Coupon Accepted Successfully!


Political Radicalism and Economic Crisis

Along with the Weimar Republic there came another revolutionary uprising called Spartacist League. This league was based on the pattern of the Bolshevik Revolution in Russia and demanded Soviet style governance. The Socialists, Democrats and the Catholics who opposed the Spartacist league met at Weimar to establish a Democratic Republic. With the help of the "Free Corps" a war veterans organisation, the Weimar Republic crushed the uprising. These Spartacists later formed the Communist Party  of Germany. Henceforth, the communists and the Socialists became irreconcilable enemies and thus could not make a common cause against Hitler.

The Economic Crisis of 1923

Germany fought the war on loans and had to pay war reparations only in gold. This depleted the gold reserves when there was a scarcity for resource. In 1923 the French occupied Ruhr, a leading industrial area, when Germany refused to pay the reparation. In retaliation Germany printed paper currency recklessly. As a result, the value of the  German mark collapsed and prices of goods soared.


One US dollar compared to the German mark in 1923.

April - 24,000 marks

July - 353,000 marks

August - 4,621,000 marks

December - 98,860,000 marks


The figure ran into trillions. People had to carry a cart load of currency to buy a loaf of bread. This crisis known as hyperinflation, drew the sympathy of the world. Germany came out of this difficult situation with the introduction of Dawes Plan by the Americans. This plan, eased the financial burden on Germany.

The Dawes Plan
In August 1924, an agreement was reached and it was called The Dawes Plan.

1. The Ruhr area should be evacuated by Allied occupation troops.

2. Reparation payments would start at 1 billion marks for the first year and over a period of four years rise to 2.5 billion marks.

3. The German Reichsbank would be reorganized under Allied supervision.

4. Foreign loans would be made available to Germany.

5. The sources for the reparation money will include transportation, excise, and custom taxes.

The plan was accepted by Germany and the Allies in the same year and went into effect in September 1924. The German business picked up and reparation payments were made immediately. The Young Plan was substituted in 1929.

Test Your Skills Now!
Take a Quiz now
Reviewer Name