The Search for Peace and Stability

The political structure of Europe was challenged and contorted much as had been patterns of thought and culture in the period between the World Wars. The Versailles treaty, rather than establish a lasting peace, had in fact only established a tenuous peace arrangement which would be difficult to maintain under any circumstances. Against the backdrop of an intellectual crisis and a revolution in artistic expression, it was even more difficult and the confidence in Europeans that international leadership could ensure a lasting peace was shaken.

Several factors prevented the imposition of a lasting peace arrangement:

Germany: All Germans, whether radical, liberal, or conservative considered the Treaty of Versailles to be harsh and dictatorial, to be repudiated or revised as soon as possible. Germany was neither broken nor reduced by the treaty, and was potentially the strongest economy in Europe. The Versailles Treaty had been too harsh for a peace of reconciliation, but at the same time it had been too soft for a peace of conquest.

France and Great Britain did not agree on Germany. France wanted to strictly enforce the harsher provisions of the treaty, since most of the war in the West had been fought on French soil and the costs of reconstruction and of repaying war debts owed to the U.S. was staggering. The French had compromised with Woodrow Wilson at the Peace Conference; yet when America refused to join the promised defensive alliance, the French felt betrayed. French leaders saw strict enforcement of the treaty as their last best hope for peace. They believed that strict enforcement of the reparations requirements of the treaty would keep Germany subdued indefinitely and allow France to feel secure.

The British respectfully disagreed. Before the war, Germany had been the second largest market for British manufactured goods, and an economically healthy Germany was essential if the British economy were to thrive. John Maynard Keynes (1883-1946) published his famous Economic Consequences of the Peace (1919) in which he argued that harsh economic measures would increase economic hardship on all countries. He argued that only a complete revision of the treaty (which he considered foolish) would save both Germany and Europe. His remarks were influential on British thinking, and caused deep feelings of guilt about Germany in the English speaking world. Both English and American leaders were rendered virtually impotent in matters concerning Germany.

Additionally, the British were suspicious of the French army, the largest in Europe, and of France’s foreign policy. France had looked to Russia as an ally against Germany since 1890; however with the communist revolution, Russia was considered hostile. At the same time, Britain and the U.S. seemed noncommittal. As a result, France allied itself with a number of eastern European countries. In 1921 the French signed a mutual defense treaty with Poland, and also associated itself with the "Little Entente" of Czechoslovakia, Romania, and Yugoslavia which had been formed as a defensive alliance against Hungary. Additionally, differences of opinion on each country's League of Nations mandates in the Middle East cooled British/French relations.

In 1921 the Allied Reparations Commission announced that Germany must pay 132 billion gold marks (roughly $33 Billion) in reparations, payable in annual installments of 2.5 billion. (The full amount was several times greater than the entire German Gross Domestic Product). Failure to make payments would mean occupation of German lands. The new German government, the Weimar Republic which was founded in that city and had subsequently moved back to Berlin, made its first payment in 1921, but announced in 1922 that it was unable to make more payments. This announcement was the result of staggering inflation, a series of political assassinations, and rising hostility and arrogance among popular German leaders. German leaders proposed a three year moratorium on payments after which time they expected that reparations would be either drastically reduced or completely eliminated.

The British were willing to accept a moratorium, but the French were not. Led by their new tough Prime Minister, Raymond Poincaré, the French decided to call Germany’s bluff, or alternatively see the entire peace settlement dissolve to Germany’s disadvantage. It was in essence a poker bluff challenge. Over British objections, French and Belgian armies occupied the Ruhr Valley district, Germany’s industrial heartland. This action created the most serious international crisis of the 1920’s. It appeared that France was willing to paralyze Germany if need be to enforce reparations.

France’s action backfired. The occupation resulted in a fresh wave of German patriotism, and the Weimar government ordered the people of the Ruhr valley to stop working and passively resist French occupation. Coal mines and steel mills were shut down, leading ten percent of the German population in need of relief. France responded by sealing off the entire Rhineland (including the Ruhr valley) and allowed in only enough food to prevent starvation. They also revived plans to create a separate state in the Rhineland, which would have left Germany emasculated.

The result was a tense stalemate. France could not collect reparations at gunpoint, and the German economy was paralyzed. Inflation soon reached runaway proportions. The German government, faced with the need to support unemployed workers, began to print paper money with abandon, and prices soared. The inflation rate was so extreme that people were seen pushing wheel barrows of money in order to buy a loaf of bread. Bank notes in 10 billion denominations were not uncommon. German currency soon completely lost its value as did anything else of stated fixed value. People who had substantial savings saw them reduced to pfennigs in value. Old middle class values of thrift and self reliance were rendered useless. Many Germans felt betrayed and blamed the western governments, whom they hated bitterly. They also blamed the more obvious scapegoats: their own government, big business, Jews, workers, and the communists. Psychologically, the German people were ready to follow a radical leader who offered them hope in this state of crisis.

In August, 1923, Gustav Stresemann assumed leadership of the new government. Stresemann tried compromise, calling off the Ruhr strike and agreeing in principle to pay reparations; but he also asked that Germany’s ability to pay be reexamined. Poncaré accepted, as his harsh attitude had become unpopular with the French as well as with American and British leaders. Moderates soon gained control in France and Germany. The reparations commission appointed an international committee, chaired by an American banker, Charles G. Dawes to re-examine the reparations plan and develop a compromise solution. The result was the Dawes Plan which reduced reparations and made them dependent on the level of German economic prosperity. Additionally, Germany would receive large loans from the United States to augment German recovery.

The plan was actually circular: Germany would receive private loans from the United States which it would use to pay reparations to France and Britain, who would in turn use the money to repay their war debts to the United States.

The plan worked for a time. Germany experienced a remarkable economic recovery, and by 1929, Germany’s wealth and income were 50 percent greater than in 1913. Germany paid $1.3 billion in reparations in 1927 and 1928 with ease, which enabled France and Britain to repay the United States. Additionally, in a political settlement reached at Locarno, Switzerland, Germany and France solemnly pledged to accept each other’s common borders; while Britain and Italy agreed to fight either country that should invade the other. Germany agreed to settle boundary disputes with Poland and Czechoslovakia, and France promised them military aid if Germany attacked. A sense of security and stability seemed to have returned to Europe at last.

Other developments seemed to indicate the return of a peaceful calm. Germany joined the League of Nations in 1926; and in 1928 fifteen countries signed the Kellogg-Briand Pact which "condemned and renounced war as an instrument of economic policy." The Pact was little more than hot air. It had originally been a ruse by the French foreign minister, August Briand, to lure the United States into a military alliance. The U.S. Secretary of State, Frank B. Kellogg, realized he had been outmaneuvered, but responded by suggesting that all interested nations sign the treaty. Kellogg was well aware that the more signatories to a treaty, the less significance of the treaty. The pact was in essence little more than diplomatic hot air as there were no provisions for enforcement; however it did seem to support some degree of cautious optimism, as well as the supposition that the U.S. would abandon isolationism and accept its responsibility as a great world power.

Hope in Democracy: During the occupation of the Ruhr and the resulting inflationary crisis, the German government seemed on the verge of collapse. In 1923, communists under Rosa Luxemburg had gained seats on several provincial governments, and in November, 1923, Adolf Hitler led his now famous Beer Hall Putsch in which he and the National Socialist Party attempted to take over the government of Munich. Hitler had been inspired by the success of Mussolini in taking over the Italian government, and anticipated that success in Munich would lead to the collapse of the German government. The Putsch failed within minutes with several people killed. Hitler, who marched arm in arm with a fellow revolutionary, saw the man shot dead beside him. The man was dead before he hit the ground, and the suddenness of his collapse did not give Hitler time to disengage his arm. As a result, he suffered a dislocated shoulder.

Hitler was convicted of treason, and sentenced to ten years in prison. It was while he was in prison (his entire term lasted less than one year) that he dictated Mein Kampf to his cell mate. In the book, he rails against the Jews and others who had caused Germany to fall from its rightful status at the head of the world. Throughout the 1920’s, the National Socialists gained support only from anti-Semites, ultranationalists, and disgruntled ex-servicemen, of whom Hitler was one. In 1928, the Nazi party had only twelve seats in the Reichstag. In fact, a new currency was established and the German economy boomed.

Hitler joined but did not found the National Socialist German Workers Party, in German the Nationalsozialistiche Deutsche Arbeiterpartei, which supported a theory of the superiority of the Aryan race. He had been sent to his first party meeting as a spy for the German army, but was soon attracted to its racist philosophy. His oratorical gifts soon propelled him to the head of the party. The party members referred to themselves as "National Socialists," rather than Nazis, which was considered a pejorative term. The term originated as an analogy to the Socialists, the primary opponent of the National Socialists, who were known as Sozi.

Most German leaders, including Stresemann, believed that a good relationship with the Western powers was important for Germany to prosper economically. Good relations seemed to dictate a good parliamentary system, and elections were held regularly. Republican democracy seemed to have the support of most Germans. However, there were sharp political divisions. Many nationalists and monarchists were in the army. Members of the new German Communist Party were noisy and active. They took orders from Moscow, and reserved their greatest hatred and most vitriolic attacks for the Social Democrats, whom they considered as betraying the revolution.

Communists and socialists also battled for support in France. France had managed a substantial reconstruction campaign, but at the cost of a large deficit and substantial inflation. The economic crisis led to the recall of Poincaré to office and the government slashed spending and raised taxes to re-establish faith in the economy. The franc finally stabilized at one fifth its prewar value, but it appeared that good times had returned.

Despite its political challenges, France appealed to artists and writers from all over the world. Paris became a city of artistic and intellectual ferment. Said Gertrude Stein, "Paris was where the twentieth century was." Black Americans found acceptance in France that they did not find in the United States, among them Josephine Baker, who brought an exotic, African form of eroticism to French music halls.

Britain also suffered, primarily from unemployment. Unemployment hovered at 12 percent, but actually reached 33 percent in June, 1921. The British government provided generous benefits to unemployed workers, including subsidized housing, medical aid, and old age pensions. As a result, living standards did not decline and class tensions did not develop; however Britain became something of a welfare state. The British Labor Party became dominant. It moved toward socialism gradually and democratically, in such a way that the middle classes did not become alarmed as the working classes gained benefits.

Compromise was the order of the day in Britain. Said the conservative leader, Stanley Baldwin, in the last line of his greatest speech to the Commons, "Give us peace in our time, O Lord." Britain granted Catholic Ireland full autonomy after a bitter guerilla war, and removed another source of friction that had existed before the War. There was cause for optimism in the late 1920’s; however that optimism proved to be short-lived.