The Great Depression in the 1930s

The Great Depression was the reason that led to the rise of Hitler in the late 1920s

Background of the Great Depression

The Great Depression started when the stock market crashed (Wall Street Crash) on 26 October 1929, which is now known as Black Thursday. The stock market crash caused panic throughout America. Many lost their money and became bankrupt. Since they didn't have any money to spend on luxury goods, this affected the business of the shop owners, causing them to make less money, eventually cutting the salary of the employees or retrenching them.  This caused many to be jobless and live in poverty. The agricultural sector was also affected as the land was taken away from the farmers. The loss of jobs caused many people to seek jobs in faraway places in America.

How did it affect Germany?

Because Germany was largely dependent on USA for money to pay the war reparations and to rebuild its economy, the stock market Crash of 1929 affected Germany the most. Since Germany borrowed huge sum of money from USA, when the US wanted Germany to pay back all the money they borrowed, it caused several problems. The impact on Weimar Germany was even direr. Germans were not so much reliant on production or exports as they were on American loans, which had propped up the Weimar economy since 1924. These loans ceased in late 1929, while many American financiers began to ‘call in’ outstanding foreign loans. The German economy was not resilient enough to withstand significant withdrawals of cash and capital. Banks struggled to provide money and credit, and consumers lost confidence in them. In 1931 there were runs on German and Austrian financial institutions and several major banks folded.

There was spiralling unemployment. German industrialists had enjoyed prosperous times in the mid- to late-1920s, thanks to foreign loans and investment. However by the early 1930s, there was little demand for their products, while capital and credit were almost impossible to obtain. To compound the problem, the United States – at that point the largest purchaser of German industrial exports – put up tariff barriers to protect its own companies. German manufacturers consequently endured a sharp downturn in export sales. Many factories and industries either closed or downsized dramatically. By 1932, German industrial production had fallen to just 58 per cent of its 1928 levels. The effect of this decline was spiralling unemployment. By the end of 1929 around 1.5 million Germans were without a job; within a year this figure had more than doubled; and by early 1933 a staggering 6 million (26 per cent) were out of work.

This unemployment had a withering impact on German society. There were few shortages of food but millions found them without the means to obtain it. Germany’s children suffered worst: thousands died from malnutrition and hunger-related diseases. Millions of industrial labourers – the same men who in 1928 had been the best-paid blue collar workers in Europe – spent a year or more in idleness. However the Depression affected all classes in Germany, not just factory workers. Unemployment was also high among white-collar workers and the professions

Sources

Source A: A description from a British novelist Christopher Isherwood, who lived in Berlin during the worst of the Depression

Morning after morning, all over the immense, damp, dreary town and the packing-case colonies of huts in the suburb allotments, young men were waking up to another workless empty day, to be spent as they could best contrive: selling boot-laces, begging, playing draughts in the hall of the Labour Exchange, hanging about urinals, opening the doors of cars, helping with crates in the market, gossiping, lounging, stealing, overhearing racing tips, sharing stumps of cigarette ends picked up in the gutter.

What can you infer about Source A? Explain your answer

I can infer from Source A that the Great Depression has created many problems for the employed who were retrenched. This is evident as Source A states that ‘Morning after morning, all over the immense, damp, dreary town and the packing-case colonies of huts in the suburb allotments, young men were waking up to another workless empty day, to be spent as they could best contrive: selling boot-laces, begging, playing draughts in the hall of the Labour Exchange’ This shows that the people who lost their job led worthless and useless lives as they cannot earn a living anymore.

Source B: An excerpt of Gustav Stresemann before his death  

"The economic position is only flourishing on the surface. Germany is in fact dancing on a volcano. If the short-term credits are called in, a large section of our economy would collapse."

What can you infer about Source B? Explain your answer

I can infer from Source B that Germany’s economy is not stable. This is evident from Source B which states ‘Germany is in fact dancing on a volcano’. This shows that Germany’s economy could worsen. Based on my contextual knowledge, The Treaty of Versailles had imposed harsh reparation on Germany that its economy obliterated. This is worsened by the Great Depression which caused thousands in Germany unemployed and caused hyperinflation in Germany. 

Source C: Unemployment rate in Germany in 1930s

September 1928	650,000 unemployed
September 1929	1,320,000 unemployed
September 1930	3,000,000 unemployed
September 1931	4,350,000 unemployed
September 1932	5,102,000 unemployed
January 1933	6,100,000 unemployed

What can you infer from Source C? Explain your answer

I can infer from Source C that the unemployment rate has increased significantly as a result of the Great Depression. This is evident in Source C which shows that in September 1928 to 1929, the unemployment rate increases from 650,000 to 1,320,000 and in September 1930 to 1931, the unemployment rate increased from 3,000,000 to 4,350,000. This shows that the unemployment rate has skyrocketed

Source D: A Great Depression Quote from Milton Friedman

The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.

What can you infer from Source D? Explain your answer.

I can infer from Source D that one of the reasons for the Great Depression was the ineffectiveness of the government. This is evident as Source D states that ‘The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement.’ This shows that the Government in USA was not capable enough to prevent the Great Depression from happening.

 Let’s watch a video on how the Great Depression affected Germany.

This video summarises the Wall Street Crash and the Great Depression and how it has impacted Germany. From this video, we can see that the stock market crash happened in the USA. So, whatever happened to USA happened to other countries like Germany as it is a major power (like a ‘brother’ to the other countries, always there with a helping hand).

Source E: A description from Alfred Sohn-Rethel, economist

Only when things went economically wrong for Germany did the Nazi Party flourish, and vice versa. Their election successes and their membership rose and fell in exact parallel to the unemployment figures. During the years of prosperity between 1924 and 1928 the Nazis as good as disappeared from the political arena. But the deeper the [economy] subsided into crisis, the more firmly did the fascist party sit in the saddle.

What can you infer from Source E?

I can infer from Source E that the economic problems in Germany attributed to Hitler’s rise to power. This is evident as the Source E states that ‘Only when things went economically wrong for Germany did the Nazi Party flourish, and vice versa. Their election successes and their membership rose and fell in exact parallel to the unemployment figures.’ This shows that the Great Depression worked to Hitler’s advantage in helping him to rise to power.

Citation

Information 0n Great Depression in Germany, Source A from http://alphahistory.com/nazigermany/the-great-depression/

Source Band D from http://www.historylearningsite.co.uk/weimar_depression_1929.htm

Source C from http://www.brainyquote.com/quotes/keywords/great_depression.html