Weimar Constitution
The Weimar Constitution included these highlights:
• The German Reich is a Republic.
• The government is made of a president, a chancellor and a parliament (Reichstag).
• Representatives of the people must be elected equally every four years by all men and women over age 20.
• The term of the President is seven years.
• All orders of the President must be endorsed by the Chancellor or a Reich Minister.
• Article 48 allows the President to suspend civil rights and operate independently in an emergency.
• Two legislative bodies (the Reichstag and the Reichsrat) were formed to represent the German people.
• All Germans are equal and have the same civil rights and responsibilities.
• All Germans have the right to freedom of expression.
• All Germans have the right to peaceful assembly.
• All Germans have the right to freedom of religion; there is no state church.
• State-run, public education is free and mandatory for children.
• All Germans have the right of private property.
• All Germans have the right to equal opportunity and earnings in the workplace.
Hyperinflation and the Fallout
Despite its new constitution, the Weimar Republic faced one of Germany’s greatest economic challenges: hyperinflation. Thanks to the Treaty of Versailles, Germany’s ability to produce revenue-generating coal and iron ore decreased. As war debts and reparations drained its coffers, the German government was unable to pay its debts.
Some of the former World War I Allies didn’t buy Germany’s claim that it couldn’t afford to pay. In a blatant League of Nations breach, French and Belgian troops occupied Germany’s main industrial area, the Ruhr, determined to get their reparation payments.
The Weimar government ordered German workers to passively resist the occupation and go on strike, shutting down the coal mines and iron factories. As a result, Germany’s economy quickly tanked.
In response, the Weimar government simply printed more money. The effort backfired, however, and further devalued the German Mark—and inflation increased at an astounding level. The cost of living rose rapidly and many people lost everything they had.
According to Paper Money, written by George J. W. Goodman under the pseudonym Adam Smith, “the law-abiding country crumbled into petty thievery.” An underground bartering economy was established to help people meet their basic needs.
Dawes Plan
Germany elected Gustav Stresemann as their new chancellor in 1923. He ordered Ruhr workers back to the factories and replaced the Mark with a new currency, the American-backed Retenmark.
In late 1923, the League of Nations asked U.S. banker and Director of the Budget, Charles Dawes, to help tackle Germany’s reparations and hyperinflation issues. He submitted the “Dawes Plan” which outlined a plan for Germany to pay more reasonable reparations on a sliding scale. Dawes was later awarded the Nobel Peace Prize for his efforts.
The Dawes Plan and Stresemann’s leadership helped stabilize the Weimar Republic and energize its economy. In addition, Germany repaired relations with France and Belgium and was finally allowed into the League of Nations, which opened the door for international trade. In general, life improved in the Weimar Republic.
Great Depression
Much of the Weimar Republic’s recovery was due to a steady flow of American dollars into its economy. But unbeknownst to Germany, America had positioned itself for an economic disaster of its own as it faced growing unemployment, low wages, declining stock values and massive, unliquidated bank loans.
The stock market crash had a global ripple effect. It was especially devastating for the newly recovered Weimar Republic. As the flow of American money dried up, Germany could no longer meet their financial responsibilities. Businesses failed, unemployment rates rose and Germany faced another devastating economic crisis.
