Economic impacts of the Great Depression

What happened in October 1929?

The US stock market collapsed.

The Wall Street Crash led to a world economic crisis.

Why did the Great Depression have a particularly severe impact on Germany?

Because of American loans and investment.

What did the collapse of the American economy result in?

US firms and banks recalling loans to Germany.

When did the economic problems begin?

In the autumn of 1928, but by Spring 1929, unemployment in Germany had climbed to 2.5 million.

How did the Wall Street crash only add to this problem?

• Unemployment continued to rise

• Demand for German goods collapsed.

• Loans on which Germany had relied on were recalled.

• Production was cut back, creating more unemployment.

How many millions of people were unemployed in January 1928 compared to 1933?

1928 - 1,862 million

1933 - 6,014 million

How many millions of people were unemployment in January 1928 and 1929?

1928 - 1,862 million

1929 - 2,850 million

What had happened by 1932?

Nearly one-third of workers were registered unemployed, while others were working shorter hours or had taken pay cuts.

This led to increased poverty and people were unable to pay rents and mortgages.

What happened to government revenue during this time?

Government revenue fell as less raised from taxes, so the government struggled to pay benefits, as the system was designed to cope with only 800,000 people unemployed, and assumed that periods of unemployment would be short.

What had been happening even before the crash?

Unemployment in Germany had been rising. By spring of 1929, it had already reached 2.5 million. 1933 reached 6.014 million.

What were rural areas already suffering with?

Low prices and unemployment, but now hardships spread through urban areas.

What was common during this period?

Malnutrition was common and was accompanied by diseases that arise from poverty, poor diet and poor housing.

What made the crisis worse in 1931?

The collapse of Austrian bank Kredit Anstalt.

What did most banks have?

Only small amounts of money in reserve, customers of other banks feared this was just the beginning of the collapse in the banking system.

As a result, they began to withdraw their money.

What did France block?

France blocked an emergency loan to Germany, which might have helped to ease the crisis and stimulate the economy.

What happened in 1932?

With no signs of improvement, a committee of financial experts agreed that reparations and inter-Allied debts should be cancelled.

However, this did not solve the crisis in Germany, and economic problems fuelled political instability.

What happened in July 1931?

The Austrian bank Kreditanstalt collapsed.

Banks had only a small amount of money in reserve, and with the collapse of Kreditanstalt, customers in other banks were forced to withdraw their money.

What happened to banks following the collapse of kreditanstalt?

Banks were forced to close and the government were forced to support them.

What did the collapse of Kreditanstalt lead to?

Led to France blocking plans for an emergency loan to Germany. 

However, it was agreed that a one-year suspension of reparation payments should be allowed, and in 1932, a committee of international finance experts agreed that reparations and inter-Allied debts should be cancelled.

What happened in May 1932?

Brüning was dismissed, leading to a period of further instability and a rapid change in chancellors.