Chapter 2- Democracy and dictatorship in Germany

By 1928, industrial production had reached the levels of 1913. This was due to more efficient techniques, and foreign investors attracted by high interest rates. German industries were also able to lower costs due to the establishment of cartels. This allowed them to buy raw materials cheaply due to less competition. For instance, Vereinigte Stahlwerke combined some of Germany’s coal, iron and steel interests and controlled half of the market. The recovery was helped by the Dawes Plan.

The economic growth benefited larger companies much more than smaller ones. In 1926, production actually declined. Rising export costs meant industrialists looked to cut their costs by making workers redundant. Valuable natural resources had been lost in the Saar region and Silesia due to the Treaty of Versailles.

To a relative extent industry reached levels similar to an imperial Germany, however they were dependant upon US loans in order to to increase the levels of industry.

Industrial Production

Between 1925 and 1929, German exports rose by 40%.

The value of imports always exceeded that of imports (Germany was always buying more than it was selling).  German businesses were hindered by protective tariffs in many parts of the world.

To some extent trade improved since exports did rise by 40% however the value of imports were always above exports as the country was buying more than what it was selling. In addition German businesses were hindered by protective tariffs all over the world, which reduce the amount of trade taking place.

trade

Hourly wage rates rose every year from 1924 to 1930 and by 5%-10% in 1928-29. Workers gained more rights such as an 8 hour day and the right to strike.

Unemployment never fell below 1.3 million, even before the Great Depression. This was due to an increase in size of the working-age population, as a result of a baby boom before the First World War. Farmworkers’ earnings were only half the national average by 1929 Still extreme wealth and poverty Concern about the cost of the welfare system and the levels of taxation

To some extent work and wages improved as workers gained fairer rights and higher wages, but unemployment was still high as there wasn't enough jobs for all of the working population.

work and wadges

In April 1924, the Dawes Plan was agreed by Stresemann in his capacity as Foreign Minister.  American banks provided a large loan to German industry and the government in order to help its industry recover. Reparations were also made more manageable.  The result was that Germany was receiving twice as much money from abroad as it was paying out in reparations. The Young Plan also reduced reparation was signed in 1929, with Britain and France agreeing the evacuation of the Rhineland by the end of June 1930.

Germany was paying reparations in money received from the USA, which was then being used by Britain and France to repay loans taken from America during the war. This meant that, in reality, only the USA benefited substantially from the Dawes Plan. High interest rates in Germany also guaranteed that foreign banks would make a profit on their loans.  Stresemann himself acknowledged that the German economy was too reliant on foreign loans, describing Germany as ‘dancing on a volcano… if the short-term loans are called in by America, a large section of our economy would collapse.’

A relative extent as the Dawes plan did help to get Germany back on its feet and pay the reparations after the war but it also meant that it was completely reliant on foreign loans and if those were to be pulled back the economy would collapse again.

Foreign loans

Throughout the 1920s, there was a worldwide depression in agriculture.  This meant that food was very cheap for the average German consumer, whilst the government provided some financial aid to peasants and imposed tariffs on food imports to protect German farmers.

German peasants made up one third of the population and struggled to make a profit due to the collapse of food prices.  This drastically reduced their spending power, influencing the whole economy, e.g. they bought less tractors, so tractor factories also suffered.  Production also collapsed. By 1929, agricultural production was still only three-quarters of production in 1913.

There was no change at all as there was no improvement at all to agriculture and effected the ⅓ of the German population that were peasants, that struggled to profit due to the collapse in prices, that did benefit the average German consumer however.

Agriculture and food prices

Weimar governments set up the most comprehensive welfare system ever, largely funded by progressive taxation (income tax for the very richest rose from 4% to 60%): Widows and the war wounded received benefits and pensions From 1922, welfare was provided for younger people from poorer backgrounds, as well as increased provision for youth clubs and sporting facilities. A standardised pensions system was established. An improved health insurance scheme meant that more Germans had access to healthcare, resulting in a drastic reduction in deaths from infectious diseases and an increase in the number of doctors and hospital beds available (before 1914 there were 4.8 doctors per 10,000 people; there were 7.4 per 10,000 after 1920). Accident insurance was provided for those doing dangerous jobs such as mining. In 1927, the Unemployment Insurance Law was passed. 17 million workers were covered. If a worker lost their job, they would be guaranteed to receive three-quarters of their pay as benefits for three-quarters of the year. This was the largest scheme in the world. Large state subsidies were provided for parks, schools, hospitals and houses. Over 2 million houses were built from 1924 to 1931, and a further 200,000 renovated. Homelessness fell by 60% during the 1920s.

Weimar governments struggled to pay for their welfare commitments with their revenue from taxation.  This drastically increased public debt. By 1928, public spending was 26% of GNP, which was double the figure in 1913. This reduced confidence in the German economy and towards the end of the decade the government had to restrict access to some benefits.

Relative change as social welfare did dramatically increase as new schemes were introduced in order to support the German population, however the Weimar government did struggle to pay for these commitments meaning an increase in taxes.

Social Welfare

Parties that supported democracy did well in these years, by 1928 they had 136 more seats than radical parties with the Nazis winning less than 3% of the vote

Coalitions continued to be unstable as the largest parties, the SPD and the liberals, disagreed over economic and social policies 1925 Hindenburg was elected President; his support for the republic was lukewarm; he wanted to exclude the SPD from government and bring in the right wing DNVP. The republic did not win loyalty from either the left or the right

No change at all since this was the case in 1919 at the beginning of the Weimar government.

Political stability

Architecture flourished in the works of the Bauhaus group Painters such as Otto Dix formed the New Objectivity Movement Jazz was popular in nightclubs and bars in many cities Women were allowed to go out unchaperoned, engage with new fashion, be part of politics and live more frivolous lifestyles

The film industry grew producing controversial films such as All quiet on the Western Front which angered nationalists. Many were scandalised by popular culture, particularly cabaret clubs which mocked the values of the ‘old Germany’ with jazz and often nudity

There was complete change since the new style often angered German nationalists as it went against traditional German values.

Flourishing Culture

Most parties weren’t committed to democracy. Proportional representation led to coalition governments. Coalition governments could never agree on domestic and foreign policy. Chancellor needs the support of the Reichstag to maintain their position. Article 48 gave the president emergency powers, wasn’t viewed as democratic.

the main weaknesses of the Weimar political system

Until 1932 it was the largest party in the Reichstag. It was firm in its support of the Republic but was divided between its desire to uphold the interests of the working class and its commitment to democracy. Some members feared that joining coalitions with other parties would weaken their principles, while others wanted to participate in government in order to influence it. Led to the SPD never joining any of the fragile governments coalitions, which weakened the power base of the coalitions. Remained the strongest party and was committed to democracy, but wasn’t prepared to take on the responsibility of government till 1928.

The SPD

Provided political leadership in Weimar politics. Participated in all the coalition governments from 1919-32 by taking ministered posts. Its appeal was restricted to traditional Catholic areas, but its electoral support was strong. Its social and economic policies, that aimed to bridge the gaps between the classes, led to internal quarrels. At the beginning it was more liberal but over time it became more right wing, that resulted in conservative leadership and further divisions in the party, posed threat to both Germany and the Weimar government.

ZP

Opposed the republic and refused to take part and joined a coalition in 1925-27. It had little power and its conciliatory policy wasn’t popular. Joined forces with the Nazi Party in 1928. Had many right wing members.

DNVP

These were not strong in the Weimar, but both joined all the coalitions. Their share of the vote had halved from 22% in 1920 to 14% in 1928. Stresemann was the leader of the DVP, but he couldn’t get them to unite as the divisions within both parties were very strong and the DDP lacked clear leadership and members were involved in internal bickering over policy.

DDP/DVP

A presidential election was due to be held in 1925, but Ebert died. After the first round of elections there wasn’t a clear successor, so a second was held. But the divisions in German society were outlined and his appointment was controversial.

How did Hindenburg come to power?

Since he was more right wing and a nationalist, meaning he wasn’t in full support of a democracy. People were worried the he might try to change the government again.

Why might Hindenburg’s presidency be seen as disastrous?

The new president proved loyal to the constitution and carried out his duties with correctness. There was no restoration of the monarchy or introduction of a military style regime. It has been argued that Hindenburg as president acted as a true substitute for the Kaiser or Evsatzkaiser. in that sense, the status of Hindenburg as president at last gave the Weimar some respect in conservative circles. He was seen as the Evsatzkaiser as he was conservative, a nationalist and a military hero.

What evidence is there that his election wasn’t disastrous for the Republic?