The Weimar Republic
1914
The Great Depression: A Comparative Approach
M 1 New York
Photograph, 1929
M 2 Franklin D. Roosevelt
(1882–1945), Photograph
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The Situation in the United States
The economic difficulties in the USA which led to the collapse of the
stock market were based on over-production of consumer goods
(automobiles, radios and electric appliances) which had flooded the
market by 1926. The wages of many workers were too low to allow
them to purchase such goods, while those who earned higher wages
had already bought them. A classic speculative bubble in the summer
of 1929 persuaded many people, especially smaller investors, to buy
stock in a booming market. Many took out bank loans to speculate in
stocks. The panic on Wall Street in late October wiped out the savings
of some and snowballed into complete ruin for many. On the worst day
(29 October) some stocks lost up to 90% of their earlier value. As one
eyewitness reported, traders on the New York Stock Exchange “hollered
and screamed, they clawed at one another’s collars. It was like a bunch
of crazy men. Every once in a while, when Radio or Steel or Auburn
would take another tumble, you’d see some poor devil collapse and fall
to the floor. ”
Between 1929 and 1932 American industrial production and the
gross national product fell to one-half of its earlier value. Drought and
lack of soil conservation in the Great Plains States made a “Dust Bowl”
of most of the Middle West from the Canadian border to Texas. Many
farmers simply gave up their homes and tried to find work elsewhere,
usually farther west. When families moved on, parents and children
took up unskilled jobs such as field workers. These children could no
longer attend school. Although the highest level of unemployment was
reached in 1933, the Great Depression lasted in the US until the
outbreak of World War II.
In 1932 President Herbert Hoover stood for election against Franklin
D. Roosevelt. Public opinion held Hoover responsible for not taking
swift action at the beginning of the Great Depression. Roosevelt, the
Governor of New York, had introduced unemployment insurance
there and promised Americans a “New Deal”. He won 57% of the votes,
with a large majority of Democrats winning seats in both houses of the
US Congress as well. As President, Roosevelt set up public works
programs to provide jobs. One of the first was the Tennessee Valley
Authority, which built dams to provide electricity, prevent flooding and
modernize the backward rural area. National soil conservation
programs for farmers were begun; photographers and writers were
even paid to travel the country and describe regional problems to a
wide audience. Roosevelt informed the public about his plans in regular
radio programmes – which he called Fireside Chats. He was an
enormously popular politician and is the only person to have been
elected to the presidency four times.
The Situation in Germany
The financial crisis after the 1929 stock market crash resulted in
growing unemployment. This led to deficits in the budget, because the
unemployed had to be supported – they no longer paid taxes, but
instead cost the state money. Chancellor Brüning and his cabinet set
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1918
1920
1922
1924
1926
a strict austerity course: Expenses had to be cut wherever possible to
reduce costs. The hyperinflation of the early years of the republic,
when the government had overspent without financial backing, still
weighed on people’s minds and could not be repeated. For example,
the salaries of civil servants were reduced by 25% and social spending
was reduced by 14%, while taxes and social security contributions
were increased. These measures set up a vicious circle: Workers with
reduced income could no longer buy goods, so industrial production
was reduced, causing more workers to lose their jobs, thereby paying
fewer taxes, increasing social security costs, forcing the authorities to
lower wages and salaries, to raise taxes and contributions, and so
on.
By July 1931 a wave of bankruptcies caused German banks to fail.
Unemployment increased from 2.6 million in February 1930 to 4.9
million in January 1931. At its height in 1932 unemployment reached
5.6 million. German trade unions and the Social Democrats demanded
state-sponsored programs to create jobs for the unemployed, but
Brüning refused to change his austerity measures. He realized that
bitter social and political troubles threatened, but could offer no other
alternative. Thus, an economic problem developed into a political
crisis. Those who still held out hope for a democratic and parliamentary
solution lost their faith in the constitutional system entirely. More and
more voters sought a new leadership with new ideas, thus paving the
way for the Nazis.
1928
1930
1932
1934
austerity course: economic policy
to reduce government
spending
M 3 Looking for Work
Photograph, 1930
M 4 Unemployed Seeking Work at the Hanover Employment Office, 1930
Note the graffiti urging voters to “Elect Hitler” and the swastikas (symbols of the Nazi Party) on the shed walls in
the background of the photograph. Photographed by Karl Ballhause, who was unemployed himself at the time of
this picture.
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