Interwar Period: Economic Crisis, Rise of Fascism, and Nazism

Posted on Nov 23, 2024 in History

The Difficulties of the War

There was a contraction of demand and overproduction, leading to a consumption crisis. Regarding international relations, there was an imbalance. Inflation was due to high credits granted and excessive emission of paper money, which led to currency devaluations. To solve the economic instability, the Genoa Conference convened, remembering where the rules were set, with dollars and pounds as convertible currencies. Currency instability continued because of inflation caused by the payment of war reparations. This damaged Germany and France, which depended on the invading German reparations from the Ruhr mining area. Beginning in 1924, with the implementation of the Dawes Plan, the U.S. conceded economic aid to facilitate the payment of war reparations.

The Years of Relative Prosperity

From 1924, the economy entered a phase of economic expansion that lasted until 1929. Energy consumption increased, work was generalized on the chain, and concentration increased. In the U.S., thanks to the return of European credits, people were traveling a lot. The consumer society became a symbol of well-being, and the model of American life (fashion, sport, culture, film) was imitated worldwide. There were many imbalances:

1. Maintenance of high unemployment rates due to the crisis in agriculture and industry.
2. Unequal growth of different sectors of production: New industrial sectors accounted for investment, while textile and coal stagnated.
3. Excess supply relative to demand; unemployment rates and lower wages limited demand, creating a risk of overproduction.
4. Instability of the international monetary system and inflation.

Economic momentum in Europe, affected by World War I, was slow and uneven.

Liberal States and Totalitarian States

Most of the states that emerged after World War I were republics, establishing democratic systems as a way of government. However, parties advocating authoritarian systems of government emerged, and anti-democratic clusters formed from conservative and nationalist positions. The balance of power was broken, and in some cases, the legislature dominated the executive, with the government assuming functions of Parliament. Trade unions lobbied to pursue their interests outside the parliamentary road. The adoption of universal suffrage gave way to a multiparty system. In the UK, the Labour Party broke with the traditional two-party system, causing a split in the Liberal Party. In France, leftist groups formed the Popular Front government in 1936. In Belgium, the Netherlands, Northern Europe, and the USA, the democratic regime was characterized by a multiparty, parliamentary system and individual freedoms. In Italy, the crisis drove the middle classes and workers to support a totalitarian regime: Fascism. In Poland, a dictatorship was imposed. Hungary and Austria established fascist governments. Romania and Yugoslavia restored monarchies and authoritarian rule. In Greece, Portugal, and Spain, conservative dictatorships were imposed. The German Democratic Republic failed to stabilize the country, and in 1933, a totalitarian regime supported by almost all of society was established.

Fascism

Peace agreements after the Great War did not meet Italian territorial aspirations. The economic crisis and social conflicts could not be solved by the democratic government. Mussolini founded the Fasci di Combattimento or fighter squadrons in 1919. These military groups aimed to curb the demands of socialist and communist governments and expel them from the factories. The fighter squadrons were financed by the bourgeoisie, who feared a Bolshevik revolution. In 1921, the National Fascist Party, led by Mussolini, was created, and the military groups were integrated into it.

The Theoretical Foundations of Fascism

This heading encompasses totalitarian movements that do not respect individual, social, and political rights and freedoms. Fascism was characterized by:

1. Inequality among individuals: Discriminatory attitudes were justified.
2. The subordination of individuals to the state, which becomes the controlling body of society. Mussolini’s fascist state is defined as a totalitarian state.
3. Existence of a charismatic leader to whom the masses are to be submitted.
4. Exaltation of feelings that lead to fanaticism.
5. Justification for expansionary policy in response to radical nationalism.

Fascism was anti-parliamentarian, anti-Marxist, and anti-capitalist. This anti-capitalism was softened by the financial support provided by big business to fascism. The use of military forces aimed to create a climate conducive to violence and the rise of the Fascist Party. The organization of this party merged with the state structure. This controlled the media and education to unite the masses in the exaltation of the imposed political regime.

Fascist Italy

In 1922, a general strike called by Mussolini served to prepare his rise to power. Victor Emmanuel III appointed him mayor in 1922. Matteotti’s assassination marked the peak of this fascist dictatorship. He began the organization of a totalitarian state led by Mussolini, also called Duce. The organs of the Fascist Party became the supreme organ of state and local government. He banned trade unions and political parties and purged the army, administration, and teaching. As for the economy, he aimed to increase production and start economic battles to achieve self-sufficiency, avoiding imports. They built highways and dams, and unemployment decreased, establishing the Institute for Industrial Reconstruction. Social politics was marked by corporatism; the state required employers and workers to be integrated into a single organization and acted as a mediator in conflicts. Different organizations were created to educate in fascism, leisure and recreational institutions, and a social security system was established.

The Weimar Republic

The Democratic Republic was proclaimed in Germany on the initiative of the Social Democratic Party in 1918. The Weimar Republic lasted until 1933. The Social Democrats had to face the Spartacists and the opposition of conservative parties. The middle class was anti-democratic. The Weimar Republic was very unstable. Drexler founded the German Workers’ Party in 1919; this party was controlled by Adolf Hitler, and in 1920, the organization was renamed the National Socialist German Workers’ Party (Nazi Party).

The Crash of 1929

The stock market crash was the result of the weakness of the American economy in 1925. In 1928, investors began stock speculation. The lack of balance between economic reality and the stock market caused the values of shares on the New York Stock Exchange to plummet. On Black Thursday in 1929, excessive selling led to a sharp drop in prices, causing a stock market crisis that ruined many investors.

The Extent of the Crisis

The stock market crisis spread to all sectors of the American economy and caused the Great Depression.

• Financial crisis: Investors did not repay loans, so the banking system collapsed. The lack of liquidity affected consumption and investment, leading to a fall in output.
• Industrial and commercial crisis: The fall in prices was higher due to reduced demand. Wages fell, and unemployment increased. Industrial production was reduced.
• Agricultural crisis: The drop in prices affected agriculture.

The U.S. financial crisis led to reduced lending to Europe and the repatriation of American capital invested abroad. Corporate and banking failures occurred. Protectionist measures were taken to boost domestic production. World trade was reduced by two-thirds between 1929 and 1932. Austria and Germany were strongly affected by the crisis. In the UK, the pound was devalued. Except for the USSR, all of Europe was influenced by the crisis, which also spread to Latin America.

The Social and Political Consequences

Social Impact: High unemployment and low wages. Hunger marches took place in the USA and Europe. In North America, more than one million people were homeless, and social inequality increased. There were demonstrations, strikes, and fear of communist ideals.

Political Consequences: The ineffectiveness of government anti-crisis measures led people to seek solutions in anti-capitalist and anti-democratic ideologies, which defended authoritarian, communist, or fascist states. Some European democracies were replaced by authoritarian regimes.

Economic Interventionism: The New Deal

:It was the social and economic policy promoted by U.S. President Roosevelt. The state took the initiative to confront the crisis. The aim was to boost consumer spending to boost investment. The state exercises control of funds and banking. Private enterprises and the agricultural harvest regulations and to promote employment is invested in infrastructure, fixing a minimum wage and unions act as interlocutors between labor and management. The steps taken were able to stabilize the economy. The solutions adopted interventionist capitalist states. In the UK, support is granted to sectors most affected by the crisis. In Germany, adopting an autarkic policy and create many jobs. Until after World War 2 ^to the financial difficulties were not resolved. It applies the theory of Keynesianism.
Keynes’s theory: JM Keynes criticized the mechanisms of liberal capitalism against the provisions of the Versailles Treaty. According to economic thought and consumption demand are the engine of economic growth since this depends on the benefits and corporate intervention and therefore employment.
The coming to power: the social bases q When the Republic became destabilized supported the Nazi party began to obtain favorable results. He was supported by unemployed workers and peasants and the military and financial sectors q saw Hitler as the only way to maintain stability. The Nazi party gained 107 seats in Parliament and in 1933 achieved an absolute majority. President Hindenburg appointed Hitler Chancellor of the Republic. The Nazi Party of Germany gets the government by democratic means. It creates the Gestapo or secret police, political parties are banned, restricted the right of assembly and is governed by decree. The structure of the Nazi Party is transferred to the state administration. In 1934 Hitler proclaimed leader and established the Third Reich.
The Nazi state:The Nazi Party Hitler to head the state controlled and eliminated the opposition through the Gestapo and the SS in 1935 by the Nuremberg laws been deprived of rights to Jews and even of German nationality. His was an attack against Jews in the “Night of Broken Glass”. During the Second World War took place the Holocaust. The arts and sciences were controlled by the German propaganda ministry headed q Goebbels. Interventionist economic policy was conducted by Göring. Unionism was banned and created bodies to which was integrated to employers and workers. The foreign policy of expansionism carecterizó. It seeks the annexation of territories of Eastern Europe.