Impact Of The Depression Flashcards
Basic outline of GD
In October 1929 there was a catastrophic fall in the value ofshares on the New York Stock Exchange - the so-called Wall Street Crash. The resulting panic and economic dislocation quickly spread around the world. Germany was one of the worst hit countries, largely because the German economy had become heavily dependent on American loans, which now had to be repaid. By 1931, the German economy was suffering from a serious depression, which had a devastating impact on German society
and on the political system.
Impact on finance
• Loans from the USA were stopped and outstanding loans had to be repaid quickly.
This led to a large outflow of foreign currency from Germany, which was therefore unable to pay reparations
• By the summer of 1931 the German banking system was in crisis, following the collapse of an Austrian bank. Banks were temporarily closed and taken under government control but the underlying problems were not resolved
Impact on Industry
• In the years 1929-32, industrial production fell by 58% of its 1928 level
• Prices fell and many companies made heavy losses, causing them to become bankrupt
• Germany’s main industrial areas in the Ruhr and Silesia, and in port cities such as Hamburg, were badly hit by factory and mine closures and the collapse of foreign trade
Impact on Trade
• Germany had developed a strong export trade in the years 1924-29 that had underpinned its economic recovery
. During the post-1929 depression, world trade shrank, which hit
Germany badly. Between 1929 and 1932, Germany’s export trade declined by 61%, which severely damaged
German industry
Impact on Farming
• The prices of agricultural products fell and exports declined
• Farmers were heavily indebted to the banks, which demanded repayment of loans
. Many farmers lost their farms
Outline of social impact
The Depression created mass unemployment, a steep rise in poverty and undermined the confidence and security of the middle class. In these circumstances, society became more polarised.
Unemployment and working class impact
• Unemployment grew; by 1932, approximately one third of all German workers were registered as unemployed.
• The official figures did not record the true scale of unemployment as many redundant workers did not register. Estimates of the true scale of unemployment in early 1933 suggest a figure of c8 million.
• Those who kept their jobs suffered cuts to wages and reductions in working hours.
Poverty impact
• Unemployment benefits were subject to strict means tests and were only provided for fixed periods.
• Poverty increased and more people became homeless; shanty towns grew up on the edges of large cities.
• Diseases linked to poor living conditions and malnutrition increased, especially among children.
Young people impact
• The unemployment rate for those under 25 was particularly high.
• Benefits for young unemployed were lower than for adults (those over 25).
• Juvenile crime increased, particularly crimes of violence, and more young men joined criminal gangs.
• More young men joined extremist political parties and were involved in political violence.
Women impact
• The female proportion of the labour force increased, as women were typically cheaper to employ than men.
•There was heightened hostility to married women in employment (on the basis that they were
‘double-earners’).
• In May 1932, a new law allowed married female civil servants to be dismissed.
Impact on middle class
• Owners of businesses that went bankrupt lost their livelihoods and, in many cases, their homes.
•Many civil servants lost their jobs; those who remained in employment suffered cuts to their salaries.
• Economic insecurity further undermined the confidence of the middle class and raised fears that they would lose status.
Impact on landowners and tenant farmers
• The collapse in agricultural prices hit farmers badly. Many tenant farmers could no longer afford to pay rents and left the countryside.
• Landowners lost out, as rents went unpaid and they fell into debt, especially in the east.
Outline of political impact
The Depression placed enormous strain on the political system. Faith in parliamentary democracy was eroded, the parties of the extreme left and extreme right gained at the expense of the moderate parties of the centre, and political violence increased.
Timeline and explanation of political events
Pg 47 and 48 (printed)
