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There were Communist uprisings in the Ruhr soon after the republic was set up. These were put down by the armed forces.
In march 1920 a reactionary and nationalistic section of the army seized control of Berlin for a time - led by Wolfgang Kapp. The workers, fearing the restoration of the monarchy, staged a general strike and the uprising was soon put down.
In March 1923 Hitler staged his Beer-Hall putsch which ended in failure.
Industry had declined and inflation had begun to rocket in the early 1920's. This caused Germany to default on the repayment of repatriations to France, who sent troops into the Ruhr to enforce the Treaty terms. This helped fuel inflation and caused discontent and humiliation. German workers in the Ruhr staged a general strike.
The number of Marks needed to buy $US1.00
| date | amount (M) |
|---|---|
| 1914 | 4.2 |
| 1919 | 8.9 |
| Nov 1921 | 70 |
| Jan 1922 | 192 |
| Aug 1922 | 1,000 |
| Jun 1923 | 18,000 |
| Jul 1923 | 100,000 |
| Aug 1923 | 1,000,000 |
| Nov 1923 | 4,200,000,000 |
In 1923 Gustav Stresemann became German Foreign Minister. He understood that the victorious powers would insist on payment and so embarked on a policy of compromise and conciliation, especially with the French. Thus, he called off the strike (which began in the Ruhr when the French invaded) and promised to pay the repatriations - the French army left in 1925.
A committee under the chairmanship of an American banker, Charles Dawes, agreed to allow Germany to extend her payments over a longer period, and was given American loans to help her along. This assisted German development and recovery and many American capital flowed into the country. A new currency, the Rantonmark, was introduced.
By 1928, inflation had ceased. Germany had also received much more foreign loans than she paid out, and the difference was used to support public works, and to revive industry. However, since this prosperity was based on loans, when the stockmarket collapsed in 1929, these loans dried up and the German economy suffered a terrible blow - thus the term "Sham Prosperity".