In the October of 1929, New York's Wall Street stock market went into a catastrophic crash. During the next three years, the US stock market continued to fall, with shares becoming worth 20% of the price they originally sold for. By 1933 11,000 of America's 25,000 banks failed , leading to the reduction of expenditure, demand and therefore production. Previously, Germany had been defeated in World War One and was left with a large war debt, money which the nation did not have. She looked to America for financial assistance. The USA provided Germany with two major loans: the Dawes plan in 1924, and the Young plan in 1929. Now, however, America was herself in a state of financial emergency and needed the loans repaid, something which Germany could not afford.
Gustav Stresemann was Foreign Minister of Germany and despite his desperate effort to stabilise her economy, died without succeeding in his task. In fact, Stresemann even predicted the effect that an event such as the Great Depression would have on the country:
The economic position is only flourishing on the surface. Germany is in fact dancing on a volcano. If the short-term credits are called in, a large section of our economy would collapse.
Workers all over the country found themselves out of jobs as factories went bankrupt and were forced to shut down. Unemployment rates rose in the millions each year (see...