The Eastern Aid Scandal (German: Osthilfeskandal) was a public fraud case within the German Empire where funds intended to revitalize the Junker estates of East Prussia were systemically misused. The funds were widely used to purchase luxuries and other frivolities, instead of the economic rebuilding that the region desperately needed. The subsequent newspaper investigation and political crisis brought an end to the military junta led by Erich Ludendorff and triggered Germany’s first public elections in over a decade, resulting in the election of Reichskanzler Alfred von Tirpitz.
The Scandal Builds
Osthilfe (Eastern Aid) was a government policy instituted after the end of the Weltkrieg in 1921 to relieve bankrupt Junker estates in East Prussia. The Russian invasion in 1914 had done great damage to the region, which was already becoming depopulated as people emigrated west to the booming Rhineland. With the failure of the Polish Frontier Strip scheme, the need for supporting the Prussian power base became even more pressing. However, very few of the funds were used for their intended purpose of revitalizing agriculture. If the money was spent at all, it was on the Junkers themselves, instead of their farmland.
The Scandal Breaks
On July 10th, 1923, the liberal newspaper Berliner Tageblatt published a lengthy expose on the misused funds. Most explosively, it named Wilhelm Breucker, adjutant to General Ludendorff, as one of the biggest culprits, and suggested the General had full knowledge of what was happening, perhaps even encouraging or facilitating it. By that afternoon, garrison Heer units had confiscated all unsold copies of the paper and occupied the Tageblatt's offices. Chief Editor Theodor Wolff began calling every possibly friendly newspaper and asking them to run his story to prevent its suppression. On the morning of July 11th, Die Post, Die Frankfurter Zeitung and Die Allgemeine Zeitung all carried the story of the "Osthilfeskandal", and by that evening the Kaiser was reading it at his cure residence.
On the 13th, Theodor Wolff and DVLP leader Admiral Alfred von Tirpitz were seen entering the Kaiser's residence. The next day, Wilhelm abruptly cancelled his vacation and returned to Berlin, holding a meeting with Reichkanzler Paul von Hindenburg that lasted into the next morning. Ludendorff demanded to meet with the Kaiser as well, but was rebuffed. The panicking General spent the 16th calling friendly army officers to a meeting at the Hotel Adlon of Berlin the following day. When his car pulled up to the hotel, it was surrounded by policemen, who placed the General under arrest.
The de facto leader of the German Empire was taken, in handcuffs, to Kaiser Wilhelm II at the Berliner Stadtschloss. In front of the generals he had presumed were his allies, von Hindenburg, von Tirpitz, Wolff and many other journalists, and the leaders of every major political party in Germany, including Otto Wels of the SPD, the Kaiser stripped Erich Ludendorff of his command and ordered him to retire. The Kaiser made a short public announcement that claimed that the forced resignation was "to provide our most loyal and selfless defender with an opportunity for rest", announced the reconvening of the Reichstag, and that its first election in over a decade was to take place in one week's time.
The 1923 Election campaign was a heinously chaotic time, and became known as the Tage der Schreihälse (Days of the Criers). In the end, the "Grand Coalition" of the DVLP, NLP-FKP, Zentrum and DKP formed the new government, although the SDP was still the largest single party.
Erich Ludendorff disappeared into retirement at his Ostelbien estate, and von Hindenburg followed him a week later after von Tirpitz' selection as Reichskanzler.