Analyze the causes and results of economic problems in one European country between 1919 and 1939.
History has taught us that economic problems are often the spark of political problems, and this is especially true of Germany in the inter-war period. Economic problems were the bane of the Weimar Republic, as despite claims that the republic was doomed from the start; its collapse came at the hands of the biggest economic crisis seen in history at that point. Throughout the 20’s as well, the biggest threat that faced the Weimar Republic was public dissatisfaction, which more often than not stemmed from economic problems. Starting from the Third Reich, economics and economic problems had much more to do with the Nazi’s specific aims than change the political outlook of Germany significantly.
In 1919 after the war, Germany suffered severe economic damage. This was as a result of both the high loss of human capital and exhaustion of the economy in order to support the war effort, and the severe reparations imposed by the Allies. German reparations were fixed at 132,000 million gold marks, the equivalent of 6,600 million pounds. This was a severe burden on the German economy as most money they made in the following years would be rightfully considered the Allies. However, subsequent historians, most notably Kissinger, have argued that the reparations were not as harsh as originally perceived and that Germany had the ability to pay it off. Despite the legitimate claims of those historians, the perception of the reparations at the time was more important, and they greatly affected the Weimar Republic’s popularity as the people viewed them as the people who had bought this upon the country. Importantly, the leading economist at the time John Keynes was one of the biggest critics of the reparations labelling them extremely high and harmful to the German economy, which increased the negative perception of them. Another economic problem that greatly influenced the German people at the time was the hyper-inflation in 1923 due to the French occupation of the Ruhr. German passive resistance led to lots of money being printed by the government which led to massive inflation. At one point the price of a loaf of bread in Germany was worth 201,000,000,000 marks, a staggering number. This also had quite an effect on the popularity of the Weimar Republic, as poverty and hopelessness was rife and desperation led to many angry, impoverished families start listening to more extremist parties, similar to the effect the Great Depression had in 1932/33. It should not be seen as a surprise that the Nazi party was actually formed in 1919 and that Hitler officially became an important figure in the Nazi party in the years of economic uncertainty.
However, despite the hopelessness that the people felt due to the economy collapsing, the government was able to get the economy back on track under the leadership of Gustav Stresemann. Stresemann introduced the Retenmark and under the guidance of Hjalmar Schacht, the German economy was able to get back on track. Again the effect on political activity was clear to see as security and stability started to show and the Weimar Republic seemed to have won over the public by the end of the 20’s, disproving claims that it was doomed from the start. The extremist parties’ effects were less obvious as the economy made a full recovery, obvious in both the failed putsch by the Nazi’s and their severe loss in the electoral votes of 1928. Although political problems were still present, the majority of the German people seemed to be satisfied, conditions that did not lend itself to the domination of an extremist party. This all changed with the coming of the Great Depression.
In 1928, before the Great Depression had started in America, there was a lot of political unrest at the Young Plan, a plan drafted up a committee in which German reparations ended in 1988. Again the perception of the idea of reparations, especially ones that ended almost 60 years after war, caused an outrage with Hitler and the prominent right-wing parties. As political unrest grew, the Great Depressions effect started to show on Germany, as unemployment sky-rocketed and the economy came to a stand-still. More than a third of the German population became unemployed and living conditions deteriorated. Ultimately, it was about economic matters that Muller’s coalition failed as there was a disagreement about the amount of government spending acceptable in such tough economic circumstances. The extremist groups started again to gain more popularity, and it was due to the Great Depression that the Nazis were able to win elections and subsequently allow Hitler to take power. Furthermore, an important point to note is that the Great Depression did not cause the economic collapse but only furthered an already weakening economy due to withdrawal of American money and banking that had been in place ever since the Dawes Plan.
Between 1933-37, under Hitler’s leadership and Schacht’s guidance, the German economy recovered and there were no major economic problems worth talking about. The Nazis were successful at keeping their people well-fed and happy with living conditions and this is one of the things that could explain Nazi popularity. From 1937 up to 1939, the focus of the economy was self-sufficiency and military spending so as to prepare for war, yet Hitler did not mobilize the German economy fully for war for fear of disrupting the life of the average German.
In conclusion, it can be argued that economic problems were the driving factor behind all other changes in Germany during the inter-war period. Crucially, the Weimar Republic had been recovering before the Great Depression hit in the early 30’s and it was the weak economy which allowed Hitler and the extremists to be able to gain popularity and power, the most significant outcome of the inter-war period.