The Great Depression, 1930s

What was the Great Depression in Germany?

The Great Depression was a world-wide economic depression between 1929 and 1939. It caused mass unemployment and terrible suffering.

Why did the Great Depression have an effect on Weimar Germany?

The Great Depression affected Germany for 7 key reasons:

• ❖ American banks and businesses had loaned money to Germany under the terms of the Dawes Plan in 1924. This connected America's economy directly to Germany's.
• ❖ German banks suffered terrible losses because they were investors on the US stock exchange on Wall Street.
• ❖ Ordinary people panicked about their savings in the banks and rushed to withdraw them. This caused some banks to run out of money.
• ❖ German industry and businesses were affected because the collapsed German banks demanded they pay back any bank loans.
• ❖ As a result, businesses, farms and industry had less money and had to reduce production or close. Both led to job losses.
• ❖ After the Wall Street Crash, US banks and businesses recalled the loans they had made to Weimar Germany.
• ❖ Businesses were closing all over the world, which meant there was lower demand for goods, which led to businesses laying off workers. By January 1933, there were 6.1 million Germans unemployed.

What were the economic effects of the Great Depression on Weimar Germany?

The Great Depression had 7 key economic consequences for Germany:

• ❖ Industrial production fell rapidly as demand for goods dropped. Between 1929 and 1932, industrial production fell by 40% and world trade dropped by approximately 70%.
• ❖ Unemployment increased rapidly. In September 1929, Germany had 1.3 million people unemployed. This increased to 6.1 million by January 1933.
• ❖ As the number of unemployed people increased, the government struggled to pay their benefits. They reduced unemployment benefits, which meant people suffered even more.
• ❖ People who had jobs also struggled as taxes were increased to help pay for those who were unemployed. Wages were also cut.
• ❖ Homelessness increased as people could not afford to pay their rent. The combination of unemployment and homelessness led to more crime and violence.
• ❖ The crash of the US stock market affected people with savings who had invested in shares. Their shares became worthless and so too did their savings.
• ❖ Everyone was affected, from the young to the elderly.

What were the political effects of the Great Depression on Weimar Germany?

The Great Depression had 8 very important political consequences for Weimar Germany:

• ❖ The people blamed the Weimar Republic for the economic problems as they had become dependent on American loans.
• ❖ The chancellor between 1930 to 1932, Heinrich Brüning, was nicknamed the 'Hunger Chancellor' because his policies of cutting unemployment benefits and increasing taxes made the situation worse.
• ❖ Brüning struggled to get the different political parties in the Reichstag to pass his laws.
• ❖ He asked President von Hindenburg to use Article 48 to pass emergency laws. Brüning's government increasingly relied on using decrees to pass laws. Approximately 100 decrees were passed between 1931 and 1932.
• ❖ The Reichstag couldn't agree on how to solve the economic crisis of the Great Depression and by 1932 it was meeting infrequently. Democracy was failing.
• ❖ The extremist parties such as the Communists (KPD) and the Nazis (NSDAP) increased their share of votes in the September 1930 and July 1932 general elections.
• ❖ Between May 1932 and January 1933, the Weimar government was damaged by political intrigue which allowed Hitler to become chancellor.
• ❖ Several events involving General von Schleicher, Franz von Papen and President von Hindenburg helped Hitler become the chancellor in January 1933 because of the Great Depression.