Europe and The Great Depression Economic Hardship and Political Change

Toward the Great Depression Three factors combined for intense severity and length of Great Depression: 1) financial crisis from WWI and settlement 2) crisis in production and distribution of goods in world market 3) west European nations and US didn’t act responsibly and lead others

The Financial Tailspin Most of Europe emerged from WWI with inflation demand for consumer and industrial goods drove up prices, Price and wage increases stopped after 1921, but inflation remained haunted governments as source of political and social instability

Reparations and War Debts: France/US determined to get reparations much of the money European powers got from Germany went to US 1922, Great Britain announced it would receive reparations only to pay US; war debts made normal business, investment, and trade difficult and expensive for European powers, currency speculation drew funds away from capital investment

American Investments: 1924, Dawes Plan reorganized administration and war debts; afterwards, private US currency flowed into Europe in short-term loans 1928, this lending contracted as American money was withdrawn from Europe and put into New York stock market US banks loaned customers money, they invested in stock market: huge amounts of money were lost in Oct 1929 stock market crash, little US money available for Europe

The End of Reparations Credit ran out, financial crisis struck Continent; Kreditanstalt, major bank in Vienna, collapsed May1931  Germany couldn’t make next payment, Hoover announced 1-yr moratorium on all payments French agreed to moratorium reluctantly; little alternative Germany’s economy almost collapsed Lausanne Conference in 1932 ended era of reparations  1933 debts owed to US settled

Problems in Agricultural Commodities Production and trade went down less demand meant idle factories/fewer jobs new wheat farming methods sent world wheat prices to record lows:  good at first for consumers and bad for farmers  farm problems pressing in eastern Europe  new farms were inefficient – German farmers were major source of support for Nazis Outside Europe agricultural commodity producers had similar problems  production had outstripped world demand  collapse in agricultural prices/financial turmoil led to stagnation/depression for Europe: depression sustaining itself

Depression and Government Policy People with work always outnumbered people w/o work, Feared they would be next,  created social discontent John Maynard Keynes’ General Theory of Employment, Interest, and Money orthodox economic policy called for cuts in govt spending to prevent inflation govt involvement in the economy increased rapidly from west to east across Continent furthered political experimentation

America: Causes of European Economic Crisis Black Tuesday, October 29, 1929 Stock Market Crashes Panic follows Run on the Banks Banks Fail US investment in Europe stops 1/3 of Americans unemployed Global Consequences

Great Britain Struggles to Recover from WWI Merchant fleet was devastated Sale of oversees investments to finance war Production falls to 80% of prewar levels New industries require renovation and capital investment, little to be found. Return to gold standard makes pound to expensive, sales drop in foreign markets

Great Britain: A Nation Divided Ramsey McDonald, Labour Party, Inexperienced Economic Advisors American trade and credit dries up Unemployment Doubled, Labour splits Conservative Landslide – The National Economy Cut unemployment, balanced the budget, raised taxes Macdonald replaced by Conservative Neville Chamberlain Regional differences, based on industries Abandoned the Gold Standard, Pound Fell Leads to a Gradual Recovery Rise of the Welfare State

France Generally had recovered from WWI Maintained high tariffs Plunged France into the Depression Conservative Government Fails Radical Government replaces them Stavisky Scandal almost leads to civil war New Coalition of Middle Class and Working Class unite to combat Fascism The Popular Front (Leon Blum) Raised Taxes, Cut Spending, Recognized Unions, 40 hour work week, raised wages

Germany- the Nazis Depression and Political Deadlock Weimar Republic hit hard by the Depression  Coalition government could not decide on economic reforms  Hindenburg appointed Heinrich Bruning as chancellor Governed under emergency decrees German unemployment rose Situation benefited the extreme political parties  Nazis gained seats in Reichstag  Gained seats through elections, violent attacks and mass rallies

Hitler comes to power political, social and economic situation did not improve Hitler ran against Hindenburg in 1932  Earned enough votes to convince Hindenburg that Bruning was no longer effective  Appointed Franz von Papen as chancellor Removed the ban on Nazi meetings Called for a Reichstag election Nazis gained 37% of the seats Hitler demanded to be appointed chancellor

November- Papen resigns Replaced with General Kurt von Schleicher  Attempted to create a coalition with the Nazis  Schleicher resigns due to his own ineffectiveness January Hindenburg’s advisors convince him to appoint Hitler chancellor  In a vain attempt to control him  Papen would be Vice Chancellor January Hitler appointed Chancellor  Supported by a wide spectrum of German groups

Hitler’s Consolidation of Power

Reichstag Fire Feb Reichstag set on fire Nazis claim it is a communist plot Hitler issues an emergency decree suspending civil liberties and arrested communists.  Remained in forced until 1945

The Enabling Act March Reichstag passed the Enabling Act which allowed Hitler to rule by decree No legal limits to his authority Hitler used the Act to go after other political parties Outlawed all other political parties by June/July 1933

Internal Nazi Purges By 1933 there were 1 million SA (stormtroopers) Led by Ernst Roehm Hitler feared Roehm as a potential rival June Hitler orders the assassination of Roehm, and other key SA officers- more than 100 killed

The Police State and Anti-Semitism The SS (Schutzstaffel)- security units Commanded by Heinrich Himmler Elite body guard for Hitler Carried out the SA purges Head of police system

Attack on Jewish Economic Life and Racial legislation Exclusion from civil service jobs Enforced boycotts against Jewish businesses Nuremburg Laws Robbed German Jews of their citizenship Professional life became limited Marriage restrictions Legal exclusion and humiliation became the law  All people with at least 3 Jewish grandparents were Jewish etc...

Kristallnacht 1938 – Nov 9 and 10- Thousands of Jewish stores and synagogues were burned Jewish community had to pay for the cleanup

Final Solution Hitler’s plan to eliminate the Jewish population of Europe, More than 6 million Jews were killed in mass executions.

Nazis and Women Hitler’s policies were similar to Mussolini’s Encouraged women to have children Opposite policy used against “inferior” groups- Jews, Gypsies, and other groups  Jewish women were targeted for death due to potential for bearing children Protected jobs of working women  Pushed for “natural” jobs for women- teaching, nursing, secretarial etc..

Nazi Economic Policy Destroyed unions Strikes became illegal Limited private exercise of capital Allowed private property and capitalism Government controlled prices and investment Created government projects to stimulate the economy Built the Autobahn Government farms Prepared the military for war

Italy: Fascist Economics Began in 1920’s “Battle of Wheat” Corporatism Industrial Syndicates Planned Economy Government Arbitrators Corporations Unified common industries 22 Corporations Corruption, increased oversight Shift to War Economy 1935

Stalin’s Soviet Union Central Economic Planning Rapid industrialization Five Year Plans Gosplan (State Planning Commission) Massive investment in infrastructure Supported by widespread propaganda Collectivization, assault on the Kulaks Cost- Millions of innocent lives

Urban Struggles and Growth Peasant flight to the cities 12 Million migrate to the cities Housing Shortages Lack of consumer products The Great Purge The Soviet Holocaust Stalin’s Paranoia, targets all enemies Achieves rapid economic and industrial growth