Interwar Period: Economic Crisis, Totalitarianism, and Rise of Superpowers

Posted on Dec 18, 2024 in History

1. The European Crisis

The First World War caused a serious crisis in Europe due to the general lack of demand for products and production difficulties, caused by:

The lack of capital and the destruction of crops.
War debts and reparations: Germany had to pay 6,000 million marks to France and the United Kingdom, who planned to use the money to pay back their debts to the USA.

As a consequence, hyperinflation took hold of Germany (and the mark lost its value).

In 1923, Germany defaulted on a reparations payment, and France occupied the Ruhr valley, intensifying the economic crisis.

In 1924, the United States intervened with the Dawes Plan, which involved dividing German debt into yearly payments and granting it loans. The objective was to allow Germany to recover and pay back its debts.

In 1929, the USA approved the Young Plan that reduced the reparations that Germany owed.

2. The Rise of the United States

The United States became the first economic power after the First World War due to several factors:

During the war, its agricultural land, industrial infrastructure, and transport networks were unaffected. Furthermore, the US had become a major exporter to Europe.
The increase in exports and new production systems (Taylorism) led to a period of prosperity. A new lifestyle model emerged, known as the American Way, that encouraged consumerism fueled by installment plans, consumer credit, and advertising.
New York became the world’s financial center, and many people made money through buying and selling shares on the stock market.

3. The Roaring Twenties

During the consumer society developed in the US, there was a huge increase in the sale of goods, such as cars and home appliances.

New types of leisure activities appeared:

A general enthusiasm for sports such as football in Europe or baseball in the United States. Other popular sports included cycling, motor racing, and boxing.
Electricity lit up the streets, allowing the development of nightlife with cinemas, music halls, and clubs where people listened to jazz and danced the Charleston or foxtrot.
Women started enjoying more freedom, playing sports, and embracing activities considered masculine, such as going out at night, drinking, smoking, and driving. Furthermore, they wore shorter dresses, wore their hair very short, and started to wear men’s styles.

4. Causes of the Great Depression

Throughout the 1920s, there were trends in the US economy which led to the crisis:

Agricultural overproduction: During the war, the United States had increased its agricultural production to supply Europe, but after the end of the war, the demand was reduced, prices went down, and many farmers could not pay back their loans and lost their lands.
Industrial overproduction: After the war, the demand was reduced, and products accumulated in warehouses.
Speculation on the stock market: Even though companies stopped growing, share prices continued to rise because people were still buying shares, using their savings and taking loans.

5. The Wall Street Crash of 1929

On October 29, 1929, share prices fell on Wall Street, shareholders started panicking, selling their shares en masse, and the market collapsed. This set off a disastrous sequence of events. Shareholders lost all their money and could not pay back their debts. As a consequence, many banks ran out of money and had to close, and as a result, more people lost their family savings. Due to the increasing number of impoverished families, the demand for products plummeted, and as a consequence, companies closed, and unemployment levels increased.

6. The New Deal

Many governments intervened in their economies to try to solve the crisis. In the United States, President Roosevelt introduced the New Deal in 1933: a set of government programs which focused on relief for the poor, recovery of the economy, and reform of the banking system:

Reform of the banking system: Banks had to pass a solvency test before they could open.
Farmers were protected: Stocks were destroyed, and production was reduced to increase prices. The farmers’ debt was reduced to increase their cash flow.
Social aid: Employment was increased through public works.

These measures led to a slow economic recovery.

7. The Rise of Totalitarianism: Fascism

During the 1930s, democracy in Europe was in crisis due to the economic crisis and the fear of a worker’s revolution. As a consequence, governments restricted individual freedoms, and antidemocratic totalitarian dictatorships appeared.

Characteristics of Fascism

Fascism is an anti-democratic totalitarian ideology characterized by:

A single-party system led by a charismatic leader. All aspects of life are controlled, and there is only one political party.
Individual rights and freedoms were restricted, especially freedom of speech, the press, and assembly.
Extreme nationalism and territorial expansion to obtain raw materials and open new markets.
Anti-Communist, anti-democratic, and anti-liberal. They supported the idea of the inequality of human beings and the superiority of some races over others.
Economic interventionism: nationalization of companies, public works, and limitation of imports, in order to limit unemployment.
Indoctrination and militarism. A large amount of money was spent on the army, police, and youth militias.
Relying heavily on propaganda and mass media to glorify the leader and demonize the enemies.

8. Italian Fascism

8.1. Causes

Italy was the first European country to establish a totalitarian regime. The causes were:

Italy was one of the winners of the war but did not obtain the territories that it wanted.
There was a huge economic and demographic crisis.
Unemployment provoked huge social discontent.

8.2. The Fascist Party

In 1919, Benito Mussolini created the Blackshirts, a paramilitary and ultranationalist group that attacked those they considered enemies of the state: strikers, socialists, and communists.

In 1921, Mussolini created the National Fascist Party that proposed a single-party system and pitted unity against individualism. It was supported by the middle class that wanted order.

In October 1922, Mussolini started the “March on Rome”: tens of thousands of Blackshirts took part in a demonstration to take power. King Victor Emmanuel III handed over power to Mussolini.

8.3. The Fascist Regime

Mussolini established a fascist regime in Italy:

Obtained full powers from parliament and made the National Fascist Party the official party.
Limited workers’ rights, imposed censorship, and created a political police (OVRA) to assassinate his political enemies.
Expansion to obtain colonies (Abyssinia and Ethiopia).
Intervention in the economy, nationalizing mines and industries and promoting public works.
Intense propaganda campaign, demanding total obedience from the Italian people.
Control of society using education to indoctrinate the younger population and promote the image of women as housewives and mothers.

9. Nazi Germany

9.1. Hitler’s Rise to Power

The rise of extreme and anti-democratic parties in 1930 made it impossible for democratic parties to form a stable government. Due to the political crisis and the rumors of a coup d’état, President Hindenburg appointed Hitler as chancellor (prime minister) in 1933. Then, Hitler laid the foundations for his totalitarian regime:

In February 1933, he blamed communists for a fire in the Reichstag and used the event to give himself full powers.
Declared a state of emergency, limiting citizens’ rights and freedom, and banned all other political parties.
He set up the Gestapo, a political secret police, and opened concentration camps.
In 1934, Hitler consolidated his power with the Night of the Long Knives, a purge carried out by the SS and the Gestapo against the leaders of the SA, among them Rohm, that was a threat to his regime.
In August, Hindenburg died, and Hitler unified the positions of president and chancellor under the title of Fuhrer.

9.2. The Third Reich

The bases of the Nazi regime were:

Economy: Reduce employment, reviving industries (especially the arms industry), funding public works, and through the mass conscription of soldiers.
Expansionism: Regaining the lands lost in the Treaty of Versailles and establishing a Great German empire in Europe: annexed the Saar region (Sarre) (1935), the Rhineland (1936), the Sudetenland and Austria (1938), and Poland (1939).
Anti-Semitism: Hitler legislated against the Jews:

1935 Nuremberg Laws: German Jews were stripped of their citizenship and prevented from marrying Germans.
Night of Broken Glass (1938): A campaign of mass attacks against the Jews, their shops, and synagogues. It is considered the start of the systematic persecution of the Jews.
They were forced to wear a gold star for identification.

Eugenics (racial hygiene): To create a perfect Aryan race, between 1933 and 1939, around 360,000 people were sterilized.
Indoctrination: Children were indoctrinated to believe Nazi ideals and obey the Fuhrer at school and by youth organizations: Nazi Party youth for boys (military training) and the League of German Girls (marriage and motherhood).
Woman’s role in society was restricted to being a good mother and wife: Kinder (children), Kuche (kitchen), Kirche (church).

10. Stalinism in the USSR

10.1. Stalin’s Planned Economy

In 1928, Stalin introduced his first five-year plan to transform communist Russia into an industrial power.

Agriculture: In rural areas, agricultural collectivization was imposed, the lands of the kulaks, rich peasants, were expropriated, and they were deported to Siberia.

Furthermore, two types of farms were established:

Sovkhoz, state-managed collective farms.
Kolkhoz, collective farms managed by the farmers, where the peasants received a part of the harvest.

In both cases, the State kept most of the profits and invested them in the industry. As a consequence, living standards for farmers declined, and there were severe famines, for example, the famine of 1932-1934 that killed four million peasants.

Industry: The main focus was heavy industry (weapons and machines), forcing workers to work longer hours and not taking rest days.

After the first three of Stalin’s five-year plans, Russia became an industrial power, but the lack of focus on light industry led to a lack of consumer goods and a decline in living standards.

10.2. Stalin’s Political Policies

Stalin maintained free healthcare, education, and housing for the population, rights recognized in the Constitution of 1936, but there were significant differences between the ruling elite and the rest of the population.

To increase his power, he used:

Propaganda to develop his cult of personality.
Purges, violent repressive campaigns (deportations and killings) against members of the party.
Gulags, labor camps to which were sent all the members of the population showing resistance to the regime.

Glossary

Fascism: An anti-democratic, authoritarian, and ultranationalist ideology that appeared in Italy during the interwar period.
New Deal: A set of government programs that focused on relief for the poor, recovery of the economy, and reform of the banking system.
Roaring Twenties: A period of prosperity in the United States, from 1918 to 1929, characterized by consumerism.
Hyperinflation: A steep and very fast rise of prices, due to the excess of currency.
Blackshirts: A paramilitary and ultranationalist group linked to the National Fascist Party.
Gestapo: The political police of Nazi Germany.
Totalitarianism: A political regime characterized by a one-party system, the elimination of the opposition, the limitation of individual rights, intervention in the economy, and the indoctrination of the population.
NSDAP: National Socialist German Workers’ Party. A fascist German party characterized by its pan-Germanism and anti-Semitism.
Gulag: Soviet labor camps to which were sent all the members of the population showing resistance to the regime.

Chronology

1919: Appearance of the Blackshirts.
1921: Appearance of the Fascist Nationalist Party.
1922: March on Rome.
1923: Putsch of Munich.
1928: Rise to power of Stalin.
1929: Wall Street Crash. Start of the Great Depression.
1933: New Deal. Hitler comes to power.
1934: Night of the Long Knives.
1938: Night of the Broken Glass.

Map 1

1. Look at the map. What is the meaning of the yellow color (1), the meaning of the light green color (2), the meaning of the red color (3), and the meaning of the dark green color (4)? The yellow color (1) identifies the countries with a democratic regime, the light green color (2) identifies the dictatorships, the red color (3) identifies the USSR, and the dark green color (4) identifies the fascist regimes.

2. Which kind of political regime was dominant in Europe in 1919? Was it still dominant in 1939? Can you identify in the map two fascist dictatorships? Can you identify a Stalinist regime? In 1919, most of the European countries were democracies, while in 1939, most of the countries were dictatorships. The two fascist dictatorships are Nazi Germany and Fascist Italy, and the Stalinist regime is in the USSR (Soviet Union).

3. Name two factors that explain the appearance of fascist regimes in Europe. The effects of the Great Depression and the fear of a worker’s revolution.

Graph

1. The blue line represents the evolution of the prices of the shares (acciones) in the New York Stock Exchange, and the numbers in the vertical line represent the prices taking a reference the year 1925.

2. During the 1920s, the share prices rose greatly, corresponding to a period of prosperity, the Roaring Twenties, due to the lack of impact of the First World War on American industry and agriculture, the increase in industrial production, the appearance of consumerism, and the conversion of New York into a financial center.

3. During the 1930s, the share prices fell sharply, corresponding to a deep economic depression, the Great Depression, that was caused by agricultural overproduction, industrial overproduction, and speculation in the stock market.

Text 1

1. Does the author believe that all humans are equal? Does the author believe in universal suffrage? Then, does he believe in democracy? No, he does not, because he talks about the “immutable, beneficial, and fruitful inequality of mankind” (line 4), and he does not believe in universal suffrage: “fascism denies that the majority, by the simple fact that it is a majority, can direct human society…” (lines 1-2). He does not believe in democracy because he rejects equal rights and suffrage.

2. Can you identify other characteristics of this ideology? Other characteristics of fascism are a single-party system, limitation of individual rights, expansionism, extreme nationalism, economic interventionism, indoctrination and militarism, and the use of propaganda.

3. Do you think that the author is Mussolini, Hitler, or Stalin? The author is Mussolini because he is a fascist but does not say anything about anti-Semitism.

Text 2

1. What is the main objective of the authors according to article 1? According to them, what is necessary to do about the treaties of Versailles and St. Germain? Why do they demand more territories for Germany? Its main objective is to unite all the Germans in a Greater Germany. Also, it is necessary to abolish the treaty of Versailles and St. Germain. They demand more territories for Germany to obtain resources and territories for the Germans.

2. According to them, who can be a citizen? According to them, can a Jewish person be a member of the German nation? Who is a Jew according to them? Only the people with “German blood” can be Germans. No, according to them, Jews can’t be Germans. For them, to be a Jew is determined by your blood and not your religion.

3. Do you think that the authors of the texts are supporters of Italian fascism or the German Nazi Party? They are Nazis because they want to create a German empire in Europe, and especially because they are so anti-Semitic that they think that a Jew can not be a German.