The Depression: Germany (1929-35)


Figure 1.--Germany experienced severe economic problems after World War I. Many families lost all their savings. Jobs were difficult to find. Slowly the economy began to improve in a economic expansion financed in part by Americam loans. Germans were devestated by the Depression which quickly spread from America to Germany. Many families were devestated by the economic collapse. The psychological impact on Germans is incalcuable.

The Depression played an important role in the NAZI sizure of power and in the image that Hitler built in Germany once he seized power. Tragically for Germany, the most serious period of the depression followed the New York Stock Market crash (1929) through Hitler's seizure of power (1933). The impact that the Depression had on Germany folded neatly into Hitler's political drive for power. Apparent economic improvements in Germany were an important element in Hitler's real popularity after seizing power. The view of the Hitler and the NAZIs in Europe was substantially different in Europe during the 1930s before Hitler launched World War II than it is today. It should be remembered that until Kristallnacht (November 1938) that NAZI actions against the Jews were not greatly different fom how Blacks were treated in the American South. In fact many NAZI racial laws were based on laws enacted against Blacks by Southern state legislatures. There were prominent Americans (Lindberg, Ford, and others) before World War II who were impressed with the NAZIs. Hitler was seen by many as the most dynamic leader in Europe. One reason for this was that NAZI policies essentially ended the depression by 1935. Many Germans had turned to the NAZIs in the earlt 1930s because of the Depression. The NAZIs expanded German labor programs, creating a National Labor Service must like the American CCC. The NAZIs seized control of the economy. German industrialists benefitted and soon learned that it was very dangerous to defy the Government. It might be argued that Germany under the NAZIs had the most controlled economy in Europe. Their major project was the construction of the Autobauns. The massive new armaments program was a major factor in putting Germans back to work. The German GNP was back to pre-Depression levels by 1935. NAZI policies made sure there was no longer wide-spread unemployment and destitution in Germany. The German people, however, were not better off. The benefits of the expanding economy was not brought to them in terms of more consumer goods, but rather a rearmed military. Many Germans, however, were convinced that they were better off. This was in part due to declinging product standards. It was also a result if the effectiveness of NAZI propaganda which emphasized the increased international respect with which Germany had achieved. [Hanby]

Social Trends

Socialist politicans before World War I had looked on war as a natural consequence of capitalism. Yet major socialist parties in Europe suppoeted their governments when war came and their was not wide spread worker resistance to the World War I. After the War, there was a wide spread movement throughout Europe for social reform. The results varied from country to country. Socialist parties like Labor in Britainn and Social Dempcrats (SD) in Germany achieved considerable success. Programs like unemployment insurance, the 8-hour day, collective baragaining righrs as well as voting rights reforms (lower voting ages, women's sufferage, and elimination of prperty right qualifications) were achieved. In addition as SD and other sovialist politicans achieved positions of power, there revolutiary ardor was quenched by therealization that major reforms could be achieved through the politucaln ststem. This placated a substantial proprtion of the working class. In addition, the Bolshevick Revolution in Russia convinced both the niddle-class and indistrialists that the legitimate needs of workers had to be met. [Gilbert-Large, p. 245.]

German Economy

The German economy following the World War I was a disaster. Famine and unemployment were followed by a runinous inflation that virtually wiped about many solid middle-class families. This was something many Germans blamed on democracy and the new Weimar Republic. Competent management, however, had stabilized the economic situation by 1925. Some Germans began to hope that Germany could regain the prosperous pre-War times once again. These hopes were dashed by the Great Depression.

German and American Economies


New York Stock Market Crash (1929)

The New York Stock Market after a period of spectacular economic expansion and a virtually uncontrolled speculative boom crashed (September 1929). While this occurred in America. The impprtance of the American economy and American policies adopted to fight the Depression quickly impacted other countries.

The Depression

ThecDepression was the greatest economic crisis in modern history. The Amereican stock market crash had ripples that affect most other countries around the world. The resulted impact on other countries had profound influences on world events that were in turn to affect the United States. The Great Depression of the 1930s was the worst economic slump ever to affect the United States. It was not just a national economic crisis, but one which spread to virtually every country. The greatest calamity to befall Americans in the 20th century was the Great Depression--a worse calamity than even two world wars. The Depression began with the Wall Street stock market crash in October 1929. Soon business were going under and Americans were losing their jobs. All Americans were affected. Eventually about one-third of all wage earners were unemployed and many who kept their jobs saw their earmings fall. While the New Deal brought relief to many desperate Americans, the Depression lingered until orders for war material from Europe began to flood into America in the late 1930s. The rest of the world was also affected by the Depression. Britain and France also struggled with the economic down turn. The response in Germany and Japan was totlalitarianism, militarism, and finally war.

Impact on Germany

The Depression played an important role in the NAZI sizure of power and in the image that Hitler built in Germany once he seized power. Tragically for Germany, the most serious period of the depression followed the New York Stock Market crash (1929) through Hitler's seizure of power (1933). The impact on Germany was especially severe because the German financial situation was still fragile. In addition to the pain and suffering of unemployment, the Depression had a profound psycholical impact on many Germans. There was briefly hope in the mid-1920s that Germany was recovering and the prpsperity of pre-War Germany could be gained. The Dpression dashed these hopes for many. And there was concern not only for the immediate problems, but many Germany believed to despair of the very idea of progress. They not only became convinced that the prosperity of pre-War Germany was irevocably lost, but that Germany was on a downward spiral giving rise to concerns over the future and an all pervasive insecurity. [Gilbert-Large, p. 241.] This provided fetile grounds for the growth of political extremism and their programs of massive political and social change as well as demogogery and scapegoating. The Depression reached crisis levels in Germany (1931). The Austrian Keditanstalt failed declared insolvenct (May 1931). This was the most important babk in Austria. Concerned that there money was not safe, Germans began withdrawing money from their banks many of which also became inslovent and had to close. Germany more than any other European country was affected by the American financial crisis. American loans were a major factor in Germany's economic recovery by 1925. Amerivan banks had also made substantial loans to German companies. Low wages in Germany had enabled companies to offer high interest rates to obtain short-term loans. Reichbank President Schacht had advised against financing through high-interest short term loans. Since the Stock Market Crash, American banks began demanding their loans repaid and refused to grant further credits. [Gilbert-Large, p. 243-44.] The resulting finacial crisis was disastrous for many Germany companies, a number of which were forced to close. Unemployment skyrocketed.

The Balkans

Economic problems in industrial countries like Germany meant a fall in commodity prices. This caused particular difficulties in the Balkans and as in Germany played a major role in the rise of Fascism in those countries.

Weimar Policies (1929-33)

The Weimar Government stepped into save the German banks, guaranteeing their solvency. They also sought delays om reparations and war debts. President Hoover in America suggested a 1-year moratorium and agreement was achieved (August 1931). German loans, however, to be repaid in gold or foreign currency reserves and the Reichbanks reserved to only 10 percent of what they were before the onset of the banking crisis. [Gilbert-Large, p. 244.] The German banking crisis added to the difficulties in America and Britain whose banks had invested heavily in Germany. This led to further restrints on international credit and both Britain and America were eventually forced off the gold standard. Germany was more dependant on exporting than other major countries. And thus enactment of restrictive trade policies in other countries, especiallY America, had huge adverse consequences for Germany. Consequences that Weimar policies did not address. Keynsian econonomic policies which New Dealers would call pump priming were not widely accepted by economists and financial officials at the onset of the Depression. Rather the initial approach was to cut government spending and ballance the budget. This only further restricted economic activity. The principal Chancellor faced with dealing with the Depression was the Centre politician, Heinrich Bruning. He persued a policy of economic austerity. Under Chancellor Bruning, the Government spending was cut to keep inflation under control. After the 1923 experiebce, Germans were still terrified of inflation. The Government also wanted to keep German exports competitive. Thus policies included tax increases, salary reductions, and cuts in unemployment assistance. Unemployment in Germany only worsened. The banking crisis (1931) has weakened the banking system. Chancellor Bruning became enormously unpopular, much more than President Hoover in America. One reports indicated that when travelling by train, Chancellor Bruning had to draw the blinds or unemployed workers woukld throw rocks. He became known as the 'Hunger Chancellor'.

Social-Class Conflict

Many of the achievements of the Weimar Republic in reducing class conlict were undone by the economic crisis. With salaries being cut, men laid off, and the government reducing social programs (especially unemployment insurance) the social cohesion that had been building in German began to distinergrate. Workers began to listen to more radical perscriptions to solve the economic crisis, especially the Communists. The growing indluence of the Communists caused many middle-class voters to turn to the right. Industrialists became more willing to fund right-wing politicans to protect their vested interest.

The NAZIs

The Depression played a major role in the electoral success of the NAZIs. Many Germans had turned to the NAZIs in the early 1930s because of the Depression. NAZI xenephobic nationlism and anti=Semitism appealed to many Germans, but others were disgusted by Hitler's rantings and SA political violence. What the Depression did was to add large numbers of disafected voters to the core NAZI loyalists. Until the Depression the NAZIs were a vocal, but relatively small party. The Depression turned the NAZIs into the most powerful political party in German. The economic despair of many Germans created a desire for string descisive leadership.

NAZI Political Campaign

The impact that the Depression had on Germany folded neatly into Hitler's political drive for power. The NAZIs only begun to gain really large poll numbers after the begining of the Depression. Hitler blamed the Depression on Weimar officials and of course the Jews. The fact that the Keditanstalt was controlled by the Rothchilds provided political capital for his anyi-Semetic diatribes.

NAZI Seizure of Power (1933)

The NAZI's after the July 1932 election were the largest German political party, but did not have a majority in the Reichstag. President Hindinburg refused to appoint Hitler Chancellor and instead turned to Papen. The political situatation remain unstable. The newly elected Reichstag in eptember voted no confidence in the Papen government. The November 1932 Reichstag election results were: NAZI Party 196 seats, Social Democrats 121 seats, the Communist Party 100 seats, and the Centre Party 70 seats. The NAZIs lost a few seats, but continued to be the biggest party in the Reichstag. Hitler continued to demand to be appointed Chancellor, Hindenberg refused saying that he said he did not trust Hitler to rule democratically. Hindenberg preferred Papen, but the Army objected. Hindenberg turned to General Kurt von Schleicher who lasted 57 days. Finally Hidenberg, running out of options, turned to Hitler whom he appointed January 30, 1933. Hidenberg attempted to control Hitler by placing Papen as vice-chancellor and surrounding Hitler with moderate ministers who supported Papen. Hitler bycarefully selecting his cabinent posts was within days gaining control. To be sure of success, however, he needed a mahority in the Reichstag. He insisted on a new election. In the middle of the elections the Reichstag went up in flames on Februarry 27, 1933. A Dutch Communist was blamed. Historins still debate who was responsible. Many blamed the NAZIs, but it appears that neither they or the Communist Party was responsible. [Davidson, pp. 17-22.] Hitler took full advantage of the situation and claimed that the fire was a Communist plot, and persuaded Hindenberg to sign an emergency Law for the Protection of the People and State. The law suspended people's rights and allowed the Nazis to arrest many Communists and others. Fear of Communism gained the NAZIs additional support at the polls. The March 1933 election results were: NAZI Party 288 seats, Social Democrats 120 seats, Communist Party 81 seats, Centre Party 73 seats, and Others 85 seats. The NAZIs still did not have a majority. Over half of the voters chose other parties. The Nationalist Party, however, decided to support the NAZIs. Their 53 deputies added to the 288 NAZI deputies provided the slim majority Hitler needed. Hitler immediately put an Enabling Act before the Reichstag and asked the members to vote for it. The Enabling Law (the NAZIs called it the Law for the Removal of Distress frommPeople and Reich) gave Hitler as Chancellor the power to make laws by decree for the next 4 years without Reichstag approval. NAZI SA storm troopers lined the entrance to the Reichstag to intimidate the opposition delegated. Only 94 members Social Democrat deputies (the Communists had been arrested) voted against the Enabling Law. Hitler now had the legal authority to reshape Germany.

NAZI Depression Policies (1933-35)

Apparent economic improvements in Germany were an important element in Hitler's real popularity after seizing power. The NAZIs expanded German labor programs, creating a National Labor Service (RAD) much like the American CCC. This was a popular prgram, byt only a small part of the overall effort. The NAZIs seized control of the economy. German industrialists benefitted and soon learned that it was very dangerous to defy the Government. It might be argued that Germany under the NAZIs had the most controlled economy in Europe. Their major public works project was the construction of the Autobauns. The massive new armaments program was the major factor in putting Germans back to work. It also was rapidly bankupting Germany. Empending bankruptsy was probably a factor in Hitler's seeming reckless policies in 1938 and 39 which eventually led to war. The looting of occupied copuntries allowed the NAZIs to evade babkruptsy.

Results

The German GNP was back to pre-Depression levels by 1935. NAZI policies made sure there was no longer wide-spread unemployment and destitution in Germany. The German people, however, wre not better off. The benefits of the expanding economy was not brought to them in terms of more consumer goods, but rather a rearmed military. Many Germans, however, were convinced that they were better off. This was in part due to declinging product standards. It was also a result if the effectiveness of NAZI propaganda which emphasized the increased international respect with which Germany had achieved. [Hanby] Not fully understood at the time ws the fact that the NAZI approach was unsustainable. It was based on huge militry expenditures which could not be sustained indefinitely.

Rearmament

Hitler and the NAZIs planned from the beginning a massive rearmament program. NAZI propaganda promoted the idea that Germany must rearm. [Riegler] The NAZIs did not, however, begin a massive rearmament program immediately upon seizing power in 1933. The Weimar Republic Goverment itself has spomsored secret armanents programs in violation of the Versailles Treaty. The NAZIs did sharply expand weapon reseearch. The German military expanded in secret during 1933-34. Hitler by March 1935, felt suffucently secure to publicize his military. The NAZIs announced that they expansion - which broke the terms of the Versailles Treaty. Europe learned that the Nazis had a modern 2,500 plane Luftwaffe and a Wehrmacht with 300,000 men. Hitler publicly announced that he was insituting a compulsory military conscription and planned to expand the Wehrmacht to 550,000 men. Actual araments production began in earnest in 1936. The NAZIs in 1936 doubled armamets spending over 1935 levels. It was in 1936 that NAZI arms spending first exceeeded the combined total for transportation and construction spending. The nature of arms spending also increased. NAZI arms spending initially focused on research, development, and capital investment. The NAZIs in 1936 began concentrating on producing actual military equipment. This is one of the least economically beneficial types of government spending. .

German Assessment of Hitler

The view of the Hitler and the NAZIs in Europe was substantially different in Europe during the 1930s before Hitler launched World War II than it is today. It should be remembered that until Kristallnacht (November 1938) that NAZI actions against the Jews were not greatly different fom how Blacks were treated in the American South. In fact many NAZI racial laws were based on laws enacted against Blacks by Southern state legislatures.

Foreign View of Hitler

There were prominent Americans (Lindberg, Ford, and others) before World War II who were impressed with the NAZIs. Hitler was seen by many as the most dynamic leader in Europe. One reason for this was that NAZI policies essentially ended the depression by 1935.

Sources

Davidson.

Gilbert, Felix with Duncan Clay Large. The End of the European Era, 1890 to the Present (Norton: New York, 1991), 598p.

Hanby, Alonzo. For the Survival of Democracy.








CIH







Navigate the Children in History Website:
[Return to Main NAZI seizure of power page]
[Return to Main NAZI government page]
[Return to Main World War II economic page]
[Return to Main German economic history page>]
[Return to Main German economy page]
[Return to Main Depression country page page]
[Return to Main World War II page]
[About Us]
[Introduction] [Biographies] [Chronology] [Climatology] [Clothing] [Disease and Health] [Economics] [Freedom] [Geography] [History] [Human Nature] [Law]
[Nationalism] [Presidents] [Religion] [Royalty] [Science] [Social Class]
[Bibliographies] [Contributions] [FAQs] [Glossaries] [Images] [Links] [Registration] [Tools]
[Children in History Home]





Created: 3:21 AM 9/26/2005
Last updated: 8:10 PM 10/31/2010