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%.