The Great Depression (1929-32)

Question 1

What caused the Great Depression, and how did this impact Germany?

Answer 1

• The US economy collapsed in late 1929 due to the Wall Street Crash, which triggered a global economic crisis
• Germany was hit by this the hardest of all as not only did US banks stop renewing short-term loans, but they also called in loans from abroad

Question 2

What is the cycle of issues created by an economic depression?

Answer 2

• Businesses sell fewer goods, so they:
• lay off staff
• order less from suppliers, who then also cut back
• Unemployment rises, so people have less money to spend
• Businesses make even less profit, so:
• there is even more unemployment
• suppliers and businesses go into debt, and may go bankrupt
• There is even more unemployment as a result, so people can’t pay rent and mortgages, and become homeless
• Banks fail due to all of the unpaid loans
• This continues to repeat

Question 3

List 5 areas of the German economy that were affected by the Great Depression.

Answer 3

• Practically all, but more specifically:
• employment
• industry
• agriculture
• banking
• welfare

Question 4

Give 3 figures on unemployment.

Answer 4

• In 1932, unemployment reached 30%; its highest level ever
• This was roughly 5.8 million workers
• However, this doesn’t take into account those who had to become part-time workers as their employer wanted to reduce their wages

Question 5

List 5 ways that unemployed people tried to cope.

Answer 5

• Sold their possessions
• Relied on churches for charity
• Children joined gangs and turned to petty crime
• There was an increase in sex work
• Some turned to begging and squatting in disused office buildings

Question 6

Give 2 figures on industry/ industrial production.

Answer 6

• In 1932 industrial production was half of its 1928 levels
• Around 50,000 German firms closed between 1929 and 1932

Question 7

Were German business able to find a market abroad? What impact did this have?

Answer 7

• No, therefore exports also fell by 55%

Question 8

Give figures on banking.

Answer 8

• 5 major German banks closed in 1931

Question 9

Give 3 ways that the Great Depression affected agriculture.

Answer 9

• There was a decrease in domestic demand as Germans had less money to spend on food
• German agriculture wasn’t as efficient as other countries’, so they couldn’t export food
• The price of food fell by 45% between 1929 and 1932

Question 10

What happened to the government in 1930, and what happened as a result of this?

Answer 10

• The coalition led by Hermann Müller (SPD) collapsed
• It was replaced with one led by Heinrich Brüning (ZP)

Question 11

Why had Müller’s government collapsed?

Answer 11

• He agreed to spending cuts, but refused to sanction welfare cuts, although the cost of unemployment benefits was rising

Question 12

What other impact did the Great Depression have on the political situation?

Answer 12

• Political violence re-emerged
• This usually involved the Nazi SA, the Communist ‘Red Front’ and the nationalist ‘Stahlhelm’

Question 13

What impact did the re-emergence of political violence have?

Answer 13

• It indicated that Weimar democracy had failed as not only could it not improve the economic situation, but it also couldn’t keep law and order

Question 14

List 3 decisions Brüning made to try to deal with the situation.

Answer 14

• Cuts in government spending, especially welfare payments
• Wage cuts
• Higher taxes

Question 15

How popular were Brüning’s policies? Give 2 details.

Answer 15

• Not popular at all
• He had to use Article 48 to have them passed
• He was nicknamed the ‘Hunger Chancellor’ by the people, as the economic situation only got worse

Question 16

Why did Brüning choose to deal with the economic crisis in this way?

Answer 16

• He did not want to risk creating inflation, or even hyperinflation

Question 17

Give 2 other ways that Brüning avoided inflation.

Answer 17

• By reducing government spending, he created a situation of deflation; prices were kept low
• He also decided against devaluing the currency (reducing the value of the currency relative to another currency as way of attracting foreign buyers to German goods) as this could lead to inflation

Question 18

What was a possible motive behind Brüning’s economic policies? Use 2 events to show how successful he was.

Answer 18

• He wanted to achieve his long-term economic goal of not paying reparations
• The Hoover Moratorium in 1931 suspended the payment of reparations for a year due to Germany’s economic situation
• The Lausanne Conference in 1932 effectively cancelled reparations

Question 19

Who was Brüning’s successor, and when did he come into power?

Answer 19

• Franz von Papen
• May 1932

Question 20

What were 2 thing von Papen did to improve the economic situation?

Answer 20

• He introduced tax concessions and subsidies for businesses that created new jobs, which were indirect measures
• He expanded public work schemes that Brüning had set up in 1931 (before they had a budget of RM167 million, but he increased this to RM302 million)

Question 21

Who succeeded von Papen as prime minister, and when?

Answer 21

• Kurt von Schleicher
• December 1932

Question 22

What 2 actions did von Schleicher take to try to improve the economic situation?

Answer 22

• He believed direct intervention was needed, and established a RM500 million emergency fund to employ people to carry out repair work, road and canal maintenance and land improvement schemes
• He kept the existing initiatives going