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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 would have an even more 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. Under the Dawes Act, the US began loaning money to Germany’s Weimar Republic. However, by 1930 America was suffering from a depression and 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. 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 was being ruined by events outside of Germany. 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 Weimar Republic 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.
- 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?