Prof Rempel lecture: weimar economic problems

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Weimar Economic Problems

This is a reprint of an article by
Professor Gerhard Rempel, who was Professor of History at Western New England College, Springfield, Massachusetts. The lecture is provided here as it would seem to be no longer available online.


The provisional government left the scene three months after its inauguration. On February 10, 1919, the constituent national assembly which had convened in Weimar four days earlier promulgated an emergency constitution. The revolutionary period was over. This assembly had been elected in January (while the army repressed KPD rioting) and showed a significant increase in SPD seats over the last imperial Reichstag. The three parties of the Peace Resolution of 1917 - SPD, Center, and Progressives (now Democrats) - had a large majority and formed the pro-republican "Weimar Coalition.''


I. The New Constitution

The emergency constitution was modeled on the imperial constitution, with a president elected by the assembly in place of the emperor. The president nominated ministers, who were responsible to the assembly. He did not have power to dissolve the assembly, which was sovereign except for the rights of the states. The federal principle was expressed in an upper house, whose assent was required for legislation. In case of disagreement between the two chambers, the issue was to be decided by referendum. For the constitution the assembly alone was responsible, but territorial boundaries could be changed only with the consent of the states concerned.

The assembly set about its constitution-making with speed. Indeed, a draft of a constitution was ready for its consideration as soon as it met. This had been drawn up by Hugo Preuss, a left-of-center liberal imbued with the ideas of Stein, Weber, and Naumann. In his draft constitution he attempted to distill a conception of the state in which this German liberal tradition would be harmonized with western parliamentary democracy.

Two characteristics stand out: his solution to the new problem of democratic leadership and his solution to the old problem of German unity. Preuss believed that the obstacle to a unitary, as opposed to a federal, state had disappeared with the removal of the princes, especially since the revolutionary government had had no connection with the states. He therefore proposed to reduce the states to merely administrative autonomy and to give the central government much wider powers. In particular, he was anxious that Prussia should lose her independence and be divided up into provinces.

But this unitarism was unacceptable to many of the state governments, to which Preuss's draft was submitted for consideration. Many politicians in Prussia objected and the middle states objected even more strongly. A more general consideration was the desirability of keeping the door open for a subsequent accession of Austria, which would be far easier if Germany remained federal. With Ebert's support, therefore, Preuss's draft was amended, even before it went to the constituent assembly, to retain from the imperial constitution the federal principle and some of the specific reservations in favor of the states.

The assembly itself took most of the latter out again, but kept the federal principle. Prussia was preserved intact, but half of her representatives in the new Federal Council (Reichsrat) were to be elected by provinces. Federal legislation was extended to certain areas formerly reserved to the states. Amendments to the constitution could be made by federal legislation or by a referendum.

Certain restrictions were imposed on the constitutions to be adopted by the states (now called Länder). In the Reichsrat each Land had votes proportionate to its population, with the exception of Prussia which was allowed a maximum of two fifths of the total. The members of the delegations from each state, unlike those in the old Bundesrat, were not required to vote as a unit. Legislation rejected by the Reichsrat could be passed by a two-thirds majority in the Reichstag (the Bundesrat had had an absolute veto).

Federalism, though reduced, had been preserved. This proved to be a source of strength, not of weakness, for the Weimar Republic. Preuss probably failed to appreciate the extent to which the degree and the character of Prussian hegemony in imperial Germany had depended on the monarchy and on the three-class suffrage. It turned out that a republican Prussian government, elected on equal suffrage, was one of the firmest pillars of the Weimar constitution.

The Prussian government from 1920 to 1932 was in the hands of a Center-SPD coalition. The SPD, the major partner, was under the leadership of Otto Braun, the prime minister. Braun appears in retrospect as one of the very few real statesmen of the Weimar Republic. He was utterly devoted to the ideal of democratic socialism, but pursued the reformist policy of the SPD with greater tactical skill than most of his party colleagues in federal politics. The Center Party contributed to the stability of the Prussian government by abandoning its former states' rights attitude. Separatism became a serious problem under the Weimar Republic not in Prussia, but in Bavaria.

It was partly because of fear of Bavarian instability that Preuss wrote into the Weimar Constitution the now famous Article 48, which gave the president of the republic the right to govern by decree in emergencies. Before 1928, however, nobody paid much attention to this provision. The Weimar presidency in general was regarded as a weak (''French''), rather than a strong (''American'') one. Preuss indeed had wanted it otherwise. He wanted a presidency strong enough to act as a counterbalance to a dangerously powerful parliament. Max Weber urged Preuss even further, toward a strong presidency as a source of ''charismatic'' leadership. Very little of this sentiment was reflected in the constitution as it was eventually promulgated, in August 1919.

The constitution was considered to provide for parliamentary government with some modifications: for example, the president was given the right of dissolution of the Reichstag and appointment of the chancellor. With Ebert as presumptive president these did not seem to anyone to be excessive powers. More significant was the direct election of the president by the population. This prescription introduced a plebiscitarian element into the presidency, which could lead to an attempt, such as was later made, to depict the president as more representative of the people than the Reichstag. But the plebiscitarian principle was also embodied in provisions for initiative and referendum. The importance of political parties in a mass democracy was tacitly acknowledged in the adoption of proportional representation.

II. Economic Problems

Economic problems were among the most pressing that the young republic had to face. Because of the inflationary means by which the imperial government had financed the war, the German mark in 1919 was worth less than 20 per cent of its prewar value. Despite Erzberger's energetic financial reforms, the state's revenues from taxation based on nominal values were hopelessly inadequate.

Moreover, the economic impact of the Treaty of Versailles was crushing. Germany lost 13 per cent of her territory, 10 per cent of her population, 15 per cent of arable land, 75 per cent of iron and 68 per cent of zinc ore, 26 per cent of her coal resources, the entire Alsatian potash and textile industries, and the communications system built around Alsace-Lorraine and Upper Silesia. Huge amounts of ships and shipping facilities and of railway rolling-stock were delivered to the Allies.

All this was more important than the reparations payments imposed by the treaty, although the latter attracted greater attention. This was because of the link made in the treaty between reparations and the so-called ''war-guilt'' clause. Article 231 bothered the Germans more than any other. The amount of reparations fixed in 1921 was estimated by J. M. Keynes to exceed by three times Germany's ability to pay.

But the punitive aspects of the treaty in general should be compared with the nature of the Treaty of Brest-Litovsk. The reparations question should be put in perspective by remember that the imperial government had proposed to recoup Germany's financial sacrifices in the war by imposing on the defeated Allies payments four times greater than those eventually demanded of Germany. These considerations help to explain, rather than to excuse, the follies of the Paris peacemakers.

Another reason for the prominence given to reparations is their alleged contribution to the runaway inflation of the early 1920s. In fact, however, inflation, far from being the consequence of reparations, preceded them. Successive governments then seized on it as a means of evading reparations payments, as well as for internal social purposes. No German government before 1923 made any attempt to stabilize the currency, because German industrialists worked out a system of ''inflation profiteering.'' They would obtain short-term loans from the central bank for improvement and expansion of their plant, and then repay the loans with inflated currency.

Similarly, the large agriculturists paid off their mortgages with virtually worthless currency. By contrast, everybody with a fixed income-broadly speaking, the middle class, was a victim of the inflation. Even union wages always lagged behind prices. The dislocation caused by inflation brought unemployment, despite the apparent industrial boom. The inflation was obviously deeply divisive in its social effects and contributed to lack of confidence in the fledgling republic among large groups of the population.

The industrialists, in addition to favoring inflation, which itself had the effect of undermining reparations payments, also directly opposed any genuine effort to meet these payments, because such an effort was likely to involve domestic austerity and a planned economy. The SPD, which had missed its opportunity to intervene in the economy during the period of provisional government, was by this time no longer in power. In the elections of 1920 it had lost sixty seats to the USPD, and the ''Weimar Coalition'' lost its majority in the Reichstag, never to recover it. The governments of the period of inflation were led by members of the Center Party and were open to influence from industry.

The situation changed after the French, realizing that Germany was deliberately evading reparations payments, decided to go and get them and occupied the Ruhr district in January 1923. The German government tried at first to resist and retaliate, but soon found this impossible. A new government was installed for the purpose of appeasing the French, getting the Ruhr cleared, and negotiating some revision of the reparations burden.

One essential requirement of proving German good faith to France was stabilization of the currency, which took a certain amount of technical financial skill and a lot of determination and nerve. These were supplied mainly by the new chancellor, Gustav Stresemann, the first and last member of a liberal party ever to hold that office. Before 1918 he had been on the left wing of the National Liberal party on domestic issues, but during the war had been an extreme annexationist and played a leading part in the dismissal of Bethmann Hollweg. On this account he had not been admitted to the leadership of the new Democratic Party (DDP) in 1918, whose founders professed to aim at a united bourgeois liberal party but which turned out to be not much more than the Progressive Party under a new name. Stresemann had therefore founded a party of his own, as a successor to the National Liberals, which he called the People's Party (DVP).

This failure to unite the middle class politically was not the least of the domestic consequences of the conflict over war aims. It meant that Stresemann led a small party which was to the right of center and to the right of him, instead of a large party, of which he would have been more representative and which would have given him more consistent and more powerful support. He failed, for example, to prevent his party from following in the footsteps of the National Liberals and regarding itself as the political mouthpiece of German industry. Stresemann himself was not associated with heavy industry, but came from a poor family and never forgot the miserable district of Berlin where he was born.

In this respect he differed, for example, from the millionaire Walther Rathenau, who had briefly played an important part in Weimar politics, just before Stresemann became chancellor. Rathenau, however, like Erzberger, was assassinated by right-wing nationalist fanatics, who resented his policy of moderation. These senseless acts robbed the Weimar Republic of its two strongest middle-class supporters and left middle-class leadership to men of Stresemann's political stripe. Stresemann was, after all, still a monarchist, and his party was officially a monarchist party. For all his many fine qualities-he was a talented orator, a man of charm and cosmopolitan culture, and one of the few statesmen who appealed to young people-Stresemann's appointment should therefore have raised the question of the viability of a ''Republic without republicans'' as early as 1923.

Fortunately, Stresemann was a practical man, a ''pragmatic conservative,'' which accounts not only for the not always entirely honest discrepancy between theory and practice, but also for his flowering when given office and his relative success as a statesman and politician. He needed an immediate practical problem. Without one, he tended to lose himself in romantic and irrational meandering. This dichotomy in his nature goes far to explain the contrast between the nationalist extremist of 1917 and the responsible chancellor and foreign minister of the 1920s, who even dropped his monarchism when he found it obsolete.

III. Political Problems

Probably his hundred days as chancellor contained Stresemann's greatest achievement, greater than that of his subsequent years as foreign minister. He had the courage and the self confidence to take office under unprecedentedly bad conditions, an act of statesmanship to be compared with that of the Weimar Coalition in voting to accept the Treaty of Versailles (which he had opposed). Both were steps which preserved the very existence of Germany. On the other hand, by no means the whole credit for securing the evacuation of the Ruhr and overcoming the inflation belongs to Stresemann alone.

The government over which he presided for the first sixty of his hundred days was a so-called "Great Coalition" government, that is to say, a cabinet which contained members of the three parties of the Weimar Coalition plus his one, the DVP. Since from 1920 on neither the Weimar Coalition alone nor the parties of the Right alone could muster a majority in the Reichstag, owing to the strength of the USPD and KPD, the great parliamentary problem of the Weimar Republic was the relationship between the SPD and the DVP.

This relationship determined the possibility, at any given time, of carrying on government at all, either through a minority government of the bourgeois parties tolerated by the SPD or through a Great Coalition. The difficulty was that the SPD was the party of the workers and the DVP the party of the employers. Stresemann's struggle to change his party's character in this respect was therefore, among other things, a struggle to make it more amenable to collaboration with the SPD, and ultimately a struggle for the survival of the Republic itself.

The whole parliamentary life of the Weimar Republic was fundamentally different from that of the Empire. It was a fully constitutional state, in which political parties played a vital and active role, as distinct from the shadow-boxing to which they had been condemned by Bismarck's sham constitutionalism. One consequence was that the parties reorganized and strengthened their internal machinery. The lead was taken by the successor to the two imperial conservative parties, the National People's Party (DNVP). By contrast with Stresemann's DVP, whose monarchism was usually passive, the DNVP from the first campaigned militantly for the restoration of the Hohenzollern monarchy. It took a position of outright hostility to the new republican regime and institutions.

That such a party could even exist is again traceable to the SPD's unwillingness to destroy the position of the Prussian Junkers during the period of provisional government. Even apart from its generally cautious approach, the SPD as an urban party had taken little interest in the problems of peasants or of agriculture in general. Insofar as they had any views on the subject, SPD leaders tended to regard large-scale agriculture as economically sensible. They thought that because of the loss of territory in the east and the economic damage of the war, the time was particularly inappropriate for any radical measures of land reform.

Nevertheless, the consequences for the new republic were disastrous. Of all the old forces from imperial Germany that survived into the Weimar Republic, none was as dangerous as the Junkers, with their economic base in agriculture, their prestige base in east-Elbian society, and their positions of power in the army and the civil service. They, more than anyone else, were responsible for the psychological incubus of monarchism weighing on the Republic. Hugo Preuss had rightly said that no constitution would work which was not accompanied by a positive ''national spirit.'' Instead, the regime was the target of a constant stream of nationalistic invective and denunciation of democracy and parliamentary government in general as un-German and wicked. This drew strength from the Versailles treaty and the ''stab in the back'' legend. Such an assault could never have assumed the proportions it did, if the Junker and other conservative and reactionary forces had not been allowed to regroup in 1919 under the banner of the DNVP.

From this bastion they went over to the offensive against the Republic, spawning various societies and para-military groups, which sponsored attacks, both verbal and physical, upon the regime. Very few supporters of the Weimar Republic even made any attempt to deal with this ''disloyal opposition.'' The SPD, to whom the men of the DNVP had been wont to apply the label ''enemy of the state'' before 1914, forbore to turn the tables after 1918.

As a political party, the DNVP took advantage of parliamentary institutions to undermine them. The leaders recognized that, deprived of the virtual veto on German affairs that they had been able to exercise through the three-class suffrage in Prussia, they must use the methods of democracy to fight democracy. They therefore abandoned the role of an agrarian pressure group and presented the party as a broadly comprehensive coalition of the political Right. By this sort of appeal they captured the loyalty of many people of merely sound patriotic feeling, as distinct from bellicose nationalism, who were alienated from the Weimar Republic and from the system of parliamentary government, which was its essence. Misunderstanding the principles of the SPD, these people were unwilling to ''accept'' the state that they considered its creature. So successful, indeed, were the leaders that by 1924 the DNVP had become the second largest party in the Reichstag, not far behind the SPD.

The SPD also-and, for that matter, all the parties-evolved more elaborate and more permanent organizations, in view of the frequency of elections and the institution of female suffrage. Party machines tended to become vested interests, and party managers, intent upon votes and the ''party image,'' inhibited the flexibility of their Reichstag delegates, who in the thick of parliamentary battle were more inclined to realism and compromise. This growing control of party bureaucracies over parliamentarians was to prove particularly ominous for the crucial relations between the SPD and the DVP.

Meanwhile it made the whole business of forming coalitions, and therefore of governing at all, infinitely more difficult and complicated. Party leaders in government were compelled to divert a good deal of their time and energy to mollifying their own party organizations. At the same time this unedifying development only served, for some people who thought of themselves as idealists, as evidence of the uselessness or harmfulness of political parties as such.

There were those who would have nothing to do with a system they regarded as having been imposed on Germany by the Allies through the SPD. There were others for whom the introduction of a fully constitutional system under conditions of crisis obscured its rational content. The attitude of contempt for parties and politicians, common before 1918, was still widespread thereafter. It was not easy, even under changed conditions, for the parties to escape from the role to which Bismarck had cast them.

This is a reprint of an article by
Professor Gerhard Rempel, who was Professor of History at Western New England College, Springfield, Massachusetts. The lecture is provided here as it would seem to be no longer available online.


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