The Failures of Versailles The creation of new nations through the policy of nationalism had created more problems than it solved. Border disputes between the new nations of Eastern Europe led to increasing tensions in the area.
Exchange rates, US Dollar to Mark, 1918-1923 Source : Gerald D. Feldman, The Great Disorder, Oxford : UP 1997, p.5 Jan. 1918 Jan. 1919 Jan. 1920 Jan. 1921 Jan. 1922 April 1922 July 1922 Oct. 1922 Jan. 1923 Feb. 1923 5.21 8.20 64.80 64.91 191.81 291.00 493.22 3,180.96 17,972.00 27,918.00 Mar. 1923 Apr. 1923 May 1923 June 1923 July 1923 Aug. 1923 Sep. 1923 Oct. 1923 Nov. 1923 Dec. 1923 21,190.00 24,475.00 47,670.00 109,966.00 353,412.00 4,620,455.00 98,860,000.00 25,260,000,000.00 2,193,600,000,000.00 4,200,000,000,000.00
From The London Daily Express - 1923 “A Berlin couple who were about to celebrate their golden wedding received an official letter advising them that the mayor, in accordance with Prussian custom, would call and present them with a donation of money. Next morning the mayor, accompanied by several aldermen in picturesque robes, arrived at the aged couple's house, and solemnly handed over in the name of the Prussian State, 1,000,000,000,000 marks or one halfpenny.”
The 1920 Kapp Putsch. "There is terrible misery and hunger in the city," wrote Einstein. "The infant mortality is horrendous...The government has become totally powerless, while the true powers fight each other: the Army, money, and groups of socialist extremists.“
By 1924, pressure from Britain and the US led the French to seek a more conciliatory tone with Germany.
The Hopeful Years (1924-1929) Election of Liberal-Socialist governments in France and Great Britain led to a more conciliatory approach to the reparations problem.
A new German government led by Gustav Stresemann ended the passive resistance and committed Germany to carry out the provisions of the Treaty of Versailles.
The Dawes Plan An international committee led by American banker Charles Dawes developed a plan to loan money to Germany to allow that country to repay its debts.
Debt restructuring and American investment led to a new era of European prosperity.
The Treaty of Locarno - 1925 German foreign minister Gustav Stresemann and French minister Aristide Briand concluded a treaty that formalized the borders between Germany and France. The agreement was hailed as a major step to ending war forever.
The Kellogg-Briand Pact The “Spirit of Locarno” carried over into a multi- national agreement negotiated by French minister Briand and American Secretary of State Frank B. Kellogg that outlawed war “as an instrument of national policy.”
The Kellogg-Briand Pact, like the League of Nations, lacked any mechanism to deal with violations of the agreement.
Disarmament Conferences A series of Disarmament Conferences were called in the 20s to deal with the issue of arms reduction.
From 1921 to 1922 the Washington Naval Conference was held to establish stable relationships among the naval forces of the various powers.
Three treaties were enacted at the conference: the Four- Power Treaty, the Five- Power Treaty, and the Nine- Power Treaty.
The Geneva Conference In 1925 a convention in Geneva, Switzerland, banned the use of toxic gas in warfare. By the time World War II began in 1939, most of the Great Powers, except Japan and the United States, were signatories.
Soviet Recognition By 1924, the Soviets had relaxed in their push for global communist revolutions in favor of economic development at home.
The western nations had also realized that the USSR was not going to disappear and most of Europe had established full diplomatic relations with the Soviets.
The Comintern The USSR still funded the propaganda activities of the Communist International, a worldwide organization of pro-Soviet Marxist organizations.
The issue of encouraging world communist revolutions kept the nations of western Europe fearful and distrustful of the new Soviet Union.
The Great Depression After World War I most of the nations of Europe abandoned the wartime government control of their economies and returned to the pre-war liberal ideal of laissez-faire.
Causes of the Great Depression War debt and reparations made the economic recovery of 1924- 1929 a fragile one. Overproduction of farm products, especially in the United States, led to a dramatic decrease in farm prices.
Eastern European nations began to close their markets to outside goods by raising tariffs An increase in the use of hydroelectricity and oil led to a slump in the coal market.
As the stock market boomed in America, many US banks and investors began to pull their money out of Europe to invest in US stocks.
The Great Crash On October 29,1929, the New York Stock Exchange, the largest in the world, had its worst day of panic selling. By the end of the year declines in stock values reached $15 billion.
Impact on Europe American investors accelerated their withdrawal of funds from Europe, leading to the weakening of banks in Germany and Central Europe.
Credit-Ansalt On May 31, 1931, the most prestigious bank in Vienna, the Credit-Ansalt, collapsed bringing about financial panic in Europe.
Impact of the Depression By the height of the depression in 1932, 25% of British workers were idled and the unemployment rate in Germany hit 40 percent.
Industrial production decreased 50% in the US and 40% in Germany and throughout the industrial world the unemployed and homeless filled the streets.
Social Impacts Women were often able to find low paying domestic work when no jobs were available for men.
This gender reversal led to social stress and opened the way for demagoguery
Young men idled by unemployment turned to crime or gangs and were lured by the rhetoric and promise of radical extremists.
Political Crises The liberal policies of Laissez- Faire were unprepared for the depth of the Great Depression. The deflationary policies of cutting costs and raising tariffs only served to worsen the economic crisis.
This in turn led to political changes – some countries adopted radical new government programs to deal with the crisis and all over Europe there was an increase in interest in Communism and Authoritarian rule.
Democracy Between the Wars After the First World War many European nations instituted democratic government elected by universal suffrage.
Women gained the right to vote in Great Britain and other states, but would have to wait in Italy, Spain and France until after WWII.
Great Britain The Liberal government of David Lloyd George was unable to cope with the economic problems after World War I.
In 1923, the Labour Party became the second largest political party in Britain and Ramsay MacDonald became the first Labour Party Prime Minister.
Labour was restrained by its coalition with the Liberals and unable to make any drastic reforms.
After ten months the party was defeated by the Conservatives who attacked the Labour administration for being soft on Communism.
Like the US, Great Britain will be led by a Conservative pro- business majority through prosperity of 1924-1929.
Despite the economic prosperity, unemployment remained at 10 percent and labor unions continued to agitate for higher wages and better conditions.
After the crash of ’29 a short- lived Labour administration was forced to create a coalition of all three parties called the National Government.
National Government This group was able to bring Britain through the worst of the depression with traditional policies of balancing the budget and protective tariffs.
John Maynard Keynes Keynes closely examined the problem of prolonged depression in his major work, The General Theory of Employment, Interest, and Money (1936).
This book proposed that no self- correcting mechanism to lift an economy out of a depression existed.
Since business investment necessarily fluctuated, it could not be depended on to maintain a high level of employment and a steady flow of income through the economy.
Keynes proposed that government spending must compensate for insufficient business investment in times of recession.
The Republic of France The biggest problem facing the conservative National Bloc government of Raymond Poincare was the reconstruction of the war devastated region of northern France.
The French tied their redevelopment to the reparation payments of the defeated Germans.
This policy led to the fiasco of the French invasion of the Ruhr valley.
When Poincare’s government was forced to raise taxes to pay for the Ruhr occupation, his National Bloc was voted out of office and replaced with the “Cartel of the Left.”
The Cartel of the Left The Cartel was a coalition of leftist parties, the Socialists and the Radicals, that shared the common ideals of anti-clericalism, anti-militarism and the importance of education.
The Radicals were a moderate party of democratic socialists, while the Socialists were Marxists.
The opposing ideologies led to their failure and the Conservatives of Poincare were back in power during the relative prosperity of 1926-29.
The Depression in France France did not feel the effects of the depression until 1932 but when it hit it led to complete political chaos. Six different cabinets were formed in a 19 month period.
The February Riots – 1934 Groups of French Fascists marched through the French cities and the ensuing riots caused the left wing to organize in 1936 into the Popular Front.
The Popular Front The first Popular Front government was formed in 1936 as a coalition of Communists, Socialists and Radicals, with Leon Blum as Prime Minister.
Leon Blum The French New Deal Blum aroused conservative opposition by introducing a program of extensive social reform, including reduction of the workweek to 40 hours, paid vacations, compulsory arbitration of labor disputes, and nationalization of the Bank of France and the munitions industry.
The ultimate failure of the Popular Front to deal with the problems of the depression weakened the government and left it incapable of dealing with the threat of Nazi Germany.
The Totalitarian States Totalitarianism, in political science, a system of government and ideology in which all social, political, economic, intellectual, cultural, and spiritual activities are subordinated to the purposes of the rulers of a state.
Several important features distinguish totalitarianism, a form of autocracy peculiar to the 20th century, from such older forms as despotism, absolutism, and tyranny.
In the older forms of autocracy people could live and work in comparative independence, provided they refrained from politics.
NSDAP In modern totalitarianism, however, people are made utterly dependent on the wishes and whims of a political party and its leaders.
The older autocracies were ruled by a monarch or other titled aristocrat who governed by a principle such as divine right, whereas the modern totalitarian state is ruled by a leader, or dictator, who controls a political party.
Totalitarian Governments Those countries whose governments are usually characterized as totalitarian were Germany, under the National Socialism of Adolph Hitler; the USSR, particularly under Joseph Stalin; and Italy under Benito Mussolini.
The Fascist State Because the Fascists only controlled a small minority, Mussolini was forced to move slowly and to appease the traditional institutions of the Church, propertied classes and the military.
The Lateran Accords February 1929, the Fascists recognized the sovereign independence of the Vatican City, a 109 acre enclave within Rome. The Church in turn recognized the Italian state and was made the “sole religion” of Italy.