Economic and Political Shifts in the Interwar Period

Posted on Dec 10, 2024 in History

The United States: The Roaring Twenties

The United States greatly benefited from the First World War. After the war, America had become the first world economic power. Its agricultural production was very high, and the industry accounted for 44.8% of world production. In addition, many countries of Europe were indebted to the United States as a result of war loans. On the contrary, the war impoverished European countries.

American Prosperity

U.S. growth continued during the ten years after the war. It was the decade of “prosperity” and the consolidation of a lifestyle based on consumerism.
The U.S. expansion was based on a profound transformation in the production process of goods, dominated by technical innovation.
Taylorism and Fordism helped to increase productivity and reduce costs.
The era of mass consumption began.
Prosperity was reflected in a boom in the stock market. The euphoria generated a large stock bubble, i.e., an increase of shareholder value that was not parallel to the increase in corporate profits.
Many investors made money buying stocks.

The Crisis of Overproduction

Prosperity did not benefit all equally, and there was a crisis.
Farmers were the first casualties since they had borrowed during World War I to acquire new land and machinery to increase production.
After the conflict, exports decreased, and the American market could not absorb all production.
With the increase in supply, stocks accumulated, prices fell, and farmers could not repay loans.
In the industry, there was a similar phenomenon. Production grew above the market. The accumulation of stocks caused the closing of factories and rising unemployment, which brought a further decline in consumption.

The “Crack” of ’29 and the “New Deal”

From “Crack” to the Great Depression

On October 24, 1929 (Black Thursday), a large wave of selling hit the New York Stock Exchange. The large supply of shares made their value fall sharply, causing the “crack” of the stock market in ’29.
Many investors were ruined, and people flocked to banks to withdraw their money. Banks had to close. The “crack” precipitated the bankruptcy of many banks.
In a few years, there was a widespread economic recession (the Great Depression).
Consumption decreased, and many factories closed, increasing the number of unemployed.
From the U.S., the crisis spread to the rest of the world.

The Fight Against the Crisis: The “New Deal”

In 1932, Roosevelt won the election, proposing a program to promote economic recovery.
It was the New Deal, which advocated state intervention to revive the economy.

Economic measures were proposed to aid companies, the destruction of agricultural stocks accumulated, and so on. The State established control over banks.

Among the social reforms, a large public works plan was prompted, along with a policy of agricultural price supports, etc.

There was a revival of the U.S. economy, but the crisis would not be exceeded until the outbreak of World War II.

Italian Fascism

Postwar Italy

The end of the Great War left Italy with serious human and economic consequences.
In the Treaty of London (1915), agreements were made that were not fulfilled in Italy. The idea that Italy’s participation in the war had been a hoax spread.
Irredentism (claiming territories inhabited by Italians) was gaining momentum. This situation was compounded by political instability, with many different governments following each other.
The economic crisis led to social tension. The fear of an outbreak of social revolution began to frighten the conservatives.

The Rise of Fascism

In this crisis emerged the figure of Mussolini, who in 1919 created the Fasci of combat, the so-called Black Shirts. They tried to stop the labor movement.
In 1921, the Fasci were transformed into the National Fascist Party. Its program was based on the creation of a strong state that would guarantee private property and an expansionist foreign policy.
The party had the support of the petty bourgeoisie, the financing of large landowners and industrialists, and the tolerance of the Catholic Church and the monarch.
In the elections of 1922, the Fascist Party got a few Members of Parliament. But this year, the Black Shirts crushed unions, striking socialists and anarchists.
Mussolini demanded the king to hand over the government. He conducted the March on Rome in October 1922, and the king appointed him head of government.

The Fascist Dictatorship

Between 1922 and 1925, Mussolini developed a process of restricting freedoms and persecuting his opponents.
After the 1924 elections, Mussolini announced the establishment of an authoritarian regime. The state and party were identified.
Political parties were banned, their leaders persecuted and imprisoned, and Parliament was replaced by a Chamber of Fasci.
The State exercised strong control over the party, which directed all aspects of social life and dominated the media.

The Establishment of Nazism in Germany

The Weimar Republic

In 1918, about to end World War I, Kaiser Wilhelm II abdicated his position and proclaimed the Republic, which established its capital at Weimar.
Germany took over the military defeat and had to accept the harsh peace terms imposed by the victors. Many Germans considered the Treaty of Versailles humiliating.
The postwar years were, for Germany, years of economic crisis, poverty, and unemployment, aggravated by the payment of war reparations.
The Weimar Republic, led by Democrats and Socialists, had to cope with this difficult situation and the discontent of the population.
It was threatened by revolutionary movements of the left and coup attempts by the far right (the Munich Putsch).

Hitler and the Nazi Party

In 1920, Hitler founded the National Socialist Workers Party of Germany, of which he was the leader and which acquired a paramilitary organization, the SA.
The ideology expressed his contempt for parliamentary democracy and hatred of Bolshevism.
He defended anti-Semitism, the superiority of the Aryan race, and the need to forge a great empire (Reich) that would unite the German-speaking peoples.
Hitler used demagoguery to captivate the working classes.
Nazi militias violently opposed the republic and carried out several attempts at insurrection.

Nazism to Power

The period 1924-1929 saw an improvement in economic and social stability. But the consequences of the crisis of 1929 were harsh in Germany.
The withdrawal of American capital dragged banks into bankruptcy, resulting in factory closures, unemployment, and social unrest.
Social unrest bowed the population towards the proposals of extremist parties.
In the 1932 elections, the Nazi party got many votes, and in 1933, Hitler was appointed chancellor.
In 1934, Hitler demanded full powers and was proclaimed Führer and Chancellor of the Third Reich.

The Third “Reich”

In 1934, the Nazis transformed Germany into a dictatorship. Political parties and unions were dissolved, the Parliament was closed, and the persecution of opponents began.
Only the Nazi party was authorized.
From the social point of view, the Nazi state aspired to total cohesion of German society, based on the superiority of the Aryan race and the National Socialist ideology.
The Nazis gave women a marginal social role.

A Regime of Terror

The German state became a police state that imposed its rule by terror.
Any kind of opposition was pursued by some police forces (the Security Section and the Gestapo).
The maintenance of the racial purity of German society involved the persecution of the Jews.
Since 1933, concentration camps were created to detain opponents and enemies of the Reich.

Economic Autarky and Rearmament

From an economic point of view, the Third Reich sought to promote a revival that would make Germany a world economic power.
Nazi economic policy responded to Hitler’s militarist and expansionist projects.
The Nazi state exercised strong economic interventionism; it wanted to achieve economic autarky and make Germany a self-reliant state.
Industry was strengthened, especially the arms industry, and an ambitious public works project was initiated.
Hitler launched a military policy and strengthened the army.

Hitler felt ready to build a great empire and conquer “living space” in eastern Europe. The road to World War II was prepared.