Discussing a Sketch: Weimar coup in a different 1931

So no Hoover Memorandum on reperations here?

Will you keep Müller Alice as well? He died in march 1931 in OTL.

Brüning deliberately accelerated the crisis. One the one hand to get through it faster on the other to get rid of the reperations once and for all.
Both goals were eventually reached, unfortunately after the end of his chancellorship.

So with a more moderate economic policy Germany will not get rid of the reperations and the speedy recovery of the mid thirties can't happen.
So the recession might drag on till the end of the decade as in the US.
I think Müller dies. He died from a bile operation gone bad IOTL, such an operation can't be postponed much and can't be said to have gotten better just because he's still chancellor. (This is actually the point where I am pondering whether a chain reaction is set in motion or not: already the question of who should be the next chancellor opens a can of worms, if the coalition has stil held out so far.)
Hoover's Memorandum came in June 1931. Stresemann's declaration a few months earlier is going to change the entire discussion, but as I'm really not sure how the whole thing is going to evolve, a similar memorandum is still in the cards. (But so is French re-occupation, an earlier banking collapse, and a lot of other possibilities.)

I agree with you that if the outcome of all of this is a continuation of something "moderate", then there'd be higher unemployment and lower industrial production than IOTL obviously (although I'm not sure if "speedy recovery" really describes Nazi economic policies and their effects well). Thing is, are you seeing Weimar heading towards republican survival just because of one more year of Müller II instead of Brüning I?

btw, glad you joined the discussion!
 

oberdada

Gone Fishin'
The final years of Weimar are fascinating.

The downside to Brüning is that he wasn't a republican, but a monarchist. So cutting back parliamentary power in favour of the President, later to be replaced by a monarch was his secret program.
So having a social democrat in power who actually believes in the republic is better.
But the SPD by 1932 has lost most of the younger generation to the KPD and the NSDAP.
The SPD could not show a way to socialism, and had not given up on it either.
Seen as the party of the republic, therefore functional conservatives, it is no wonder that the party ran into trouble once things got really bad.
 
The final years of Weimar are fascinating.
Indeed they are.

The downside to Brüning is that he wasn't a republican, but a monarchist. So cutting back parliamentary power in favour of the President, later to be replaced by a monarch was his secret program.
So having a social democrat in power who actually believes in the republic is better.
I think so, too - Brüning's stance towards parliament became a sort of self-fulfilling prophecy. By TTL's early 1931, there's not going to be the same sense of institutional emergency and political madness as IOTL at the same time yet. A lot of boundaries have not been crossed yet. Plus, both the topics and the culture of discussions in the Reichstag without half a year of massive NSDAP presence are going to be different, too. Heck, there are going to be Reichstag debates at least, instead of a scared Reichstag not convening too often at all IOTL. By early 1931, I think everyone is seeing a dire economic crisis, but they're not necessarily also seeing a political-institutional crisis. That can change, though.

But the SPD by 1932 has lost most of the younger generation to the KPD and the NSDAP.
The SPD could not show a way to socialism, and had not given up on it either.
Seen as the party of the republic, therefore functional conservatives, it is no wonder that the party ran into trouble once things got really bad.
Can you point me to any sources as to electoral demographics like the one you alluded to? That would be very helpful!
Yes, the situation of the SPD was not admirable, and a sense of ideological hollowness was certainly there, too. Another year in power won't change that at all (quite the opposite).
On the other hand, these developments weren't all bad for the SPD, either. They did begin to absorb liberal middle class votes, too (unfortunately at the cost of their ally's, the DDP's, survival), and election results not only on the imperial, but also on the Land and Provinz level not only in 1928, but even as late as 1929 and, before the Reichstag elections of September, also in 1930, were quite good and actually on a slight upward trend. After September 1930 IOTL, of course, not only did the Nazis become a front page topic, but also - actually already from April 1930 onwards when Brüning had sidelined the SPD - there was clearly no longer any option of power for the SPD once the bourgeois parties had turned away from them (and parliamentary democracy really) - and the KPD was still on its Sozialfaschismus path.

With another year for the great coalition under an SPD chancellor, I think chances are not so bad for the SPD to electorally hold their ground. The economic crisis being a global one, it's not going to get universally blamed on "Social Democrats can't handle the economy" - rather, it's (IOTL and ITTL, too) the moderate bourgeois parties who eroded or even imploded. That's of course no good news for the SPD really, and you're right that leading social democrats are bound to be as clueless as IOTL as to what to do with that. (If it didn't turn out so horribly, it could be said to be funny: the SPD had always officially postulated that capitalism would sooner or later collapse, bourgeois democracy would outlive itself, and a new window of opportunity for transition would open. Yet, when something quite similar to that happened, they seemed to be utterly unprepared for it...)

While I'm at it, I think ITTL there's not going to be a September 14th election in Braunschweig (together with there not being a simultaneous Reichstag election); the constitutional parliamentary period in the Freistaat Braunschweig would continue until summer 1931, and so would the SPD-only cabinet Heinrich Jasper III. That means, no Nazis in power there until 1931. IOTL, it was the DNVP-NSDAP post-1930 Brunswick coalition which enabled Hitler to obtain German citizenship.


I've been thinking a little about Stresemann's proclamation of Germany's inability to pay its 1931 reparations. This may turn out really bad, but I think it's one of the less far-fetched direct consequences of his survival. He was not only internally a great diplomat and compromise-finder. He was also an international statesman of great standing - and he would be the foreign minister of a broad coalition government which doesn't and cannot pursue Brüning's plan of proving to the world that Germany is sincerely unable to pay the reparations. He had a lot more space for maneuvres than Curtius, and Stresemann was also bolder. Plus, as I said, his government has its back against the wall financially, he wasn't bluffing. Now, Stresemann still wouldn't have pulled such a stunt, had he not checked with his French counterpart, Aristide Briant, that no such thing as a French re-occupation or other similar shit would follow. (It didn't even follow when the much more dangerous Hitler government brazenly tore Versailles apart entirely.)

What Stresemann couldn't foresee, though, was how financial markets would react.
He could anticipate some trouble, and most likely concerning the foreign currency loans provided by various countries to the Reichsbank to cover its mandatory minimum of foreign currency and gold. Germany defaulting on the Young reparation schedule could result in these loans being recalled, quasi as a way to sequester the reparations the German minister of finance isn't sending to the Bank for International Settlements. That would leave the Reichsbank short of its required minimum of guarantees - potentially throwing into question the Reichsmark's stability. Would the lenders (chief among them Hoover) do that?

What he could not anticipate, because the bank had not really told anyone how bad things stood, was how close the Austrian Creditanstalt was to illiquidity. Germany's defaulting on reparations, which means Young bonds are not yielding a return in 1931, puts an additional strain on the continental banking system, and if coupled with doubts about the solidity of the Reichsmark, it could send the whole house of cards tumbling down earlier than IOTL.
 
OK, so I've decided on a course of events for March 1931, hope you and plausibility are still with me:

As March and the first days of spring arrived, Germany and its government experienced trouble like they had not since 1923. There was no sign of the usual seasonal recovery on the job market, and demonstrations of the unemployed in cities across the country turned violent ever more often, with the KPD almost always present in organising and agitating them. Across the Ruhr, coal miners were on strike to prevent wage cuts. There had been a number of serious injuries in clashes between unionised striking workers and private "security" forces of the mining companies who attempted to break through the strikers' blockades in order to let day-hired replacements in. The unions appealed to the Social Democratic minister for the economy to protect the miners, while the employers and a slowly forming coalition of right-wing dissenters in DVP and the Zentrum voiced their opinion that the government should send the Reichswehr in against the striking and blockading miners instead, and if the social democrats would not suffer this, then they should leave the government at last. And while France's foreign minister, Aristide Briant, had not threatened Germany with reoccupation, he could not let Stresemann's declaration slip, either. France insisted that at least the fixed sum of 600 million RM be paid, while the postponement of the rest of 1931's rate could be judged by the commission the Young Plan mentioned as the arbiter in cases of extraordinary economic impasses which would make Germany's payments impossible. Should Germany not agree to this official procedure, France would consider impounding, for example by withdrawing its loans to the Reichsbank's foreign currency reserves. This threat had increased insecurity on Germany's financial markets, and the trickle of foreign capital out of Germany began to swell into a veritable wave. The banks and insurance companies of Germany - and of Austria, too, since the two countries' financial institutions were interwoven to some degree - approached critical limits. But the government, and the general public, did not know of this yet, for neither of the financial institutions who stood with their backs against the wall had said anything yet, for fear of causing a bank run which would finish them off.
And so the Reich's chancellor Hermann Müller was not fully aware of just how dramatic the situation was when he decided that his bile operation could no longer be postponed. For the time being, vice-chancellor Joseph Wirth (Zentrum) would lead the cabinet's meetings.
And then, Reichskanzler Hermann Müller died in hospital on March 24th, 1931. [1]

From how fast they reacted, one could think that a number of groups had already expected this to happen. What is more likely is that the atmosphere of increasing polarisation and discontent had lots of people planning something...

On March 26th, 1931, when Müller's body had not even been buried yet, a group of parliamentarians called for a cabinet of technocrats in the Reichstag and petitioned the Reichspräsident to quickly appoint a "personality above the parties" as chancellor who would reorganise the cabinet and fill it with what they called "experts".
The group was not a spontaneous formation. Its backbone was the Association for the Renewal of the Reich, founded by former chancellor and current Reichsbank president Hans Luther (DVP). It had supporters in all bourgeois parties, and its agenda had varied over time. It began as an initiative to restructure Prussia and eliminate double power structures between the Reich's administration and that of Preußen, the member state which comprised by far the largest part of its territory and population. As economic crisis and political conflicts escalated, the association, whose leading figures all came from the industrialist "haute bourgeoisie", increasingly became a focus of anti-social democratic sentiment and plots. Its plans and visions for Reich reform took on more and more authoritarian traits, with anti-unionism and a distanced attitude to traditional parliamentarism becoming mainstream among its growing membership, who began to comprise outspoken supporters of a restoration of the monarchy, too. Newspapers leaning towards these circles propagated a "fast shock cure" of deflatory policies, and although nationalism was rampant among them, they viewed Stresemann's declaration of Germany's defaulting and the threat a withdrawal of French money from the Reichsbank which would leave the central bank short of its required minimum reserves with some degree of horror.

President Paul von Hindenburg was not very difficult to convince. He had not been enthusiastic about having to appoint a Social Democrat as chancellor in 1928 in the first place, and he was supportive of the idea of getting rid of the reds and forming a cabinet of "personalities". And so, on April 1st (and that was unfortunately not a joke), he appointed Franz von Papen as the new Reichskanzler.


[1] This is merely four days later than IOTL.
 
Franz von Papen inherited a cabinet full of ministers from different political backgrounds, many of them influential figures in their respective parties. If he was to fulfill the expectations set in him, this would inevitably change - and that was something von Papen considered necessary, too.

The breaking point was the continuing coal miners' strike. After a number of preliminary discussions (both open and secret), von Papen decided that the strike had end within a week. He confronted the Social Democratic Minister for Work, Rudolf Wissell, with his expectations for an arbitration ("Schlichterspruch"). Wissell, who was skeptical and who sensed which the way the wind was blowing, nevertheless did his best and tried to placate both sides in an arbitration which was, without question, the worst deal any group of workers has been offered in decades. Predictably, his efforts failed. Von Papen then decreed the arbitration and insisted that Reichswehr units dispersed any groups of striking miners who would still blockade the mines after an ultimatum of 24 hours. Wissell rejected this course of action with shock. Last minute talks fell through, as the atmosphere among the ministers "on leased time" grew more and more confrontational, and shortly before von Papen's marching orders were executed, Rudolf Wissell resigned in protest. Along with him, his party colleagues Rudolf Schmidt (Minister for Work) and Carl Severing (Minister for Internal Affairs) resigned, too. The enforcement of the strike ban, which negated the freedom of coalition enshrined in the Weimar Constitution, came at the cost of seventeen human lives, all of them unionized miners who held out to the last moment. The social democratic newspaper "Vorwärts" denounced von Papen on the next day as "Arbeitermörder" and "Industriediktator", and the party's president, Otto Wels, would announce in the next day's issue that the SPD group in the Reichstag would call a vote of no confidence against von Papen at the next opportunity.

Von Papen had seen this coming. His nominations for replacements followed the reorientation his preparatory talks with various political groups had outlined: Wissell was replaced by Gottfried Treviranus as Minister for Work, who had left the DNVP after Hugenberg's ascent to power and radicalisation, and founded the Konservative Volkspartei - a smallish faction in the Reichstag which, following Treviranus' nomination, supported von Papen's government. Schmidt was replaced by Hugo Schäffler, who pursued just the anti-unionist policies which the industrialist circles who backed von Papen's government had called for. Severing, finally, was replaced by Wilhelm Groener, who united both the Ministries of Defense and Inner Affairs in his person. Thus, von Papen attempted to garner support of industry-friendly small parties like the Wirtschaftspartei, integrate the KVP into his ad hoc coalition, and neutralise, if possible, the DNVP in the Reichstag vote which would inevitably follow. But this was not enough to garner a passive negative majority. He had to court various smaller agrarian parties, too - and to this end, he had the DDP minister for Agriculture, Hermann Dietrich, reach out to the agrarian lobbies by promising a mixture of protective tariffs and debt conversion aids, which was a U-turn on the previous Great Coalition's agrarian policies.

The Reichstag would convene on May 4th, 1931. In the days before, the opposition on the left, now including the SPD, was pressured by their supporters to stand their ground. On May 1st, 1931, millions of workers took to the streets, shouting demands to topple von Papen's "class dictatorship". They were joined by equally large numbers of unemployed who wildly protested von Papen's latest plan: to cut unemployment benefits by 20 %. THis was not only aimed at freeing up resources for the agrarian aids promised to groups like the CNLB, Landbund, and Bauernpartei, but also at weakening the financial basis of the leftist opposition parties (who relied on the fees of their members, not few of whom were unemployed right now) and the bargaining position of the unions. SPD- and KPD-led demonstrations marched separately, to the dismay of perspicacious people in both parties, though. But the display of the popular will was clear enough: the SPD in the Reichstag would clearly lose its face if they did not vote unanimously against von Papen, and the KPD's position on the issue was unambiguous anyway. At least in their vote of no confidence, the two largest parties of Germany's working class would be united.

But these two parties were not the only ones von Papen was afraid of. The Catholic Zentrum featured its own left wing, too, and politicians like Adam Stegerwald and Joseph Wirth had already openly criticsed the Ruhr killings. Rumours had it that they planned to nominate an alternative, more moderate candidate who could win back the SPD's support. To placate his fellow Zentrum members, von Papen brought the issue of state support and equal protection for confessional schools up again - at the cost of alienating secularists in the DDP and DVP.

Yet, if party politics and parliamentary majorities were already a serious problem for von Papen, developments beyond Germany's borders were even more dangerous. French loans to the Reichsbank were, indeed, withdrawn, although for the moment only in part, and the Reichsbank's required minimum of foreign currency deposits was still met, for the time being. Yet, investors both in Germany and abroad began to feel growing unease, and the amount of capital withdrawn from Germany increased. What was even more consequential: apparently, Germany's virus was considered by a significant number of US investors to be contagious enough to threaten Austria's economy, too - so there, too, capital was being withdrawn. It was not much - but in combination with deep-lying internal problems of Austria's own financial market, it was more than enough. And so, on April 30th, the largest financial institution of Austria, the Creditanstalt, publicised its annual review, stating that the bank was currently short of the required minimum of capital cover. [1]

[1] This happens slightly earlier than IOTL because of the capital outflux caused by Stresemann's declaration.
 
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