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Depression in Germany
After World War I, Germany had a new government known as the Weimar Republic. In October
of 1929, the American economy would be devastated by a stock market crash and an ensuing
depression. The crash had a devastating impact on both the American economy and German
economy because America had helped the Weimar Republic with huge loans in 1924. So the
devastation of the American economy also had a devastating effect on Germany’s economy.
In the 1920s no other country could or would loan money to Germany. Britain and France were
still recovering from the First World War and would not forgive the reparations owed to them.
Stalin’s Soviet Union was still struggling with their economy and was embarking on the 5-year
plans. Therefore, the impoverished [poor] Weimar Germany could only call on America for help.
The United States wanted to help Germany, since America thought Germany was unfairly treated
at the end of WW I and figured that by helping Germany the US could help maintain peace in
Europe. However, by 1930 since America was suffering from a depression, America needed the
German loans to be paid back in order to assist the faltering American economy. America gave
Germany 90 days to start to re-pay the money that was loaned. The well-oiled German industrial
machine quickly ground to a halt. By the end of 1929, Germany was on the verge of bankruptcy.
Companies throughout Germany went bankrupt and workers were laid off in the millions.
Unemployment affected nearly every German family. From 1928 to 1933, unemployment rose
in Germany from 650,000 to 6.1 million. Germany’s money was also worthless. 800 German
marks equaled just one American Dollar. German businesses could not make a profit because
even if they charged a lot of German marks, it translated to little actual money. In addition, most
Germans could not even afford low prices that the German merchants were charging.
Overnight, the middle class standard of living that so many German families enjoyed were being
ruined by events outside of Germany that was beyond their control. As the Great Depression
began most Germans were cast into poverty and deep misery. These people began looking for a
solution, any solution.
Despite the hard times that were hitting Germany, the allied powers of Britain and France who
won World War I insisted that Germany keep repaying its war debts. The country of Germany
was completely broke! Adolf Hitler knew his opportunity had arrived.
In the good times before the Great Depression the Nazi party experienced slow growth,
barely reaching 100,000 members in a country of over sixty million. But the Nazi party,
despite its tiny size, was a tightly controlled, highly disciplined organization of fanatics
poised to spring into action.
Since the failed Beer Hall Putsch in 1923, Hitler had changed tactics and was for the
most part playing by the rules of democracy. Hitler had gambled in 1923, attempting to
overthrow the young German democracy by force, and lost. Now he was determined to
overthrow it legally by getting his party elected while at the same time building a Nazi
shadow government that would one day replace the democracy. The country was in
shambles, and the Nazis knew now was the time to make their move.
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How did the American stock market crash affect Germany’s Weimar Republic?
Why was the United States the only country that would loan Germany money?
Describe unemployment in 1920s-30s Germany.
What was the value of German money and how did this affect German people?
How do you think Hitler and the Nazis were able to take advantage of the
situation?