Sunday, 3 April 2011

Class of '39

Charlie Pottins looks at British support for Hitler before the Second World War. (originally published in 1989 for the 50th anniversary of the war's outbreak.)

FRIENDS IN HIGH PLACES. The Duke and Duchess of Windsor meet the Fuhrer

One still hears the argument every so often, "We made the mistake of underestimating Hitler. We must not be deceived again." Margaret Thatcher, evoking Churchillian daydreams, admonishes peace-seekers sternly, blaming them for pre-war appeasement and encouraging aggression.

Wiseacres, claiming superior knowledge by virtue merely of having lived longer, attempt to silence the young by conjuring-up the cliche of Neville Chamberlain back from Munich, promising "Peace in our Time". "We must not be fooled again," they say with a superior smile. But whoever "We" are (and it apparently includes the prime minister, armed service chiefs, captains of industry, intelligence chiefs and the person on the bar stool addressing you, all with an assumed common interest and shared knowledge) rest assured, "We" are the goodies, ever the innocent and injured party. Our political leaders may be fools occasionally, misled by the wily foreigner, but never (except possibly when putting up taxes) knaves or the villains of the piece.

The picture of Chamberlain being duped by Hitler, due to his sincere quest for peace in our time, is a myth. If the British government was duped, it was because it wanted to be. How it systematically duped the British public, with the help of the Tory media, is another matter.) In February 1938, Chamberlain
rejected a US approach for one from Mussolini, got rid of Eden, and effectively connived at the Nazi Anschluss in Austria the following month.

By May (six months before the Munich agreement) British Foreign Office officials were talking of how the Czechs must concede territory to the Reich. Nazi emissaries, including the Sudetan fuhrer, Konrad Heinrein, were warmly received in London while the Czechs and their republic were roundly abused in ruling circles.
On 3 March 1939, dissident German officers tipped off British intelligence that invasion of Czechoslovakia was imminent. Chamberlain encouraged Sir Samuel Hoare to make a speech on 10 March anticipating a "Golden Age of peace and prosperity, the end of the armaments race, and future co-operation between nations".

The Nazi tanks rolled into Czechoslovakia five days later.

A wisecrack that went around Prague at the time of the Russian invasion in 1968, when the Kremlin claimed it was forestalling "fascist aggression", was that the Soviet army had arrived a little late. The same could be said of the British Tories' new-found concern, 30 years after Munich, for Czech sovereignty and freedom. "...Czechoslovakia, a tumour in the heart of Europe ruled by the Communist Benes, which required a surgical operation to prevent it poisoning the lifestream of Eurooe," wrote Professor A P Laurie of the pro-Nazi organisation, the Link, in its Anglo-German Review, December 1938.

Headed by Admiral Sir Barry Domville, a former Director of Naval Intelligence, the Link was just part of a chain of groups and prominent individuals in Britain who wanted an alliance between this country and Hitler. Its council included Lord Redesdale, father of Unity Mitford and father-in-law of Sir Oswald Mosley. Just before the war it was joined by the Duke of Westminster, one of the richest landowners in England and friend of the Duke of Windsor.

The Pro-Nazi Lobby

Sir Barry Domville was involved with Mosley, the fanatically antisemitic Tory MP Captain Archibald Maule Ramsay, and others in a series of conspiratorial secret meetings from 1939 to 1940 which were brought to a close by their internment. Some writers believe that a pro-Nazi coup was being hatched and go so far as to link Rudolf Hess's flight to Britain with this, as well as the Duke of Windsor's possible role as a figurehead. (It is said the reason Anthony Blunt enjoyed protection in later years was his inside knowledge gained from wartime work in MIS, and his willingness to recover embarrassing documents for the royal family.)

The Windsors and the Mosleys remained on friendly social terms in Paris in the 1950s and 1960s. Sir Barry Domville had his memoirs, blaming a Jewish freemason for his being pensioned off from Naval Intelligence, published by the Britons Publishing Society. (They also published the Protocols of the Elders of Zion, and had among their post-war directors Sir Archibald Maule Ramsay.) In 1967, Domville was a founder and honorary president of the National Front.

The discussions which Admiral Domville, Lord Lymington, Lord Tavistock (later Duke of Bedford) and Mosley had between March and the end of May 1940, concerning a negotiated peace with Germany, had parallels at a more official level as Holland, Belgium and Norway fell. On 29 May, in Cabinet, Lord Halifax proposed suing for peace. Lord Buccleuth, a friend of the Duke of Windsor, had been urging peace
with Hitler, as had the Duke of Westminster. Sir Samuel Hoare at the Foreign Office was reputed to be in favour. Indeed, his permanent secretary, Sir Alexander Cadogan, remarked, perhaps unfairly: "He'll be the Quisling of England when Germany conquers us..." (He was made ambassador to Franco instead.)

The pre-war pro-Nazi lobby in Britain was not confined to a few convinced fascists or antisemitic eccentrics. Nor was it a matter of "peace at any price", as the Nazis conquered Europe. Even before Hitler attained power in Germany he had powerful backers abroad, such as Sir Henri Deterding of Royal Dutch Shell. Some researchers probing the prehistory of the Nazi Party, among the right-wing Freikorps and the antisemitic, aristocratic Thule Society, say evidence points to some British "godfathers" being around when Nazism was still in its cradle. Then, it was a matter of combating Bolshevism in Germany. Later, the Nazi reich was seen as both good for business, through rearmament and crushing trade unions, and an ally in the war against communism.

"Liberal ideas and public freedom of thought and speech are to some extent luxuries...," merchant banker Ernest Tennant told an audience at Ashridge Conservative College, explaining the Nazis' rise to power. Germany had endured economic chaos, a grim struggle for survival, and the threat of communism, he said. "When accusing the Nazis of wanton brutality, it must be remembered that the alternative — a Commu­nist revolution — might have been worse." Tennant led a British trade delegation to Germany in 1934 and was pleased to see how impressed members were. "It was decided on returning to London to form and finance the start of the Anglo-German Fellowship." Richard Griffiths, in Fellow Travellers of the Right, suggests the real source of the idea may have been Ribbentrop.

An earlier Anglo-German Association, aiming to promote friendship between the two peoples and including such people as Wells and Galsworthy, had been dissolved when Hitler came to power. There was little doubt of the mutual approval which existed between the Fellowship and the Nazis. Among speakers who were guests of the Anglo-German Fellowship were Ribbentrop (on several occasions), General Tholens of the German Labour Service, Hitler Youth leaders, and Freiherr von Hadeln, SS Adjutant to Himmler.
Ribbentrop was nicknamed the "Londonderry Herr" by some wags, being a frequent guest of the Marquess of Londonderry at his seat in County Down. The Marquess, Minister of Air from 1931 to 1935, was invited to Goering's summer residence along with Mussolini after the 1937 German army manoeuvres.

He had already met Hitler the year before and was keen for him to succeed, although he mildly cautioned Ribbentrop on taking antisemitism too far: "As I told you, I have no great affection for the Jews. It is possible to trace their participation in most of these international disturbances which have createdso much havoc in different countries, but on the other hand one can find many Jews strongly ranged on the other side."

Influence in High Places

In 1936, the secretary of the Anglo-German Fellow­ship told a reporter: "It isn't numbers that matter. We want 'Names', otherwise how can we have any influence with the government or the Foreign Office." If "names" were what was needed, the Fellowship must have gained plenty of influence! Along with Sir Barry Domville, Professor Laurie and Lord Redesdale (who turn up again in the Link), the Anglo-German Fellowship had about 2 7 Conservative MPs as members and at least 30 members of the House of Lords, such as the Marquess of Londonderry, Viscount Esher, the Earl of Glasgow and the Duke of Wellington.

Lieutenant Colonel Sir Thomas Moore, one of three Tory MPs on the Fellowship council, had written an interesting article in the Daily Mail on 25 April 1934, entitled: The Blackshirts have what the Conservatives Need.

"What is there in a black shirt which gives apparent dignity and intelligence to its wearer?" he said, describing a fascist rally at the Albert Hall. "All seemingly filled with the same emotions, pride of race, love of country, loyalty, hope... As I listened ;o the vibrant tones of Sir Oswald Mosley ... I got my answer. There was little if any of the policy which could not be accepted by the most loyal followers of our present Conservative leaders... Why,therefore the Blackshirts? The answer lies in the one word - Action!"

Having satisfied himself that the Moslev movement was "largely derived from the Conservative Party" and shared the same "instincts" — "loyalty to the throne and love of country". Sir Thomas urged an alliance between his own party and "this new and virile ofshoot". In another article that year, entitled Give Hitler a Chance he told readers, "I am satisfied that Herr Hither is absolutely honest and sincere."

An interesting feature of the Anglo-German Fellow­ship, noted in Simon Haxey's classic work Tory MP, 1939. but left unexamined in more recent books, was its corporate membership (as perhaps befitted suppor­ters of the corporate state!). Companies which had corporate membership of this pro-Nazi propaganda body, indicating that their Board of Directors approved, included Guinness, Mahon & Co, Lazard Bros, and J Henry Shroder in City banking; Firth-Vickers in the steel industry; and, among other firms, Dunlop, McDougalls, and the giant Unilever corpora­tion.

Individual members of the Anglo-German Fellow­ship included 21 bank directors, including the Gover­nor of the Bank of Scotland, Lord Lothian; and Deputy-Governor, Sir Donald Cameron. Three direc­tors of the Bank of England were members; one of them, F C Tiarks, on the Anglo-German Fellowship Council. Lord McGowan, chairman of ICI and director of Midland Bank; Andrew Agnew, managing director of Shell; and Sir Leonard Lyle, president of Tate and Lyle; are a few more names on the Anglo-German Fellowship's list.

Material Support

It is well known that British industry was shipping strategic materials to Germany right up to the out­break of war. A third of Britain's 50,000-ton stock of rubber was on its way in mid-August 1939. What is perhaps not so well known is that the British govern­ment and the Bank of England facilitated credit and exchange for the Nazi war build-up. Montague Norman at the bank also saw to it that Czechoslovakia's gold was handed over to the Nazis.

While, according to its secretary, the Fellowship was a club for Tory peers and "distinguished repre­sentatives of Big Business", the Link, set up by Admiral Domville, formed local branches for local bigwigs: city aldermen, country squires, magistrates, vicars, councillors (some of them Labour) and retired military and naval officers who were probably attracted by the Admiral. It grew in the outer London suburbs, the Midlands, southern services towns and Ulster.

There were garden parties and socials, as well as propaganda. Ilford branch had a "Bierabend" in March 1939, at which local MP Geoffrey Hutchinson praised the work of the Link. Croydon branch had sent Alderman Mrs Bessie Roberts and her daughter to the 1938 Nuremberg rally: "an unforgettable experience," she enthused. "Herr Hitler himself is very keen on the movement," Admiral Domville assured reporters (The Observer, 28 November 1937).

The president of the Anglo-German Fellowship, and also chairman of the Anti-Socialist Union, was former Tory MP and Transport Minister Lord Mount-Temple. "If another war comes, " he told the Fellow­ship's annual dinner in 1936, "well, I must not say what I was going to sav — I hope the partners will be changed." He met Hitler that year. At a reception for the German ambassador on 19 October 1938, propos­ing the toast, Mount-Temple said, "Never, since the Anglo-German Fellowship started have we met under fairer auspices."

After Kristallnacht
On 19 November, following the Kristallnacht pogroms and Nazi anti-Jewish decrees, the London Evening Standard reported Lord Mount-Temple's resignation from the chairmanship of the Fellowship "as a protest against the treatment of the Jews by the German government." Perhaps it had taken a while for him to notice. Mount-Temple's first wife, the mother of Lady Mountbatten, had been of Jewish descent, the Evening Standard pointed out. If he had been a German subject "this non-Aryan connection would be enough to make him ineligible for chairmanship of the Deutsch-Englische Gesellschaft in Berlin". Although resigning his post, Mount-Temple did not quit the Fellowship.

Only 20 of the Anglo-German Fellowship's 900 members decided to leave after Kristallnacht. As for the Link, although its Anglo-German Review received a few letters protesting the antisemitic outrages in Germany, membership continued to grow: from 2,600 in September 1938 to 3,500 by the end of the year, and more than 4,300 by June 1939. The Link's Central London branch, launched at the beginning of 1939, soon had 400 members. In June 1939, Captain Ramsay addressed them on "Secret Forces Working for War". It's a fair guess that he was not talking about Krupp or IG Farben. Ramsay, Tory MP for Peebles, was a devotee of the Protocols. In August 1939, the subject was "The Hidden Hand in European Affairs", with their vice-chairman, Richard Finlay, describing "the influence exerted by the Jews in Europe as an evil one," the Anglo-German Review reported.

People may have joined the Link for a variety of reasons, from naive views on peace to social climbing, and not all were hardline Nazis. However, it is clear that Nazi antisemitism was embraced with enthusiasm by most of the rest. When we picture, ranged behind these respectable suburbanites, the powerful barons of the Anglo-German Fellowship, and in front of them the lumpen organised by Mosley, it is not difficult to imagine that had the Nazis ever occupied this country they would have enjoyed the same collaboration from the same social forces as they found elsewhere in Europe.

Without in any way justifying the Communist Party's contortions — before, during and after the infamous Molotov-Ribbentrop Pact — one can under­stand left-wing hostility and distrust of the motives behind rearmament.

As it happened, the conflict between Axis ambitions and British interests overcame the tendency of right-wing rulers to ally. It was Labour, which had opposed the betrayal of Czecho­slovakia, whose backing during the May 1940 crisis enabled Churchill to take over government. The man who had used artillery against a few anarchists and sent in troops against the miners, who had told Mussolini in 1927: "Had I been an Italian, I would have been with you from the start", became the defender of democracy.

"The use of recriminating about the past is to enforce effective action at the present," Churchill said on another occasion. Today, when a decayed British imperialism attempts to restore its youthful vigour via Thatcherism, the danger to peace may be not from the appeasement of some foreign power, but the belli­gerence of our own bomb-happy Tories. It is essential to tear down myths about the past and counter those engaged in recreating facades of virtue for our rulers in order to find the way again for our future.

Some recommended reading:

Fellow Travellers of the Right by Richard Griffiths

Tory MP by Simon Haxey (Gollancz 1939). Look out
for it in second-hand bookshops or on older
friends' shelves.

Wallis by Charles Higham (Sidgwick and Jackson).
American biographer's blockbuster expose of the
Duchess of Windsor.

Peace for Our Time by Robert Rothschild (Brasseys)

Fascism in Britain by Richard Thurlow (Basil Blackwell 1987)

(Original article published in Jewish Socialist, Summer 1989)

Friday, 1 April 2011

1929-1933 Four Fateful Years (2): Red or Brown?

Communist presidential candidate
Ernst Thaelmann.


"Millions stand behind me" -Hitler. As depicted by anti-Nazi artist John Heartfield

The Communists in Germany had good reason to oppose Social Democracy. Each time the Party commemorated the 1918-19 revolution it reminded
its people how the Social Democrat minister Noske had restored 'order' with the help of the military Free Corps, who murdered Karl Liebknecht and Rosa Luxemburg.

For young workers now joining, the bitterness was underlined by experience of Social Democrat union officials collaborating with bosses to lower pay and conditions, and 'fingering' Reds to be first for the sack. The Communist Party was becoming the party of the unemployed and the young. By 1932 less than one in 10 of the members in the north­west coast region, including Hamburg, had a job. Instead of the factory strongholds of communist textbooks, the party was being built in the neighbourhoods, with rent strikes, and in fights with the fascists on the streets.

On the propaganda side, the Communist Party could contrast the grim, demoralising daily experience of capitalist depression with glowing reports of Soviet progress implementing its Five Year Plan. The underside of Stalinist repression spoke less loudly to those impressed with Russia's absence of unemployment. But, adhering to Stalin's supposedly revolutionary 'Third Period' vision which characterised Social Democracy and Fascism as 'twins', and insisted potential allies were but 'left social fascists', the German Communists were unable to establish a United Front against fascism, or win the trust of Social Democrat workers. Party members who questioned the line were denounced as 'imperialist agents', expelled, and subjected to violence.

Whether or not Stalin secretly saw advantages in a Nazi victory, hoping it would disrupt the West, as some alleged, his policies objectively contributed to it. Having declared that fascism was already installed under the 1931-32 Bruning government, the Communist Party was ill-prepared to confront the real thing when Hitler became chancellor the following year.

Some Nazis had openly rejoiced that the worse things got for Germany, and the greater the fear of Bolshevism, the better it would be for their Party. They, too, appealed to the unemployed, and to some of the working class, but more especially to those in the civil service and middle class who, slipping down the ladder, became angry with the rich and powerful, but still resented the organised workers, to whom they considered themselves superior.

The Nazis offered a theory which might have been rejected as crankish and out of place in a booming modern society but reappeared in a more attractive light now nothing seemed to make much sense. It was not something abstract like 'the system', but an outside foe conspiring to do down good Germans. The banker bleeding you for interest was the rich Jew, so was the chain-store owner. Meanwhile his brother the red Jew was agitating the workers, helping to put you out of business, by bringing them out on strike. To the shopkeeper, and to the student hoping to enter a profession, the Nazis could promise that good Aryans/Christians should not have to compete with Jews. For the lumpen criminal element there was also the prospect of sanctioned plunder and violence.

Although they called themselves the National Socialist German Workers Party, and some took the mixture seriously, Hitler and his crew knew which side their bread was buttered. In the autumn of 1928, Hitler decided he needed a new headquarters. Rudolf Hess approached a coal owner he knew, Emil Kirdorf, who said his own business was on hard times, but arranged a meeting with Fritz Thyssen, the steel magnate, who agreed a loan. With this the Nazis acquired a luxurious mansion, which became the Brown House. It was a bit different to the drab halls in which out-of-work Brownshirts might hang around, seeing if they could manage a beer to accompany their cheap meal, while awaiting news of a street fight to make their day.
'A grand staircase led to the second floor where the offices of Hitler and his staff were located. The interior of these rooms were decorated with dark wood panelling and rich red leather armchairs. Everything had the air of richness which comes only from expensive materials, said a visitor.' (Wlio Financed Hitler. The secret funding of Hitler's rise to power, 1919-1933, by James Pool, 1999).

Nazi 'anti-capitalism' was not just there to delude the less well-off or vent the intellectuals' spleen, but nor were they waging a class struggle to ovethrow the system. National Socialism aimed at a disciplined capitalism, where each knew their place, marching in step to make Germany the world power that racism said it ought to be. As political power appeared nearer, Hitler took steps to prove he was worthy of patronage.

In the autumn of 1931, Otto Dietrich, a former business editor with links to heavy industry and Rhineland mining interests was appointed chief of the Nazi Party press office. Hitler went on tour with Dietrich in a big black Mercedes, meeting wealthy potential supporters and business leaders. On 27th January 1932, Hitler addressed 650 members of the Industry Club in Dusseldorf's Park Hotel. The meeting had been arranged with the help of Fritz Thyssen, and Alfried Krupp sent a representative, who reported back very favourably. The Nazi leader had not lectured them on the evils of capitalism, nor even wasted their time with invective against the Jews. His themes were hard work, private property, and the danger of Bolshevism.

Becoming 'respectable' in the eyes of business did not bring any diminution of Nazi violence on the streets. It probably assured pro-Nazi police officers that they could let the Nazi stormtroopers do as they please. A Social Democrat councillor who had been hounded and attacked tried to defend himself in his home. The police arrested the councillor for possessing a revolver. In Altona, a working class district of Hamburg where the Communists were strong, something like the battle of Cable Street ensued, except it ended with police opening fire, killing 18 people and wounding hundreds, so the Nazis could proceed with their march.

In December 1930, the president of the Reichsbank, Hjalmar Schacht had been invited by one of the bank's board members to join him for dinner at the home of Herman Goering, Hitler's number two, in a pleasant Berlin suburb There followed a further invitation to Schacht and his wife, on 5th January 1931. Fritz Thyssen and Dr Goebbels were also present. After dinner the special guest arrived, in uniform: Adolf Hitler. Dr Schacht subsequently lobbied for Hitler to be found a place in government. Asked by an American journalist whether he could run Germany's economy under the Nazis, Schacht said that he could. In the end it was Hitler's government that found a place for Dr Schacht.

Schacht was important not just for his financial expertise but for his connections. He had met Montague Norman, governor of the Bank of England, during 1924 talks, and they became good friends. In October 1931, Nazi ideologist Alfred Rosenberg came to Britain to meet Norman, and also met with Geoffrey Dawson editor of The Times, Lord Hailsham, and Lord Rothermere, owner of the Daily Mail, who had been enthusiastic over Nazi gains in the elections the previous year: 'If we examine this transfer of political influence in Germany to the National Socialists we shall find that it has many advantages for the rest of Europe. It sets up an additional rampart against Bolshevism.'

When Hitler stood in the 1932 presidential election, the money showed. He was piloted around Germany in a hired plane, speaking at 48 meetings, and for anywhere he did not reach, the Nazis recorded speeches-- and broadcast them through loudspeakers, even radio. For new and younger voters particularly, the appeal was that Germany needed a young man of action. Hitler still came second to Hindenburg, but the following year the Field Marshall would appoint him Chancellor.

On 25th February 1933, as German) faced new Reichstag elections, Goering called top industrialists to a meeting at the Presidential Palace. After Goering and Schacht greeted them, Gustav Krupp pledged his support for Hitler. Goering left the room. 'All right gentlemen. Now to the cash register!', chirped Schacht. Very soon 3 million marks were pledged for Hitler.

Shacht came over for talks with Montague Norman in May and June 1934. Shortly afterwards he became Nazi Minister of Economics. The following year, leading British companies like Unilever, Dunlop, Shell and ICI came together with City banks in the Anglo-German Fellowship. The Bank of England's helpfulness continued in 1939 when the Czech gold reserve, which had been placed in London for safe keeping, was obligingly handed over, through the Bank for International Settlements, to the Nazis who had invaded Czechoslovakia.

The Nazis had long enjoyed support from others besides German capitalists. Sir Henri Deterding of Shell had seen his oil interests in the Caucasus taken over by the Soviets, and thought the Nazis might help him get his own back. Henry Ford, whom Hitler admired for union-busting and antisemitism, was decorated with the Order of the German Eagle in 1937, as had been Thomas Watson of IBM. Hitler believed that the spread of international companies and competition between them could be harnessed for use by an organised German capitalism. The Reich needed raw materials, more particularly war materials, like oil and rubber. IG Farben, which had agreements with Standard Oil and ICI, became especially important, once it had rid itself of Jews; this was the company to set up a Buna (synthetic rubber) plant at a Polish village called Oswiecim.

But all that lay ahead. When the Nazis took power, their opponents had little fight left. The Social Democrats, despite all the beatings and thuggery they had suffered at Nazi hands, had remained law-abiding, telling themselves that Germany was not Italy and could not really go fascist. They took pride in not being 'provoked'. The Communists, too, were quiet, reassuring themselves that the Nazis could not last. 'After Hitler it will be our turn'.

Some demoralised Red Front fighters went over to the stormtroops, whether hoping to subvert them or conceding to the winning side. On May Day 1933 the trade unions accepted that they should march behind the stormtroopers playing the Horst Wessel song. The following day, as planned, the Nazis took over every union hall or office in Germany, beating up trade unionists and sending leading members off to Dachau. Social Democrats continued sitting in parliament, even voting for government measures, till they and the Communists and other left-wingers were taking their turns on lorries and trains heading for the camps.

There was nothing automatic about the sequence of events between 1929 and 1933. Just because the big money swung behind Hitler, this did not guarantee that he would win, though it must have helped. But, hopefully, looking at some of the underlying connections should dissuade us from complacency and help us towards seeing what is necessary to say 'Never again'.


Some books that I found helpful:

The Coming of the Third Reich: How the Nazis Destroyed Democracy and Seized Power in Germany
by Richard J.Evans

Who financed Hitler : the secret funding of Hitler's rise to power, 1919-1933
by James Pool, Suzanne Pool

Hitler's Banker: Hjalmar Horace Greeley Schacht
by John Weitz

Germany 1931-1932
by Leon Trotsky

also worth reading if you can get hold of them:

Der Fuhrer
by Konrad Heiden

Our Street
by Jan Petersen

(Article originally published in Jewish Socialist Autumn 2009)

1929-1933 Four Fateful Years (1) Hunger and Anger

WORLD news, and anxious crowds wait on Wall Street. and below: NAZI propaganda says 'Break the Dawes chains'. But Germany had depended on Dawes Plan US loans. After 1929 it was replaced by Young Plan which required repayment in gold.

Eighty years ago the Roaring '20s, the decade of booming capitalism, mass-produced automobiles and confidence in lasting prosperity, came to a sudden end. On 24th October 1929, shares on Wall Street took a tumble, and the following week the fall continued. Real estate had already peaked and started to decline in prices some years before, but anyone in America with cash to spare had been able to buy shares, and borrow money to buy more. Before the Crash, the Dow Jones Index had reached an all-time height, and American loans and investment had shored up Europe too. Now America's crash marked the beginning of the worldwide slump.

For Germany, it was a rude awakening to catastrophe. Huge American loans and investment had helped the country out of the crazy 1923 inflation, easing the burden of war reparations, assisting industry to rebuild and compete, and the Social Democrats to plan welfare reforms. The middle class, which had faced ruin, now had money to spend on cafe life, cars, cabaret and concerts, and borrowed more money to buy shares, inflating their value. Companies like Mercedes Benz borrowed to produce more consumer goods. It was the age of modernism and the Bauhaus. Not everyone had jobs, or money, but for those who did, these were the Golden Years. The head of the Reichsbank, Hjalmar Horace Greeley Schacht, grumbled about 'loans for luxury' in 1927, but few politicians wanted to hear his tidings of gloom.

On Black Tuesday, 29th October 1929, 16.4 million shares were sold on Wall Street and $10 million were wiped off the value of US companies. Between September 1929 and July 1932 the New York Times Index fell from 452 points to 58 points. In the same three years, British industrial production fell by 11%, In Germany it fell 40%.

Like the proverbial man who asks for his umbrella back when it starts raining, the US creditors began recalling their loans. Then the United States raised its tariffs by 50%, while Britain delivered a double blow, raising imperial tariff barriers and taking the pound off the Gold Standard, which meant devaluation and cheaper exports.

In April 1931, Germany and Austria agreed a customs union, which should have provided a bigger market for German industry, keeping out Czech goods. France, which had insisted most firmly on full reparations, even occupying the Ruhr from 1923-24, declared any union a breach of the Versailles peace, and withdrew loans from Austria. The Rothschild-founded Credit Anstalt in Vienna, the biggest bank in Central and Eastern Europe, having taken over a smaller bank and its debts, collapsed in May 1931, and German banks began to follow.

By the winter of 1930-31 there were 5 million unemployed in Germany. By the following year, one in three Germans was unemployed, and the proportions in the Ruhr and Silesia were higher. The number of unemployed in Berlin rose from 153,000 to 600,000. In Hamburg the numbers rose from 32,000 to 155,000. Many workers only held on to their jobs by accepting short-time working and pay cuts.
Unemployment benefit had only been meant to provide relief during short spells out of work. Now the local authorities which had responsibility for it were caught out between rising joblessness and falling tax revenues. Those which had taken short-term American loans were bankrupted. Unemployment benefit was cut or ran out.

In the harsh winter of 1931 -32, millions of tons of unsold coal, lay piled around the pitheads of the Ruhr, while millions of Germans could not afford to heat their homes. It was a similar picture elsewhere in the capitalist world, with ill-fed, ill-shod and ragged people shuffling past idle factories and mills. But Germany was worst hit. A working-class housewife told how she and her husband tried to survive on bread and potatoes, with nothing at all at the end of the week, when they hoped for a bit of sausage. People took work on church- and charity-run schemes, labouring for subsistence. Men and women alike turned to begging, prostitution and crime.

It was not only the industrial workers who were suffering this crisis. Many professionals and public servants, who might have regarded themselves as middle class, had their career hopes dashed as banks and firms closed, and government projects were cancelled. Small shopkeepers, already losing out to the chain stores with their special offers, were left with customers who needed 'tick' and then could not pay up. Businesses went bankrupt.

The political posters of this time, from whatever party, show heroic, powerful, well-muscled figures, stepping out confidently to claim their future. These were the very opposite of the weakness and humiliation felt by hungry individuals. On each party's poster the big strong giant triumphs over enemies. A Nazi poster has him smashing 'the world-enemy, international high finance', whereas a cloth-capped Communist giant declares 'Out with this system!' - the system being represented by top-hatted capitalists seated around a huge table. On the Social Democrat poster the muscular giant elbows aside Nazis and Communists.

In elections for the Reichstag in May 1928 the Social Democrats won 29% of the votes cast, while the Communists won 10.6%. The Nazis gained only 2.6%, having retreated from some of their 'socialist' rhetoric in a turn to the countryside, and to reassure some of the business interests from whom Hitler was beginning to obtain funds. Though the Nazi vote fell by 100, 000 nationally, they still took 12 seats. The effect of the 1929 slump as reflected in the September 1930 election was that the Social Democrats were down to 24.5%, the Communists had 13.1%, but the Nazi vote rose to 18.3%.