Early on 20 June 1919, the government of Philipp Scheidemann resigned when it was unable to agree on a common stance towards the Allied ultimatum to either sign the Treaty of Versailles or face a resumption of hostilities.

It was widely feared that a refusal to sign would result in the dismemberment of the German state, occupation by foreign troops and a possible plunge into civil war.

After the cabinet's resignation, it fell to President Friedrich Ebert and the majority parties of the Weimar National Assembly to create a new government and to decide whether to sign the Treaty.

Under the leadership of Matthias Erzberger, the Centre Party was willing to sign provided that some "dishonourable" clauses were struck from the text, and the Social Democrats advocated a separate, parallel note of protest.

[1] Threats by Ebert to resign and even the readiness of SPD and Centre Party to accept the DDP's demands failed to bring the Democrats on board.

The Social Democrats in the Assembly named Eduard David, who next to Erzberger had been the member of the old cabinet most supportive of the Treaty, as candidate for head of government.

President Ebert apparently had exercised a considerable amount of influence on events (to which he was entitled under §8 of the temporary constitution, the Law on Provisional Reich Power).

Bauer was not a great leadership personality who could be confidently expected to deal successfully with the huge challenges posed by complying with the Treaty while fending off internal dissent both from the left and the right.

From the moment of its inception, the Bauer cabinet was thus tainted in the eyes of many in Germany, both for its submissive acceptance and its failure to negotiate an improvement in the Treaty.

It was only the clear message sent by General Wilhelm Groener at the Supreme Army Command (OHL) that a resumption of hostilities would be "hopeless" that prevented the speedy collapse of the Bauer cabinet.

[1] The members of the cabinet – known collectively as the Reich Ministry until the Weimar Constitution came into force in August 1919, when the official name became the Reich government – were as follows:[5] Notes:[5] After the National Assembly's June vote to accept the Treaty of Versailles by a vote of 237 to 138 with 5 abstentions,[6] it formally ratified the Treaty and the regulations covering the occupation of the Rhineland on 9 July.

On 7 July, Finance Minister Matthias Erzberger (Centre Party) presented a package of far-reaching fiscal reforms that fundamentally changed Germany's tax system.

A winter supplement was provided in October 1919, and the maximum benefit for single males over the age of 21 was increased from three and a half to six marks in February 1920.

After the failure of the Kapp-Lüttwitz Putsch on 17 March 1920, union and left-wing leaders such as Carl Legien, Arthur Crispien and Rudolf Hilferding put pressure on the government that had just returned to Berlin after having fled first to Dresden and then to Stuttgart.

On 22 March the unions ended their general strike, which had been central to defeating the putsch, conditional on concessions by the government: withdrawal of troops from Berlin and a decisive influence of organized labour on the makeup of the next cabinet.

It was to be replaced by a cabinet of politicians who could not be charged with leading Germany to the brink of class and civil war, precisely where it had been a year earlier.