There was prevailing uncertainty period after the First World War I due to the effects of imposing the provisions of the Treaty of Versailles (see Eurodocs, World War I Archive: Conventions and Treaties). The American President Woodrow Wilson articulated had expressed in his Fourteen Points Peace Plan called for economic and political equality of all nations, and demanded that Europe be reorganized along lines of nationality. This idea implied the German loss of Alsace-Lorraine and the creation of a truly independent Polish state that would have to receive access to the Baltic Sea at the expense of German territory. War reparations were be limited to repairing the damage done by invading troops. It was that the German government had asked to open negotiations for a truce in October 1918 on the basis of these fourteen points, while Wilson placed heavier emphasis on Alsace-Lorraine and the Polish corridor. Moreover, the contents of these provisions did not mitigate the demands of the French authorities who were anxious to weaken Germany, whereas British authorities preferred to restore German economic strength and maintain a balance of power in Europe.
A League of Nations, established on 10 January 1920, was to resolve all international disputes under the idea of collective security to offer protection against the outbreak of war. The permanent assembly in Geneva and the international Court of Justice in the Hague were the main institutions for the preservation of peace. The primary function of the League was to provide the machinery for the settlement of international disputes without recourse to war, and it also performed a number of lesser services. They included the elaboration of codes for the protection of women and children, the suppression of the slave trade and illicit traffic in drugs, and activities to protect public health and prevent disease. The League was also very successful in dealing with small disputes. Of the 66 international disputes it dealt with, twenty were transferred to other channels, thirty-five were successfully resolved, but the eleven most serious were not overcome. A more serious problem deficiency of the League was the absence of any independent power source, since the League depended on its members to provide any cooperative military or economic sanctions, and also had an incomplete membership. Germany and the Soviet Union were not allowed to join, and the United States Senate was concerned about getting drawn into more overseas disputes, so refused to join the League. This League could only back its decisions with economic sanctions to maintain collective security, which could not suffice to prevent aggressive actions. There was also turmoil within European countries that would lead to future conflict.
Fighting remained ongoing in eastern Europe. Bolshevik Russia remained engaged in civil war while attempting to establish political authority against various hostile elements, which included the new Second Polish Republic, where fighting remained ongoing on separate fronts to settle boundary disputes with Germany, Czechoslovakia, Lithuania, Ukraine and Russia. The delegates at the Paris peace conference supported the creation of a new Polish state, but disagreed on the eastern boundaries. The Allies proposed the Curzon Line, which was opposed by the Poles, the Bolsheviks, Belarus, Lithuania, After German troops withdrew from Poland during 1919, fighting broke out between Poland and Bolshevik Russia, which led to Polish advances into Minsk and eastern Galicia, during a time when the Bolsheviks were engaged with White forces threatening their areas of control, while support for either the Bolsheviks or for the Poles among the local populations remained in flux. Polish forces entered Kiev on 7 May 1920, but did not possess sufficient resources to invade Russia, while the Bolsheviks regained strength following defeats inflicted against White forces, and a provisional administration of Ukraine under Symon Petliura was unable to establish an independent Ukrainian state with sufficient support from the local population that could either serve as a Polish ally or a buffer state that could resist Bolshevik encroachments. Bolshevik Red Army forces reoccupied Kiev on 10 June, and besieged Lviv in early August, and were two hundred kilometres from Warsaw on 1 August, which was followed by an assault on Warsaw on 13 August, aiming to extirpate “White Poland.” A Polish counterattack countered this threat by late August. The Polish army ultimately defended its eastern borders against Lithuanian incursions, and a ceasefire was signed with Lithuania in late October. The Red Army was pressed to retreat as far as Minsk by 18 October, when Poland and Bolshevik Russia agreed to sign the peace treaty of Riga.
A peace settlement needed to be arranged with Germany, and the end result was the Treaty to World War I, which was in reality five separate treaties with the defeated nations of Germany, Austria, Hungary, Bulgaria and the Ottoman Empire. The Peace Conference that met in Paris from January 1919 to June 1920 was dominated by Woodrow Wilson, the United States President, David Lloyd George, Prime Minister of Great Britain, and Georges Clemenceau, Premier of France. There were serious differences among them, and the defeated states were excluded altogether. Wilson had been discussing a basis for a peace settlement before the end of the war he called the Fourteen Points, which became the charter of the Allied war aims throughout 1918. This was a call for open peace agreements rather than secret diplomacy. He also wanted to reduce the armaments of all of the nations and self-determination based on democratic governments for all of the people of Europe. To ensure that everyone would follow these points, he wanted to see the creation of a general association of nations called the League of Nations that he hoped would bring permanent peace to the world. On the other hand, Clemenceau was interested in preventing the recovery of German military strength, and hoped to be able to wring from Germany reparations for the damages that had been done to France during the war. Lloyd George generally stood between them. Like Clemenceau, he wanted reparations, but he tended to sympathise more with the idealistic hopes of President Wilson that the French premier did.
These conflicts were supplemented by the numerous and frequently incompatible claims that smaller nations advanced before the Peace Conference (See Eurodocs, World War I Archive: Versailles.). Italian demands for the annexation of the Dalmatian coast were especially troublesome. Secret treaties had promised the Italians a great deal of Austrian territory to achieve gains in the balance of power by establishing strong borders and achieve unity by adding Italian speaking populations, and it was on this basis that the Italian government entered the war on the Allied side. However, the promises of the secret treaties violated the principle of self-determination that President Wilson had enunciated as the basis of a just and durable peace, and he set his face resolutely against their fulfillment while being conscious of how Italy was economically dependent on Britain and the U.S. Wilson agreed to extend Italy’s borders at Austria’s expense, but would concede extending its borders at the expense of new states that emerged from the collapse of the Austro-Hungarian empire. Wilson also refused to concede what had been guaranteed by secret treaties that would not be recognised by the U.S. since it was not a party to them or even aware of them, and these therefore became meaningless in view of the changed circumstances. Britain and France likewise sided with Wilson against Italy in order to satisfy the Yugoslavs’ demand for seaboard territories as a matter of economic necessity and Wilson’s demand for upholding national determination. Italy thus emerged from the war with an enormous national deficit and the realisation that the Entente powers expected the Italian government to be satisfied with new possessions in North Africa, excluding its demands for Austrian territory and Aegean islands.
As a result, Italian delegates withdrew from the Peace Conference, and in the end the frontier between the new state of Yugoslavia, formed around the prewar Serbia with the addition of Croatia, Slovenia and Montenegro, and Italy was settled by direct negotiation between these two countries. The Italians felt they were shabbily treated by their former allies, especially since the war had lasted much longer than had been anticipated, and Italy’s obligations were greatly augmented by Russia’s defection that led having to bear the brunt of all instead of part of Austria’s forces, and therefore the sacrifices that were demanded became proportionately heavier, and in fact made a great contribution to defeating the Central Powers through their intervention. Italy had done all it had promised to help the Entente, and its earlier neutrality had also influenced Rumania into not joining the Central Powers at the outset of the hostilities.
The Treaty of Saint-Germain-en-Laye on 10 September 1919 eliminated the existence of Austro-Hungarian Empire to disappear, giving formal expression to how loyalty to the dual monarchy empire during the war, and nationalist sentiments for greater autonomy, and then complete separation, had become irrepressible in the face of the wartime hardships, and was also given encouragement by the Russian revolution of March 1917. Defeat in the world war meant dissolution of the Hapsburg empire, and the former elements hereafter became the independent nations of Austria, Hungary, Czechoslovakia and Yugoslavia. The largest part of the former Austro-Hungarian Empire was portioned out to Czechoslovakia, Romania, Poland, Yugoslavia and Italy, although Italian authorities were unsatisfied with these gains that were not compatible with the terms of the 26 April 1915 Treaty of London that had led to Italy joining the war effort. Separate treaties were signed with Bulgaria and Turkey.
The most important was the Treaty of Versailles, which was signed by Germany on 18 June 1919. Germany agreed that they were responsible for causing the war, and had to pay reparations in the form of 132 billion gold marks to compensate for the wartime destruction of property in Allied countries, regardless of the warnings by the British economist John Maynard Keynes who was present at the peace conference that highly punitive amounts of reparations would endanger the economic stability of Europe as a single economic whole that required rehabilitation to achieve postwar financial stabilisation. He argued in <em>The Economic Consequences of the Peace, published in December 1919, argued that the reparations would ruin the German economy, and of Europe as a whole. In practice, there were incalculable political repercussions as a result of the resentment that the treaty generated.
Germany’s army was limited to 100,000 men with prohibitions on conscriptions, tanks and heavy artillery, which in practice meant reducing it to an internal police force. The navy was to be reduced to 15,000 men with thirty-six vessels of different sizes, and not allowing any submarines. The air force was to be eliminated. The treaty also took territory from Germany, including Alsace and Lorraine, which were returned to France, and land was granted to Belgium, Denmark, Lithuania and Czechoslovakia. The port of Danzig was handed over to the League of Nations and Poland would have free use of the docks. The Saarland was handed over to the League of Nations to be administered by France for fifteen years to compensate for the destruction of its coal mines. A large part of eastern Germany was given to the new nation of Poland. Altogether, this involved a loss of 13 percent of German territory, 10 percent of its population, 14.6 of its arable land, and 74.5 percent of its iron ore resources. All of Germany’s colonies were to be handed over to the League of Nations. Germany also agreed to create a demilitarised zone of 30 miles east of the Rhine on the German and French border. The west bank of the Rhine was to be occupied for fifteen years by allied troops as a guarantee of the fulfillment of the terms of the treaty. Article 231 held that Germany was guilty for the war, and therefore this created the liability for the payment of compensation for the destruction that was caused. Nearly all Germans regarded the Versailles treaty as unfairly punitive, but the socialist government that came to power after the abdication of the emperor signed it only upon threat of resumption of war and the threat of revolution in Germany while the economic blockade was still in effect that exercised a stranglehold on Germany along with superior Allied military strength, and therefore signed this treaty on 28 June 1919.
According to the German historian Fritz Fischer, Germany had to bear the main responsibility for the outbreak of war. He argued that: the German government under the Kaiser deemed a European war inevitable since 1911-1912, prepared for war, and decided to seize the next opportunity to start it, with the support of industrial and agricultural interests that had expansive aims; the German government and general staff precipitated an escalation of the Austro-Serbian crisis in order to launch a preventive war against Russia and France, and if war did not break out, Germany at least hoped to weaken the Entente and win a moral victory that would increase the prestige and stability of Germany and the Hapsburg empire, and therefore Bethmann-Hollweg accepted a risk of escalation; there was long term continuity in German aims for expansion.
The first argument lacks evidence with regard to war preparations. Although the second argument is widely accepted, it would be wrong to exculpate Austria-Hungary and Russia. The third argument is also weak since it makes too much of superficial similarities between German war aims in the two world wars, such as the racial agenda that did not play any significant role in the First World War. Moreover, the German and other European governments had not expected a war of attrition, and domestic calculations played a limited role while there was no immediately pressing domestic crisis. In addition, there was the inevitable belief that after recurring diplomatic crises, all governments were less willing than before to find a frustrating compromise. In Germany in particular, the German government was hoping to overcome the Entente encirclement and opted for the risk of war that the German generals wanted. Meanwhile, the Austro-Hungarian government chose to risk a punitive war against Serbia to stabilize the empire, while knowing this would mean risking a European war. Russian did not restrain its ally Serbia. Moreover, its mobilisation almost represented an act of war since early mobilization at the time gave powers a nearly decisive advantage.
The Versailles Treaty consequently was a victors’ peace, and became a contributing factor the rise of fascism in Germany and Italy. The numerous details of the frontiers drawn by the peace treaties also disregarded the principle of self-determination, as the individuals who drew up the new boundaries were interested in rewarding friends and punishing enemies. They were also inspired by a fear of the revival of German military power, and therefore strove to create states on the frontiers to check any resurgence of German strength. On several occasions, Wilson tried to mollify the severity of the terms imposed on the defeated nations, but in general, he put his main reliance on the League of Nations that he hoped would adjust some of the faults of the peace treaties. The Covenant of the League of Nations had been incorporated as part of the Versailles Treaty and other peace treaties. However, it was unable to enforce demands. It began to meet in 1920, but another weakness was it did not include the United States. The American Senate refused to ratify the Versailles Treaty, largely because ratification would commit the U.S. to membership in the League, and therefore limit American sovereignty. The League also excluded Germany as well as Russia, which was then at war with the leading powers of the League.
In spite of their efforts to end the war with Germany, the Bolsheviks had not been allowed to remain in unchallenged control of Russia. A number of counter-revolutionary “white armies’ formed in 1918, and Germany, France, Great Britain, the United States and Japan all at different times and in varying degrees lend aid to the counterrevolutionary forces. In the westernmost areas of the Russian empire, the revolutionaries met with some success. A tier of new states was formed largely or entirely from former Russian territory: Finland, Estonia, Latvia, Lithuania and Poland. The Bolsheviks remained at war with disparate conflicting forces that were determined to eliminate their regime until 1921. The white armies had been driven from nearly all of the areas of the earlier tsarist empire, and the Bolshevik government decided to make peace and recognise the independence of the new states on the former western frontier. However, tensions would remain as this regime would remain internationally isolated.
Tensions also remained as a result of the failure of Italian diplomats to acquire satisfying territorial demands, particularly extensive territorial gains in Dalmatia at the Peace Conference of 1919 contributed to discrediting the government as a result of nationalist resentment in the view of the Italian public, which later became a contributing factor to the rise of fascism. Another negative consequence of the First World War was how it emphasised the weakness of the Italian economy, and by 1918-1919, state expenditure was three times the size of its income, imports were three times greater than exports, and inflation swept ahead of wages. This led to the widespread outbreak of disorder, especially in the northern cities, where revolutionary socialist parties and a new Fascist party came into conflict through street brawls and riots in the face of the complacency of Italy’s liberal leaders that would not rely on state intervention to solve economic problems. Moreover, the extension of the franchise led to the emergence of new mass parties, and a new voting system introduced in 1919 tended to fragment the groupings in the government, which worsened the chances of effective government.
One of the new postwar parties was the Fascist party, or Fascio di Combattimento, named for the ancient Roman symbol of power, the fasces, was founded in Milan on 23 March 1919 under the leadership of Benito Mussolini who preached the glory of the state over the individual, strong centralised government and the state suppression of opposition, playing on the middle class fears of a communist takeover of Italy and capitalising on the lack of postwar territorial aggrandisement. Italy was in an economically and politically weakened state after the end of the First World War. Italians considered the Versailles Treaty to be diplomatically humiliating, as earlier allied pledges to make territorial concessions in eastern Europe were not fulfilled, which shattered the confidence of the population in the postwar government that could not provide sufficient benefits to veterans, and therefore sought radical solutions, particularly by electing socialist representatives, and communist councils were set up throughout Italy. Mussolini combined the grievances of nationalists who denounced the peace conference as a fraud that had given Italy a “mutilated peace,” as well as socialist demands for an eighty-five percent tax on war profits, workers’ participation in management, and confiscation of all church property. When his original message was insufficient to mobilise support and the movement fared badly in the November 1919 election, the movement shifted dramatically to the right, dropping or reducing elements of the programme that were tinged with socialism. He and others who developed a mixture of socialist and nationalist policies never had a clear programme, but Mussolini’s objective by 1919-1920 was seizing political power for its own sake, and the very vagueness of the Fascist party was its great quality that appealed to nationalists, disgruntled soldiers who were unsettled by the government unfulfilled promises, conservative landowners and industrialists who both feared socialist unrest and sought the prospect of a revival of markets through militarist expansion.
Mussolini formed the Blackshirts, a fascist militia that engaged in political violence against socialist, communists and anarchists, from 1920 to alleviate the fears of a socialist revolution. They not only vocalised his message, but also made it physical, attacking the offices and newspapers of socialist parties, strikers, and agricultural labourer “squatters” seizing land, as well as intimidating, assaulting and killing political opponents. Another outcome of the wave of political violence was Mussolini establishing the Partito Nationale Fascista (PDF), or the National Fascist Party, leading to Mussolini being elected to parliament along with thirty-four fascist supporters in 1921. Mussolini’s rise to political power was also the result of more subtle factors than political violence, including forming an alliance with liberals in the May 1921 elections who intended to use the fascists as a force against socialism. This was especially apparent in August 1922, when the socialist party made the fatal mistake of calling for an anti-fascist general strike, and the fascists then claimed to stand for law and order by ejecting socialist councils in many of the major cities, which was applauded by the bourgeoisie.
One of the announced aims of the Italian fascists was establishing a sufficiently powerful state to maintain order, during a time when striking socialist workers occupied industrial areas and the government failed to restrain their influence. Mussolini had sufficient amounts of support by October 1922 to make demands for power when Mussolini’s followers controlled extensive areas and had considerable public support, while the government was incapable of quelling political violence. He announced a march on Rome on 28 October, with his Blackshirts followers who took over the principal public buildings without meeting any effective resistance, while he remained in Milan. Authorities throughout northern Italy capitulated to the fascists and it seemed that the state was disintegrating, and most of the army sympathised with the fascists. Many politicians were also prepared to accept them in the interest of restoring stability. The king of Italy, Victor Emmanuel III, influenced by Fascist-inclined members of the royal family, by the fear that might be deposed if he resisted, and by the uncertain reliability of the army, gave in to his demands and made Mussolini the prime minister of Italy of a coalition government on 31 October, with his party holding a seven percent minority in the Chamber of Deputies, consisting of thirty-five out of four hundred elected representatives, while his first cabinet contained ten nationalist and conservative non-fascists against four members of his party.
However, Mussolini was able to wrest a grant of special powers from the Chamber of Deputies, and took advantage of this position to put fascists into key official positions while building up both the strength of both the army. The first important steps towards creating a permanent dictatorship were taken in December with establishing a Fascist Grand Council, ostensibly as a link between the party and the government, but soon became more important than the government. On 30 December, Mussolini ordered the arrest of the communist leaders and all other members of the Communist party. The radicals in Mussolini’s party were also brought into line with the formation of a militia that was unquestionably loyal to Mussolini. These militias then served to intimidate non-Fascist deputies in the parliament to support the Fascist deputies into passing the Acerbo Law in November 1923, which stated that the party gaining the largest share of the votes – provided they had gained at least twenty-five percent of the votes – gained two-thirds of the seats. The remaining third was shared amongst the other parties on a proportional basis.
Further support for the regime initially took place through elections. With the subsequent genuine popular support, electoral violence and a divided opposition, the Fascists received sixty-five percent of the total vote, which were acquired with the Blackshirts engaging in political violence against any forms of opposition, and 374 seats in March 1924, and acquired control of the government in April. The consolidation of power then continued through legislative means. Fascist battalions continued attacking political opponents, and by degrees non-Fascist political parties were driven underground while the King and leading liberals saw Mussolini as the only alternative to social revolution. Press censorship was instituted in 1924. All opposition newspapers were outlawed in November 1926. Independent parties were made illegal in January 1926, making Italy a one-party state under the authority of a Fascist Grand Council.
In addition to political life, actions were also taken to put the labour movement under control. The old trade unions were abolished a corporatist economic system on 2 October 1925 with the creation of the Palazzo Vidioni Pact, in which the Italian employers’ association Confindustria and Fascist trade unions agreed to recognise each other as the sole representatives of Italy’s employers and employees, excluding non-fascist trade unions. The fascist regime first created a Ministry of Corporations that organised the Italian economy into 22 sectoral corporations, banned workers’ strikes and lock-outs. On 21 April 1927, the Charter of Labour established workers’ rights and duties and created labour tribunals to arbitrate employer-employee disputes. In practice, the sectoral corporations exercised little independence and were largely controlled by the regime, and employee organizations were rarely led by employees themselves, but instead by appointed Fascist party members. Mussolini also used his power to reorganise the political institutions of the country on fascist lines. All rival political parties were made illegal, and the organisation of the Chamber of Deputies was drastically transformed. Representation was based occupational groupings rather than on geographical regions after 1928. A list of candidates was prepared under the scrutiny of the Fascist party, and voters could choose between endorsing the list presented to them or casting a negative vote.
Changes in governmental machinery were accompanied by a steady expansion of the role of government in the economy. Extensive public works were carried through, and private capital was guided into channels approved by the state. Education was extended to many backward regions of the country on a greater scale than ever before, and systematic efforts were made to rally the entire Italian people behind the Fascist government and the Duce, i.e. leader. By 1928, the electorate was only able to accept or reject candidates selected by the ruling Grand Council of Fascism. By 1928, the electorate was only able to accept or reject candidates selected by the ruling Grand Council of Fascism, the body that held and applied power to control the institutions of government which became a state body on 9 December 1928, and thus disbanding parliamentary government. The fascist regime gained the political support and blessing of the Roman Catholic Church by signing a concordat with the Church, the Lateran Treaty, in 1929. The pope recognized the loss of the Papal States and accepted sovereignty over a tiny area around the Vatican and St. Peter’s. In return for this concession, Mussolini declared Roman Catholicism to be the “sole religion of the state,” and undertook to pay clerical salaries from state funds.
Like Italy, the Versailles Treaty also caused difficulties for Germany that emerged from the First World War in a state of instability. Defeat in 1918 brought profound discredit to the imperial regime, serious impoverishment, and widespread social disorder. After the Kaiser abdicated in November 1918, and interim regime led by Social Democrats took over, and a constitutional assembly was to meet in Weimar to establish a new republican constitution for Germany. However, as with the rise of Mussolini to power in Italy, the failure of the Weimar republic and the rise of totalitarianism were due to the interaction of the potential weaknesses of the German constitutional and political structure, and social and economic circumstances.
The popular image of the German Republic was very much affected by different adverse influences. First, many Germans believed the true cause of defeat of 1918 and the loss of thirteen percent of the land and population of Germany was not the failure of the army, but revolution and political betrayal known as the “stab in the back” conspiracy theory. There was a common belief in German society that the military had not been defeated in view of the orderly withdrawal from the front. In fact, military resistance had in fact been overwhelmed as a primary cause for losing the war, which had strained available resources while fighting on two separate fronts and enduring the prolonged effects of the naval blockade that caused shortages of vital resources for critical war materials, until the western allies ultimately broke the stalemate on the western front.
Politicians were further burdened by the humiliating peace terms and the confession of war guilt, and a narrow power base that was threatened by extremists. The postwar government was also from the beginning of its operation largely unable to cope with the chaotic conditions of postwar Germany, where demobilisation of over six million troops was massive and disorderly and faced an unstable economy and governmental authority, leading to outbreaks of widespread political violence triggered by disaffected social elements. A powerful German Communist Party attempts to seize power in 1919, including the Spartacist revolt in January 1919 and the attempted establishment of a Bavarian Soviet Republic from March to May 1919, which were suppressed by regular troops and Free Corps volunteer soldiers, who the provisional government relied to restore order during the immediate postwar emergency circumstances. Another threat came from the right in the attempted Kapp Putsch of March 1920, in which soldiers who were to be demobilised staged a coup attempt and attempted to install Wolfgang Kapp, a minor politician, as Chancellor. It was broken by a general strike while most workers were loyal to the democratic republic, but it also revealed the reactionary spirit and doubtful loyalty of the officer corps. On the extreme right, splinter groups and parties arose who leaders were altogether unwilling to abide by the rules of democratic and parliamentary government. The German Workers’ Party was one such group founded in 1919, and soon came under the leadership of an obscure Austrian, Adolf Hitler.
He had dropped out of school at the age of fourteen, and spent four years as a struggling third-rate artist before trying to enroll in the Academy of Fine Arts in Vienna where he was told he did not have any artistic talent. Back on the streets, he consoled his sense of inferiority by absorbing a nationalist ideology that Germans were a superior race of people and the natural masters of Europe, as well as anti-Semitism and other forms of racism, such as against Slavs. When war broke out in 1914, he believed he found salvation, finding that the struggle and discipline of the war gave his life meaning while served in the German army. When defeat came in 1918, his world was shattered. He developed the idea that a Jewish and Communist conspiracy had cost Germany the war, and had to be removed.
He returned to Munich after demobilisation, and became an informer for the army, investigating communist sympathisers in the wake of the short-lived Bavarian Soviet Republic. In this connection, he first acquired knowledge of the German Workers’ Party. Although the name was suspect, he soon discovered that its small membership consisted principally of fanatical nationalists like himself. He joined the party in September 1919, became a member of its executive committee, and in the following year altered its name to the National Socialist German Workers’ party (National Sozialistische Deutsche Arbeiter Partei or NSDAP). By 1921, Hitler was in control of the party. The party membership continued growing while Hitler made a reputation as a mob orator attacking Weimar and democracy, the threat of communism and the Jews as scapegoats for Germany’s problems, while he hoped to use the party to seize power in Germany.
The continued survival of the Weimar republic until 1923 often seemed in doubt, which worsened due to economic factors. France had suffered the worst losses in the First World War, as most of the fighting on the western front had taken place in its richest area. More than half of France’s prewar industrial production, including 60 per cent of its steel and 70 per cent of its coal, had been located in the war-devastated area, which was also among the most important agricultural regions. Most appalling was the loss of life: 1.5 million French citizens – one-half of the prewar male population of military age – had been killed, with half as many more permanently disabled. France thus demanded that Germany pay for the war, and sought security above all. France had therefore insisted on harsh terms and strict enforcement that caused economic hardship for Germany while France itself was facing serious economic problems and therefore intended to restrict German power economically while it possessed massive economic potential.
In view of their diplomatic isolation, Germany and Russia restored relations with each other on 16 April 1922 in the Treaty of Rapallo. Whereas German state authorities sought to acquire potential international trade concessions and implement rearmament plans outside of Germany, Lenin and Stalin recognised that the defeat inflicted by Poland in the Polish–Soviet War that was concluded on 18 March 1921 that temporary cooperation with countries opposing their state political ideology was a pragmatic necessity in the interest of acquiring necessary material assets from abroad, and also generate tension among western powers, as this agreement would evoke suspicion among them concerning diplomatically isolated Germany and the Soviet Union, as well as forestall further armed intervention from the west, while also sharing a common antipathy against Poland. Germany recognised the Soviet Union and repudiated all debt claims, and insisted that the Russians should not compensate any other countries. In return, the Soviet Union waived any right to reparations from Germany. This treaty prompted France to make the Germans pay reparations in full under the terms of the Versailles Treaty. The Soviet authorities nevertheless maintained guarded suspicion about Germany that was not considered an ally, with further suspicions being evoked as a result of Germany’s diplomatic rapprochement with the western powers through subsequent western foreign policy developments, including the Dawes Plan, the Locarno Accords, Germany’s entry into the League of Nations, and the Young Plan that were interpreted as further isolating the Soviet Union, while Germany and the Soviet Union maintained an uneasy diplomatic truce.
Reparations payments aggravated existing economic problems, while the Reichsbank, the German central bank, faced dealing with two major problems that could eventually lead to state bankruptcy. One matter was the international balance of payments deficit, which greatly undermined the central bank’s foreign currency reserves. The Treaty of Versailles had reduced export earnings while also increasing Germany’s import requirements as a result of losing resource rich territories, and burdened the German economy by imposing the requirement to pay reparations in the form of foreign currency, which amounted to approximately 2.5 percent of the country’s gross domestic product, which ultimately depleted the central bank reserves, while imports could not be reduced to maintain these reparations payments for the German economy that depended on importing crucial raw materials, such as iron ore and petroleum. During this time, the German government was also burdened by repaying war bonds to the German population that had financed the war effort, rather than increasing taxes. Rather than imposing austerity measures to radically reduce government spending and dramatically raising taxes, the central bank resorted to printing new amounts of currency to purchase gold, which led to generating liquidity without creating economic productivity.
This short term solution to enable the Weimar government to make reparations payments necessarily led to the rapid deterioration of German currency, or causing inflation, as the its value dramatically decreased relative to the value of gold as a genuine value, and increased the cost of imports, which in turn led to higher costs to sustain the economy while debts increased with reduced productivity with relatively low unemployment as liquidity remained flowing, and the value of artificially inflated currency allowed for paying for war debts in the form of bonds that were issued during wartime, at the cost of reducing the value of savings and fixed pension incomes as a result of the reduced purchasing value. The reduced purchasing value of German currency had become dramatically apparent in the immediate postwar years, when the cost of living was eight times higher in December 1919 than in 1913, which would only worsen as a result of the economy being incapable of generating tangible value while burdened with loan as well as reparations payments. The economic crisis became aggravated in April 1921 when the allies presented the London Schedule of Payments for reparations, demanding a total of 132 billion gold RM, to be paid in annual installments of 2 billion along with twenty-six percent of the value of German exports, with the further condition that a failure to make payments would result in occupation and higher demands. Further complicating postwar economic recovery a League of Nations decision on 20 October 1921 was settling the disputed border between Upper Silesia and Poland, granting two-thirds to Germany and the remaining one-third to Poland, which led to shifting possession of most of the industrial sector and coal and iron ore facilities to Poland, and thereby caused further economic dislocation among the workforces and supply lines, in addition to Germany losing revenue and increasing national deficit, leading to further currency devaluation. During this time, the German central bank remained issuing new currency that flooded the national economy as a short-term troubleshooting solution that could not be sustained.
When the German government needed to pay thirty-three billion dollars in war reparations by April 1921, and the German government announced to France in July 1922 that it could not pay until the end of 1924, the weakened economic conditions inevitably reached irrecoverable crisis proportions. In response to late payments of coal and timber, the French and Belgians sent troops to occupy the Ruhr Valley – Germany’s chief industrial and mining centre – in 1923 intending to collect reparations payments from the operation of the mines directly, regardless of the objections of Britain and the League of Nations, which necessarily throttled national economic capacity. The German workers of the Ruhr Valley retaliated by going on strike. In order to pay the workers to return to work, the German government printed more paper currency that triggered runaway hyperinflation, and making German currency almost worthless. While the German government expected the Allied occupation to be made too costly to remain politically sustainable, the cash savings of hundreds of thousands of middle-class individuals were consequently eliminated while industrial production in the Ruhr was paralysed. This affected the sentiment and economic standing of social classes in Germany, bringing many professional and salaried people to a proletarian level, and also became followers for the National Socialist party that threatened the Weimar republic.
The crisis of 1923 provoked a new flare-up of political violence in Germany. The Chancellor, Gustav Stressemann, announced the end of the policy of passive resistance in the Ruhr and there had to be a resumption of the reparations payments, reasoning that if Germany was to be saved and a drift to anarchy stemmed, some sort of agreement had to be negotiated so that the republic could regain economic strength. To meet the inevitable opposition, Stressemann persuaded President Friedrich Ebert to declare a state of emergency. Hitler then tried to imitate Mussolini by proclaiming a “Putsch” in a beer hall in Munich on 8 November 1923, where the Central State Commissioner von Kahr and the local Armed Forces Commander Otto von Lossow were addressing a patriotic meeting. This attempt was unsuccessful since the army was called in to disperse those who had staged this putsch attempt, and Hitler and some other Nazi leaders were imprisoned, with Hitler being sentenced to five years and in released six months later. Hitler used this time to write a book on his views called Mein Kampf, or “My Struggle,” which combined autobiography, and political doctrine that combined contempt for democracy, Jew-baiting and race mysticism in what became a textbook for the NSDAP. Drawing on Social Darwinism, Hitler believed that superior nations had the right to gain living space, just as superior individuals had the right to acquire leadership over others. An essential belief was a belief in a “master race” composed of mythical “Aryans” that was threatened with destruction by a worldwide conspiracy of Jews, either in the role of capitalists who either impoverished populations or communists who conspired to wage war against them. He also put forth his anti-communist, anti-Semitic, and nationalist ideas including the so-called Final Solution, which called for the extermination of the Jewish race to permit the Aryan race to be perfected. The Nazis now had their own guide for their beliefs, whereas the Weimar Republic maintained attempts to restore political and economic stability.
The new Reichsbank president, Hjalmar Schacht, was appointed to resolve the economic crisis following the election of a new government in 1923. Schacht prepared a new currency to supersede the previous one that hyperinflation had rendered valueless. The economy was thus stabilised at the national level, while the underlying economic situation remained problematic. Although hyperinflation had resolved local debts, there remained the balance of payments crisis that remained being aggravated by the requirement to make continued reparations payments. In order to rectify the economic situation in Germany, U.S. financier Charles Dawes recommended in August 1924 that the reparations amounts and the annual payments be reduced based on realistic German productivity, along with stabilising German currency by setting a more moderate schedule of reduced reparations payments, and granting a 200 million dollar loan to the German government to further facilitate economic recovery by providing the funding that would allow for paying reparations to allied countries, which could in turn be enable to repay American loans. Removing exceedingly high debts and the immediate economic threat of reparations thus removed the necessity to issue a new form of currency as a short term solution. Inflation fell and the economy became increasingly stabilised, which also attracted foreign investment, which allowed for improved balance of payments conditions, and facilitated making reparations payments while exports were increased that led to increased levels of foreign reserves as the world economy improved as a whole. Nevertheless, the social consequences of the economic crisis would remain, and continue affecting German political life.
Like Mussolini, the Nazis began as both a socialist and nationalist movement, but as support for them gathered, Hitler emphasized his nationalistic, anti-Semitic and anti-Bolshevik doctrines. Different characteristics distinguished the National Socialist movement. One of these was the leadership cult. Nazis fixed all authority on the person of Adolf Hitler, who in some mystic way was supposed to embody the will of the German race in his person and would therefore provide the strong and resolute government that alone could throw off the shackles of Versailles, and assure the future of the German people against its enemies. This was followed by one of the ideological tenets of National Socialism, which advocated establishing the national superiority by advocating rearmament and the reversal of the Versailles Treaty so that all Germans could be united in a Greater Germany, which would entail the recovery of German minorities in Poland, France and Czechoslovakia, union of Germany and Austria, and recovery of full sovereign control over the Rhineland. Another Nazi ideological peculiarity was that the Aryan or Nordic peoples were naturally superior in physique and intellect, and that the Germans were a “master race” threatened with corruption by inferior races. This was characterized by extreme anti-Semitism justified by the assertion that Jews as well as Slavs were of a different race from true Germans and therefore enemies. Thus, he sought the subordination of these “sub-humans.” A third principle was living space. Regarding Germany as deficient in land and supplies of food and industrial raw materials, Hitler advocated the creation of an eastern central European empire, and the enslavement of the native populations. A fourth principle was loosely defined socialism, advocating reforms such as nationalisation of the biggest industries and tracts of land, and the abolition of unearned incomes. Although this last principle attracted the support of the working and lower middle class, it would not be put into practice while the party attracted the financial backing of industrialists and landowners who were attracted by the anti-communist stance. After he was freed from prison, Hitler then spent the remainder of the 1920s and early 1930s to leading the Nazi party to power by legal means, rather than a forceful takeover, but their support remained in a minority status until there would be another crisis situation and achieving power by using the system against itself.
Germany enjoyed relative economic stability until 1929 that precluded radical political parties from acquiring support against democracy, but it remained diplomatically isolated. Relations between Germany and France later improved with the Treaty of Locarno in October 1925 after France’s hardline policy had failed. This treaty guaranteed the western borders of France and Belgium, and paved the way for Germany to join the League of Nations as a permanent member of the leading Council of the League in September 1926. This thus meant a partial revision of the Versailles Treaty, since France would not be in a position to take hostile action against Germany, and could block decisions for taking military action through its membership on the Council. There was also not any guarantee of Germany’s eastern borders due to Britain’s opposition to provide guarantees.
The Kellogg-Briand Pact signed on 27 August 1928 also reassured many that a new era of peace had begun. Sixty-three nations claimed to renounce war as an instrument of national policy while agreeing to settle disputes through peaceful means, and called upon the countries that signed it to reduce their military forces. However, there was no way to enforce the pact, and few countries wanted to risk national security by reducing their armed forces, so in the end it was a worthless agreement. Meanwhile, there rankled two great sources of resentment beneath the surface of economic prosperity. Nearly all Germans felt that the Versailles Treaty was unjust, and many Germans felt impatient with a government that had accepted the Treaty, and which seemed incapable of securing real modification of its terms by peaceful negotiations. Denunciation of Versailles constituted one of Hitler’s principal propaganda weapons until the early 1930s, and since he seemed to have the will to do something drastic about the hated treaty, his appeal was effective. The second weakness of the Weimar regime was the discontent of the impoverished professional and salaried classes after the hyperinflation of 1923. In addition, there were powerful German groups, comprising of aristocratic landowners, some industrialists and the old officer corps who looked back at the glories of imperial Germany with deep regret. Such conservative and nationalist groups disliked the Weimar regime, partly because a democratic and liberal government seemed weak, being without concrete actions, and partly because they viewed the political leaders of the Social Democratic and other associated parties as social upstarts whose political goals were subversive to the old order. In addition, the working classes, upon whom the Social Democrats depended for their popular support, were also not solidly committed to the Weimar government. A powerful communist party continued existing, and regarded the democratic and liberal constitution of Germany with contempt. Communists directed their efforts against the Social Democrats in the hope of seizing power for themselves, which later also contributed to Hitler’s eventual success, along with greatly worsened economic conditions that were caused by the onset of the Great Depression Germany was particularly vulnerable to international economic conditions for different reasons. American loans to Germany that had alleviated the burden of reparations payments abruptly ended, and German exports collapsed as the U.S. and the U.K. turned to imposing protective tariffs in attempts to maintain their employment levels through their respective national economic productivity, which consequently caused a renewed balance of payments crisis in Germany. Printing money and increasingly greater degrees of protectionism would not protect the Germany economy from international factors, and drastically reducing importing vital goods would devastate German industry. Reparations payments would thus continue draining the Reichsbank reserves while the national economy could not be salvaged by any other means than to allow for economic market forces to function without governmental intervention and controls. The government could not control international trade, and therefore the local population would have to endure facing austerity measures on an individual level in the form of taxation and reduced public spending, while employers could not sustain their workforces. Unemployment soared, leading to widespread disaffection with the national government, which became vulnerable to attacks by radical political parties, such as the Communist party and the NSDAP, offering radical solutions to social and economic grievances to impoverished voters.
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