Chapter 9 - the impact of the depression of 1929

Question 1

The economic impact

Answer 1

• On the 24th October 1929, the New York Stock exchange experienced its worst ever fall in share prices in an event that became known as “Black Thursday”
• This was followed by another collapse the following Tuesday, on 29th October
• On that day alone, the value of the largest American companies fell by 10 billion dollars
• Overnight, millionaires lost their fortunes and many small investors lost all their savings
• Many companies went bankrupt, workers lost their jobs, and banks stopped lending and called in their existing loans
• This was the start of a prolonged depression, which spread from the USA around the world
• For Germany, the Wall Street Crash had a profound impact on its economy, its society and its political system
• The German economy had been stagnating (failing to develop) since 1928 as investments decreased
• Germany’s economic recovery had been largely financed by American loans but, in the aftermath of the Wall Street Crash, these loans dried up
• To make matters worse, the American banks that had lent money to Germany on short-term loans demanded immediate repayment
• Thus, at a time when the German economy needed more investment to stimulate the economy, money was being withdrawn
• The USA had also been the largest overseas market for German manufactured goods, but the depression drastically reduced demand for imported goods in the USA and Germany’s export trade declined rapidly
• Between 1929 and 1932, Germany’s export trade declined by 61% and its industrial production fell by 58% of its 1928 level
• The result was that the German economy entered a deep depression
• The depression affected other countries as well, but Germany suffered a greater fall in industrial production than other European countries
• In Britain, for example, the decline in industrial production between 1929 and 1932 was 11%
• As germany’s foreign trade coillapsed and prices fell, many companies had no alternative but to declare themselbes as bankrupt and make their workers redundant
• Even those companies that survived had to reduce their workforces and cut the hours and wages of those workers who continued working
• Banks also began tp get into difficulties as customers withdrew their money and outstanding lpans were not repaid
• Following the collapse of an Austrian bank in May 1931, the German banking system was plunged into crisis
• In July 1931, the govenemtn closed the bamks and the stock exchange for 2 days to provide the financial system with some breathing space, but these measures gave only temporary respite
• The depression deepened, became more prolonged and economic conditions for millions of Germans became more desperate
• Unemployment increased
• By 1932, about one third of all german workers were registered as unemployed
• These official figures did not, however, reflect the true scale of unemployment since they only recorded those who were registered as unemployed
• Many redundant workers, especially women, did not register and so were not counted
• It has been estimated that, in January 1933, the true number of enmployed was about 8 million
• The impact of the depression fell very heavily on the main industrial areas, such as the Ruhr, Silesia and the main port cities such as Hamburg
• White collar workers were also hit badly
• In the civil service, there were severe cuts in the workforce and reductuons in the salaries of those who remained employed
• Farming was also hit very badly by the depression
• Farmers had struggled even during the so called “golden age” between 1924 and 1928, but the depression pushed many of them into serious difficulty
• Prices collapsed, exports of agriculture produe declined and sales of food fell as Germans had less money to spend
• Many more farmers were forced to give up their farms as the banks demanded repayment of loans
• Unemployment spread to the countryside as farm labourers lost their jobs

Question 2

The social impact - increasing poverty

Answer 2

• Mass unemployment had a highly corrosive effect on German society
• Although the Weimar Republic had a well developed system of unemployment and welfare benefits, the cost very quickly overwhelmed the welfare budget and, from 1930, there were moves to limit the amount of benefits being paid
• The unemployed were only entitled to state benefits for a fixed period, after which they had to apply to local authorities for relief, and local benefits were less generous and strictly means tested (determination of eligibility for government assistance)
• Women received less benefit that en and young people less than adults
• Some areas were hit harder than others by the depression
• In towns that depended on a single industry, the impact was far worse than in towns with a more diverse economy
• There were many indications that poverty was rising as a result of the depression
• Diseases linked to poor nutrition and living conditions, such as Tuberculosis and rickets, began to show an increase after a period of decline
• Doctors reported numerous cases of malnutrition among children
• The suicide rate increased as hopes for the future disappeared
• Meanwhile, as unemployed tenants were unable to pay their rents and were evicted, tent cities and shanty towns began to appear on the edges of large cities such as Berlin

Question 3

The social impact - impact on young people

Answer 3

• The depression led to a high rate of unemployment among young people
• In Hamburg, in June 1933, for example, the unemployment rate among males aged 14 to 25 was 39%, whilst among females it was 25.2%
• Such high rates of youth unemployment had a number of consequences
• With no jobs, and little prospect in the foreseeable future, gangs of young men congregated in pulic spaces in German towns and cities, their very presence causing alarm among older, middle class citizens
• There were fears that youth involvement in crime was increasing and that young men were being drawn into extremist political organisations

Question 4

The social impact - juvenile crime

Answer 4

• Although the overall rate of juvenile convictions did not increase during the depression, the number of 14-25 year olds accused of crime did increase
• The number of young men charged with theft grew during the depression years but there was also a significant increase in youths charged with offences against the state and with assault and threatening behaviour
• Offences against the state included participating in violent disorder during political demonstrations and the rise in these offences undoubtedly reflected the deteriorating political situation

Question 5

Political extremism

Answer 5

• The involvement of young men in extremist political organisations increased during the depression
• The KPD, for example, had some success in recruiting woeking class touths from the “wild cliques” to join political demomstrations and engage in street battles with their opponents
• The parliamentary organisations of the national right also set out to recruit enemployed youths
• Organisations such as the Hitler youth and the SA (Nazi stormtroopers) offered unemployed boys and young men food, uniforms, shelter and the excitement of fighting street battles, all of which could relieve the insecurity and boredom of unemployment
• Youth membership of these organisations, however, was not stable and the majority of young unemployed males still had little or no contact with political extremes
• Girls and young women were even less involved

Question 6

Schemes to help the young unemployed

Answer 6

• The polciies of Bruning’s government towards the unemployed was to get as many youngsters as possible on vocational courses as possible, getting them off the streets, maintain their will to work and protecting them from the physical, intellectual and moral dangers of unemployment
• Placing their faith in the market forces to revive the economy at some time in the future, the government’s priorities were to keep control over expenditure on unemployment benefits and to lessen the damaging effects of unemployment on the young
• To this end, they established day centres for young people where they could participate in work related acitivites and socialise
• There were also emergency labour schemes in which unemployed youths were required to undertake unskilled manual labour, receiving wages that were below the legal minimum
• Needless to say, these schemes were unpopular with young people, resulting on two waves of strikes for higher wages in October 1930 and June 1932
• In addition to the compulsory schemes, there were voluntary labour schemes, which involved young unemployed people beign sent away from the cities to residential work camps for periods of 6 months
• Few of these schemes offered any prospect of vocational training, still less of finding permanent of employment
• As the Minister of Labour had said, the priority was to get the young unemployed “off the streets”

Question 7

The impact on women

Answer 7

• In some ways, women workers weathered the effects of the Depression better than their male counterparts
• The female proportion of the total workforce increased during the depression years
• Nevertheless, the onset of depression and the dismissal of many millions of workers from their jobs reignited the debate about whether married women should continue to be employed when males were out of work
• The campaign waged by right wing parties against the employment of so called “double earners” achieved some success in May 1932 when a law was passed allowing married women civil servants to be dismissed/sacked
• Although the extent of the law was limited to central government employees and women could only be dismissed if it could be proved that their economic circumstances were secure, this was nevertheless an important symbolic victory for those who believed that a married woman should not be employed outside the home
• After the law was passed, th Reich Postal Service dimisssed about 1000 married women from its employment
• The cause of equal rights for women, therefore, suffered a serious set back during the depression

Question 8

Nazis use of these social impacts

Answer 8

• They radicalised young, unemployed men
• They supported the movement back towards the traditional role of the woman where they were no longer apart of the workforce
• Looked to reduce the extreme poverty and unemployed

Question 9

The political impact

Answer 9

• The strains on the political system caused by the depression had far-reaching consequences
• It caused the collapse of the Grand Coalition, led by Hermann Muller, in March 1930
• It provided an opportunity for the parties of the extreme left and extreme right to gain support and, in doing so, fatally undermined the democratic system
• It led to an intensification of political violence

Question 10

The collapse of the Grand Coalition

Answer 10

• The Grand Coalition was one of the most broadly based coalition governments in the Weimar period, representing 5 political parties from the SPD on the left to the moderate right wing in the form of the DVP
• Therein lay both its strengths and weaknesses
• After the Wall Street Crash, in October 1929, unemployment soared and the rising cost of unemployment benefit placed a severe strain on state finances
• With falling tax revenues adding to the problem, the state budget was in srrious deficit by the end of 1929
• This split the coalition
• On the right, the DVP wanted to reduce unemployment benefit whilst, on the left, the SPD wanted to protect the level of benefits and raise taxes
• The government was deadlocked on the issue and, in March 1930, Muller resigned
• His successor, appointed by Hindenburg, was Heinrich Bruning, the leader of the centre party
• Hindeburg’s decision to appoint Bruning was heavily influenced by 2 key military figures: General Groener, who, since 1928, had been defence minister, and General Kurt von Schleicher, Groener’s political advisor
• Their role in the appointment was an indication that the army had begun to play a key role in politics
• Both men were opposed to parliamentary democracy and saw the political crisis of March 1930 as an opportunity to begin to impose a more authoritarian style of government
• In President Hindenburg, they had a leader who shared their contempt for democracy (but respected the constitution) and in Bruning they had a chancellor who also had authoritarian leanings
• Bruning’s coalition excluded the SPD, the largest party in the Reichstag, which meant that his government did not have enough support in the Reichstag to pass laws
• After March 1930, no government had majority support in the Reichstag and governments had to rely on ruling by presidential decree
• Even before Hitler was appointed chancellor in January 1933 and began to establish a dictatorship, Weimar democracy was effectively dead in the water

Question 11

The September 1930 Reichstag election and growth in support for extremist parties

Answer 11

• Bruning’s response to the depression was to cut expenditure (policy of deflation) and raise taxes in order to balance the budget
• Since he did not have majority support in the Reichstag, Bruning persuaded Hindenburg to issue a presidential decree passing the budget into law
• This provoked another political crisis, since article 48 of the constitution was only supposed to be used in an emergency not for the conduct of normal political business
• One of the few positives of his policies was that, as Germany’s depression deepened, it was clear to other countries that it would not be able to meet reparations of repay loans
• As a result of this, the Hoover Moratium suspended the need for Germany to pay back loans
• However Bruning’s policies deepened the recession between 1930 and 1932 as industrial production fell, prices fell and exports fell, all by around 50% and unemployment reached its highest level in 1932
• The SPD won Reichstag support for a motion demanding that the decree be withdrawn
• Bruning dissolved the Reichstag and called an election in September 1930
• The result of this election completely changed the political landscape of Germany
• The extremist parties on the left and right gained the most in the 1930 election
• The communists gained over a million votes, mostly from the SPD, and 77 seats in the Reichstag
• Far more significant however, was the growth in support for the Nazi party
• In 1928, the Nazis had received a mere 810,000 votes, whereas in September 1930, they gained nearly 6.5 million votes and their representation in the Reichstag increased from 12 to 107 seats, making them the second largest party
• In the election as a whole, 2 out of 5 voters gave their support to anti-democratic parties
• From this breakthrough in September 1930, support for the Nazis continued to grow
• Moreover, with 107 deputies in the Reichstag, the Nazis now had the opportunity to disrupt its proceedings through chanting, shouting, and interrupting
• As the Reichstag became unmanageable, its proceedings became increasingly irrelevant
• It did not meet at all between February and October 1931 and, even after that, its sessions became shorter and more infrequent
• Political power in Weimar Germany had shifted from the Reichstag to the President and his circle of advisers, but also to the streets

Question 12

The intensification of political violence

Answer 12

• The early years of the Weimar Republic, between 1919 and 1923, had seen frequent riots, political assassinations, and political uprisings
• During the years 1924-29, the violence had subsided but not completely disappeared as the Nazis claimed that 29 of their men had been killed in clashes with communists, whilst the communists said that 92 of their supporters had been killed
• In the years 1930-33, however, the level of political violence increased dramatically
• Nazis and communists, the latter with their Red-Front Fighters’ League, took their political struggle onto the streets
• Each side attempted to break up the political meetings of their opponents and rival marches often degenerated into full scale riots
• The violence was particularly severe at election times
• By the end of 1931, the violence had become so intense that Bruning decided to act
• He issued a decree in December 1931 banning the wearing of political uniforms, but this had little effect as the Nazi stormtroopers (SA) continued to march wearing white shirts
• In April 1932, therefore, Hindenburg was persuaded to sign a decree outlawing the SA
• Even this ban, however, failed to curb the activities of the Stormtroopers
• Their membership continued to grow, and political violence was not brought under control
• By the end of 1932, the SA was estimated to have 400,000 members