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How did the Wall Street crash of 1929 affect the German economy?
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Weimar Republic
Learn about Germany's fledgling Weimar Republic and the challenges it faced.
The prosperity of the Weimar Republic in the late 1920s was precarious, as it relied heavily on foreign credits. When the crash on the New York Stock Exchange occurred in October 1929, these foreign loans were called in, plunging Germany into a severe economic slump that exceeded the impact felt by most other nations.1
The resulting Great Depression had devastating effects on the German economy:
- Unemployment: Figures rose dramatically as the industrial sector collapsed.1
- Trade and Industry: Foreign trade was drastically curtailed, and the number of bankruptcies increased daily.1
- Wages: Real wages fell, further impoverishing the population.1
- Political Instability: The economic distress undermined the republic's foundations, leading to the collapse of the coalition government under Hermann Müller in 1930. This environment fueled support for extremist parties, most notably the Nazis, who leveraged the crisis to rise to power.1
Ultimately, the economic collapse rendered Germany’s ability to meet reparations obligations under the Young Plan nearly impossible.2