The Depression refers to the most catastrophic economic crash the modern world has endured. Triggered by the collapse of the America stock market on the 24th of October 1929, but the economic recession began long before in 1928. This affected the whole world but hit Germany particularly hard as it relied on America hugely. Germany was ‘dancing on a volcano’ inevitable to erupt. This lead to German exports slumping, industries to fail and consequently millions of jobs were lost.
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In the years 1929 to 1934, the economic impact of the Depression was hugely important as it impacted all of society from the richest bankers to the poorest farmers. After the hyper inflation crisis of 1923 the German economy was extremely dependent on American loans and had slowly recovered under Stresemann’s chancellorship during the ‘Golden Ages’ of Germany. From 1924 to 1929, Germany experienced economic stability and improved living standards as the American loans kept the economy afloat. But Germany’s ‘economic position was only flourishing on the surface’ as they relied on American loans heavily and Stresemann knew the loans were only a short term solution. Therefore in 1929 when they asked German banks to repay these loans Germany faced detrimental repercussions. Between 1929 and 1932 unemployment rocketed by around 4.5 million and 40% of factory workers were left without jobs. Unemployment soared due to the number of factories and businesses that closed down which led to Germany’s production being halved. German banks had no possibility of stabilising their losses, the largest German banks such as the Darmstadter und National Bank went bankrupt. The city government of Cologne couldn’t afford to pay any interest on its debt and consequently closed. Businesses and industries suffered as well, from small-scale shops to high-scale businesses, demands for goods and services decreased. But it was farmers and German agriculture that were hit particularly hard: as world demand contracted further, the agricultural depression deepened. Farmers faced unavoidably high production costs, for example a grower of rye received 23% less income after the war. It was clear that Germany suffered severely as a result of America’s deflation and to make matters worse taxes were raised to pay for the increasing numbers of unemployed. In January 1933, 6.1 million Germans were unemployed and 23 million were directly affected by unemployment in Germany. The economic situation in Germany was extremely significant as it accentuated the loss of pride through unemployment and the decline of industries. Therefore, the economic significance is the greatest as it eventually led to the uprising of the Nazi’s due to the government’s inability to handle the crisis as well as society’s discontent.
Politically, the Depression was significant as it led to the uprising of the Nazi party and to the downfall of the Weimar government and indeed constitution. The Depression brought great despair to the German people leading to the rise of extremist parties. Parties such as the Nazis and the Communists were popular as their criticism of the Weimar mirrored the peoples views. After the economic crash, the Weimar government and the democratic parties took the blame as they were indecisive, as evidenced by the division of the Reichstag. Due to the lack decisiveness Hindenburg was forced to use Article 48 too frequently and consequently the government was ruled by presidential decree. Due to proportional representation Chancellor after Chancellor could not get a Reichstag majority to support their ideas. Stresemann’s death caused great trouble in Germany as he was seen as Germany’s last democratic hope. Therefore as democracy failed ‘voters rushed to extremes’. ????
The Weimar republic was ‘torn apart by the resurrection of the emotive issue of reparations’, many plans were put into place in order to soften the economic blow but these were not popular in German society. The Dawes and Young Plans (1924 &1929) allowed Germany to reschedule payments and regain economic stability and reduced the final sum to $1,850 million. The political fallout claimed Müller’s administration and was succeeded by Brüning, his solutions to the economic crisis were to make cuts in government expenses and achieve a balanced budget. But all of these were rejected in the Reichstag in July 1930 highlighting the ineffectiveness of proportional representation. Whilst the economy deteriorated Hitler used every opportunity he could to prevent the spread of Communism and bring attention to the Nazi Party using propaganda, led by Josef Goebbels. Propaganda included his twenty five point plan which targeted the vulnerable and promised Germany a brighter future. Generally, people supported the Nazi party on the basis of ‘negative cohesion’ and the 1930 elections were the turning point as they gained 95 seats. The Depression was greatly significant between 1929 to 1934 as it led to the radical changes in German politics. This is reaffirmed in the 1930 elections highlighting the connection between political radicalisation and the economic crisis. In July 1932, the Nazi Party became the largest party in the Reichstag polling over 13 million votes. The elections benefitted the Nazi Party hugely as their votes increases from 810,000 to 6,409,600.
Due to the overwhelming support of the Nazi Party, Hitler was appointed Chancellor in 1933 after he had 43.9% of the Reichstag. The Depression was significant politically as it gave Hitler a majority in the government and allowed him to grow in power. But Hitler faced a constant threat: communism. The Communist party was run by Ernest Thälmann who had originally been a Social Democrat. Hitler used Communists to promote the Nazi Party ‘Fear of Communism’ which led to rivalry between the parties. Nazis and Communists fought regularly and 500 were killed in 7 weeks during the elections. Communists never had more seats than the Nazi’s in the 1930s with its highest being 100 seats. Therefore, the Depression was significant politically for Germany as it caused violence and unrest in German society. It meant that society was desperate and took refuge in extremism as it was their only hope. This is significant as it led to Hitlers power in the government and eventually World War 2.
The social impact of the economic and political crises due to the Depression was detrimental. Between 1929 to 1934 all classes struggled, but the lower class such as farmers felt the repercussions of the Depression more so than any other class. For the lower class, prices has been falling since the 1920s and by the 1930s they had slipped into debt. Farmers faced the catastrophic combination of paying high rent for their land and low worth for their produce and ultimately the ignominy of eviction. Their was a incalculable apprehension, and embitterment etched into the minds of the working classes. Many lower class workers had to live in municipal housing ‘iron bedsteads… no windows… not easy to get supper’ which is significant as it highlights the living conditions the Depression forced people into. Unemployment was on the rise and 40% of factory workers were unemployed by 1932. Many of lower class workers moved to shanty towns as those who were jobless could not afford to pay rent. After losing a job a German would be paid benefits by the government for 26 weeks and after lived on ‘crisis payments’. However, the social depression accentuated through the government cuts to the unemployment benefit scheme. No one in Germany could afford to buy goods and therefore the government had no income to pay for schemes which meant the unemployment scheme income fell by one third. Many workers faced the prospect of indefinite unemployment. As well as the lower class, the Mittelstand felt the economic pinch of the Depression as they were living in an environment where big businesses dominated. The Mittelstand were furious due to the new welfare measures put into place, this had to be paid out of increased taxation leaving them in a greater depressive state as they had no money for their own living conditions. It was seen as beyond the bounds of possibility to keep families warm and well fed. Society itself was shattering uncontrollably as ‘a loss of pride and respectability accompanied poverty and unemployment’. Prussian Junkers had a powerful influence over Germany and were less affected by the Depression. It was after the Depression that hit the upper class hard as they lost status and influence being replaced by Hitler. Previously, under Brüning the wishes of large business men were met and they placed responsibility on the middle class and lower class through Article 48. Similarly, von Papen consolidated the rule of the upper class and looked down on the upper and middle class. Therefore, people lost faith in the Weimar Republic as they has no solutions to the misery, and therefore sought salvation in political extremism. In 1934, when Hitler was elected people saw hope under his rule as the level of public investment doubled and went straight to unemployment schemes. Socially, the Depression was significant as it led to millions of unemployed Germans which meant that they struggled to have basic living conditions such as shelter and food.
The Depression was significant to international relations as its repercussions were felt across the world and caused great competition. There was no part of the world left untouched. Europe was hit particularly badly the worst being: Poland, Austria and Germany with one fifth of their population unemployed. World trade collapsed and demand slumped with a fall of 40% of industrial outputSPECIFY. By 1932, the value of trade in Europe slumped to one third of what it had been in 1929. The most respected banks such as the Bank Of England were on the brink of collapse after the abandonment of the gold standard system. Counties began to feel the pinch and introduced new regulations and trading terms in order to reestablish the governments power. In 1932, France had introduced tight quotas on over 3,000 manufactured goods crossing the border. Furthermore, Britain who has been free traders for 85 years ended this ethos of free trade. The decline in trade was mostly due to the relationships which were disrupted by the Great Depression. The world separated into competing blocs, and every country in Europe enhanced tariffs to stop imports harming the domestic and agricultural industries. Britain and France felt weak after losing support from America, as previously Europe received a total of $7.8 billion in six years. As John Maynard Keynes famously put it ‘when America sneezed the rest of the world caught a cold’. Therefore Britain and France were hostile towards Germany as they felt the economic pinch and were competitively trying to recover. Germany similarly felt hostile towards America as America demanded for all their loans back at once. This put Germany into a impossible situation to recover from and therefore they blamed America for all the repercussions. ADD =
The Depression affected Germany culturally as there was a large decline in leisure activities and general creativity from 1929 onwards. During the ‘Golden Ages’ of Germany culture flourished with ‘music, theatre, cinema and cabaret’. Powerful and influential artwork was created during this time including ‘Pillars of Society’ by George Grosz. But after the crash in 1929 German morale declined and the creativity once seen had diminished. This is significant as The Depression caused the Nazi Party into government and culture hadn’t recovered until Hitlers death in 1945. The totalitarian nature of Hitlers regime meant cultural life ceased to exist. People didn’t have the money and Nazi wanted to restore the original prewar values.