Great Depression in Germany

The Great Depression in Germany (German: Weltwirtschaftskrise in Deutschland) was a severe economic downturn during the late Weimar Republic and early years of Nazi Germany. As part of the global Great Depression of 1929 to 1939, it had profound effects on the nation both economically and politically. At its peak in 1932/33, Germany's unemployment rate hit 30%, with nearly six million unemployed. The economic crisis exacerbated the political weaknesses of the Weimar Republic. Germans lost faith in the centrist parties that had been in control of its governments and turned increasingly to the Communist Party of Germany (KPD) on the far left and the Nazi Party on the far right. The effects of the Great Depression played a significant role in Adolf Hitler's rise to power in 1933.

The depression hit Germany especially hard because it had become highly dependent on American loans during the second half of the 1920s. When American banks began calling in the loans after the Wall Street crash of late October 1929, it led to a major capital crisis in Germany. The government's fiscal and monetary problems were made worse by Germany's large World War I reparations debt. Chancellor Heinrich Brüning introduced a policy of austerity and deflation in an attempt to handle the twin crises. After the Reichstag rejected his initial proposals, he began ruling by decree, marking the start of the presidential cabinets that continued until the end of the Weimar Republic. Rather than improving Germany's economic situation, Brüning's deflationary measures made it worse. The two short-lived cabinets that followed Brüning's failed to halt either the economic slide or the rise of the Nazis. After Adolf Hitler became chancellor in 1933, he used public works projects, a massive rearmament program and deficit spending to return Germany to near full employment by 1939.