After the initial frustration of the reparations crisis subsided in 1923, cooler heads prevailed for a time and the Weimar Republic started to address its immediate economic problems. The Weimar solved the fiscal crisis by replacing the devalued and disreputable rentenmark with a new currency, the reischmark. (146) The Dawes Plan eased reparations anxiety by bringing in American bankers to loan Germany hard currency to support the reischmark while overseeing the payment of reparations in reischmarks. (146)

Structurally, the Weimar government encouraged free trade and sought to restore Germany's historic trade surplus by favoring the production of goods for export, which eased unemployment greatly. (149) Germany's economic recovery was also aided by loans from investors in the United States, which underwent an extended boom throughout the 1920s owing partly to the economic gains it made during Germany's wartime absence from world trade. (158) By 1929, Germany had made enough economic progress to silence the political malcontents for a moment. In fact, the supposedly insurmountable reparations payments accounted for only 10% of Germany's GDP at that point. (148)

Although Germany was regaining its place as a powerhouse economy, it economy was not yet strong enough to withstand the unprecedented damage wrought by the Great Depression of 1929. (157) In fact, Germany's method of reintegration into the world economy might have made it more vulnerable to the Great Depression, as the cheap American financing it had relied on to rebuild its cities during the boom quickly dried up. (158)

As the money disappeared, the Weimar's national unemployment insurance fund collapsed, sending a collective panic into the country's numerous unemployed, at that time 14.5% of the population. (159) Actually, the unemployment insurance fund crisis would prove to be the undoing of the Weimar Republic as a parliamentary democracy. (159) The Reichstag's dominant coalition, that of the moderate-left SDP and the moderate DVP, would eventually implode while debating the means for financing the unemployment insurance fund. (159)

There was no political coalition strong enough...

(159) The result was a "paralysis of forces" in the Reichstag that prevented the Weimar government from functioning at all. (159) It is in the context of this parliamentary paralysis that the President of the Reichstag assumed power, effectively ending parliamentary rule and installing the Reichsprasident and Chancellor as virtual dictators.
The Weimar's Reichstag under Dictatorship

Although the Reichstag still held authority to pass certain bills, the Reichsprasident could also evoke the Article 48 Emergency Decree Provisions of the Weimar Constitution to pass bills directly into law. (162) Reichsprasident Paul Van Hindendburg employed the Emergency Degree Provisions in support of the Conservative Chancellors he appointed to the government. (163) In July 1932, Chancellor Von Papen found the Reichstag unsupportive so he had the Reichstag dissolved and called for re-elections. (169)Unfortunately, these re-elections yielded 37.2% of the votes for the Nazi party, whose popularity rose as the Great Depression dragged on. (170) From this position, Hitler would eventually maneuver himself into the Chancellorship, from which he clamped down on opposition parties and struck an alliance with the Catholic Centre Party to secure the 2/3 majority necessary to pass the Enabling Act, which allowed the Cabinet to pass legislation without the approval of the Reichstag or the Reichsprasident. (170, 184) With the passage of the Enabling Act, Hitler effectively ended the Weimar Republic.

Conclusion

Considering the enormous challenges facing it, it is somewhat of a miracle that the Weimar Republic endured for as long as it did. However, it is not so puzzling if one recognizes that during the Weimar period, the political situation tended to reflect the economic conditions. In this sense, it is not hard to imagine a stable moderate-left coalition emerging after five more years of economic prosperity. However, considering the fragile economic foundations and persistent political threats, the Weimar had a very small margin for error, a margin…