Figure 1.--Here Berlin school children are getting a free lunch during the Depression (December 1931). They are lining up to be served hot soup. We are not sure how wide programs like this were during the Weimar Republic. Nor do we know who financed this program. Notice that almost all the boys wearing short trousers seem to be wearing brown long stockings. We do not see knee socks. Notice that one boy in the foreground wears a sailor suit to school. Source: Bundesarchive. Bild 102.12780

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 experience when inflation ran wild, 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'.

Sources

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

Created: 9:15 PM 10/31/2010
Last updated: 9:15 PM 10/31/2010