German Poverty in the 30s


BERLIN, Germany — The rise of the Nazi Party in pre-World War II Germany was made possible not only by the charisma and manipulations of political leader Adolf Hitler, but also by Germany’s destitute economic conditions following World War I. Poverty, alongside the desperation of poor, fueled a German escape mission that preluded the mass murder of at least 11 million people that came to be known as the Holocaust.

What wouldn’t one do to relieve himself of the strains of abject poverty? This case study seems to offer what one would do: condone chauvinistic racism and brutal extermination.

Following the end of World War I, Germany fell from its position as an economic power and world leader to a country in ruins. The Treaty of Versailles demanded Germany pay hefty reparations to the Allied powers, and Germany, after four long years of taxing warfare, did not have the means to do this. Asked for 132 billion marks, Germany only had around 50.

The German mark, at this point, was already slightly inflated. To the chagrin of German financial advisors such as Hjalmar Schacht, Germany paid for World War I entirely with borrowed money. France, in contrast, instated its first income tax. France’s decision to use money from its economic system saw more success than Germany’s strategy of borrowing money and inflating its value.

The worst for Germany, however, was yet to come. Since it was about 82 billion marks short, officials began rapidly printing bank notes to buy foreign currency which it could use to pay the Allies. This devalued the mark substantially. As more bank notes were printed, the mark’s value plummeted, meaning an increasing number of marks were needed to buy foreign currency. By 1923, the U.S. dollar was worth more than 4.2 trillion marks.

For Germans this was a financial disaster and humanitarian crisis. Workers’ wages were now practically worthless, along with any money families had saved. Banks began to disappear as loans were paid and deposits became valueless. In November of 1923, one billion marks could buy someone three pounds of meat or two glasses of beer. Later that year, in December, one needed 200 billion marks to buy a loaf of bread.

This disaster required immediate attention from Allied powers who still needed compensation for World War I. To aid Germany, Charles G. Dawes, an American banker and politician, proposed what became know as the Dawes Plan. It would establish a German schedule of payment of one billion marks the first year and  more every subsequent year, as well as a method for raising revenue – mostly transportation, excise and customs taxes – and a U.S. loan to Germany.

The effects were positive for Germany, which enjoyed a more stable economy and a cultural flourishing named the Golden Twenties in Berlin. The Dawes Plan, however, made Germany heavily dependent on foreign countries and foreign markets, so when the U.S. stock market crashed in 1929 Germany felt the consequences acutely.

Unable to export enough goods to sustain its economy, German industry started to falter. This lead to worker layoffs, bank failures and, again, mark devaluation. German poverty, due to residual consequences of World War I, reparations, the Great Depression and lack of foreign markets, began to expand. Miserable and impoverished people started looking for any way out.

For many Germans, Hitler made this escape from economic ruin possible. He excited the German middle class with engaging and inspiring speeches and soon his party, the NSDAP, also known as the Nazi party, was a major political power. Skyrocketed into prominence by taking advantage of poor economic conditions, President Paul von Hindenburg appointed Hitler chancellor after months of arduous negotiations.

From there Hitler seized political control, established the Third Reich and initiated the Holocaust.

Although poverty does not always lead to such catastrophic ends, economic and social ruin is easy to take advantage of on a smaller scale. When someone has sex with a desperate prostitute, forces child laborers to work with little pay or displaces unindustrialized natives from their homeland, he is profiting from the vulnerability of poverty.

Adam Kaminski

Sources: History Place, The Holocaust Explained
Photo: Huffington Post


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