Economics played a principal
role in the politics of the Weimar Republic. The Republic was born in
tumultuous
economic times. The war funded by loans rather than taxes left the postwar
society with an inflation. The immediate postwar era saw no relief. The
government added to the inflationary pressures of the wartime by refusing
to raise taxes and relying on shortterm foreign loans. Moreover, the
loss of territories in the Treaty
of Versailles impinged negatively on
the economy. Above all, the reparations schedule, or the fear of having
to meet the scheduled payments, heightened the inflation.
Crisis of 1923
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Image: Ten million Reichsmark
note from the economic crisis of 1923. See Numismatics. |
Claiming that the government was defaulting on its loans, France occupied
the Ruhr in January 19923. In indignation, Germans engaged in passive
resistance by blocking the transport of goods through the Ruhr area.
When 130,000 German workers refused to work, the productivity of the
Ruhr region declined more than fifty percent. The French responded
to these actions with arrests, imprisonment and in some cases executions.
By November 1923 the inflation had reached a point that the mark was
virtually worthless: 4,200,000,000 marks to the U.S. dollar. After
November, the policy of passive resistance was dropped and an agreement
was reached
on reparations.
A new currency, the Rentemark, was introduced. It was backed
by Germany’s
land and real estate.
Chart of Inflation of the Mark 1923
Photo: Jews and non-Jews await food distribution in front of the
soup kitchen. The soup kitchen building belonged to Leib der Grober
(the fat one) who immigrated to the United States. The other homes
belonged to Avaraham-Asher (middle) and Hayyim Leibke Paikowski
(left). 1914-1917. |
 |
Photo: Massive inflation occured in Germany in 1923.
Courtesy of United States Holocaust Memorial Museum Bettmann
Archive. |
Chart: The German inflation crisis of 1920-23.
From Sefton Delmer, Weimar Germany: Democracy on Trial, pp.
74-75.
|
The Social Repercussions of the 1923 Inflation
 |
Composite photo: Scenes of
post-war conditions in Germany with workers hunting for non-existent
jobs
and living in shacks, railway coaches, and abandoned airplanes.
From Sefton Delmer, Weimar Germany: Democracy on Trial, pp.
73-74. |
The journalist, Friedrich Kroner, described the social repercussions
of the 1923 inflation in his article “Overwrought Nerves,” first
published in the Berliner Illustrite Zeitung on August 26,
1923:
There is not much to add. It pounds
daily on the nerves: the insanity of numbers, the uncertain future,
today, and tomorrow become doubtful once more overnight. An epidemic
of fear, naked need: lines of shoppers, long since an unaccustomed
sight, once more form in front of the shops, first in front of
one, then in front of all. No disease is as contagious as this
one. The lines have something suggestive about them: the women’s
glances, theirn hastily donned kitchen dresses, their careworn,
patient faces. This line always sends the same message: the city,
the big stone city will be shopped empty again. Rice, 80,000 marks
a pound yesterday, costs 160,000 marks today, and tomorrow perhaps
twice as much; the day after, the man behind the counter will shrug
his shoulders, “No more rice.” Well then noodles! “No
more noodles.” Barley, groats, beans, lentils—always
the same, buy, buy, buy. The piece of paper, the spanking brandnew
bank note, still moist from the printers, paid out today as a weekly
wage, shrinks in value on the way to the grocer’s shop. The
zeros, multiplying zeros! “Well, zero, zero ain’t nothing.”
They rise with the dollar, hate, desperation, and need—daily
emotions like daily rates of exchange. The rising dollar brings
mockery and laughter: “Cheaper butter! Instead of 1,600,000
marks just 1,400,000 marks.” This is no joke; this is reality
written seriously with a pencil, hung in the shop window; and seriously
read.
It rises with the dollar, the haste to turn that piece of paper
into something one can swallow, something filling. The weekend
markets overflow with people. . . .
Somewhere patience ex;lodes. Resignation breaks. Not at the turnip
man, who is a big fellow. One also swallows the butcher’s
biting remark, that all cows have to have bones. One pays and staggers
off. Then the girl in the dairy store, the one whose face is always
pinched, whose way of speaking becomes every more finicky. . .she
issues regulations: how one is to behave as a customer, that shoving
is rude, that everyone should not shout at once. Otherwise she
can not concentrate on the scale. “Come on, when am I finally
going to get my butter?” screams a woman. “Your butter.
It is not your butter by a long shot. By the time hyou get to the
front of the line, your butter will be all gone.” And then
comes the umbrella handle, a response crashing through the glass
cover on the cream cheese. And the cop standing watch outside pulls
a sobbing woman from the store. And there is an uproar. And charges
are filed.
As quoted in The Weimar Republic Sourcebook, eds.
Anton Kaes, Marin Jap, Edward Demenberg, pp. 63-64. |
Stabilization of the Weimar Economy, 1924-1929
Between 1924 and 1929, there was relative prosperity in Germany. Foreign
loans, primarily from the United States, helped offset the reparations
payments. Moreover, the Dawes Plan of August 1924 resulted in a reduced
payment schedule.
Characteristic of the economy in these years of relative prosperity
were the increasing concentration of industries and the introduction
of Taylorism, or scientific management.
The Crash of Wall Street, October 1929
 |
Photo: Masses of people after
receiving news of the U.S. Stock Market Crash of 1929. |
The crash of the New York Stock Market in October 1929 rapidly affected
the German economy since so much of the revival of the economy had
depended on American loans that were called in after the stock market
crash. By
1932, there were over six million unemployed in Germany.
In Before the Deluge, Otto Friedrich describes the repercussions of
the Wall Street Crash:
. . . Within a few months of the Wall
Street Crash of 1929, the world-wide depression had begun, and
no nation was so vulnerable to the contraction of trade and credit
as Germany. Foreign investors started calling in their loans and
German capital began flowing out of the country; companies started
laying off workers, or closing down entirely. During the one month
of January, 1930, the number of German unemployed soared from 1.5
million to almost 2.5 million, and every month, the figure kept
climbing. And these were only the official figures of the workmen
who officially lost their jobs and went on relief, standing in
long lines on the sidewalks outside government employment offices
and then getting a little stamp that entitled them to a dole of
about seventeen dollars a month. Even those who still had jobs
had to take pay cuts—the miners’ average wages shrank
from forty-seven dollars a month in 1930 to thirty-nine dollars
the following year. And there are no figures for the millions who
lost part-time jobs, or the farmers who could no longer sell their
crops, or the students who reached their graduation and found no
jobs to be filled.
Otto Friedrich, Before the Deluge, pp. 300-301. |
The statistics of unemployment between 1928 and 1932 suggest the magnitude
of the economic crisis in these years:
Unemployment |
Year |
Number |
1928 |
1,862,000 |
1929 |
2,850,000 |
1930 |
3,217,000 |
1931 |
4.886.000 |
1932 |
6,042,000 |
The number of bankruptcies in Germany during these years serve as another
indication of the severity of the economic crisis:
Bankruptcies
|
Year
|
Number
|
1928
|
10,595
|
1929
|
13,180
|
1930
|
15,486
|
1931
|
19,254
|
1932
|
14,138
|
Figures culled from Joachim Remak, ed., The Nazi Years, p. 24.
A series of Weimar coalitions suspended the Constitution in these
years to deal with the severe economic crisis. Extremist political parties—such
as the National Socialist Party and the Communist Party—took advantage
of the economic dislocation in political campaigns.
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