Interwar Period: 1919-1939 – From Prosperity to Depression

Posted on Dec 7, 2024 in History

The Interwar Period: 1919 – 1939

The Roaring Twenties

The decade of the 1920s marked the beginning of US economic hegemony, to the detriment of the United Kingdom. During the 1920s, there was significant economic growth in the US, years during which the consumer society emerged.

The Crisis of 1929

It started in the US, which was a major economic power since 1919, because:

  • Up to 45% of the world’s gold reserves were in the US.
  • Many European countries were indebted to them (war loans).

1919-1929 saw great economic development; industrial production and stocks grew significantly, and US consumers were living in a dream. Between 1919 and 1929, the foundations were laid for a crisis of overproduction.

Motives: Farmers had some problems during the 1920s. During WWI, farmers were increasing production to sell products in Europe. They bought new land and machinery with loans. When WWI ended, farmers could not sell all their production due to Europe’s recovery. A surplus was generated, which gave rise to stocks. Product prices went down. Farmers earned less and could not repay their loans, losing the land they had purchased. Before WWI, factories produced more than they sold, leading to lower product prices. Factory workers were laid off, and benefits were reduced. The population had less money and bought less, marking the end of the “happy 20s.” The crisis reached its peak in 1929.

Stock Market Crash and Economic Depression

Great distrust arose when the economic situation became worrying. Everybody wanted to sell shares of companies that were in crisis. The number of sales made the price of shares fall extraordinarily (October 24, 1929). People withdrew money from banks. The banks had no money and closed. Neither farmers nor industry could get loans again. The banks had to take back the money that European countries had borrowed. At that time, banks in Europe went bankrupt, and the crisis spread.

Solutions to the Crash

The New Deal was an economic program conducted by Franklin D. Roosevelt, starting in 1932, with the aim of promoting the country’s economic recovery through state intervention. It consisted of:

  1. The government encouraged the implementation of public works to employ many people.
  2. The government forced banks to offer low-interest loans so entrepreneurs could create new businesses.
  3. The government gave subsidies to farmers to reduce crop production and increase prices.
  4. The government paid subsidies to unemployed workers.

Consequences: US economic growth, decreased unemployment, more consumption, more production, new factories, etc.

The USSR: Stalin and Communism

Before 1917, Russia was ruled by a Tsar, an absolute monarch. Privileged feudal nobles still retained large estates where serfs worked, and workers and peasants suffered exploitation.

Revolution of 1917

February: There were workers’ revolts in the cities. Reasons:

  1. People asked for Russia to abandon WWI.
  2. Russia was suffering a hunger crisis.

The Tsar left, and a provisional government was established, which made reforms. The more radical groups (of communist ideology, organized in soviets) wanted more changes: withdrawal from WWI, improving conditions for workers, and land allotment.

October: The interim government did not solve the problems. Lenin (leader of the radical communists, the Bolsheviks) proposed changes: withdrawal from WWI, land allotment, workers should monitor the factories, and political power should be in the hands of the Soviets. The Bolsheviks stormed the Winter Palace in St. Petersburg and seized power. After October, a war started between the Bolsheviks and anti-revolutionaries. During the war, the Bolsheviks abandoned WWI. The revolutionary Bolsheviks won.

After the Civil War (1917-1921), the USSR (Union of Soviet Socialist Republics) was created, replacing Russia. Lenin controlled the Communist Party, which controlled the country. Communism was the basis of economic performance: land distribution and control of the means of production by the state. In 1929, Stalin came to power after Lenin died. This marked the beginning of a dictatorship:

  1. He promoted a personality cult. Through propaganda, he was presented as a savior of the USSR.
  2. He reinforced the party; to participate in politics, one had to be a member of the Communist Party.
  3. He applied “Terror.” Any dissident was jailed or eliminated in Gulag concentration camps.

Italy: Mussolini’s Fascism, 1919-1939

1. Italy after WWI: Northern Italy was destroyed by the war, with high unemployment and workers’ strikes. Mussolini presented himself as a defender of order, gaining the support of the bourgeoisie and landowners. He created groups to confront the workers (Blackshirts).

2. Mussolini’s Rise to Power: Mussolini decided to seize power by force. There was a concentration of Fascists. He threatened to attack Rome with his followers (October 1922). The king appointed him President.

3. 1922-1945: Mussolini’s Dictatorship: He ended the system of free elections by removing the parliament and political parties. There was only one political party, the Fascist Party, which was undemocratic and anti-communist. Mussolini had full power (dictatorial system). He controlled the whole society. He developed a cult of violence and militarism, creating groups to attack rivals and adopting a military lifestyle (uniforms, etc.).