The loss of a war frequently means the loss of a throne. When Napoleon Bonaparte found that his enemies were too strong for him he abdicated and ingloriously fled, leaving his underlings and his exhausted country to face the consequences of his military adventures. A hundred years later Wilhelm Hohenzollern followed the same course and sought safety in Holland. In both instances the government did not survive the defection of its chief. In 1870 France became a republic because Napoleon III failed to fulfil the promise to lead his armies to Berlin. In 1918 Germany became a republic because Wilhelm II failed to fulfil the promise to lead his armies to Paris. In all three instances, the successor government endeavored to throw the blame of the war upon the defunct government and to use the change of rÉgime as a plea for moderate peace terms. France got off easily in 1815. She did not do so well in 1870, owing to the triumph of the military party in the counsels of victorious Germany. And France, remembering what she The pre-armistice negotiations had not yet been completed when the German navy mutinied at Kiel on November 5. Munich revolted on November 7. The revolution spread to Berlin on November 9. The movement was sponsored by the “Workers’ and Soldiers’ Council,” in which the Social Democratic party assumed the leadership. A coalition Government was formed, consisting of three representatives each of the Majority and Minority Socialists, with Herr Ebert, a member of Prince Max’s cabinet, as Chancellor. In turning over the reins of government to Herr Ebert, Prince Max announced the abdication of the Kaiser, who had “retired” to Holland. But the Kaiser did not formally abdicate until November 28. The new Government issued a proclamation on the evening of November 9 declaring that it would “arrange for an election of a Constituent National Assembly, in which all citizens of either sex over twenty years of age will take part with absolutely equal rights.” The state of siege and the censorship were abolished; amnesty was granted for all political punishments; and the At the beginning of 1919, before the Peace Conference opened, the Spartacists issued their defiance to the new Government. Rioting, incited by Karl Liebknecht and Rosa Luxemburg, broke out in Berlin on January 5 and continued for a week. The Bolshevist revolution failed because of the hostility of the people and the loyalty of the army. Its two leaders were killed by mobs. Freed of this peril, the Government proceeded to the promised General Election on January 19, in which the remarkable total of 95 per cent of the electors voted. The Social Democratic party won 163 out of 421 seats. The National Liberals and Conservatives suffered severely; but the defeat of the extremists was more striking still. On the whole, the composition of the National Assembly was very much the same as that of the last Reichstag. The strength of the Clericals remained about the same. In Prussia, Bavaria, Saxony and WÜrtemburg local elections for constituent assemblies, held during the same month, resulted in an almost similar majority The new German Parliament opened its sessions at Weimar on February 6; and on February 11 Herr Ebert was elected president of Germany. For the premiership (the term prime minister was substituted for chancellor) Herr Scheidemann was chosen, and he succeeded in forming a strong and representative Ministry containing able men of all parties. Serious troubles arose in Munich and Berlin in March, and elsewhere in Germany in the early spring. But the people kept their heads, and there was general hope that the new Government would bring internal peace and secure a reasonable treaty. But, as we have seen in an earlier chapter, the Peace Conference had no intention of letting Germany off easily. Nothing was done from outside to strengthen the existing Government. Rather than sign the Treaty of Versailles, Count von Brockdorff-Rantzau, the foreign minister, who had gone as head of the delegation to Versailles, resigned. The Scheidemann cabinet fell. A new cabinet, less representative than its predecessor, was formed. Out of desperation the treaty was signed and was ratified by the National Assembly on July 9, coupled with a unanimous declaration The new constitution for the German Republic was passed by the National Assembly on July 31. It contained a provision giving the right to representatives of Austria to sit in the Reichstag, but not to vote “until after the union of Austria with the rest of Germany.” The Entente Powers declared that this was a violation of Article LXXX of the Treaty of Versailles and ordered it stricken out. The Germans answered that self-determination had been definitely promised as a basis for the durable world peace, and that this article was intended only to provide for what would inevitably happen, when the European situation should become stabilized. But the Entente Powers, refusing discussion, issued an ultimatum; once more Germany had to bow to force. Disastrous and humiliating as the experiences of the eight months after Germany laid down her arms had proved, the defeat had brought distinct advantages, through the revolution, to the German people. There is no cloud without its silver lining. The deposition of the Hohenzollerns had been followed by that of the other kings, Given the antipathy of the stolid, law-abiding German for engaging in Bolshevist adventures, even for the sake of avoiding the humiliation and disadvantages of a Carthaginian peace, the situation would not have been hopeless had the victors adopted a different attitude toward Germany. The Government might have been strengthened by sympathy and understanding of its great and varied problems. The people might have been assured that if they bent their shoulder to the wheel and paid for the damages they had wrought, they would be given a chance of rehabilitation. The hatchet might have been buried, and a chastened Germany welcomed back into the family of nations. This was the policy advocated by Premier Nitti of Italy; by Lord d’Abernon, British ambassador to Berlin; and by a host of Allied officials, familiar with conditions in Germany, whom I have met on the Rhine, in Berlin, Munich, and elsewhere, since the treaty was signed. The policy is aptly expressed by Dr. Nicholas Murray
Instead of helping the German Republic to a new life, the policy of punishment and fear was adopted, a policy outlined by Professor Andler of the Sorbonne on March 4, 1917. Said M. Andler:
The controlling idea of French policy toward Germany was simply this, that a strong, united, prosperous Germany would never be a changed Germany. The proof demanded of a change of heart on the part of the German people would be their willingness to become again “the modest Germans of 1848.” The political unity of Germany must at all costs be destroyed. This was a sine qua non of security for France, as we have explained elsewhere, and the execution of the treaty had as its principal object to prevent the economic rehabilitation and the political unity of the German peoples in Europe. In reviewing events in Germany since 1918 we must keep this Herr Bauer, who succeeded Herr Scheidemann just before the signing of the Treaty of Versailles, formed a cabinet that lasted month after month only because the German people were morally and politically dazed. The extreme Left, demanding Bolshevism, and the extreme Right, demanding a repudiation of the Treaty of Versailles, offered hopeless anarchy. Consequently the Center parties combined against a common danger. The Government could have been stabilized and could have established its authority only by securing support from the conquerors of Germany. Hope of a reasonable settlement of the reparations issue held together the Bauer Government and enabled it to put down the reactionary Kapp coup d’État in Berlin in March, 1920. But it was immediately followed by a Spartacist insurrection in the Ruhr and elsewhere, with which Herr Bauer could not cope. For the Ruhr was in the neutral zone, and the French refused to permit Germany to use force there. It is impossible to overestimate the effect in Germany of these events. Public opinion was convinced that France was seeking, not reparations, but the destruction of Germany. How else explain her unwillingness to allow the German Government to put down the Ruhr insurrection, whose success would have rendered any payments on the reparations account impossible? How else explain the refusal of France, a fortnight later, to accept the suggestion of Premiers Lloyd George and Nitti that the German Government be invited to confer with the Allied Governments on reparations and disarmament at San Remo? We have seen elsewhere how the British and Italians at San Remo agreed to stiffen their attitude toward Germany in return for concessions The Weimar Assembly had outlived its usefulness. A new General Election was held on June 6 to choose the first Reichstag under the new constitution. While the Center parties still had a majority, it was greatly reduced, both the Right and Left gaining. The moderates were drifting to the two extremes. The Nationalist vote increased by three millions and the Minority Socialist vote by two and a half millions. This made more unstable than ever the authority of the Government, especially as the Allies at the Spa conference in July insisted upon the reduction of the German army to the treaty figure of one hundred thousand by January 1, 1921. In vain did the Germans plead that an army of one hundred thousand would make impossible the maintenance of authority and the insistence upon strict fulfilment of the treaty obligations. The Government pointed out that the only way to secure the arrest and trial of the “war criminals”—lists of whom, well up in the thousands, contained the most prominent names in the army and navy—would be for the Entente Powers to occupy militarily the whole of Germany and to take over the running of the country. For no German Government would have the means to obey this behest. But the French Government declared that the surrender of existing war material and the disbanding of irregular organizations were only a part of the disarmament problem.19 Measures During all the reparations discussion, Germany had always maintained that the retention of Upper Silesia was indispensible to the fulfilment of reparations obligations. But the plebiscite, as The Allies could come to no agreement in regard to the disposition of Upper Silesia. The question was turned over to the League of Nations, which awarded the most valuable industrial part of the territory to Poland.20 This was the The German cabinet resigned, but Herr Wirth consented to head a new ministry. He made clear, however, his attitude and that of his colleagues in regard to Upper Silesia in the following declaration:
The “economic dictates” were no less disastrous than the territorial ones of 1921. At the end of January a conference at Paris formulated a plan by which Germany was to pay 226 billion gold marks in forty-two fixed annuities from May 1, 1921, to May 1, 1963, and in addition forty-two varying annuities each equal to 12 per cent of German exports. This demand was communicated to Germany, with the threat that non-acceptance would involve the occupation of the Ruhr. The foreign minister, Herr Simons, told the Reichstag that these demands were impossible of fulfilment, infringed the Treaty of Versailles, foreshadowed the dismemberment of Germany, and meant the economic enslavement of the German people. Germany refused to entertain them. Seeing that economists the world over, in France as well as in other countries, regarded the proposal as absurd, the German refusal was not answered by military steps, but a new conference was called in London, at which the Germans were to be allowed to submit counter-proposals. These were unsatisfactory, and the occupation Appeals were made for intervention at Washington and the Vatican, but they were received coldly. The American Government pointed out that Germany should “at once make directly to the Allied Governments clear, definite, and adequate proposals which would in all respects meet its just obligations.” There is no doubt that Germany at this juncture ought to have recognized the inevitability of making supreme sacrifices in order to live up to her obligations. Whether the effort to do this was possible under existing conditions was another matter. The cabinet evidently thought that there was nothing to be done, and presented to President Ebert its resignation. In the meantime the Reparations Commission had fixed the indemnity at 132 billion gold marks, this sum coming due, as provided for in the treaty, on May 1, 1921; and a further sum of twelve billion gold marks was demanded for the reconstruction of demolished industrial works. As a guarantee, the German Government was to send immediately into occupied territory the gold reserve of the Reichsbank and other banking-houses. The Entente Powers issued an ultimatum giving After many efforts a new cabinet was formed on May 10 under Herr Wirth, a man of great ability, who gathered good men around him. It was just in time to accept the ultimatum and prevent the further invasion of Germany. But the payment of the first billion marks in gold caused the mark to depreciate one third in value. The Wirth Government seemed unable to raise more money. An attempt to borrow money abroad failed. In December the Government told the Reparations Commission that it could not pay the January and February instalments. The burden under which Germany was resting was the payment of two billion gold marks annually plus an amount equal to 26 per cent of her exports. In addition she had to face deliveries in kind, of which the most important was twenty million tons of coal per annum. She had to find the money to pay for this coal, and to buy coal abroad to make up her deficiency resulting from this loss plus her loss from the alienation of Upper Silesia. How the reparations crisis developed to the breaking-point, as a result of It is difficult, almost impossible, one must confess, to make a categorical statement or pass a definitive judgment upon the financial policy of successive German cabinets since the World War. In every discussion the assertion of what Germany might have done is based upon the assumption that there existed ability but not the will to do it. Just as on the Allied side reparations demands have never been based on an impartial expert estimate of German capacity to pay, and the Reparations Commission has been political and not judicial in all its decisions, on the German side the budget has not taken into account treaty obligations, and enormous sums seem to have been spent on railroads and other public work and on shipping. The industrial life of Germany was not harmed by the war. Her plants and mines remained intact. She was ready to resume business; and her industrialists succeeded, despite all the moral and political confusion related in this chapter, in keeping things going. There has been virtually no unemployment, no shutting down of factories and mines, no suspension of transportation service, in a word, no outward sign to indicate that the country was hard up and unable to pay reparations. On the other hand, one noted in Germany in 1922 One was tempted to ask last summer, “Why does not Germany pay?” Mutilated and buffeted about as she has been since 1918, her people certainly seem to have kept their spirit, and very largely to have recovered from the starvation days following the World War. And yet, as is very clearly shown by the figures, her finances have become more and more involved until the Government faces bankruptcy. The first billion gold marks paid under the arrangement of 1921 As an economic problem, the reparations issue boils itself down to three questions: How much is Germany’s surplus per annum? How much of that surplus can be taken for reparations? How can the amount taken be transferred abroad? This is the practical side of the reparations question. To find the answers it was necessary to take into consideration basic economic laws and internal conditions in Germany. Only a healthy goose lays golden eggs. Only a strong government can tax adequately a nation that has representative institutions. Here the moral factors enter in. The people must have the willingness to make sacrifices, and must consent to the measures adopted by the Government. In the matter of reparations, for instance, nothing could be accomplished unless the German people had impressed upon them that their moral rehabilitation and the return of Germany to the family of nations on terms of equality depended upon making the tremendous sacrifices In Germany, ever since the armistice, and much more so during the last two years, the governing class has had a desperate fight on its hands simply to prevent the German people from embracing one or the other of the mad alternatives of despair, extreme Nationalism and extreme Socialism. The governing class has been successful in appealing to the instincts of order and conservation of property. But the policy of the Allies has given the capitalists no incentive or encouragement to make tremendous sacrifices. Good faith has been lacking on the side of the victors. Could it be expected on the side of the vanquished? The bourgeois class was morally sick and physically exhausted. The insistence of the Allies in calling for gold payments has ruined the salaried and investing classes throughout Germany. Until the invasion of the Ruhr reawakened national spirit, the screws put down on the Germans at French insistence had brought the country to the verge of social paralysis. There has been loose talk of rich German industrialists The German tax on fixed incomes—salaries, wages, and pensions—includes directors of companies in the Ruhr and all their high-salaried staff, officers in the army, and ministers of state. Laborers pay only 10 per cent, but the tax goes up to 60 per cent. As it is paid at the source, evasion is impossible. As for the capitalists, besides the income tax, they have been subjected to so many different levies that it would have been impossible for them to escape heavy taxation during the last four years. On top of the war profits tax came the emergency law of 1921, which put the Government in possession of 65 per cent of the largest fortunes. The forced loan law of Successive Cabinets since the war have been criticized for swelling the budget with enormous sums for railways and public works, for not taxing the people to the limit, for allowing the capitalists to send money out of the country. This policy, or lack of policy, has been interpreted as proof of dishonesty. But when a business Government, headed by Herr Cuno, the able shipping man, came into office in 1922, there was no longer doubt in the minds of impartial observers that Germany was ready to consent to any practicable reparations program and to put her house in order so that it could be carried out. The new But all the negotiations proved that the reparations problem was a political and not an economic one. France wanted reparations if she could get them; but she wanted security more than reparations. Public opinion in France had come to believe that the economic recovery of Germany spelled the ruin of France. Therefore, there could be peace in Europe only when the Germans became again “the modest Germans of 1848,” that is, a disunited people, content to be in a position of inferiority, military and economic, to their neighbors. France may not have cherished these ideas at all. But the German people believed that she had them. So long as the French refrained from entering the Ruhr, the uncertainty of the situation demoralized the Germans completely. They seemed during the latter part of 1922 to be disintegrating socially, through the ruin of the bourgeois class. Then came the events of January, 1923, confronting Germany squarely with the issue, “To be or not to be.” The blow of the Ruhr invasion fell upon Germany despite every effort made at home and abroad to stave it off. Herr Cuno had raised Writing before the Ruhr invasion, the Dutch economist, Dr. Stuart, of the University of Utrecht, put the root of Germany’s problem in one short paragraph:
Professor Stuart believes that Germany cannot exist in her present condition, even if she pays no reparations at all! He points out, with a masterly array of figures, what has been said over and over again by the foremost British economists, that the territorial losses of Germany and the export of reparations coal have made it necessary for Germany to buy more food-stuffs than she did before the war in outside markets, and, instead of exporting coal, she has had to buy coal. On the other hand, she has lost most of her shipping. The means she formerly had of overcoming an adverse balance of trade are gone, and the adverse balance of trade is greater than ever. Inflation warded off the collapse. But Germany’s depreciated mark has not helped her abroad, as some people think, because she has had to buy foreign currencies to meet the adverse trade balance and the reparations payments, and to pay for food-stuffs and raw materials. Less than five years have proved that the Treaty |