Chapter 9

Question 1

The start of the economic depression (Wall street crash)

Answer 1

• 24th October 1929, the New York Stock Exchange experienced its worst ever fall in share prices in an event that became known as ‘Black Thursday’
• this was followed by another collapse the following Tuesday (29th October)
• on that day alone, the value of the largest American companies fell by 10 billion dollars
• many companies went bankrupt, workers lost jobs and banks stopped lending and called in their existing loans
• start of prolonged depression
• for Germany, the Wall Street Crash had a profound impact on its economy, society and political system

Question 2

Impact of the Wall Street Crash on Germany

Answer 2

• German economy had been stagnating since 1928 as investment decreased
• Germany’s economic recovery 1924-28 had been largely financed by American loans but after Wall Street crash those loans dried up
• Also, the American banks that lent Germany money on short-term loans demanded immediate repayment
• so at time when German economy needed more investment to stimulate economy, money was being withdrawn
• USA had also been largest oversees market for German manufactured goods, but Depression drastically reduced demand for imported goods in USA and Germany’s export trade declined rapidly
• between 1929-32 Germany’s export trade declined by 61% and its industrial production fell by 58% of its 1928 level
• economy entered deep depression

Question 3

Impact on Germany’s export trade and industrial production

Answer 3

• between 1929-32 Germany’s export trade declined by 61% and its industrial production fell by 58% of its 1928 level

Question 4

Impact of Wall Street Crash on other countries

Answer 4

• Germany suffered greater fall in industrial production than other European countries
• Britain = the decline in industrial production 1929-32 was 11%

Question 5

Wall Street Crash - effect on German banks

Answer 5

• banks in difficulty as as customers withdrew their money and outstanding loans not repaid
• following collapse of Austrian bank in May 1931, German banking system plunged into crisis
• July 1931, the government closed the banks and the stock exchange for two days to provide the financial system with some breathing space, but these measures gave mere temporary respite
• depression deepened, became more prolonged

Question 6

Effect on unemployment

Answer 6

• unemployment increased
• by 1932, about one third of all German workers was registered as unemployed

Question 7

Why were these figures not reflect the true scale of unemployment - what was the true estimation

Answer 7

• they only recorded those who registered as unemployed
• many redundant workers, especially women, did not register and so were not counted
• estimated that in January 1933, the true number of unemployed was about 8 million