the following year. Worse still, to pay their own debts, Americans repatriated huge sums of money. Germany, Austria, and Britain were the hardest hit. Between the end of May and the middle of July in 1931, the German central bank, the Reichsbank, lost $2 billion in gold and foreign currency. To compound Europe’s problems, on June 17, 1930, the United States enacted the protective Smoot-Hawley Tariff Act, increasing the average import duty level to about 50 percent.
The combined results were catastrophic. Highly respected banks failed, first among them the great Kreditanstalt of Vienna, which collapsed in May 1931. The Bank of England, at that time, was losing gold at the rate of £2.5 million a day. Everywhere, industrial production fell: by 40 percent in Germany, 14 percent in Britain, and 29 percent in France.
On June 20, 1931, U.S. President Herbert Hoover announced a year’s moratorium on all government debts. When it expired in June 1932, the secretary of state, Henry Stimson, proposed a year’s extension, but Hoover refused. The Europeans had meanwhile agreed to cancel their claims on German reparations but not to ratify this decision unless the United States wrote off their war debts. The Americans, seeing this as a European conspiracy, demanded continued payment. At this, all the European nations except Finland dug their heels in, exacerbating U.S. isolationism and making a global solution of the crisis still more unlikely.
In June 1933, nevertheless, a World Economic Conference met in London. Hoover’s successor as president, Franklin D. Roosevelt, made his secretary of state, Cordell Hull, the head of the U.S. delegation. Hull was a free-trader, but in July 1933 Roosevelt sent a message to the conference insisting that its main concern must be monetary exchanges, and in January 1934 the United States passed the Johnson Act, forbidding even private loans to countries that had not paid their war debts.
So there was no global solution: it was every man for himself. Some European countries—Germany in 1930–32, France until 1936—responded by deflation; they maintained the external value of their currencies but reduced their export prices by cutting wages and costs. The result was social unrest. In Germany, Chancellor Brüning’s 1930 decrees of the dissolution of the Reichstag and government by presidential order led to 107 Nazis and 77 communists being elected to Parliament that September. In France, Pierre Laval’s decrees led to the 1936 success of the left-wing Popular Front.
Other countries took to devaluation, leaving the gold standard to which Belgium, France, Italy, the Netherlands, and Switzerland still clung from 1931 to 1935. Britain devalued in September 1931, the United States in April 1933, and France in September 1936. This had the effect of making exports cheaper, but since it made imports more expensive it worked only if they could be discouraged by high tariffs (as in the United States) or if the country in question had access to cheap raw materials (as in Britain’s system of imperial preference).
A third option was to impose exchange controls to cut the economy off from world markets. This was the solution adopted by Germany in 1932 and by most of central Europe and the Balkans. It had the effect of creating German hegemony, since those central European and Balkan countries that needed to sell to the large German market were unable to repatriate their earnings and had to buy German goods. In 1932 Germany saw exchange controls and their effects as a temporary expedient. For Adolf Hitler and the Nazi party, however, they became part of a settled and sinister policy.
