The Economic impacts of the Treaty of Versailles:Weimer Republic, Hyperinflation, The Dawes act, Ruhr Crisis and the Locarno Treaty

The Treaties and Economics

The Treaty of Versailles affected European economic situations more by what it did not do, than by what it did.

It did not deal with any economic questions accept reparations.

It failed to deal with the issues of Allied war debts

Economic Disaster and USA “Great Britain had lent millions of pounds to the Allies during the war

and had herself been borrowing heavily from America....   Mr. Churchill went to the United States to discuss the war debt, pointing out the economic chaos throughout the world which the payment of these enormous sums of money would cause; but the United States of America was adamant.   'They borrowed the money, didn't they?' was President Coolidge's comment.

Great Britain had suggested an all-round cancellation of war debts, but after learning of the United States insistence of payment she declared to the Allies that 'she would collect no more from her debtors, ally or former enemy, than the United States collected from her'.   At the end of the war, Britain owed the United States some $4000 million.   'The enforcement of the Baldwin-Coolidge debt settlement', wrote Mr. Churchill in 1948, is a recognizable factor in the economic collapse which was soon to overwhelm the world'.

Mary Cathcart Borer, Britain - Twentieth Century (1966)

Because America insisted that Britain repaying her war-debts to America, Britain was forced to insist on the huge reparations payments from Germany.

  

The Weimer Republic:

In 1919 Germany became a democracy for the first time.

When Keiser Wilhelm II abdicated, the government passed from Royal hands to an elected government

known as the Weimer Republic. Friedrich Ebert made the 1st president of the Republic.

Ebert was referred to as the “November Criminal”, “the Enemy of Germany” and many other names for the outcome of Germany at the end of the Great war.

The Weimer Republic continued

In the Weimer Republic the German people voted for members of Parliament to represent them in the Reichstag (Parliament).

The political party that gained a majority large enough to win votes formed the government.

The leader of that party became the Chancellor (Prime Minister).

To keep check on the actions of the new government, a head of state (President) was elected. This person did not run Germany on a daily basis that was the role of the Chancellor.

In 1933 Hitler took both the Chancellors and Presidents position illegally.

Problems facing the Weimer Republic The number of political parties in Germany made winning

a majority in the Reichstag, a virtual impossibility.

Some parties included the SPD (workers), the KPD (communists), the Zentrum (Catholics) and many more.

When there was a vote to pass a law there were not enough Members of Parliament to push it into action.

A second problem was that the Weimer Republic was often blamed for surrendering in 1918 and agreeing to the Treaty of Versailles.

They also faced strong opposition from Communists in Berlin and right-wing, paramilitary groups such as the Nazi party.

Major economic problems facing the population.

The Ruhr Crisis

Ruhr Crisis (1923-24)

The Occupation of the Ruhr, by troops from France and Belgium, was a response to the failure of the German Weimar Republic to pay reparations in the aftermath of World War I.

By late 1922, the German defaults on payments had grown so serious and regular that French and Belgian delegates were urging the seizure of the Ruhr as a way of encouraging the Germans to make more effort to pay, and the British delegate urging a lowering of the payments.

As a consequence of an enormous German default on timber deliveries in December 1922, the Reparations Commission declared Germany in default, which led to the Franco-Belgian occupation of the Ruhr in January 1923.

Franco Belgium Occupation

http://www.jatsbulgaria.org/show.php?head=5&id=20&issue_id=2&type=article

Ruhr Crisis Cont. French Prime Minister Poincaré decided to occupy the

Ruhr in 11 January 1923 to extract the reparations himself.

Poincaré argued that the Germans could get away with defying Versailles in regards to the reparations, than a precedent would be created, and inevitably the Germans would proceed to dismantle the rest of the Versailles treaty.

Finally, Poincaré argued that once the chains that had bound Germany in Versailles had been destroyed; it was inevitable that Germany would once more plunge the world back into another world war.

The invasion took place on January 11, 1923, with the aim of occupying the center of German coal, iron and steel production in the Ruhr area valley, in order to gain the money that Germany owed. France had the iron ore and Germany had the coal.

Passive resistance by miners

http://www.missouriwestern.edu/orgs/germanclub/inflation2.html

Hyperinflation in Germany

http://www.dailymarkets.com/economy/2009/05/27/blast-from-the-pastor-pictures-of-our-future/

Success found with Gustav Stresseman

Appointed chancellor from August 1923-November 1923 at which point he became the foreign minister until 1929.

Despite the progress that was achieved in his time, the Wall street crash of 1929 proved too detrimental for democracy to survive in Germany.

             

           

Gustav Stresemann 1878-1929

THE FACTS

Stresemann was Chancellor in 1923 only.

His main role was as Foreign Minister from 1924

He was a right-winger and more able than Ebert

He built up Germany’s prosperity again although all of Europe was recovering

He signed Germany up to the Dawes Plan in 1924

US aid to Germany

Foreign Policy

Stresemann showed real skill in foreign policy – 1925

1. Locarno Treaties – 1925

2. 1926 – Germany joined the League of Nations

3. Young plan - 1929

After a number of years in the wilderness Germany was accepted back into the international community

Aristide Briand, Austin Chamberlain and Gustav Stresemann signing the Locarno Treaty (1925)

http://www.spartacus.schoolnet.co.uk/GERlocarno.htm

Locarno Treaties The Locarno Treaties were seven agreements

negotiated at Locarno, Switzerland on Oct. 5 – 16, 1925 and formally signed in London on Dec. 1, in which the Western European Allied powers and the new states of central and Eastern Europe sought to secure the post-war territorial settlement, normalizing relations with defeated Germany (which was, by this time, the Weimar Republic).

Locarno divided borders in Europe into two categories: western, which were guaranteed by Locarno treaties, and eastern borders (of Germany), which were open for revision.

The principal treaty concluded at Locarno was the "Rhineland Pact" between Germany, France, Belgium, Britain, and Italy. The first three signatories undertook not to attack each other, with the latter two acting as guarantors. In the event of aggression by any of the first three states against another, all other parties were to assist the country under attack.

Locarno Spring (1925)

The Locarno Treaties were regarded as the keystone of the improved western European diplomatic climate of 1924-1930, introducing a hope for international peace, typically called the "spirit of Locarno". This spirit was seen in Germany's admission to the League of Nations, the international organization established under the Versailles treaty to promote world peace and co-operation, and in the subsequent withdrawal (completed in June 1930) of Allied troops from Germany's western Rhineland.

Other features of the Stresemann Years

• Golden age of German cinema

• Night life, cabaret

• Removal of censorship

• Unemployment and poverty still high

• Growing prosperity based on USA loans –

what would happen if USA wanted the money back ?

POSITIVESnegatives

Anything else?

Stresemann wasn’t popular with either the extreme nationalists like Hitler and the Nazis, or with the Communists

Hitler disliked the League because it supported the Treaty of Versailles

BUT both the Nazis and the Communists made little progress in these years because people were much better off and their EXTREME ideas did not appeal to people

Reading and Questions

Read pages 60-65 and complete the source based question on page 65.