IB History The Great Depression and Years of Crisis Notes

Six Million Unemployed: How the Depression Handed Weimar Democracy to Hitler

The Wall Street Crash and Germany's Economic Collapse

1. On October 24, 1929 (Black Thursday), the New York stock market began a catastrophic crash. Within weeks, American banks began recalling short-term loans to Germany. The German economy, which had recovered in the mid-1920s largely on the basis of these loans, contracted at devastating speed. Industrial output fell by more than 40% between 1929 and 1932. Unemployment rose from 1.3 million in 1929 to 6 million by January 1932, representing nearly 30% of the German workforce. Millions more were underemployed or on reduced hours.
   1. The social consequences were catastrophic and visible. Families lined up for soup kitchens. Young men without work gathered on street corners. Rural communities that had never recovered from the hyperinflation of 1923 now faced deflation and falling farm prices. The middle class, which had rebuilt modest savings in the late 1920s, watched them erode again. The German political system, already under strain, cracked under the pressure of mass unemployment.
   2. The coalition government of Social Democrat Hermann Muller collapsed in March 1930 over disagreements about unemployment insurance. No replacement coalition was possible with a Reichstag majority. From this point, Germany was governed by presidential decree under Article 48. Three chancellors (Bruning, von Papen, Schleicher) ruled without parliamentary support between 1930 and January 1933. The Reichstag became marginal. The republic's democratic institutions had already effectively ceased to function before Hitler's appointment.

Hitler's Appointment: Conservative Miscalculation

1. By November 1932, the NSDAP's share of the vote had actually declined from 37.4% in July to 33.1%. Hitler was losing support at the margins. Some commentators thought the Nazi tide had peaked. But the political situation remained desperate. President Hindenburg's government under Schleicher had no parliamentary majority and governed only by Article 48. The conservative establishment faced a choice: further authoritarian rule without Hitler, or a Hitler-led government they believed they could control.
   1. Franz von Papen, a conservative politician who had briefly been Chancellor and harboured ambitions for further power, brokered the deal. He persuaded Hindenburg that a cabinet in which Hitler was Chancellor but von Papen was Vice-Chancellor, with conservatives holding most portfolios, would be manageable. Hindenburg disliked and distrusted Hitler (he reportedly called him "that Bohemian corporal"). But he was convinced the arrangement would contain him. On January 30, 1933, Hindenburg appointed Hitler Chancellor of Germany.
   2. Von Papen's confidence was quickly revealed as fatal. Within weeks, Hitler had used the Reichstag fire (February 27, 1933) and the resulting emergency decree to suspend civil liberties, organize new elections under conditions of SA violence, and pass the Enabling Act, which gave him power to rule by decree for four years. The conservative ministers who were supposed to control Hitler found themselves marginalized and powerless.

The Depression Reaches Germany

1. American banks recalled loans and refused to renew credit used by German businesses and municipalities.
2. Investment fell as firms lost access to finance and expected weaker demand.
3. Exports declined because the global downturn reduced trade and encouraged protectionism.
4. Industrial production contracted sharply between 1929 and 1932.
5. Business failures spread unemployment through manufacturing, construction, retail, and transport.
6. Short-time working left additional workers employed but earning reduced wages.
7. Falling wages and unemployment reduced consumer demand and deepened the contraction.
8. Municipalities faced rising welfare costs while tax revenues declined.
9. The crisis was economic in origin but became political because governments could not agree on its costs.

The Collapse of Parliamentary Government

1. The Grand Coalition led by Hermann Müller included Social Democrats, Centre politicians, liberals, and the German People's Party.
2. Coalition partners disagreed over how to finance the unemployment insurance system.
3. Employers and conservative parties demanded benefit reductions while the Social Democrats resisted cuts.
4. President Hindenburg appointed Heinrich Brüning as chancellor without a secure Reichstag majority.
5. Brüning relied increasingly on Article 48 emergency decrees approved by the president.
6. The Reichstag rejected a financial decree in July 1930.
7. Hindenburg dissolved parliament after the rejection and called an early election.
8. Presidential government shifted political authority away from parliamentary coalition building.
9. Emergency decrees remained constitutional in form but weakened democratic accountability.
10. The change created a precedent used by Papen and Schleicher after Brüning's dismissal.

Brüning's Deflationary Policies

1. Brüning reduced public spending, wages, salaries, and welfare payments to balance state finances.
2. His government increased taxes while demand and employment were already falling.
3. Deflation aimed to restore confidence and demonstrate that reparations were economically impossible.
4. Lower prices and wages were intended to improve export competitiveness.
5. Global protectionism limited the capacity of cheaper German goods to find foreign markets.
6. Spending cuts removed demand from an economy already suffering private contraction.
7. Unemployment insurance could not support the rapidly growing number of claimants.
8. Local relief became less adequate and varied between communities.
9. Brüning rejected large deficit-financed recovery because he feared inflation and political opposition.
10. Memories of 1923 made currency instability a powerful constraint on policy choices.
11. Deflation helped secure the cancellation of reparations but imposed severe social and political costs.

Banking Crisis and Social Impact

1. The failure of Austria's Creditanstalt in May 1931 intensified pressure on Central European banks.
2. Depositors withdrew funds as confidence in German financial institutions weakened.
3. The collapse of the Danatbank in July 1931 helped trigger a wider banking crisis.
4. The government temporarily closed banks and imposed controls to stop capital flight.
5. Business credit became harder to obtain and industrial contraction continued.
6. Unemployed workers exhausted insurance entitlement and moved onto lower emergency or municipal support.
7. Young people faced weak employment prospects and delayed entry into stable careers.
8. Middle-class families feared unemployment, bankruptcy, and loss of professional status.
9. Farmers faced low prices, debt, and foreclosure pressures that had begun before 1929.
10. Women often carried greater unpaid work while facing pressure to surrender jobs to men.
11. Different social groups experienced the crisis differently but shared declining confidence in established parties.

Electoral Radicalization

1. The Nazi vote rose from 2.6 per cent in 1928 to 18.3 per cent in September 1930.
2. The Nazis became the second-largest Reichstag party after the 1930 election.
3. The Communist Party also gained support as unemployment and political polarization intensified.
4. Middle-class voters moved toward the Nazis because the party promised national revival and protection from communism.
5. Many Protestant rural areas produced especially strong Nazi electoral results.
6. Workers remained divided because many supported the Social Democrats or Communists rather than Hitler.
7. Nazi propaganda tailored messages to farmers, workers, business owners, women, veterans, and young voters.
8. Hitler promised work, national unity, rejection of Versailles, and strong leadership without specifying consistent policy.
9. The SA created visibility through marches, uniforms, meetings, intimidation, and street violence.
10. Modern campaigning used aircraft travel, posters, radio coverage, and coordinated local organization.
11. Economic crisis expanded Nazi opportunity, but organization and political messaging converted distress into votes.

Papen, Schleicher, and Elite Intrigue

1. Hindenburg dismissed Brüning in May 1932 despite Brüning's reliance on presidential authority.
2. Franz von Papen formed a cabinet with little parliamentary support and strong conservative connections.
3. Papen lifted the ban on the SA and SS, contributing to intensified street violence.
4. His government removed the elected Prussian government in July 1932 through the Prussian coup.
5. The coup weakened federalism and placed Germany's largest state under central control.
6. The July 1932 election made the Nazis the largest party with 230 seats.
7. Hitler refused subordinate office and demanded the chancellorship.
8. The November 1932 election reduced Nazi seats to 196 but left parliament fragmented.
9. General Kurt von Schleicher replaced Papen in December 1932 and tried to divide the Nazi movement.
10. Schleicher failed to build a stable coalition or secure sufficient presidential confidence.
11. Papen then negotiated with Hitler and persuaded Hindenburg that conservative ministers could control him.

Hitler's Appointment and Historical Judgement

1. Only three Nazis entered the first cabinet, while conservatives held most ministerial posts.
2. Papen became vice-chancellor and expected institutional restraints to limit Hitler.
3. Conservative elites wanted Nazi mass support for an authoritarian government without accepting Nazi autonomy.
4. Industrial and agricultural interests supported anti-left policies but did not act as a single unified bloc.
5. The army valued rearmament and anti-communism while remaining cautious about Nazi radicalism.
6. Hitler's appointment was not required by an electoral majority because the Nazis never won more than half the vote.
7. The Depression destroyed support for moderate coalition politics and made authoritarian alternatives more acceptable.
8. Presidential government weakened parliamentary norms before Hitler entered office.
9. Elite miscalculation converted Nazi electoral power into control of the chancellorship.

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