Prelude to War: 5. The Golden Years and False Dawn
Weimar’s Stability (1924-1929)
In November 1923, Germany stood on the edge of collapse. Hyperinflation had destroyed the currency. French troops occupied the Ruhr, Germany’s industrial heartland. Political violence tore at the republic from both extremes. Adolf Hitler had just attempted to overthrow the Bavarian government in Munich. The Weimar Republic seemed finished.
Five years later, Germany looked transformed. The currency held stable. Foreign investment poured into German industry. Berlin rivalled Paris as Europe’s cultural capital. Germany sat at the table of nations as an equal partner. Cafes and cabarets thrived. Unemployment fell. The republic appeared secure.
This transformation was real, but it rested on foundations more fragile than anyone understood.
The Architect of Recovery
Gustav Stresemann dominated this period. He served as chancellor for only three months in 1923, but as foreign minister from 1923 until his death in 1929, he shaped Germany’s recovery and international rehabilitation.
Stresemann came from humble origins. His father ran a small beer distribution business in Berlin. Stresemann studied economics and literature, earning his doctorate in 1901. He entered politics through business associations, representing commercial interests in the Reichstag from 1907. During the Great War, he supported Germany’s expansionist aims. He belonged to the nationalist right, not the democratic centre.
The collapse of 1918 changed him. Stresemann recognised that Germany’s future depended on accepting the new reality. The monarchy would not return. The Versailles Treaty, however unjust, could not be overthrown by force. Germany must work within the international system to revise its terms. He became a reluctant republican, supporting democracy not from conviction but from necessity.
His approach combined pragmatism with patience. Germany had lost the war. It must rebuild its strength through economic recovery and diplomatic manoeuvre, not military adventure. This meant cooperation with former enemies, particularly France. It meant accepting temporary compromises to achieve long-term revision of Versailles. It meant restraining the nationalist right while undermining communist influence. Above all, it meant stability.
Stresemann faced savage criticism from the nationalist right. They called him a traitor for accepting Versailles. They accused him of selling out German interests. They demanded confrontation with France, recovery of lost territories, rejection of war guilt. Stresemann held firm. Germany was too weak for confrontation. It must rebuild first, then negotiate from strength.
Ending the Currency Catastrophe
The hyperinflation that ravaged Germany in 1923 had destroyed the old currency, the papiermark. By November 1923, it took 4.2 trillion papiermarks to buy a single US dollar. Money became worthless faster than it could be printed. Workers demanded payment twice daily so they could spend wages before they lost value. People burned banknotes for warmth because they were cheaper than firewood. The middle class saw life savings evaporate. The currency collapse threatened to destroy not just the economy but the social order itself.
Hjalmar Schacht led the recovery. Schacht came from a commercial background. His father had worked in insurance and finance. Schacht himself made his career in banking, rising to become president of the Reichsbank in December 1923 at age 46. He combined financial expertise with political skill and absolute confidence in his own judgement.
Schacht introduced a new currency, the Rentenmark, on 15 November 1923. The Rentenmark drew its backing from a mortgage on Germany’s agricultural and industrial assets rather than gold reserves. This backing was largely theoretical. What mattered was that the government stopped printing money to cover its debts. Schacht enforced strict limits on currency creation. The money supply stabilised. Inflation stopped almost overnight.
The psychological impact proved as important as the economic mechanism. Germans needed to believe the new currency would hold its value. Schacht provided that confidence through force of personality and rigid discipline. He refused government demands for easy credit. He maintained the Rentenmark’s value against foreign currencies. By August 1924, the government introduced a new permanent currency, the Reichsmark, at the same value as the Rentenmark. One Reichsmark equaled one trillion old papiermarks.
The currency stabilisation worked. Prices stopped rising. Wages held steady. Savings regained meaning. But the underlying problem remained. Germany still owed massive reparations. Its budget still ran deficits. Economic recovery required more than currency reform. It required capital.
The Dawes Plan
Germany could not pay its reparations. This had been clear since 1921. The occupation of the Ruhr in 1923 proved that trying to extract payments by force failed. France gained nothing. Germany’s economy collapsed. The crisis threatened European stability.
American intervention broke the deadlock. The United States had loaned billions to Britain and France during the war. Those countries needed German reparations to repay American loans. If Germany could not pay, the whole financial structure of postwar Europe might collapse. America had a stake in finding a solution.
Charles Dawes, an American banker and politician, chaired an international committee of financial experts in 1924. The committee included representatives from the United States, Britain, France, Italy, and Belgium. They examined Germany’s capacity to pay reparations and proposed a new payment schedule.
The Dawes Plan, announced in April 1924, restructured Germany’s obligations. It set annual payments starting at 1 billion marks, rising to 2.5 billion marks over five years. These amounts were lower than previous demands and tied to Germany’s economic capacity. If the economy struggled, payments could be adjusted. The plan also arranged an immediate loan of 800 million marks to stabilise Germany’s finances and currency.
Crucially, the plan did not set a final total for reparations. It focused on annual payments Germany could actually make. This avoided the politically explosive question of the overall debt. Germany would pay what it could afford. The question of total obligations could be addressed later, when tensions had eased.
The plan also required France to end its occupation of the Ruhr. French troops began withdrawing in summer 1924 and completed their departure by August 1925. Germany regained control of its industrial heartland.
The Dawes Plan worked because all parties gained something. Germany got lower payments, foreign loans, and an end to the Ruhr occupation. France received guaranteed payments and avoided further confrontation. Britain and the United States secured European financial stability. The plan rested on American loans flowing to Germany, which used that money to pay reparations to France and Britain, which used those payments to repay American war loans. This circular flow of capital seemed sustainable as long as American money kept flowing.
The plan triggered an economic boom. American investors poured money into German industry, seeing opportunities for profit in a recovering economy. German cities borrowed heavily to build infrastructure, housing, schools, hospitals. Between 1924 and 1929, Germany received roughly 25 billion marks in foreign loans, mostly from the United States. This vastly exceeded what Germany paid in reparations during the same period.
The contradiction was obvious but ignored. Germany was borrowing more than it paid out. The economic recovery depended on continued foreign lending. If that lending stopped, the whole structure would collapse.
The Young Plan
By 1928, pressure mounted to settle the reparations question permanently. The Dawes Plan had stabilised payments but left the total amount undefined. Germany wanted a final settlement with reduced obligations. The creditor nations wanted certainty about what they would receive.
Owen Young, another American businessman, chaired a new committee in 1929. The Young Plan reduced Germany’s total reparations from the original 132 billion gold marks demanded at Versailles to 112 billion marks, payable over 59 years until 1988. Annual payments averaged 2 billion marks, less than the Dawes Plan’s later years. The plan also removed foreign supervision of German finances and called for the final Allied evacuation of the Rhineland by June 1930, five years ahead of the Versailles schedule.
The Young Plan represented a major diplomatic victory for Stresemann. It reduced Germany’s burden, ended foreign oversight, and secured early evacuation of occupied territory. Germany regained full sovereignty over its finances and territory.
But the plan also exposed deep political divisions within Germany. The nationalist right, led by media baron Alfred Hugenberg and supported by Hitler’s Nazi Party, launched a massive campaign against the Young Plan. They called it a continuation of Versailles slavery. They demanded a referendum to reject reparations entirely and prosecute anyone who cooperated with foreign powers.
The campaign failed. The referendum in December 1929 attracted only 14 percent support. Most Germans recognised that rejecting the Young Plan would bring economic chaos and possible reoccupation. They accepted the compromise.
The debate proved significant through what it revealed. Hitler’s Nazis gained national publicity through their alliance with Hugenberg’s mainstream conservatives. The Young Plan campaign brought Hitler into respectable political circles. It showed that opposition to Versailles could unite the nationalist right across class and party lines. It demonstrated the power of anti-republican propaganda.
Stresemann did not live to see the results. He died of a stroke on 3 October 1929, aged 51, exhausted by years of political struggle and constant battles with nationalist opposition. His death removed the one figure who combined political skill, international respect, and commitment to working within the democratic system. No one of comparable ability replaced him.
International Rehabilitation
Stresemann’s greatest achievement lay in foreign policy. He brought Germany back into the community of nations as an equal partner. This required convincing France that Germany no longer threatened its security and persuading Britain and the United States that a stable, prosperous Germany served everyone’s interests.
The Locarno Treaties of October 1925 marked the breakthrough. Germany, France, Belgium, Britain, and Italy gathered in the Swiss town of Locarno to negotiate a new security arrangement. Germany voluntarily accepted its western borders with France and Belgium as permanent. It renounced any territorial claims in the west. In return, France accepted Germany as a partner rather than a defeated enemy.
The agreement was limited. Germany did not accept its eastern borders with Poland and Czechoslovakia as permanent. It made clear that revision in the east remained a German aim, to be pursued through negotiation not force. France and Britain understood this but accepted it. Securing the western borders mattered most.
Britain and Italy guaranteed the western borders. If Germany attacked France or France attacked Germany, Britain and Italy would support the victim. This created a security framework based on mutual interest rather than the imposed terms of Versailles.
The Locarno Treaties transformed Germany’s international position. The nation went from defeated enemy to negotiating partner. Germany joined the League of Nations in September 1926, receiving a permanent seat on the League Council alongside Britain, France, Italy, and Japan. This symbolised Germany’s return to great power status.
The improvement in Franco-German relations proved real if fragile. French Prime Minister Aristide Briand and Stresemann developed a working relationship based on mutual respect if not trust. They met regularly to discuss European problems. In 1926, they shared the Nobel Peace Prize for their work on reconciliation.
The Kellogg-Briand Pact of August 1928 furthered this progress. Sixty-three nations, including Germany, signed an agreement renouncing war as an instrument of national policy. The pact had no enforcement mechanism and proved meaningless in practice, but it symbolised the hope that international disputes could be resolved peacefully.
This diplomatic success created space for economic recovery and gave Germans pride in their country’s achievements. Germany had gone from pariah to partner in five years. Stresemann had achieved through diplomacy what military force could never have delivered.
But the rehabilitation remained incomplete and conditional. Germany accepted Locarno because it had no choice. The nation was too weak to challenge France militarily. Stresemann himself saw Locarno as a tactical step toward eventual treaty revision, not a permanent settlement. He wrote privately that Germany must accept the western borders to gain freedom to revise the eastern ones. His strategy aimed at undoing Versailles gradually through diplomacy and economic strength.
The French never fully trusted German intentions, with reason. The German military, operating in secret, had already begun to evade Versailles restrictions on rearmament. German officers trained in the Soviet Union. German companies developed weapons technology abroad. The Reichswehr planned for eventual rearmament and revision of Germany’s borders. Stresemann knew about these activities and tacitly approved them.
The international rehabilitation of the mid-1920s rested on German weakness and American money, not on genuine acceptance of the postwar order.
Cultural Explosion
While Stresemann rebuilt Germany’s international standing, German culture exploded in creativity. Berlin became Europe’s most dynamic city, rivalling Paris in art, theatre, music, and film. The Weimar period produced cultural innovations that shaped the modern world.
The Bauhaus school of design, founded by Walter Gropius in Weimar in 1919, moved to Dessau in 1925 and reached its peak influence. The Bauhaus rejected traditional distinctions between fine art and craftsmanship. It combined art, architecture, and industrial design into a unified vision. Clean lines, functional forms, and modern materials defined its aesthetic. The school trained students to create beautiful, practical objects for everyday life.
Bauhaus influence spread across Europe and eventually the world. Its approach to architecture, furniture design, typography, and industrial production shaped modern design. The school faced constant attack from conservative critics who saw its modernism as un-German and its internationalism as un-patriotic. It survived through the 1920s but closed when the Nazis took power in 1933.
German cinema dominated European film production. Fritz Lang directed Metropolis in 1927, a science fiction epic about a dystopian future city divided between wealthy elites and exploited workers. The film’s visual style influenced science fiction for decades. Lang’s M in 1931 starred Peter Lorre as a child murderer hunted by both police and criminals. The film pioneered psychological crime drama and used sound in innovative ways.
Ernst Lubitsch and F.W. Murnau created sophisticated comedies and haunting dramas. Josef von Sternberg discovered Marlene Dietrich and directed The Blue Angel in 1930, making her an international star. German film studios in Babelsberg, outside Berlin, produced hundreds of films annually.
German theatre pushed boundaries under directors like Max Reinhardt and Erwin Piscator. Bertolt Brecht developed his theory of epic theatre, rejecting emotional identification in favour of critical distance. His plays, written with composer Kurt Weill, combined biting social criticism with innovative staging. The Threepenny Opera in 1928 became a sensation, making Brecht and Weill famous across Europe.
Cabaret culture thrived in Berlin. Small clubs featured political satire, jazz music, and performances that challenged sexual conventions. Berlin’s nightlife became legendary for its openness and experimentation. Clubs catered to gay and lesbian audiences in a relative tolerance unmatched elsewhere in Europe. Drugs, sex, and breaking the norms, defined the cabaret scene.
This cultural flowering came with risks. The openness that enabled creativity provoked reactionary backlash. Conservative Germans saw Weimar culture as degenerate, immoral, and foreign. They blamed Jewish artists and intellectuals for corrupting German values. They attacked modern art as cultural Bolshevism. They demanded a return to traditional German culture rooted in folk traditions and national themes.
The cultural battles reflected deeper social divisions. Urban Germany, particularly Berlin, embraced modernism and change. Rural Germany, small towns, and the traditional middle class rejected it. The cultural explosion of the 1920s created masterpieces that shaped the twentieth century. It also fuelled resentment that the Nazis would later exploit.
Democracy Without Democrats
The Weimar Republic stabilised politically between 1924 and 1929, but stability did not mean democratic consolidation. Elections produced coalition governments that required multiple parties to agree on policy. Coalitions formed, governed briefly, and collapsed over relatively minor disputes. Between 1924 and 1928, Germany had five different governments.
The fragmentation reflected Germany’s political culture. Parties represented distinct social groups and ideological positions. The Social Democrats drew support from industrial workers and trade unions. They supported democracy and social reform. The Catholic Centre Party represented Catholic voters across class lines. It defended church interests and advocated moderate policies. The German Democratic Party appealed to middle-class liberals and professionals. The German People’s Party, Stresemann’s party, represented business interests and moderate nationalists. The German National People’s Party spoke for conservative Protestants, landowners, and hard-line nationalists. The Communists attracted radical workers who rejected social democracy as too moderate.
These parties rarely cooperated effectively. The Social Democrats refused to govern with the German National People’s Party. The German National People’s Party rejected cooperation with Social Democrats. The Communists opposed everyone. Coalition building became an exercise in finding the minimum common ground among parties that distrusted each other.
Presidential authority filled the gap. The Weimar Constitution gave the president substantial powers. Article 48 allowed the president to rule by emergency decree when the Reichstag could not function. President Paul von Hindenburg, elected in 1925, used these powers sparingly during the stable years but their existence undermined parliamentary government.
Hindenburg himself embodied the ambiguity of Weimar democracy. He was 77 when elected, a hero of the Great War, a monarchist who took an oath to defend a republic he had not wanted. He performed his duties correctly but never accepted the legitimacy of the democratic system. He viewed parliament with contempt. He preferred rule by decree to legislative negotiation. His election showed that most Germans still trusted military authority more than democratic politics.
The civil service, judiciary, and military remained largely hostile to democracy. Judges appointed under the Kaiser continued to serve under the republic. They treated left-wing political violence harshly while showing leniency to right-wing offenders. The murder statistics told the story. Between 1919 and 1922, right-wing extremists committed 354 political murders. Courts convicted 24 perpetrators. Left-wing extremists committed 22 political murders. Courts convicted all 22 perpetrators. The disparity revealed judicial bias that never changed.
The Reichswehr, limited to 100,000 men by Versailles, became a professional force officered by men who served the Kaiser. The military leadership accepted the republic as a temporary necessity but worked to preserve the army’s autonomy and prepare for eventual rearmament. General Hans von Seeckt, who commanded the Reichswehr from 1920 to 1926, maintained the military as a state within the state. He refused to allow democratic oversight of military planning. He secretly cooperated with the Soviet Union to develop weapons and train officers in violation of Versailles. He saw democracy as a weakness to be endured until Germany could restore authoritarian rule.
Universities and schools taught nationalism and militarism. Professors overwhelmingly opposed democracy. Student organisations excluded Jews and Social Democrats. The educated elite rejected the republic and taught the next generation to reject it as well.
The weakness went deeper than institutions. Democratic culture requires more than elections and parliaments. It requires citizens who accept political opposition as legitimate, who compromise rather than seek total victory, who value stability over ideological purity, who trust that losing today does not mean permanent exclusion tomorrow.
Politics in Weimar Germany never developed the habits that sustain parliamentary life. Parties questioned the very presence of their rivals in the system and treated each other as hostile forces. Communists aimed to replace capitalism with a revolutionary order. Nationalists worked toward the end of democratic government. The centre parties tried to defend the republic but struggled to build the loyalty and common purpose needed for stable politics. The essential practices of democracy, such as trust, compromise, and a shared commitment to constitutional rules, remained fragile. Political life moved through confrontation and suspicion rather than cooperation.
The democratic parties suffered from a particular problem. They defended a system imposed by defeat. Democracy came to Germany through military collapse, revolution, and a treaty most Germans saw as unjust. Democrats appeared to accept national humiliation. Nationalists promised to restore national pride. This association between democracy and defeat poisoned the republic from birth.
The stable years between 1924 and 1929 never produced democratic conviction. Germans accepted the republic because it delivered prosperity and stability. It worked. But it never became more than a practical arrangement. Few Germans loved democracy. Most tolerated it. When it stopped delivering prosperity, that tolerance evaporated.
The Shallow Foundation
The prosperity of the mid-1920s rested on American loans. German cities, states, and companies borrowed heavily from American investors seeking higher returns than they could get at home. This money funded construction projects, industrial expansion, and municipal services. It created jobs and growth. But it created dependency.
The loans had to be repaid. Germany borrowed short-term and spent long-term. Cities built swimming pools and parks with money that had to be paid back in a few years. Companies expanded production facilities with loans that came due before the facilities generated profits. The entire structure assumed that new loans would always be available to refinance old debts.
Agricultural distress persisted even during the good years. Small farmers struggled with debt and falling prices. Global agricultural production had increased during the war to feed combatant nations. After the war, production remained high but demand fell. Prices collapsed. Farmers could not repay loans taken out during the inflation years when money was cheap. Rural Germany remained an area of poverty and resentment while cities prospered.
Unemployment never disappeared. Even in the best years, roughly 1.3 million Germans could not find work. The unemployment insurance system, introduced in 1927, provided support but also created fiscal pressure. The system assumed continued growth. It could not survive a serious downturn.
Political extremism retreated but did not disappear. The Nazi Party reorganised after Hitler’s release from prison in December 1924. It remained small and marginal during the prosperous years. The 1928 Reichstag election gave the Nazis only 2.6 percent of the vote and 12 seats. But the party infrastructure remained intact. The SA continued to recruit and train. Hitler continued to speak. The organisation waited for the next crisis.
The Communist Party retained substantial support among industrial workers. It won 10.6 percent of the vote in 1928. The Communists rejected democracy openly. They called the Social Democrats social fascists and refused cooperation. They looked to Soviet Russia as their model. They prepared for revolution.
The political extremes attracted only minorities during good times. But their presence showed that millions of Germans rejected the democratic system on principle. They waited for conditions that would let them destroy it.
The False Dawn
In 1928, Germany appeared secure. The economy hummed. Construction cranes dotted city skylines. Factories hired workers. International tensions eased. Foreign troops prepared to leave the Rhineland. The Young Plan promised to settle reparations permanently. German culture flourished. Democracy seemed to work.
The appearance was false. Every element of stability depended on conditions that could not last. American loans depended on American prosperity. German democracy depended on economic growth. International goodwill depended on German weakness. Cultural flowering depended on social tolerance that was already generating backlash.
The golden years were an more of an interlude than a transformation. They proved that Weimar democracy could function when conditions favoured it. They also proved that those conditions were fragile and that the roots of democratic loyalty remained shallow.
Stresemann understood this. He knew Germany’s recovery depended on American money. He knew the nationalist right waited to exploit any crisis. He knew that time was running out to build genuine democratic conviction. His death in October 1929 removed the one leader who combined skill, determination, and international respect.
Three weeks later, the New York stock market crashed. American loans to Germany stopped. The foundation crumbled. The golden years ended.