The German economy collapsed between 1919 and 1923.

Four main factors were responsible for this collapse. Firstly, the end of the war dislocated industry geared to the production of war material, while demilitarisation threw millions of ex-soldiers on to an unprepared labour market. Secondly, the reparations demanded by the Treaty of Versailles drained the country of capital which would have been required to restructure the economy; thirdly, the government's attempt to solve currency led to hyper-inflation. Paper money became worthless and so did savings. Those on regular incomes and pensions found themselves unable to make ends meet. Finally, the French occupation of the Ruhr in 1923 precipitated a general strike in that region which deprived German industry elsewhere of vital raw materials and unemployment reached ever higher levels.

Within a few months, however, the work of Gustav Stresemann and his colleagues went a long way to reversing this situation. A new currency was introduced and those who had most greedily profited under inflation were penalised - up to a point. The reparations clauses of the Versailles Treaty were renegotiated and the Dawes Plan allowed for smaller annual payments as well as providing an 800 million dollar loan to redevelop German industry.The air of confidence that now prevailed encouraged state and municipal authorities to borrow money abroad to build schools, hospitals and other amenities. When the loans because due for repayment, the borrowed the necessary cash for that too. However, unemployment remained high, and though the profits of the 'big businesses' increased through its cartels and combines, the lower middle classes who had lost out in the great inflation never recovered their former economic power.

Germany's air of economic prosperity in the years 1923 - 1929 was therefore due to self-deception and the illusion was finally shattered with the advent of the great Depression.The American banks now called in their short-term loans and no institution was willing to grant any more. There was therefore no money to fuel the German economy, while reparations (albeit reduced by the Young Plan) continued to drain badly-needed capital from the country. Unemployment rose steeply, and the necessity to provide unemployment benefit proved an additional benefit drain on the economy.

Chancellors Muller and Bruning were haunted by the memories of the great inflation of 1923 and they resisted the temptation to spend their way out of the Depression by printing additional currency. Their solution to Germany's economic problems involved reducing the public service, cutting wages, increasing taxes and reducing unemployment and welfare benefits. The consequent hardship undermined support for the moderate parties they represented. Electors transferred their support o more extreme parties, ad it was from the resulting instability that Hitler emerged to "conquer" Germany in 1933.The Allies trusted the Weimar Republic only marginally more that they trusted the Hohenzollern empire, and if the Germans had hoped that their change of government in 1918 would win them a lenient peace treat, they were to be sadly disappointed.

Indeed, all Germans felt the conditions of the Versailles Treaty to be so harsh that much of their political activity in the inter-war years was geared to circumventing them.In 1922, Germany and Russia concluded the Rapallo Treaty, which established diplomatic relations between them, renounced financial claims on one another and pledged future cooperation. This co-operation involved German assistance in setting up industries in Russia, and it involved Russian co-operation with the German army in developing tanks, aircraft and military tactics. The German "right" might be happy to slaughter Communists at home, but they saw no contradiction in helping them abroad.Gustav Streseman was foreign minister from 1923 to 1929. He hoped to win acceptance for Germany amongst the powers by fulfilling the Versailles Treaty, while at the same time working to modify its less palatable terms.

His efforts culminated in the Locarno Treaty (1925) in which Britain, France, German and Belgium recognised each others borders and the demiliterisation of the Rhineland. Allied troops were to be withdrawn from the Rhineland , and Germany promised to seek revision of this eastern frontier only through negotiation.Germany was now invited to join the League of Nations, and Stresemann used the League as a platform to win the final evacuations of Allied troops from the Rhineland in 1928 and the Young Plan (reducing reparations) in 1929.Stresemann died in 1929 and his policies died with him.

Few Germans understood - or accepted - his policies of gradually destroying Versailles through wining international acceptance of Germany as a democratic law-abiding country. However, the economic problems that followed hard on Stresemann's death removed foreign policy from the centre of the German political stage to which it was not returned until the advent of Adolf Hitler in 1933.Culture during the Second Reich might best be described as dull and formal. The collapse of the old Germany led to the breaking of those restraints, official and unofficial alike, which had fettered culture, and the Weimar Republic was characterised by one of the greatest explosions of cultural activity witnessed in modern times.The Bauhaus at Weimar was the centre of architectural artistic and design education, first under Walter Gropius and then under Mies van der Rohe.

The Bauhaus tried to break down the distinctions between art and craft and between decoration and utility, while rejecting the heavy elaborations of the late 19th century in favour of clear simple lines. A basic aim was to produce designs suitable for mass production. The art of the Bauhaus is therefore clear, simple and austere, and is exemplified I the buildings of Gropius and the paintings of Paul Klee.These new departures in art were also reflected in the theatre, where old fashioned stages cluttered with scenery gave way to bare stages almost devoid of props.

In plays such as Brecht's "Mother Courage and her Children", the language itself became a vehicle for heightening the spectators awareness and forcing them to think more deeply on the significance of the plot. Many of the plays of the period were directly critical of capitalism, conservatism and war and there fore unacceptable to the conservative forces which still dominated the Weimar Republic.The new art of the cinema threw up great producers and directors such as Joseph Von Sternberg and Fritz Land, but while there were some fine films such as "M", "The Blue Angel" and "The Cabinet of Dr. Caligari", most films of the time were simply vehicles of escapism.