The Significance of the Great Depression on German History 1923-1939

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From the vivid, carefree ‘Golden Years’ to wretched poverty and unemployment, it is clear that the Great Depression was incredibly influential on Germany. From the politics of the Weimar Republic to the German society, the Depression affected every aspect of Germany. Its effect was bolstered by war debts, reparations and previous events (such as the Treaty of Versailles and the Ruhr crisis) that made the short-term effect of the crash even more devastating. In addition, it came at the height of the Nazi propaganda campaign and therefore also had a significant long-term effect: a chain reaction that arguably led to the breakout of the Second World War. The German nation left behind World War I was quick-changing and volatile. The war had hit Germany hard. Over two million soldiers had died, leaving behind hundreds of thousands of widows and orphans. The German economy was weakened not only by war debts but also by the high reparations demanded by the Treaty of Versailles. Politics at this time were also unstable: the extremely democratic Weimar government was drastically different from the totalitarian rule of the Kaiser. The system of proportional representation led to an indecisive government in which it was nearly impossible to get laws passed. This economic, social and political volatility influenced the way in which the Great Depression affected Germany.

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The impact of the Depression was reinforced by earlier events that had already weakened Germany’s economic situation and the people’s trust in the Weimar government. One such turning point was the Ruhr crisis and hyperinflation. In 1922, Germany found itself unable to complete the annual payment of the Treaty of Versailles reparations. France and Belgium grew impatient and sent troops into the industrial Ruhr region, taking what was owed to them in the form of raw materials. The German government ordered passive resistance in an attempt to combat the invasion. This led to catastrophic results, most notably hyperinflation. Prices increased “between a million and billion times their previous level”. People found that their savings were practically worthless; pensioners and middle-class families became bankrupt nearly overnight.

The greatest significance of the Ruhr crisis in the context of the Great Depression lies in the fact that it caused general distrust of the new Weimar government. The evidence for this can be seen in the election numbers: in the elections of 1919, the three Weimar-supporting parties accumulated 76.2% of the popular vote. However, in the post-crisis elections, they gained less than 50% of the vote, while the popularity of fringe parties such as the KPD and NSDAP shot up. It seemed to the people that the new government simply could not bring Germany to its pre-war glory. The German people were already skeptical regarding the new democratic government: the Ruhr crisis and following hyperinflation were their final proof that President Ebert did not have the capacity to restore the great German empire. In addition, many believed the ‘stab-in-the-back’ theory that the government had betrayed Germany by signing the Treaty of Versailles. Therefore, when the economy crashed again in 1929, people saw no use in supporting the Weimar government. In this way, the Ruhr crisis increased the impact of the Great Depression. Democracy had failed the German people more than once; when the economy began to collapse again, the government no longer had the backing of its people. So how did the Wall Street Crash change life so utterly more than 6000 kilometers from New York?

The main reason was the deep reliance of Germany on American loans. Most of Germany’s post-war loans came from American investors, notably the 1924 Dawes Plan of 800 million marks and the 1929 Young Plan that reduced annual war reparations. Billions of American dollars poured into Germany, kick-starting the economy. These loans were essential for Germany’s economic recovery: they brought Germany back from the brink of total collapse, creating jobs and restoring residential and industrial areas. However, they also put the nation in a precarious economic position. Germany’s plight was further increased by the Treaty of Versailles reparations the Allies still demanded. In hindsight, it is clear that American loans could not have supported Germany long-term; their effect was in fact entirely “superficial or occurred in the short-term”. It is therefore unsurprising that when these massive loans were recalled following the crash, Germany was plunged into acute crisis. The effect of the crash on German society was perhaps the worst of its short-term consequences. Unemployment rocketed. Hauser, a German writer of the time, describes “an almost unbroken chain of homeless men […] for 200 miles… This was the strongest impression that the year 1932 left with me.” By 1933 the unemployment had gotten even worse. Six million were on the street without a job. The crisis affected not only the working classes, but also the educated. By the end of 1932, more than half a million white-collar workers were unemployed, their wages reduced by 15% and many senior employees discharged. Pensioners were also hit hard: for many, savings had been lost when the major banks in Germany folded. The government had slashed pensions as well, leaving the elderly totally destitute. Germany’s modernization over the past few decades undid itself in months. Long-gone prejudices against women began to reappear. Anxious unemployed men urged female workers “to give up their jobs and return home to their traditional roles as wives and mothers”. “I would be happy if I could properly provide for my household and children,” a female worker lamented, “I wonder what I live for and why everything is so unequal.” The morale of the German people sank to a new low, with nearly 300 in a million committing suicide. The Weimar government, terrified of hyperinflation, increased the tax and reduced unemployment benefits, plunging the people into poverty even further. Working class and higher class, young and old, the Great Depression had an immediate effect on the lives of all in the Weimar Republic. The dire situation of the people had a substantial impact on the political situation. With the government preoccupied with fixing the economy, a golden opportunity arose for Hitler to spread his message.

British historian Mary Fulbrook names two main reasons for the rise of the Nazis: their “distinctive organization and strategy”, and the “socio-economic positions which created grievances”. Many historians believe that the main reason for the rise of Hitler was the Nazi propaganda campaign, aided by the Munich Putsch. “A state does not simply fall apart as a result of depression…” a German historian states, “Weimar Germany was not destroyed by economic depression or widespread unemployment.” In 1923, Adolf Hitler launched an attempted rebellion known as the Munich Putsch. The attack itself was a failure: the army and police easily crushed the revolt, and the two leaders — Ludendorff and Hitler — were found and arrested. The revolt was not wholly unsuccessful, however. In fact, it gave Hitler an opportunity to spread his ideas using the media coverage of the trial. Nazi slogans could now permeate beyond the 20,000-member Nazi party. Hitler’s orating also impressed the judges to the extent that his expected life sentence was reduced to five years; in the end, Hitler was released after only nine months. This time allowed him to gather his ideas into a book, Mein Kampf. In this way, the Munich Putsch played a major role in forming the foundation for the Nazis’ massive propaganda campaign and terror tactics.

A decade after the Putsch, Hitler stated, “the events of November 9th 1923, with their blood sacrifice, have proven the most effective propaganda”. Yet others disagree. “During the years of prosperity between 1924 and 1928 the Nazis as good as disappeared from the political arena,” another German economist counters, “the deeper the [economy] subsided into crisis, the more firmly did the fascist party sit in the saddle.” One of the most significant impacts of the Great Depression is that it brought the Nazi Party into the spotlight. The 1920s brought a boom in art and urban culture to Germany such that had never been seen before. With the hyperinflation crisis solved by Chancellor Stresemann and steadily improving international relations, the days of poverty and unhappiness seemed far behind. The life in Berlin and Munich was described to be “more free, more modern, more exciting”. International tensions loosened after Stresemann signed the Locarno Treaties that secured Germany’s borders with Belgium and France. Germany’s economy was also well on its way to recovery. A report from the Dawes Committee in 1924 stated they were “hopeful with regard to Germany’s future production”. Wages, welfare benefits and the standard of living improved. This “climate of material prosperity and feeling of relaxation” caused fringe parties on both ends to remain inconsequential: in the 1928 elections, the National Socialist and Communist Parties combined earned less than 15% of the vote. Extremist figures such as Hitler who spoke of impending crisis seemed like deluded harbingers of doom and gloom. However, as poverty began to settle among the German people, new meaning was brought to Hitler’s theories of economic crisis.

For the impoverished, starving Germans, Hitler’s promise of ‘work and bread’ seemed like their only hope. Hundreds of thousands flocked to Hitler who was regarded as a prophet. Numbers show a strong correlation between the Depression and the popularity of the NSDAP: in the 1928 elections, the NSDAP managed to obtain only 12 seats in the Reichstag; in 1930, they became the second largest party with 108 seats. There is no doubt that the Nazis’ terror tactics and aptitude for propaganda were crucial for their rise. However, Goebbels’ campaign had brought little result until 1930. Hitler’s speeches and rebellions had failed simply because there was not enough support. Though the Nazis had built a solid foundation, the Great Depression lit the fuse. “Never in my life have I been so well disposed and inwardly contented as in these days,” Hitler writes in 1929, “hard reality has opened the eyes of millions of Germans.” By July 1932, the Communists and Nazis had a majority in the Reichstag. The Weimar-supporting central parties faded away. Hitler’s popularity quickly led to him becoming Chancellor, and then dictator with the 1933 Enabling Act. In this way, the Great Depression had a massive long-term impact on the politics of Germany, leading it from the highly democratic Weimar Republic to the totalitarian Nazi regime.

In conclusion, the Great Depression was hugely impactful, significantly affecting the politics and society of Germany. It occurred when Germany’s economic and political state were still extremely unstable and volatile, and was amplified by the general distrust in the Weimar government, especially after the crisis of 1923. Its most significant short-term effect was the mass unemployment and acute poverty. This drove the German people to look elsewhere for a solution to their problems, and consequently fringe parties grew in popularity and power. Hitler’s propaganda against the Communists eventually led to the Enabling Act and the descent of Germany into the Third Reich. In this way, the Great Depression’s fundamentally shaped German history both in the short- and long-term.

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