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Why did Germany lose the First World War?

The breakdown of the Schlieffen plan

Germany's defeat in 1918 was not simply due to a failure of military planning. It is, however, true that the failure of Germany to achieve immediate victory at the beginning of the war in Autumn 1914 brought about a war of attrition for which Germany was not prepared. The Germans had long been aware of the difficulty in facing war on two fronts. The Schlieffen plan was an attempt to overcome this strategic weakness. But there was an error of judgement in the German high command in failing to recognise that the violation of the neutrality of Belgium, the Netherlands and Luxemburg would have political consequences. They may, also, have over-relied on the expectation of a slow Russian mobilisation. The German Army Supreme Commander, Moltke, endeavoured to minimalise the diplomatic repercussions by not invading the Netherlands, and this may have weakened Germany's military position.
From the beginning, the war did not go Germany's way. Russia succeeded in mobilising more quickly than they expected. The German army encountered stiff Belgian resistance, and the British expeditionary force contributed to the slowing of the German attack. The Germans were forced to abandon their plan to surround Paris, and the Allies were able to mount a counter attack at the battle of the Marne. Moltke had a nervous breakdown and resigned. He was succeeded by Falkenhayn. The Germans were forced to transfer two army corps to the Russian front, and by November 1914 they had the war on two fronts that they had always feared.

The failure of alternative strategies

During 1915 Germany failed to find an alternative military strategy that could produce victory. They won battles on the Russian front, and successfully forced the Allies to withdraw from the Dardanelles. However, Britain achieved significant naval successes. They took German colonies, they destroyed the German cruiser squadron, and imposed a naval blockade. In response Tirpitz requested unrestricted submarine warfare. Chancellor Bethmann allowed this in February 1915. However, having sunk the American liner the Lusitania, and fearing the political consequences, they abandoned this policy in September 1915. Yet they reintroduced unrestricted submarine warfare in February 1916, only to abandon it again when the USA threatened to break off diplomatic relations.
Falkenhayn's response was to launch an assault against the French fortress of Verdun. This failed to achieve a breakthrough, and the Germans also suffered heavy casualties in the Battle of the Somme. This forced the resignation of Falkenhayn, and he was succeeded in Summer 1916 by the joint leadership of Hindenburg & Ludendorff.

The Limitations of German Economic Mobilisation

Thus Germany faced a war of attrition. Importation of foodstuffs and raw materials was prevented by the British naval blockade. Serious shortages in oil, rubber, nitrates, and metals such as copper and mercury soon developed. Shortages of fats and fertilizers disrupted food production. The German High Command (OHL — Oberste Heeresleitung — Army Supreme Command) responded by appointing Walther Rathenau as head of the War Raw Materials Department (The KRA, Kriegsrohstoffabeteilung), which was a branch of the War Ministry. One achievement of the KRA was to produce nitrates by the invention of artificial nitrogen fixation. This enabled Germany to continue producing munitions. However, food shortages developed, bread rationing commenced in 1915, and by the end of 1916 all foodstuffs were rationed.
Germany's long-term capacity to sustain a war of attrition was weakened by the inadequacies of the government finances. Even before the war the German government was sustaining a deficit, and this deficit grew during the war. It was regarded as politically unacceptable to increase taxes on income and profits, which would have meant that the wealthier classes would have to pay more. In fact a mere 16% of the war costs were matched by tax revenues. The deficit financing resulted in a huge expansion of the money supply, and this created inflation.
There was also a problem over the supply of agricultural products. Grain production fell off, but the rich and powerful Junkers resisted any extension of government control that might have improved efficiency and increased supply.
Nonetheless, the Military Command was determined to win the war, and at the end of 1916 developed contracts directly with heavy industry to increase the production of munitions. The Auxiliary Service Law aimed to mobilise the entire population. Ironically, the military and autocratic regime in Germany did not succeed in mobilising to the same extent as Britain, with its democratic regime.
Submarine warfare and the entry of the USA
The response of the German High Command was once again to press for unrestricted submarine warfare. Bethmann tried to oppose this, but the Military had its way in January 1917. At first Britain suffered serious losses, a but by the second half of 1917 the convoy system brought losses to a manageable level. The inevitable political repercussion was the declaration of war on Germany by the USA in April 1917.

The collapse of Germany's final offensive

Germany's defeat was delayed by the collapse of Russia, and the Bolshevik revolution of November 1917. The Russians sued for peace, and ceded huge tracts of territory at the Treaty of Brest-Litovsk. This enabled Germany to transfer military resources to the Western Front. They almost succeeded in breaking through in their "operation Michael", which took them across the Marne in June 1918. But the Allied lines did not break and German resources were tied down by the occupation of eastern Europe which required one and a half million men. In August 1918 the Allies counter-attacked, and although the German lines were also not broken, it was clear that Germany could not resist for much longer, and Hindenburg & Ludendorff advised the Kaiser to sue for peace on 29 September 1918.