Answer:
After the First World War Germany suffered from inflation. In January, 1921, there were 64 marks to the dollar. By November, 1923 this had changed to 4,200,000,000,000 marks to the dollar.
Some politicians in the United States and Britain began to realize that the terms of the Versailles Treaty had been too harsh and in April 1924 Charles Dawes presented a report on German economic problems to the Allied Reparations Committee. The report proposed a plan for regulating annual payments of reparations and the reorganizing the German State Bank so as to stabilize the currency. Promises were also made to provide Germany with foreign loans.
These policies were successful and by the end of 1924 inflation had been brought under control and the economy began to improve. By 1928 unemployment had fallen to 8.4 per cent of the workforce. The German people gradually gained a new faith in their democratic system and began to find the extremist solutions proposed by people such as Adolf Hitler unattractive.
The fortunes of the National Socialist German Workers Party changed with the Wall Street Crash in October 1929. Desperate for capital, the United States began to recall loans from Europe. One of the consequences of this was a rapid increase in unemployment. Germany, whose economy relied heavily on investment from the United States, suffered more than any other country in Europe.
Before the crash, 1.25 million people were unemployed in Germany. By the end of 1930 the figure had reached nearly 4 million, 15.3 per cent of the population. Even those in work suffered as many were only working part-time. With the drop in demand for labour, wages also fell and those with full-time work had to survive on lower incomes. Hitler, who was considered a fool in 1928 when he predicted economic disaster, was now seen in a different light. People began to say that if he was clever enough to predict the depression maybe he also knew how to solve it.
By 1932 over 30 per cent of the German workforce was unemployed. In the 1933 Election campaign, Adolf Hitler promised that if he gained power he would abolish unemployment. He was lucky in that the German economy was just beginning to recover when he came into office. However, the policies that Hitler introduced did help to reduce the number of people unemployed in Germany.
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