The Great depression: effect in German economy

The depression began with the Wall Street Crash. This was a collapse of confidence among American investors. After Wall Street, there was a dramatic slump in the USA and this had catastrophic results because the world economy depended on the USA. After the crash, there was a worldwide economic crisis. Governments turned to protectionism: they imposed high import taxes to protect their own industries. This resulted in a further decline in world trade and widespread unemployment.

Rampant hyperinflation, massive unemployment and a large drop in living standards were primary factors.

In Europe, the impact of the Depression was at its greatest in Germany. The democratic government set up at Weimar was already in trouble before the Depression started. This added a new sense of crisis to German politics which made the economy of Germany depend on American loans. As nearly as 1930 emergency powers were given to the president that limited the power of the Reichstag.

Unemployment soared, especially in larger cities, and the political system veered toward extremism(any ideology or political act far outside the perceived political center of a society; or otherwise claimed to violate common moral standards).The unemployment rate reached nearly 30% in 1932, bolstering support for the anti-capitalist Nazi and Communist parties, which both rose in the years following the crash to altogether possess a Reichstag majority following the general election in July 1932.

A scene from the Great Depression: an unemployed man seeking work.



After the Wall Street Crash, America gave Germany 90 days to start to re-pay money loaned to her. No other world power had the money to give Germany cash injections. Britain and France were still recovering from the First World War and the Wall Street Crash was to have an impact on industrial Britain. Stalin’s Russia was still in a desperate state and embarking on the 5 year plans. Therefore, an impoverished Weimar Germany could only call on America for help and she was effectively bankrupt by the end of 1929 and quite incapable of lending money.


Companies throughout Germany - though primarily in the industrial zones such as the Ruhr - went bankrupt and workers were laid off in their millions.

September 1928	650,000 unemployed
September 1929	1,320,000 unemployed
September 1930	3,000,000 unemployed
September 1931	4,350,000 unemployed
September 1932	5,102,000 unemployed
January 1933	6,100,000 unemployed

Unemployment affected nearly every German family just 6 years after the last major economic disaster - hyperinflation - had hit Weimar.

Most, though not all, of the unemployed were male. These men were almost certainly family men who could see no way ahead with regards to providing for their families. Money was required for food, heating a home, clothes etc. With no obvious end to their plight under the Weimar regime, it is not surprising that those who saw no end to their troubles turned to the more extreme political parties in Germany - the Nazi and Communist Parties.


Hitler and the Nazi Party came to power in January 1933, establishing a totalitarian single-party state within months and initiating the path towards World War II, the most devastating conflict in world history.






Valeria Otarola