Chapter Summary

Despite the Marxist expectations for a universal capitalist collapse, the years after World War I saw the survival of governments in western Europe. The United States, the savior of the Allied cause in the war, withdrew from active participation except on its own economic terms. The other giant, Russia, was isolated from European affairs in order to quarantine the spread of socialist revolution.

Eastern Europe was most changed by the peace treaties that ended the Great War. New nations created in 1919 hemmed in the Russian menace. Unfortunately, the new states were extremely unstable. Ethnic minorities within the newly formed states demanded recognition. Eastern Europe was generally behind in industrialization. The end of the Great War did nothing to improve economic prospects in the region. Geography dictated that most of the new nations were more dependent on Germany than on western Europe. Finally, the eastern states feuded among themselves and their more ancient neighbors over boundaries. Germany and Russia were intent on recovering territories lost as a result of peace negotiations.

Germany was defeated but not destroyed. The war had not been carried to its territory. New states in central Europe were susceptible to German economic and diplomatic influence. German losses were limited to its western boundaries and the “corridor” ceded to Prussia. German foreign policy in the decades after 1919 was predicated on recovering lost territory on the French border and in the Polish Corridor. German economic development required discovering new markets. Initially, attempts were made to open trade with Russia. When the Russian economy proved unable to absorb the products of German industry, Germany turned to Britain, France, and the United States. Under foreign minister Gustav Stresemann, Germany sought to heal past grievances and revise the most economically damaging aspects of the Treaty of Versailles. The new sense of cooperation was reflected in a series of non-aggression treaties signed at Locarno in 1925. At the same time, Germany rearmed secretly in contradiction of the “spirit of Locarno” to regain its dominant position in central Europe.

France desperately needed to maintain its military advantage over demilitarized Germany. When Britain and the United States refused to extend the alliances created in the First World War, France created new ties with the new nations of eastern Europe—Poland, Czechoslovakia, Romania, and Yugoslavia. Committed to the strict enforcement of the Versailles Treaty against Germany, the French armies actually entered the Ruhr district of Germany in 1923 in order to force payment of reparations. In 1925 France was forced to reverse its strict observation of the Treaty of Versailles and joined the negotiations at Locarno. French foreign policy continued to distrust German intentions even after Locarno. In the late 1920s France began construction of an elaborate series of defenses along the German border, the Maginot line.

After the Great War, no balance of power could be maintained in Europe without the active participation of the United States. The government of the United States shrank from the task. With only the USSR (a member in 1934) and Germany (a member in 1926), the United States remained outside the League of Nations. By remaining aloof, the United States denied the League any real authority as a peace-keeping force. U.S. policy in Europe was dedicated to restoring German economic vitality. The U.S. also actively supported the Kellogg-Briand Pact of 1928, which renounced war as a means of resolving diplomatic problems.

At the end of the war all the belligerents owed large sums of money which they borrowed first from their own population to finance the enormous expense of the Great War.

In additional to the sale of bonds to their own citizens, the Governments also borrowed from other nations and when that was not enough, the governments simply printed paper money with nothing to back it up. The result was inflation. The greatest creditor nation after 1919 was the United States. The U.S. did not want to accept payment in the inflated post-war European currencies, but had difficulty making any other sort of arrangement. The Allies other than the U.S. counted on German reparation payments to restore their economies and pay the war debt. The amount of reparations was unreasonable. Neither the Allies nor the Germans believed it could be paid in full. In Germany the payment of reparations was viewed as an international disgrace. When Germany fell behind in reparations, France fell behind in repaying loans from the United States. To force Germany to pay, France invaded the German Ruhr, an important industrial center. The Germans responded with passive resistance supported by payments of paper currency to the unemployed German laborers. Rampant inflation weakened the German mark and threatened international financial chaos. To restore equilibrium, Charles Dawes, an American banker, urged reduction in German repayments and an American loan to temporarily prime the German economy. France was bullied into accepting the plan by threats of withdrawal of American financial support. All countries saw trade as a means of accumulating income to pay debts and restore the total European economy. In order to be successful, the restoration of trade had to be based on open markets and stable currency. The policy of the United States frustrated plans for restoring European markets to prewar conditions. The U.S. insisted on protecting domestic production with high tariffs that shut out European producers. The U.S. also found its own products too expensive for European consumers because of inflation and unstable currencies. Even with enormous infusions of American cash, Germany continued to resent the reparations. Despite difficulties, most countries prospered in the postwar era. Prosperity was largely illusory, however. American protectionism, German anger over reparations, irresponsible speculation in stocks, and low long-term capital investment led to the disaster of 1929.

The American stock market crash of 1929 signaled a worldwide depression. Except for nonindustrialized nations and the isolated Soviet economy, the financial and economic systems of the world economy collapsed. Depression in the United States meant an end to American capital in Europe, without which most countries could not survive. In l931 Great Britain was forced to renounce the gold standard, a decision that amounted to ceding that country’s preeminent position in finance. Faith in a self-correcting economy evaporated with dramatic effects on liberal governments. Throughout the world, political change followed the footsteps of depression.

Rooted in the mass political movements of the late nineteenth century, right-wing movements sought to fill the void between the discredited liberalism of prewar Europe and the revolutionary socialism of the Soviet Union and radical socialism. Committed to extreme nationalism and the politics of the irrational, fascism became a powerful force in post-war politics.

Benito Mussolini was a former socialist and war veteran. In the 1920s he formed a new political organization, the Fascists, and launched an attack on the chaotic parliamentary government of Italy. Mussolini created a staunchly nationalistic party that identified communists, big business, and labor unions as enemies of the Italian state. Embraced by a middle class seeking any kind of security in the shaky postwar economy, Mussolini’s Fascists began to take over Italian cities, including Rome in 1922. Mussolini neutralized his political rivals through use of violence and terrorism. By 1925 Mussolini’s party controlled the government entirely as a one-party dictatorship. Once in power, Mussolini concocted a strange alliance with big business to create the “corporate” state. The dictator was also able to come to an accommodation with the other power of Italy, Pope Pius XI. The pope agreed to the Lateran Treaty which recognized the continued role of Catholicism in marriage laws and education. In return, the Vatican was recognized as a sovereign state.

Mussolini’s corporativist state failed to solve the problems of the depression. To focus popular opinion away from economic failures, Mussolini committed Italy to an imperialist scheme in northern Africa. In 1935 Italian troops invaded Ethiopia. The League of Nations was unable to prevent Italian occupation of Ethiopia, although Britain and France expressed their displeasure. Mussolini turned to an alliance with fascist Germany, the Pact of Steel, in 1936. In 1938, Italy annexed Albania.

Between 1924 and 1929, inflation increased despite the growing economy in Germany. The unsteady economic mood was reflected in the political party system in the Weimar Republic. The depression of 1929 destroyed German prosperity. American loans were withdrawn, reparations could not be paid, and the welfare system could not be funded. The volatile party system destroyed parliamentary effectiveness. In the wake of economic disaster, the Weimar constitution was overthrown.

Adolf Hitler was, like Mussolini, a military veteran of the First World War. A believer in the betrayal of the German military, Hitler blamed the Weimar Republic in general and Jews and communists in particular for Germany’s defeat in 1919. Hitler’s message was particularly attractive to German military veterans who believed in the myth of the Weimar “stab in the back.” Hitler’s first attempt at political revolution in Mussolini’s style, the Munich Beer Hall Putsch of 1923, was halted by military force. Hitler served a brief jail term during which he wrote Mein Kampf, a right-wing diatribe against Jews, communists, and middle-class liberals whom Hitler blamed for the downfall of Germany. Hitler changed his tactics after the abortive Putsch and began to seek power within the constitutional party system. By 1928, the National Socialists were a small, but recognizable party in German politics. In 1933 Adolf Hitler, as leader of the largest single party in the Weimar Republic, was offered the position of Chancellor by President Paul von Hindenburg. Hitler immediately declared a national emergency on the pretext of socialist threat and imposed a legal dictatorship. The Nazis abolished political parties, imposed censorship, outlawed labor unions, and suspended parliamentary government. Hitler used violence administered by paramilitary organizations to gradually centralize his authority. The first of the paramilitary groups was the SA (Sturmabteilung) headed by Ernst Rohm. Rohm was eliminated by Heinrich Himmler, head of the SS (Shutzstaffel) in 1934. The SS then emerged as the chief enforcement arm of the Nazi government.

Hitler’s goals were territorial expansion (Lebensraum), economic recovery, and rearmament. Hitler wanted world domination for Germany, but established control of central and eastern Europe as his immediate goal. Hitler devoted an enormous proportion of Germany’s income to creating a powerful military. In order to provide for military self-sufficiency, Hitler promoted the concept of autarky, production of all materials needed for the military machine. Armament industries and other state-supported businesses created full employment in Germany. When it appeared that Germany could not achieve autarky, Hitler determined it was necessary to conquer nations that had supplies of natural resources.

Joseph Goebbels headed the Ministry of Propaganda, which organized massive displays of public loyalty to the Nazi regime. The Nazis created party organizations for children of both sexes. Women were urged to stop working, get married, and have children. In 1939 when the outbreak of war caused labor shortages, the Nazis urged women to return to the workforce. By 1943 German women were conscripted for labor duty. To secure political unanimity, the Nazis taught the doctrine of racial purity. Foreigners, communists, homosexuals, the mentally ill, and gypsies were all targeted for expulsion, euthanasia, or persecution; but no group received the degree of persecution reserved for Jews. On 9 November 1938, widespread destruction of Jewish property was carried out during Kristallnacht. Mandatory sterilization of “undesirables” was required to prevent the dissipation of pure, German breeding lines.

The leaders of Europe’s democracies made only tentative steps to respond to the Great Depression. As a result, internal dissension and political disruption were common.

Paralyzed by the multiplicity of political parties, the Third Republic of France took virtually no action to ameliorate the conditions of the depression. In 1936 demands for change led to the victory of a socialist government, the Popular Front, under Leon Blum. Although it promised reforms—wage increases, paid vacations, and collective bargaining—the Popular Front was unable to deliver on its campaign promises. Blum’s government was voted out in 1937. The failure of socialist politics led to the formation of right-wing groups that favored Hitler over Blum. Leftwing parties drifted ever farther in the political spectrum into communism. French politics remained fragmented, but became more ideologically radical.

The depression forced the establishment of a coalition government in Britain. The Labour government of Ramsay MacDonald resigned, although MacDonald remained prime minister. He was joined by members of the Liberal and the Conservative Parties in forming the National Government (1931-1935). The National Government took Britain off the gold standard, resurrected tariffs, and established state-planned production quotas for industry. Sir Oswald Mosley, favored imperial development as the solution for British economic problems. When his advice was refused, Mosley formed the British Union of Fascists. John Maynard Keynes urged more vigorous government intervention. Despite initial success, the BUF was declared illegal in 1936 and rejected by the majority of Englishmen. Although the National Government failed to deal aggressively with the depression, the British tradition of liberal, parliamentary government emerged unscathed.

Spain became a republic in 1931 and rapidly formed a socialist government, the National Front, that revolutionized the traditional Spanish economy. The directness of the assault on the aristocracy, the Catholic Church, and the military resulted in civil war. Republicans (supporters of the Spanish Popular Front) confronted Nationalists (monarchists, Church supporters, and the military). Germany and Italy intervened on the side of the Nationalists under Francisco Franco. The Soviet Union supported the socialist Republicans. Unofficial international brigades, manned primarily by communists, volunteered in support of the Republic. Franco’s Nationalist armies won a bitter victory in 1939.