Post-WWI Europe: Economic Crisis & Rise of Totalitarianism

Posted on Feb 21, 2025 in History

Europe After WWI: Adaptation from War to Peacetime

The adaptation from war to peacetime was difficult because of destruction from the war, inflation, and high unemployment. European countries had to pay debts to the USA.

A) German Hyperinflation

The crisis was especially severe in Germany. It had to pay war reparations. This led to a huge rise in prices and the devaluation of the German Mark. In November 1923, 1 dollar was worth 4.3 billion marks. Production grew (1914) and employment rose, made possible by American investment.

B) International Politics

The economic crisis was a problem for France. If this country did not receive the reparations, it couldn’t pay the debt. France occupied the Ruhr. The United States set up the Dawes Plan (1924): Germany would receive money from the USA to pay reparations to the Allies, and these could pay their debts to the USA. France and Germany signed the Treaty of Locarno (1925). According to the Treaty of Versailles, Germany was admitted to the League of Nations (1926). In 1928, 50 countries signed the Kellogg-Briand Pact.

The New Deal (1933)

President Franklin D. Roosevelt launched an economic program to help the United States recover from the crisis, The New Deal. This established greater state intervention in the economy. The measures taken were:

  1. Public works to create employment and stimulate investment by large companies.
  2. Farming subsidies: farmers were paid to produce less so that prices would rise and profits would increase.
  3. Improved working conditions, which included a shorter workday, a minimum wage, and unemployment insurance.
  4. Restructuring of the financial system.

The goal of these four measures was to increase consumption and stimulate the United States economy.

Characteristics of Totalitarian Regimes

Those regimes had some common characteristics:

  1. Opposition to democracy, communism, and liberalism.
  2. The state was totalitarian and run by its all-powerful leader.
  3. There was a single political party; other parties were banned, and there were no free elections.
  4. The state controlled the economy, and its goal was to make an autarchy (an economically self-sufficient state).
  5. The state controlled the media and propaganda.
  6. Nationalism: these states looked for the territories that they had lost in WWI, and military conquest was glorified. They needed a “living space.”
  7. Great importance of symbols and propaganda.
  8. Glorification of violence: these states created violent groups to end the riots and establish their governments.

Fascist parties believed that women had no rights; they must follow the three Ks: Kinder (children), Küche (kitchen), and Kirche (church).

Causes of the 1929 Crash

Economic crisis:

  1. Overproduction: When the war ended, the United States made all types of products, leading to excess supply.
  2. Speculation: Banks lent money to invest in the stock market. The value of the stocks of these industries continued because people kept buying them. When companies needed money to pay, they sold their stocks.

Mass selling of stocks began on Black Thursday, October 24th. The stocks lost all their value, and companies and investors went bankrupt.