12. The Great Depression in Germany
Germany, its economy all but destroyed by the inflation which followed the First World War and the Weimar Republic, was hit badly by the Great Depression, in particular because of its impact on American banks which had lent money to help the German government pay war reparations. By 1931 the German economy was all but abandoned by international investors, and the government of the United States proposed a suspension of reparations, an act which the French opposed virulently. The harsh reprisals and the actions of the European allies which strove to enforce the punitive Treaty of Versailles provided a propaganda windfall for the rising Nazi party, which also took the opportunity to blame international Jewish bankers for the nation’s economic woes. Unemployment in Germany reached the level of 30% in 1932. The Nazis, supporters of government sponsored labor programs, gained significant support among workers.
By 1935, the Nazis were in power, and the government sponsored programs which put people to work and helped them gain further credibility among political moderates. Contrary to popular belief, Hitler and the Nazi party did not create the public works project which led to the construction of the Autobahn, but they wholeheartedly endorsed it, as well as other internal infrastructure projects. It would be a stretch to claim that the Great Depression created Hitler’s Germany, but it went a long way towards legitimizing his regime in the eyes of the German people. After 1935 Hitler’s military rebuilding programs further bolstered the economy, and by the end of the decade German shipyards, railroads, electrical generation and distribution grids, and other industries were the envy of Europe, with political states such as Czechoslovakia, Austria, and the former Rhineland contributing significantly to Germany’s recovery.