The Downfall of Money: Germanys Hyperinflation and the Destruction of the Middle Class
Page 11
Whether the far left could ever have taken control of the entire Reich is doubtful. Even in Berlin, in March 1919 – a much better planned and executed attempt at a coup than the poorly organised affair that cost Liebknecht and Luxemburg their lives two months earlier – the revolutionaries never seriously threatened the centre of power. Their main achievement was to divide the German capital into two bitterly hostile camps – the middle and upper class ‘West’ of Berlin and the proletarian ‘East’, where the Spartacists had their strongholds – and to push the new government into a ruthless frame of mind.
Noske, the socialist who had accepted the role of ‘bloodhound’ and now seemed to be playing it with a little too much relish, issued an order during the second Berlin uprising that any civilians found ‘in the act of armed conflict against the Government forces’ should be shot on the spot. Once passed through the chain of command of the Freikorps, this order turned out to be open to, shall we say, free interpretation. Like their comrades in Munich, reactionary Freikorps commanders such as Captain Pabst of the Guard-Cavalry-Rifle Division clearly saw this as carte blanche to rid the country of dangerous subversives and Communist riff-raff, and the instruction was conveyed to the ordinary Freikorps members in that spirit.
Harry Kessler, appalled at the violence of the government’s response, wrote that Noske was ‘ensconced in the Ministry of War behind barbed wire. With seven officers, twelve non-commissioned officers, and fifty rankers as his personal guard, just like Nicholas II* or the tyrant Dionysus.’7
For the next four or more years, all the same, the danger of armed rebellion from the left or right persisted in Germany. One problem was the ready availability of arms and ammunition, a consequence in part of widespread desertion from the army in November 1918, followed, under circumstances of less than perfect discipline, by mass demobilisation and the disbandment of most regular units. The radical artist George Grosz, at that time a strong Spartacist sympathiser, recalled the near-anarchic situation in 1919:
Guns and ammunition were freely on sale. My cousin, who was released from the army a short time after me, brought me a complete machine-gun one day. I could pay for it in easy instalments, he said. And did I perhaps know anyone who might be interested in buying two more machine-guns and a small field-piece? (He was, of course, thinking of my links with certain political organisations, which had started to arm themselves against their rivals.)8
Certainly, while lacking true mass support, the Spartacists and their Communist successors could never complain about being short of weaponry.
Meanwhile, the world looked on. Most Germans were not involved in the fighting. Most wanted peace, employment and the rule of law, and supported measures necessary to achieve those things. This was even true of many who joined the Freikorps, often remaining with the colours for quite short periods of time. In some cases, these relatively brief spells in uniform resemble those experienced by armed volunteer police units at many historical junctures and in many places, from the early nineteenth-century English Yeomanry and Special Constables, to the Garde nationale in France, or the National Guard in America.
Hermann Zander, for instance, still in his early twenties, joined a Freikorps unit, ‘Bahrenfeld’, in the Hamburg suburb of Altona in June 1919, along with several of his colleagues from the bank where he worked as a clerk. Hamburg had recently been subjected to fierce rioting, during which Communist-led groups had seized a number of the city’s public buildings, including the prison and the city hall. The Freikorps unit, composed of four companies, totalled around 120 men. Zander’s company was assigned to guard the docks, while the other three companies took part in an attempt to drive the ‘Reds’ out of the city hall. ‘The other companies stormed the city hall, but then lost it again to the Reds. We couldn’t make headway against the Reds.’ The Mayor of Hamburg, a Majority Social Democrat, then called in the Reichswehr. Regular troops under General von Lettow-Vorbeck, a war hero who had waged a successful guerrilla campaign against the British in the former German East Africa, finally cleared the city hall. There were mass arrests and some deaths. ‘This military episode ended for me with a parade on the Spielbudenplatz on Saint Pauli,’ Zander concluded breezily and with a minimum of fanaticism.9
Many, perhaps the majority, including those who, like Zander, took to arms on a purely temporary basis, hoped that beyond the chaos and the violence lay not just an orderly, prosperous Germany but a fair and reasonable new world organised along the lines proposed under President Wilson’s Fourteen Points. ‘Germans,’ as one distinguished historian of the Versailles Treaty wrote, ‘clutched at the Fourteen Points like a life-raft.’10 An American diplomat in Paris, Ellis Dresel, wrote:
The people had been led to believe that Germany had been unluckily beaten after a fine and clean fight, owing to the ruinous effect of the blockade on the home morale, and perhaps some too far-reaching plans of her leaders, but that happily President Wilson could be appealed to, and would arrange a compromise peace satisfactory to Germany.
This was a delusion. What faced them was the very opposite of a ‘compromise peace’. The truth was that the President Wilson of the Fourteen Points had by the spring of 1919 largely given way to an altogether more vengeful American leader, one rarely mentioned in many history books. It was this version of Wilson, appalled by the crushing treaties inflicted by Germany on Russia at Brest-Litovsk and Romania at Bucharest in early 1918, who told his colleagues that the treaty must rightly be ‘very severe indeed’:
I must say that though in many respects harsh, I do not think that it is on the whole unjust in the circumstances . . . inevitably my thought goes back to the very great offence against civilisation which the German state committed and the necessity for making it evident once and for all that such things can only lead to the most severe punishment.11
The German delegates, led by Erzberger and Brockdorff-Rantzau, travelled to Paris at the end of April 1919, ready to be told, after months of discussion by the bickering victors, of the conditions to be imposed on the defeated Reich. They were kept waiting for more than a week before the fateful day finally arrived.
The date was 7 May 1919, a little less than two months after the suppression of the March uprising in Berlin, and only four days after so-called ‘white’ forces had entered Munich and bloodily extinguished the remnants of the ‘red’ republic of Bavaria.
The German delegates to the peace conference had been summoned by the Allies to a large meeting room at the Trianon Palace Hotel in Versailles. Here the venerable French Prime Minister, Georges Clemenceau – at the beginning of his political career, mayor of the Paris district of Montmartre during the German siege of the city in 1870-71 – would publicly inform them of the peace terms being demanded by the victors. There would, it was clear, be no discussion or negotiation, which was why Versailles would become known to the German public as the Diktat, or dictated peace.
The space had, it seemed, been arranged so that the delegates of the defeated Reich would be seated at a table facing the Allied representatives and surrounded by those from many nations, military men, journalists, all hanging on the Germans’ reaction. Brockdorff-Rantzau had apparently seen the Germans’ pre-ordained table described in a French newspaper as ‘the prisoners’ dock’. He led his delegation into the building, determined to avoid humiliation: ‘All eyes turned to the door as they entered, “stiff, awkward-looking figures”,’ writes Margaret MacMillan. ‘Brockdorff-Rantzau, said a witness, “looked ill, drawn and nervous”, and was sweating.’ There was a brief hesitation and the crowd, observing a courtesy from the vanished world of 1914, rose to its feet. Brockdorff-Rantzau and Clemenceau bowed to each other.
Clemenceau opened the proceedings. Without the slightest sign of nerves, he spoke coldly, outlining the main headings of the treaty. ‘The hour has struck for the weighty settlement of our account,’ he told the Germans. ‘You asked us for peace. We are disposed to grant it to you.’ He threw out his words, said one of the German dele
gates, ‘as if in concentrated anger and disdain, and . . . from the very outset, for the Germans, made any reply quite futile.’12
The terms were crushing. Germany would lose 13 per cent of her territory and 10 per cent of her population. Moreover, contrary to the ‘self-determination’ clauses in President Wilson’s Fourteen Points, the German-speaking territories of the now defunct Austrian Empire – the rump of Austria proper, including Vienna, and the German-speaking parts of Bohemia – were forbidden to unite with the German Republic. This, despite their inhabitants’ express desire to do so, given that their lands were not properly politically or economically viable without the non-German areas they had long dominated, now granted to the new post-war states of Czechoslovakia, Poland and Yugoslavia. It was probably unrealistic for Germans to expect that their country would actually be allowed to gain territory as a result of defeat, but then the fine American talk of a just peace had, in its way, encouraged an element of wishful thinking in the vanquished.
And that was not all. Germany must also demilitarise. Reparations to the victors, while not yet definitively fixed, would amount to a sum in the hundreds of billions of gold marks, with Germany paying not just for damage to French and Belgian territory, and not just the cost of the war itself, but also the pensions of the Allied war disabled and of the war widows and orphans (this last was the British Prime Minister Lloyd George’s special contribution).
Brockdorff-Rantzau, the picture (to foreign eyes) of the arrogant, stiff Prussian aristocrat, delivered a speech of protest in his (to foreign ears) unattractive, guttural German, laying great emphasis on his refusal to accept his country’s responsibility for the war. This last point he clearly saw not just as a moral axiom but also as the legal basis for the coming fight against the treaty’s punitive clauses. Although actually Brockdorff-Rantzau was one of the few Prussian aristocrats to welcome the new German democracy, neither his ‘Junker’ manner nor the substance of his speech went down well with the Allied representatives, or with Allied public opinion. As Philip Kerr, one of Lloyd George’s aides, commented drily, ‘At the start everybody felt a little sympathy with the Hun, but by the time Brockdorff-Rantzau had finished, most people were almost anxious to recommence the war.’13
There was much in the draft terms that, rightly or wrongly, disturbed and angered the German delegates and, as soon as the text of the treaty could be translated and published at home, affected their government and the overwhelming majority of their fellow Germans likewise. The so-called ‘war guilt’ clause (Article 231) caused especial outrage. It read:
The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.
From a purely practical point of view, it was quite rational that the German government took issue with this clause. It was also quite logical from the Allied point of view that they included it in the first place. If Germany and her allies were not responsible for the war, then there was no moral or legal justification for the imposition of reparations, at least those going beyond actual damage to Allied territory occupied by the German army, which (see Chapter 3) was already quite considerable. Brockdorff-Rantzau realised this, and so, quite specifically, did Lloyd George, who later wrote somewhat sheepishly in his memoirs: ‘I could not accept the German point of view without giving away our entire case for entering into the war.’14
What was less logical was the passion with which both the German elite and the general public took against the notion of ‘war guilt’. It would be true to say that the clause can be interpreted as broadly ‘blaming’ Germany and her allies for the outbreak of the war. After all, the Allied governments had to answer to electorates that had spent more than four years suffering hardship, deprivation, and often terrible personal loss.
Oskar Münsterberg, a Jewish factory owner in Berlin, nevertheless typified the reaction of most ordinary Germans when he wrote in his diary on 8 May, after the Allied terms had been revealed, that ‘all joy in living fails, one’s heart falters’ on this ‘blackest day of the war’:
Where are the fine speeches about humanity and rectitude? Where are Wilson’s points, whose acceptance by the enemy and by us was followed by the armistice agreement? Has this all been a deception? Must all justice and all belief be as nothing?
It cannot be the end. For the moment it exists only on paper and life goes peacefully on, but slowly, increasing year on year, as the old reserves are used up, worry and want will make their entrance, and the entire people will face impoverishment and despair.
No, this cannot be how a state that remained undefeated in the field will meet its end! The bowstring has been stretched to breaking point, but from where will come our salvation? What would be the effect of a rejection of the treaty? A new revolution either here or abroad. There is nowhere a chink of light, only black clouds! What purpose is there left to life?15
Most on the Allied side saw things quite differently. Few voters, especially in France and Britain, were in the mood to accept some wishy-washy ‘no-fault’ formula after such a hard-won victory. ‘Squeeze Germany Till the Pips Squeak’ was a popular slogan in the winter of 1918-19. All the same, there is evidence that at the time the American framers of the clause – who included a young lawyer by the name of John Foster Dulles, forty years later to serve as Eisenhower’s Secretary of State – were intent on simply doing the lawyerly thing and making sure their ‘clients’ (in this case the Allied governments) got the ‘other guys’ (Germany and her allies) to admit liability, as is normal in a civil case involving damages. The next article of the treaty, §232, goes on specifically to state that, notwithstanding the enemy’s admission of liability in §231, ‘The Allied and Associated Governments recognise that the resources of Germany are not adequate, after taking into account permanent diminutions of such resources which will result from other provisions of the present Treaty, to make complete reparation for all such loss and damage.’16
There was a strange contrast, too, in the fact that the Austrians (in the Peace of Saint-Germain) and the Hungarians (in the Peace of Trianon) were presented with the same so-called ‘war guilt’ article, the only difference being that instead of ‘Germany and her allies’, their drafts read ‘Austria and . . .’ and ‘Hungary and . . .’ respectively. Vienna and Budapest complained bitterly about some aspects of the terms imposed on them, especially the crushing territorial adjustments – much more serious than any of Germany’s losses – but they chose essentially to ignore the references to responsibility.
Nonetheless, the terms imposed on Germany, if not ruinous, presaged a great amount of added economic suffering and consequent political instability in a country that had already run up vast internal, and considerable external, debts in order to pay for the war.
The shock at the fact that there would be no ‘democratic peace’ based on ‘solidarity of peoples’, or at least not for Germany and the other losers, was traumatic in the extreme, and all the more so because Germans had clung to that hope. In the weeks that followed Brockdorff-Rantzau’s agonising appearance before the Allies at Trianon, the German delegation fired note after indignant note at the victors, demanding and pleading changes to the proposed treaty, protesting to the point of exhaustion against its penal clauses, economic, territorial and moral. They argued Germany’s case well. Some of the victors’ leaders were impressed. General Sir Henry ‘Jumbo’ Wilson, Chief of the Imperial British General Staff and military adviser to Lloyd George at the conference, wrote in his diary: ‘The Boches have done exactly what I forecast – they have driven a coach and four through our Terms, and then they have submitted a complete set of their own, based on the 14 points, which are much more coherent than ours.’17
General Smuts of South Africa went further, describing the treaty as ‘an impossible peace’
, the territorial changes ‘full of menace for the future of Europe’ and the reparations clauses ‘unworkable’.18 As an Afrikaner, a former Boer commander who had thrown in his lot with the British Empire as a consequence of the remarkably conciliatory peace terms granted by the British after their victory in the Boer War, Smuts had some right to express an opinion on such matters.
Many British and American delegates agreed broadly with Smuts. The diplomat and writer Harold Nicolson, who had been in Paris throughout the negotiations, wrote gloomily, ‘if I were the Germans, I shouldn’t sign for a moment’. The brilliant economist, John Maynard Keynes, resigned from the Allied delegation and threw himself into writing his famous denunciation of the treaty, The Economic Consequences of the Peace.19 Even the Archbishop of Canterbury expressed serious qualms.
In fact, the Germans did get some minor concessions. The most important was a plebiscite in Upper Silesia, where there was a mixed German-Polish population.
More than a month passed. Finally, on 16 June 1919, the Germans were told that they had three days to agree to the Allied terms. The senior members of the German delegation departed by train for Weimar, where the National Assembly was still in session, to report on the final treaty.