Why did the German economy collapse in 1929?

Answer 1

The German economy was not 'in ruins throughout the 1930s'. Like most other countries it was hit by the Great Depression that followed the stockmarket crash of October 1929. It was affected more severely than, for example, Britain and for a while had an extremely high rate of unemployment in the early 1930s, like the U.S. By 1933 the economy was slowly picking up, thanks partly to measures initiated by the Weimar governments. After Hitler came to power in 1933 onwards the German economy received an enormous boost from rearmament. Unemployment fell and living standards rose, though there is disagreement about some of the details.

Answer 2

At the time Germany was very dependent on short term loans from abroad, especially the US. These were recalled.

- Umm... no. The real answer is the Versailles treaty - a punitive treaty under which Germany lost their entire mercantile fleet, all of their collonies, the contol of Germany's coalfields was given to France, and one of Germany's most productive Industrial regions, the Saarland, was taken over by the League of Nations.

While bearing this destruction of their ability to produce wealth, the German people were forced into making full and complete economic reparations (the "War Guilt clause") for repayment of ALL losses encured by the Allies during WW1.

The cost to the German people, robbed of their means of production and most of their wealth, eventually caused Germany to default on its reparation payments. In response, Belgium and France, both of whom had become dependent on Germany's payments, seized Germany's Ruhr valley - it's one remaining productive Industrial region, in order to force the German people to make the payments via direct oversight. The German people in turn, practiced a policy of passive resistance, producing little for the occupying French and Belgiums to take. Unfortunately, this also produced very little for the Germans, and resulted in the hyperinflation for which the Weimarr Republic is now remembered.

In 1929, the US stock marketcollapsed, and this exasperated the situation in Germany, as Germany's main bank collapsed shortly afterward. Unemployment went out of control, resentment of 20 years of economic destruction came to a head, and this allowed the German Socialist Party to come into power.

Answer 3

Due to hyperinflation of the mark, eventually the mark was worth nothing, and becoming toys for children, building blocks for houses, and even things to burn a fire. The mark becoming worth £0.00, meant they couldn't buy anything making the economy crash.

Answer 4

The German economy was especially vulnerable since it was built out of foreign capital, mostly loans from America and was very dependent on foreign trade. When those loans suddenly came due and when the world market for German exports dried up, the well oiled German industrial machine quickly ground to a halt. As production levels fell, German workers were laid off. Along with this, banks failed throughout Germany. Savings accounts, the result of years of hard work, were instantly wiped out. Inflation soon followed making it hard for families to purchase expensive necessities with devalued money.

Answer 5

Nova Net Review Test Answer: The value of Germany's currency dropped and inflation soared.

Answer 6

There is exactly one reason: socialism.