Weimar Republic and the Great Depression
The Weimar Republic was devastated by Wall Street Crash of October 1929 and the Great Depression that followed. The Crash had a devastating impact on the American economy but because America had propped up the Weimar Republic with huge loans in 1924 (the Dawes Plan) and in 1929 (the Young Plan), what happened to the American economy had to impact the Weimar Republic's economy.
Both plans had loaned Weimar money to prop up the country’s economy - especially after the experiences of hyperinflation in 1923. Now America needed those loans back to assist her faltering economy.
Stresemann had died in 1929, but shortly before he died even he admitted that the German economy was a lot more fragile than some would have liked to accept.
"The economic position is only flourishing on the surface. Germany is in fact dancing on a volcano. If the short-term credits are called in, a large section of our economy would collapse."
After the Wall Street Crash, America gave Germany 90 days to start to re-pay money loaned to her. No other world power had the money to give Germany cash injections. Britain and France were still recovering from the First World War and the Wall Street Crash was to have an impact on industrial Britain. Stalin’s Russia was still in a desperate state and embarking on the 5 year plans. Therefore, an impoverished Weimar Germany could only call on America for help and she was effectively bankrupt by the end of 1929 and quite incapable of lending money.
Companies throughout Germany - though primarily in the industrial zones such as the Ruhr - went bankrupt and workers were laid off in their millions. Unemployment affected nearly every German family just 6 years after the last major economic disaster -hyperinflation - had hit Weimar.
September 1928 650,000 unemployed
September 1929 1,320,000 unemployed
September 1930 3,000,000 unemployed
September 1931 4,350,000 unemployed