The Impact of the Wall Street Crash on Germany (Edexcel GCSE History)
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Author
Zoe WadeExpertise
History
The Wall Street Crash & its Impact on Weimar Germany - Summary
Historians identify the Wall Street Crash on 24 October 1929 as the ‘turning point’ in the success of the Weimar Republic. A turning point is an event in which a decisive change occurs that affects the course of history. In 1929, many people in Weimar Germany were experiencing a ‘Golden Age’. Extremist parties like the Nazi Party were unpopular in elections. Many historians would argue that, without another economic depression, the Weimar government would have continued to gain popularity and strength. The death of Stresemann on 3rd October 1929 weakened the government. Stresemann possessed the ability to combat the economic impact of the Wall Street Crash on Germany. Some historians claim that, without Stresemann, the Weimar government lacked decisiveness. Other historians suggest that Weimar Germany was doomed to fail. The foundations of the Republic were insecure. The Weimar Constitution contained some significant loopholes. The biggest issue was the wording and overuse of Article 48. Historians also argue that Stresemann’s connection of the USA’s economy to Germany through the Dawes Plan would have led to economic collapse sooner or later. In either case, the Wall Street Crash signified the end of the Weimar Republic’s ‘Golden Age’. The subsequent depression in Germany from 1930 marked the true beginning of Hitler’s rise to power. |
The Wall Street Crash, 1929
Throughout the 1920s, the USA experienced a boom in their economy
Britain and France were repaying their wartime loans to the USA
As a result, the USA had a surplus of money in their economy
The USA’s economy was growing at such a rapid rate that, by October 1929, stockbrokers began to speculate that the market would decline
Americans from all areas of society had 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
This event is called ‘Black Thursday’
People sold 13 million shares
Prices plummeted due to the amount 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 is called the ‘Wall Street Crash’ as Wall Street is where the Stock Exchange is based in New York
Impacts of the Wall Street Crash on Germany
The Wall Street Crash created economic collapses across Europe, including Germany
The Dawes Plan connected Britain, France and Germany to the USA’s economy. The USA's money allowed the payment of reparations and First World War loans
The USA began to recall its loans to save its economy. This jeopardised the economies in Europe
The below diagram explains how Wall Street impacted Germany’s economy:
How did the Wall Street Crash cause an economic depression in Germany?
A flow diagram explaining how the Wall Street Crash caused Germany's economy to collapse
The Effects of Unemployment
The economic issues triggered an employment crisis
German banks recalled loans, which forced businesses to close and workers to lose their jobs
The USA’s crash affected other countries across the world. 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
40% were factory workers
Half of all 16 and 30-year-olds did not work
By January 1933, unemployment hit 6.1 million people
The below table shows how unemployment affected different economic groups in German society:
The impact of unemployment in Weimar Germany
The economic groups of Weimar Germany | The impact of unemployment |
The unemployed | Even after raising taxes, the government had to cut unemployment benefits. This increased the hardship of the unemployed. In Berlin, the arrests for theft rose by 24% |
Savers | When share prices fell, the value of savings dropped. If people became unemployed, they would not have any savings to survive on |
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 1928 average wages |
The homeless | If workers became unemployed, they could no longer afford their houses. Many unemployed workers established makeshift houses. Homelessness increased violence on the streets, particularly among unemployed young men |
Weimar Reaction to Unemployment
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 meant that the government could afford these payments to the unemployed
The Reichstag did not approve of Brüning’s policies
This marked the end of moderate parties working together in the Reichstag
Hermann Muller, the leader of the SPD, refused to support Brüning’s approach to unemployment
In July 1930, the Reichstag voted against Brüning’s measures
Brüning began to bypass the Reichstag in an attempt to rescue Germany’s economy
This allowed Brüning to go to President Hindenburg to approve 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 enacted Article 48 115 times
Instead of improving Germany, Brüning 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
The measures that Brüning implemented did not improve Germany’s economy
Growing Support for the Communist Party (KPD)
The support for the KPD grew after the Wall Street Crash
From 1928 to 1932, the KPD gained 1 million voters
By 1932, the KPD was the largest communist party outside of Russia
The KPD benefited from Germany’s economic crisis
The levels of unemployment increased. Workers felt frightened that they were going to lose their jobs
The value of wages fell. Workers’ living standards dropped significantly. The working classes believed that the KPD would improve their living conditions if they came to power
What prevented the KPD from becoming the largest party in Germany?
A communist government scared the middle and upper classes
Communists threatened to remove the wealth of the middle and upper classes
Communism was against the private ownership of land and property, which was the source of wealth for the middle and upper classes
The government in Russia caused fear of communism across Europe
Communist Russia was a dictatorship - the people lacked freedom. The German people believed that a communist government would revoke their rights
This fear forced the middle and upper classes to look for alternative solutions
Their conservative values aligned with the NSDAP’s policies
Hitler believed in autocratic rule. Middle- and upper-class Germans believed that the NSDAP were strong enough to repel communism
Hindenburg held nationalist, right-wing beliefs. He would not stand for a communist government in Germany
Exam Tip
It is vital to consider the importance of the fear of communism in understanding how Hitler became chancellor in January 1933. Whilst politicians like Hindenburg felt Hitler and the NSDAP were extremists, they disliked the KPD even more. Given the choice between communism and fascism, the upper classes of Germany chose fascism. Fascism did not threaten their wealth or position in society.
Worked Example
Study Interpretations 1 and 2. They give different views about what caused the decline of the Weimar Republic after the Wall Street Crash
What is the main difference between these views?
Explain your answer, using details from both interpretations
4 marks
Interpretation 1: An extract from Weimar and the Rise of Hitler by A.J. Nicholls. It was published in 2000 The real German problem lay in the political structure of the Weimar Republic and the decisions of its political leadership. Instead of trying to find a solution to the crisis to save the republican system, many officials, businessmen and politicians were only too happy to exploit the crisis to change the system. Most of them did not intend to help Hitler into power. By their actions, however, they undoubtedly did so |
Interpretation 2: An extract from Weimar and Nazi Germany by Stephen Lee. It was published in 1996 There was now a much greater chance for an extremist party to come to power, especially one which had reorganized itself and changed its whole strategy. A larger part of the population showed interest in Hitler’s ideas and policies, and Nazi policies were addressed to all classes |
Answers:
Interpretations 1 and 2 differ about how responsible Weimar politicians were for the collapse of the Weimar Republic. Interpretation 1 states that the actions of Weimar politicians resulted in the failure of the Weimar Republic (1). A quote that supports this is “The real German problem lay in the political structure of the Weimar Republic and the decisions of its political leadership” (1).
Interpretation 2 believes that Hitler’s actions caused the collapse of the Weimar Republic (1). A quote to support this is “A larger part of the population showed interest in Hitler’s ideas and policies” (1).
Worked Example
Suggest one reason why Interpretations 1 and 2 give different views about what caused the decline of the Weimar Republic after the Wall Street Crash
You may use Sources B and C to help explain your answer
4 marks
Source B: A picture taken in 1931. It shows the Protestant Church feeding the unemployed in Berlin. This food was paid for by charity donations, not the government
Image courtesy of the Library of Congress, USA
Source C: An extract from a Nazi leaflet, distributed in 1932
“Big Capitalism and Bolshevism [Russian Communism] work hand in hand: they are born of Jewish thought and serve the master plan of Jewry. Who alone can rescue the farmer from these dangers? NATIONAL SOCIALISM”
Answer: Interpretations 1 and 2 may differ because the historians have studied different sources. Interpretation 1 states that the actions of Weimar politicians resulted in the failure of Weimar (1). This historian may have studied sources like Source B as it shows that Weimar politicians did not support the unemployed in the economic crisis of the 1930s. The Church was ensuring the unemployed did not die of starvation (1). Interpretation 2 argues that Hitler’s actions caused the collapse of the Weimar Republic (1). This historian may have used sources like Source C to support his point. Source C shows that Hitler was targeting different people such as farmers. His policies were persuading people to vote for the NSDAP (1). |
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