The world economic depression, which began with the Wall Street Crash in October 1929, had a devastating effect on the German economy. Banks collapsed, prices fell and world trade contracted. Agriculture was badly affected by the fall in world trade. Foreign banks withdrew funds. To make matters worse, Heinrich Bruning (Chancellor 1930—32) adopted a deflationary economic policy to balance the Budget by cutting public expenditure. This helped to fuel the dramatic rise in unemployment, which, by early 1932, had reached 6 million. In such a dire economic climate, political extremism flourished. The NSDAP (the Nazi party) was the main beneficiary. Winning only 12 seats (2.6% of the vote) in the 1928 Reichstag elections, its support rose to 107 seats in 1930 and 230 seats in July 1932. Similarly, the KPD (Communist party) saw a diplomatic rise in electoral support, gaining 100 seats by November 1932. With the appearance of two large parliamentary blocs that were openly disapproving of democracy, the survival of the Weimar Republic was put at risk. From the moment of its creation the Republic was faced with serious economic problems. The loss of territory under the Treaty of Versailles and the huge reparations payment of £6,600 million, set in 1921, undermined German postwar economic recovery.
In addition, the need to provide for war victims and war widows meant that one-third of the Reich government’s disposable funds went on pensions. The economic crisis which engulfed Germany in the years 1922 to 1924 was directly linked to these problems. The effect of economic collapse and hyperinflation led to the erosion of German savings. This meant that in the years 1924 to 1929 German industry became over-dependent on foreign loans. Once the Crash occurred, it was the German economy that suffered most from the loss of foreign investment. However, economic problems were beginning to appear even before 1929. An unemployment insurance scheme, involving thousands of workers, collapsed in 1927. In 1928 unrest spread through the main industrial area of the Ruhr, where employers locked out workers who were demanding wage increases of between 2% and 4%. Without the great economic depression of 1929—33, the Weimar Republic may well have survived. However, it is important to remember that economic problems hit Germany immediately after the Great War and these persisted through the 1920s.
Weimar’s next problem was its system of government where a series of events led to the collapse of parliamentary democracy in Germany. Had any one of these events happened by themselves then the Republic could have survived however the cumulative effects of all the events occurring simultaneously saw parliamentary government end, certainly by 1933. The first problem in the parliamentary system was proportional representation. This allowed small, localised parties, like the Nazis and the Bavarian People’s Party to gain seats in the Reichstag, and a gain national prestige. Proportional representation didn’t necessarily mean that no party would ever gain a majority, however this was the case for Weimar. In the history of the Republic no party ever held more than 50% of the seat, hence no party would ever form a majority government, this certainly weakened the whole parliamentary system. Proportional representation was responsible for a series of coalition governments, which ruled Germany between 1919 and 1933. However the only time the pro-Weimar parties ever held a majority was in the first elections of 1919, thereafter they where always in the minority. Thus a series of parties gained power, even though it was through coalition, who ultimately had the aim of bring down Weimar’s fragile democracy. A combined effect of proportional representation and coalition politics was the need for the SPD, the largest pro-Weimar & leftwing party to form part of a coalition government. However the SPD’s refusal to join coalition governments led to the major pro-Weimar party, only forming the government once, in 1919. Here again we can see the system of parliamentary democracy in Germany was a factor in the collapse of Weimar.
