Selected Aspects of the development of the German Economy in the Great Depression

The Great Depression deepened problems of the Weimar Republic and contributed to the establishment of the Nazi dictatorship. However, the symptoms of weakness in the economical sphere could be already seen in the late 1920s. The indebtedness of the state and high public expenditures related to the great bulk of foreign loans became the biggest problems of this state. Political parties could not achieve unanimity in anti-crisis reforms and, as a result, in 1930 President Paul von Hindenburg appointed new Chancellor Dr Heinrich Brüning. His cabinet focused on balancing of the national budget and nullifi cation of reparations. Consecutively, the German government adopted a wide range of drastically saving provisions with the intention of lowering state expenditures and maintaining the stability of currency. The adopted defl ation policy did not take into account rapidly increasing unemployment and social instability that was refl ected in the rising preferences of radical political parties - NSDAP and KPD. Economic slump reached its peak after the outbreak of the socalled Bank crisis, caused by the collapse of infl uential Berlin bank houses. German government continued to pursue the defl ation policy which was based on an experience with the hyperinfl ation in the years 1923-1924 and the majority of politicians feared that new credits and state interventions would cause depreciation of currency and political unrest. Following cabinets of Franz von Papen and Kurt von Schleicher did not manage to stop the impact of the Great Depression. Only the new cabinet of Adolf Hitler started the era of state investments into armament and construction and thus contributed to the fi nishing of the depression.