The economic stagnation of 1927/28, the rapid increase in unemployment since 1928/29 and the considerable budgetary deficits led to a withdrawal of foreign capital from Germany which was even more accelerated after the New York stock market crash of October 1929 and the rise of the NSDAP led by Adolf Hitler in the elections of September 1930.
The German debtors were in great difficulties, resulting in countless bankruptcies, insolvencies and bank failures. The consequences were disastrous: industrial production and the national wealth declined by 40% between 1929 and 1933; agricultural prices fell through the floor; unemployment figures shot up until by 1932, one third of all employees were out of work; unemployment compensation, war welfare and other welfare services were drastically cut.
The catastrophic economical hardship strengthened the radical parties, especially the NSDAP (National Socialist Party), which increased or stabilised its election result of 2% in 1928 to 31% (July 1932) and finally 26.5%. The NSDAP failed to achieve an absolute majority, and it was clear that they could not come to power without a coalition, but they were now a force to be reckoned with. In January 1933, after vain attempts to split the NSDAP, it came about: President Hindenburg appointed Hitler Chancellor of a coalition government consisting of National Socialists and Conservatives.