In the 1920s, after the Kaiser had fled, Germany experimented with democracy. After a very difficult start, the new democratic Republic seemed to be doing well.
Source: History.com
In October 1929 the Wall Street Crash on the US stock exchange brought about a global economic depression. In Europe, Germany was worst affected since American banks called in all of their foreign loans at very short notice.
These loans, agreed under the Dawes Plan in 1924, had been the basis for Weimar’s economic recovery from the hyperinflation disaster. The loans funded German industry and helped to pay reparations. Without these loans, the German industry collapsed and a depression began.
The most obvious consequence of this collapse was a huge rise in unemployment. Over the winter of 1929-1930, the number of unemployed rose from 1.4 million to over 2 million. By the time Hitler became Chancellor in January 1933 one in three Germans were unemployed, with the figure hitting 6.1 million.
Industrial production had also more than halved over the same period. Farming was also hit due to low food prices.
Source: The Guardian
An eyewitness describes the unemployed people in Germany in 1932, by commenting that “No one knows how many they were of them. They completely filled the streets. They stood or lay about in the streets as if they had taken root there. They sat or lay on the pavements or in the roadway and gravely shared out scraps of newspapers among themselves.”
The Depression was a worldwide problem. It was not just Germany that suffered. Nor was the Weimer government the only government having diculties in solving the problems of unemployment. However, due to Germany’s dependence on American loans and the reparations to the Allies, the problems were most acute in Germany.
In addition, it seemed that the Weimar Constitution, with its careful balance of power, made firm and decisive action by the government very difficult indeed a significant rise in government expenditure on unemployment insurance and other benefits.
However, Chancellor Heinrich Brüning actually cut government spending on welfare benefits.
He urged Germans to make sacrifices, Some historians think that he was deliberately making the situation worse in order to get the international community to cancel reparation payments: Other historians think that he was afraid of hyperinflation as in 1923.
Source: Foreign Affairs
Brüning called new elections in 1930 which resulted in yet another divided Reichstag. Perhaps the biggest negative was dissatisfaction with democracy in Weimar Germany. The impression was that democracy involved politicians squabbling over jobs they would get. Meanwhile, they did nothing about the real world, where unemployment was heading towards 6 million and the average German’s income had fallen by 40% since 1929.
The Reichstag seemed irrelevant as it met only for five days in 1932 and Brüning bypassed the democratic process by relying on President Hindenburg’s emergency powers. Germans began to lose faith in democracy and looked to extreme parties on both the Left (the communists) and the Right (the Nazis) for quick and simple solutions. Between 1930 and 1933 support for the extreme right-wing Nazis and the extreme left-wing communists soared.
By 1932, these parties held 319 seats out of a total of 608 in the Reichstag, with many workers turning to communism. However, the real beneficiaries were the Nazis who were led by Hitler.