The Impact of the Great Depression, 1929 (AQA A Level History: Component 2: Depth study): Revision Note

Summary

• When the US stock exchange crashed in 1929, it triggered a global economic recession

  • Germany was reliant on American loans and was badly affected

  • Millions of Germans became unemployed

• The Chancellor, Heinrich Brüning, increased taxes and cut unemployment payments

  • His policies were deeply unpopular and opposed in the Reichstag

  • To pass his acts, Brüning began to bypass the Reichstag and use the emergency decree, Article 48

• This damaged people's belief in democracy, but did not improve the economic situation

  • People began to abandon the moderate political parties and vote in increasing numbers for the extremist parties like the communist KPD and the Nazis

The Wall Street Crash and its impact on Germany

• Wall Street is the name used to describe America's stock exchange

  • It is named after the street in New York where it is located

• By 1929, the USA’s economy was growing at such a rapid rate that stockbrokers began to speculate that the market would decline

  • Americans from all areas of society bought shares in the 1920s

    • Working-class Americans could not afford for their share prices to drop too far

  • Share prices began to fall

  • Shareholders rushed to sell their shares before their value dropped too significantly

• Between 24th and 30th October 1929, the USA’s economy collapsed

  • The 24th was known as ‘Black Thursday’

  • People sold 13 million shares

  • Prices plummeted due to the number of shares available

    • Shares that were worth $20,000 on the morning of 24 October 1929 were worth $1,000 by the end of the day

  • By 30th October 1929, investors had lost $4 billion

  • This event became known as the ‘Wall Street Crash’, and it triggered a global economic depression

The economic and social impact of the depression

• The economic issues triggered an employment crisis

  • German banks recalled loans

    • This forced businesses to close and workers to lose their jobs

  • Other countries stopped purchasing German goods, which increased unemployment

  • Unemployed workers did not spend money on goods or services

    • This resulted in even more companies having to make redundancies

• By September 1931, 4.3 million German workers were unemployed

  • Over 40% were factory workers

  • Half of all 16 to 30-year-olds did not have paid work

• By January 1933, unemployment hit 6.1 million people

How were Germans affected by unemployment?

The workers

• The workers had to pay increased taxes to support the unemployed

• Businesses were forced to cut the real income of workers

  • The value of wages was 70% of the 1928 average wages

The savers

• When share prices fell, the value of savings dropped

  • If people became unemployed, they did not have any savings to survive on

The unemployed

• The government had to cut unemployment benefits

  • This increased the hardship for the unemployed

  • In Berlin, the arrests for theft rose by 24%

• Without work, many people felt a deep sense of despair and experienced a loss of identity and purpose

"The unemployed had to do a lot to get their benefits. They stood in endless lines in every kind of weather at the unemployment offices. There they stood and waited until it was their turn. Unemployment became a tragedy for many. Not only because of the poverty that mutely sat at their table at all times. Not working, doing nothing, producing nothing – work that not only provided food, but also, despite all the harassment and drudgery, was satisfying, developed skills, and stimulated thinking; work, a human need – was not available; and wherever it was lacking, decay, malaise, and despair set in."

From the autobiography of Lea Grundig, Gesichte und Geschichte, published in 1964. Grundig was a communist and an active member of the KPD. She was also an artist and a painter.

The homeless

• Many unemployed workers established makeshift houses

• Homelessness increased violence on the streets, particularly among unemployed young men

Working Women

• Many women with jobs reported increased resentment towards them

  • Many of them felt as if they were being seen as taking men's jobs

"Women have become unpopular. An uncomfortable atmosphere is gathering around all working women. Along the entire spectrum from left to right, the meaning of women’s employment and their right to it are suddenly being questioned. At the moment, it is not even the old discussion over so-called ‘equal rights’ or ‘equal pay for equal work’ that occupies the foreground. Suddenly, we are obliged to counter the most primitive arguments against the gainful employment of women."

From an article titled ‘Twilight for Women’, by Hilde Walter that was published in July 1931. Walter was a journalist and former social worker who wrote for the left-wing magazine Die Weltbühne

The political impact: Elections and governments

• People blamed the Weimar government for the economic crash

  • The decision to link Germany's economy to the USA through the Dawes and Young Plans had proved to be disastrous

  • The economic disaster of hyperinflation had occurred just six years earlier

  • Increasing numbers of German people began to believe that the Weimar Republic could not be trusted with the economy and began to look for alternatives

• Extremist parties offered those alternatives

  • The Nazi Party promised to reverse the Treaty of Versailles and make Germany strong again

  • The KPD promised to improve the workers' living conditions and tackle unemployment

Brüning's government and policies

• From 1930 to 1932, the Chancellor of Germany was Heinrich Brüning

  • He was the leader of the Centre Party from 1929

  • The Centre Party was Germany’s moderate party

  • It was neither left-wing nor right-wing

• Brüning’s policies to tackle unemployment were controversial

  • He attempted to raise taxes on workers

    • This was ineffective when levels of unemployment increased

  • He began to cut the salaries of public workers and decrease unemployment benefits

  • This was meant to ensure that the government could afford to make benefit payments to the unemployed

  • However, it angered both employed and unemployed people

What impact did Brüning’s policies have?

• The Reichstag did not approve of Brüning’s policies

  • This marked the end of moderate parties working together in the Reichstag

• In July 1930, the Reichstag voted against Brüning’s measures

• Brüning began to use Article 48 to bypass the Reichstag in an attempt to rescue Germany’s economy

  • This emergency power allowed him to get President Hindenburg to approve his policies rather than the Reichstag

  • In 1932, the Reichstag met only 13 times

  • From 1930-32, the Reichstag passed 29 bills

  • In the same period, Brüning used Article 48 115 times

• By doing this, Brüning greatly weakened the Weimar Republic

  • People started to lose faith in democracy

  • An increasing number of the German public started to believe that the Weimar government was inefficient and corrupt

  • The autocratic government that Hitler campaigned for did not seem so different to how Brüning was acting

  • Using Article 48 made the chancellor look like a dictator

  • Perhaps most importantly, the measures that Brüning implemented did nothing to improve Germany’s economy

How damaging was the depression to Weimar democracy?

• There is a debate amongst historians over how much damage the Great Depression caused to the Weimar Republic

  • Some argue that it struck a fatal blow that it was never going to recover from

  • They believe the Depression caused deep psychological damage and not only put millions of people out of work, but it also made millions of people turn against the idea of democracy

• Others argue that the Weimar Republic faced much greater threats, such as the strategy and appeal of Adolf Hitler

  • They reason that the Depression alone cannot explain the enormous increase in popularity of the Nazis

  • They argue that other extremist parties, such as the KPD, did not see the same increase in popularity as the Nazis