Depression: Overview

Description:
The world depression, which began in 1929, brought misery and despair to Germany. The dramatic fall of American corporate stock prices and the failure of banks led to investor panic and the need to bring American capital invested abroad back to the United States. As a result of the Dawes and Young Plans, Germany had received much of this American capital in the form of short-term loans. German industrialists had invested this money in long-term projects, which could not be easily liquidated. The American call back of loans brought much of the German economy to a standstill. Millions became unemployed and the Government chose a policy of budget reduction rather than expanded social services. Corporate greed and labor union inflexibility compounded the situation. Germans felt anger, despair and hopelessness as they waited on lines for whatever work was available or to receive charity to feed their families.

Connections Questions for the Classroom:

• Write a working definition of depression. Historians note a decrease in tolerance and an increase in the number of hate groups during periods of depression and other forms of economic instability. How do you account for the decrease in tolerance? The rise in the number of hate groups? Are their observations as true today as they were in the past?
• It has been said that “any system can stand in fair weather; it is tested when the wind blows.” How do economic crises test democracy? How do such crises encourage people to place their faith in leaders who offer simple solutions to complex problems?