The Great Depression, could Germany have actually been the cause?
The Great Depression between 1929 and 1933 arrived after the introduction of a new currency. By 1929 all the major countries had returned to the Gold Standard, after abandoning it during the Great War.
Germany and the Wall Street crash
The depression kicked off with a stock market crash. Weimar Germany had been viewed as weak and unthreatening so America decided that it was safe to remove all the Allied controls over the German economy and to give it a generous new deal over paying its war reparations. During the negotiations there was a bubble in the stock market, but the week after it was agreed the market started to sag. Then prominent German politician and media magnate, Alfred Hugenberg, put Hitler on his petitions committee and campaigned successfully for a referendum against paying any war reparations at all, on the grounds that Germany was guiltless of starting World War I. The anxiety that America’s trust was misplaced and that Germany might renege, not only on paying war reparations, but also on all its foreign debts, helped cause a disastrous collapse on Wall Street.
Germany’s part in creating America’s ‘Dust Bowl’
By itself the Wall Street crash would not have caused a lasting depression but the agricultural slump of 1930/31 hit America hard. The inadequacy of American farmers has long been condemned for creating the legendary ‘dust bowl’ in the American heartlands. That is not the whole story. Germany was not as weak as its creditors believed and its former armament manufacturers were already secretly making armaments again and were willing to sell them to Stalin, with the proviso that they were paid for in hard currency. Russia was practically bankrupt in 1928 but had been a major wheat exporter before World War I; so Stalin sent his kulak farmers to
Siberia and created giant farms from their land. In 1930, with the help of, in effect, slave labour, the Soviet wheat arrived at rock-bottom prices onto an unsuspecting, already overprovided world market. Stalin obtained his modern German weapons and the factories to produce them, at the cost of death for his kulaks and bankruptcy and despair for American farmers. The question is why the German armaments makers helped Stalin. One answer could lie in the hold that Stalin had over the German Communists. Previously they had sided with the Socialists. Yet after Stalin’s agreement with Germany, despite fighting Hitler’s storm troopers on the streets, the German historian Erich Eyck1 reveals that German Communists faithfully voted with Hugenberg’s far-right DNVP and Hitler’s NSDAP in the German Bundestag, and the Russian historian AlexanDr Nekrich shows how the Communists helped Hitler’s electoral triumph in 1932.2
How Germany made its people suffer for political ends
An additional cause of the Great Depression, which has been overlooked, was Germany’s deliberate policy of deflation. When GermanChancellor, Heinrich Brüning, took office in 1930, he told his Labour Federation associates of his intention to cut wages, raise taxes and divert all the country’s energies into export, in order to
put pressure on America to allow Germany to renege on paying reparations and debt. By 1931 Germany was the world’s greatest exporter, with a mountain of cash in the Reichsbank. Yet although America and the allies gave Germany a moratorium on its war reparations payments, its policy of deflation continued in pursuit of further
objectives. After Hitler came to power America’s worst fears of 1929 were realised when Germany not only reneged on paying war reparations but also called for a moratorium on its foreign debts, inflicting further misery on Americans.
For a more in depth look at the causes of the Great depression, read our article: The Untold Story of One of the Major Causes of the Great Depression