Information sheet 4
The End of the Golden Years
In October 1929 the price of shares on the New York stock exchange fell dramatically (the value of shares collapsed) after a period of wild speculation. This became known as the Wall Street Crash as the stock exchange was on Wall Street. America was one of the wealthiest countries in the world so this was bound to have an effect on the world economy. Many countries were very badly hit by this economic slump and fell into depression. Germany, who relied heavily upon American loans to sustain her economic growth, was severely affected.
Germany had negotiated large loans with America between 1924-29. Now American banks recalled these loans. Having to pay back such large sums of money meant that many areas of German society would suffer as a result. Stresemann himself had stated in1928 that he thought that Germany was “dancing on a volcano”. As foreign minister he knew that if America recalled all of the loans that she had arranged with the Weimar Republic, huge areas within the economy would collapse. Stresemann did not live to see his prediction come true as he died just before the great economic crash of 1929.
Q. Discuss which areas of society you believe would suffer the most as a result of the Wall Street Crash and why?
For example:
Many people felt doubly bitter in 1929. They had lived through the horrors of hyperinflation in 1923 and now the Weimar government had led them into economic ruin for a second time. Many businessmen who had lost their factories and shops during the period of hyperinflation had renewed hope after the Dawes Plan. They had often struggled to rebuild their businesses in the light of renewed prosperity and trade. Now, again their businesses began to collapse as industryrapidly declined and export markets around the world dried up as countries tried to save money. This in turn meant that fewer machines were needed, which in turn meant that fewer people were needed within industrial centres. As profits declined it became increasingly difficult to pay the workers who were still employed and thousands of businesses went bankrupt.
The government made matters worse by making businesses pay higher taxes to try and raise money to help the poor and unemployed sectors of society. This policy forced more businesses to lay off workers, which meant that the government had an even bigger unemployment problem. Those businesses that did manage to survive saw their profits fall drastically. Unemployment rose rapidly between 1929-32. Unemployment figures stood at just under 6 million in 1932. The unemployed suffered terribly as the government added to their burden by slowly cutting unemployment benefit. Without a regular wage or adequate government help they lacked essential foodstuffs and many became homeless as they could no longer afford to pay the rent on houses and flats. Many of these people moved to “shanty towns” - areas where families made improvised (makeshift) dwellings out of any materials that they could find. The younger generation also suffered. They found that there were few jobs to be had when they left school and college, and if there were jobs they were very poorly paid. Many joined the ranks of the farmers, small businessmen and unemployed workers who were extremely dissatisfied with the way in which the Weimar Republic was handling the new economic crisis.
Many people either forgot about the Golden Years, or looked back with increasing anger at what they had lost. The people’s faith in democracy and the Weimar Republic seemed to have been misplaced. Some looked for a stronger style of leadership, one that could hold Germany together and bring it out of the crisis that it was now facing. Many German people now believed that a more extreme form of politics may be called for.
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