By the end of 1933 the republic had been brought on the verge of collapse. The financial disaster had profound effects on German society. Hyperinflation became a significant factor in the collapse of the republic in 1933, with wages for the working class becoming valueless, trade union funds wiped out, and middle classes and small capitalists losing their savings, society began to turn to extreme anti-republican groups. The replacement of the devalued currency with the 'rentenmark', in 1923 and was given equal value to pre-war gold Reichsmark in an attempt to save the economy. The turn to extreme parties due to economic issues is demonstrated with the 1932 elections.
Anti-republican parties gaining majority, the Nazis gained 230 seats, and the KPD, 89 seats. By march 1933 elections the Nazis gained 44% of the vote. These figures demonstrate the strain in which the economy had on the republic, the action civilians took in turning to other extreme parties for a resolution and the loss for support of the democracy leading to its eventual failure. As stated by S.J.Lee, “it was the economic disasters…which lead to political ramifications”.
The fragile Weimar Republic was held up by a 'period of stability' during the Stressmann era, a time of recovery and consolidation, of no violence, political opposition or economic problems, and social freedoms at a high. Economic stability improved dramatically after the year of 1924, due to the 'Dawes Plan', giving time for stabilisation by altering reparation payments, and allowing Germany to take on American loans. Germany's acceptance of 20 billion marks from 1924-1929 of "short term loans" would later become a fault in the new recovery, by investing in long-term projects, and depending completely on the stabilisation of the American economy, it's loans and Germany's growing debts, living in borrowed time as well as borrowed money. And as historian S.J.Lee has said, “short term loans which had unwisely been committed to long term projects immediately wakened the industrial welfare infrastructure”, “ making it highly vulnerable to external pressures”.
The "young plan" of 1928 later refined Germany's reparation payments to allow them to pay off their debt by 1988. Hitler, taking advantage of his association with Hudenburg, proclaimed his great opposition to both the Dawes, and Young plan were later used as a tactic of patriotism, gaining support for his Nazi party.
Under Stressmann power, German foreign relations began to improve significantly, implementing a "policy of fulfilment" towards the Versailles provisions in the belief that “the victors should be acknowledged and that over time, positive changes would flow”. The "Locarno treaty" in October 1925 was signed to settle issues between France and Germany and the post border between the two, it was significant in an ending to the idea of European winners and losers of WW1.
It was this that the anti-republican extremists parties later used to criticise the democracy and gave the army motive to be discontented with the republic government. The positive impact of German national status due to Stressmann's cooperation and his policy of fulfilment is demonstrated in their admission into the "League of Nations" in September 1926. It was not long however until the building resentment would contribute to the republics collapse and the end of the Stressmann era, S.J.Lee, expresses that “successful though it appeared on the surface, it was fundamentally unsound”.
As said by J.W.Hidden “grave difficulties were bound to arise in Weimar Germany when the economic crisis of 1929 interacted with a political and social crisis, capitalising the growing resentment against the republican leaders”, the trigger of the eruption of the opposition of the republic was the depression of 1929, after the collapse of the Wall Street stock market in New York (black Thursday). Depression of disastrous proportions overwhelmed the republic, with figures of the unemployed rising from 3.5 million in 1930 and exceeding 6 million in 1932. The depression alone was not enough to cause such a collapse. “The depression did not start this process of decline; it acted as a turning point. It was not an initiator; it was a catalyst”(S.J.Lee).
The financing of unemployment relief caused bitter wrangling amongst the parties, thus the depression wedged the parties apart, and revealed the ineffective nature of what the parliamentary system consisted. “The depression created a situation in which the parliamentary system broke down, opening way to presidential government by decree” (W.M.Simon). The shift towards radical anti-republican parties became more prominent the lack of charismic leaders lead to the decline of support to the political system, having a significant impact towards the later collapse of the German republic in 1933.
