On 29 October 1929 the US stock market crashed. The effect could be felt worldwide and started the Great Depression. In the previous years Germany had loaned money from the US as aid to pay its reparations. Therefore it had large debts with the US and was hit the hardest by the Depression. US banks demanded their money back which resulted in many German factories to be closed down and unemployment rates increased rapidly. In 1932 some 5.5 millions Germans were unemployed.
As Dr. Schacht said in his speech on 29 November 1938:
“The collapse of German economy after Versailles had its climax in the credit crisis of 1931 (Note 13 July 1931). It was unleashed by the "run" of our creditors abroad who would have liked to collect the entire debt of no less than 25 billion Reichsmark on three months notice. The fraction which was actually transferred was still large enough to destroy our economy. All credit transactions ceased, payments had to be considerably restricted, all large banks showed themselves to be in need of restoration and one, the Danat Bank, was even beyond restoration.
Rates of interest reached insane heights, the number of bankruptcies mounted by leap and bounds. Each individual collapse of necessity released a new chain of suspensions of payment and thus entire branches of economy, among them primarily agriculture, were soon facing ruin. The state of public finances became hopeless. Each increase in the tax rate only brought a decrease in receipts. All of these manifestations of economic decay had unequaled social misery as their inevitable result.
The most staggering proof of this is found in the number of unemployed, which passed the 6-million mark in the winter of 1932/33, the peak was reached 16 February 1933 with 6047289 unemployed by actual count, and which. including invisible unemployment, amounted to almost 7 million. If in addition to this one considers that since 1926 the number of unemployed had never averaged less than 1.3 million per year, and that by 1930 the number already amounted to more than three million, then no further proof is needed that such constant mass unemployment constituted a political danger of the most serious order.”
As Germany's economic situation got worse, with nearly six million unemployed, the Chancellor at that time, Heinrich Brüning, was labeled "The Hunger Chancellor". Brüning had also continued the dangerous precedent of ruling by decree. He invoked Article 48 of the German constitution several times to break the political stalemate in Berlin. On May 29, 1932, Von Hindenburg called in Brüning and told him to resign. Von Hindenburg had received complaints about Brüning’s plans to divide up estates from bankrupt rich aristocrats. The next day, Heinrich Brüning handed in his resignation.
Franz von Papen was appointed the new Chancellor on 1 June 1932 by Von Hindenburg.
The Nazi party meanwhile made good use of the political unrest and unstable economical situation and gained strength. For the Reichstag elections in July 1932 the NSDAP gained 37.27% of all votes, which was 15% more than the second party SDP. To compare, in September 1930 the NSDAP had only 18.25% of the votes, and in May 1928 thus only a mere 2.6%.
We can see the results of the Reichstag elections for the NSDAP between both world wars. It shows clearly that they made perfect use of the Wallstreet Crash to manipulate the voters. They were a marginal party before the Crash and the major party after it.
Hitler wanted to become the Chancellor as his party now was the greatest in Germany. However Von Schleicher and Von Papen and declined his wishes. The best they could offer was a vice Chancellorship. Hitler was furious and clashed with both men. Later he was called to Von Hindenburg and got a tongue lashing. Hitler backed down for a short while.
On 12 September 1932 the Reichstag gave a vote of no confidence to the current cabinet. But just before that vote was taken, Von Papen dissolved the Reichstag and calling yet again for new elections. In November 1932 this election took place and the NSDAP was still the largest party, although it did lose some 4% of the votes. And even though the NSDAP was the largest party, they failed to form a government coalition. As a result Von Papen resigned as Chancellor. Hitler saw an opportunity and asked Von Hindenburg to appoint him as Chancellor. Von Hindenburg refused twice to do so. Instead after much debate, bickering and shouting, Kurt von Schleicher was appointed Chancellor on 2 December 1932.
As nobody trusted nobody, Von Schleicher couldn’t get the cabinet moving. On 28 January 1933 he resigned.
And so, on 30 January 1933 Hitler was appointed Chancellor by President Von Hindenburg. Hitler immediately called for new elections. These last free elections before WWII were held on 5 March 1933. This time the NSDAP gained 43.91% of all votes. Together with the DNVP they formed a coalition to get the majority of votes. Although in letter these elections were free, the Nazi party unleashed a storm of violence towards other parties by banning newspapers, physical attacks or breaking up their meetings.
About two weeks later, on 24 March 1933, the Reichstag passed the Enabling Act (Gesetz zur Behebung der Not von Volk und Reich (Law to Remedy the Distress of People and Reich)). This would give the cabinet legislative power for four years. Basically giving Hitler dictatorial powers.
One year later German President Paul von Hindenburg died on 2 August 1934, aged 86 years old. On 19 August 90% of the German public voted in favor of Chancellor Adolf Hitler becoming Führer und Reichskanzler, a new title created earlier in the month. Although Hitler already had all necessary powers, now he could say that the German people had chosen him and him alone to guide them into a new era.
The German–Polish Non-Aggression Pact was signed on 26 January 1934. Both countries would engage in talks to resolve their problems and also declared peace for a period of ten years.
Next Story: Regaining Territory
Read Again: The Road to World War 2
Read Again: The Treaty of Versailles
Read Again: The Early 20s in Germany
Read Again: Beer Hall Putsch
Read Again: Roaring Twenties