Edition, by Kagan, Ozment, and Turner Chapters 27 and 28-The Major Powers between the Wars

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The Western Heritage, 8th edition, by Kagan, Ozment, and Turner

Chapters 27 and 28—The Major Powers between the Wars

Overview: 1920’s

  • Authoritarianism and aggression were not the inescapable destiny of Europe. They emerged from the failure to secure alternative modes of democratic political life, stable international relations, and long-term economic prosperity.

  • In 1919, new experimental governments studded the map of Europe.

  • Many countries turned to liberal democracy and expanded the franchise to women.

  • Yet to pursue parliamentary politics where it had never been practiced before proved no simple task. The Wilsonian vision of democratic, self-determined nations foundered on the harsh realities of economics, aggressive nationalism, and political conservatism.

  • The economic and social anxieties of the electorate, along with nationalism, could undo these nascent governments.

  • The Paris treaties became a source of European frustration. The losing states were incensed about some of its provisions. Borders were in flux in Eastern Europe. The victors thought that the treaty wasn’t being adequately enforced.

  • After 1918, it was difficult to return to economic “normalcy.” By 1918, the European states, once the economic leaders of the world, were heavily indebted to the US. This allowed the US and Japan to penetrate markets that Europeans had dominated before.

  • The European economies would have benefited from more openness and integration. However, hatred from the war prevented this from occurring. Tariffs rose across the continent.

  • The destruction of much of the modern economic infrastructure (ports, roads, etc.) hurt the rebuilding efforts. By breaking up Europe into small states, transportation became harder.

  • Labor unions and movements generally cooperated with national governments during the war. They agreed to freeze wages in the name of national security. This improvement in both the status and influence of labor was one of the most significant changes of WWI.

  • In reaction to the new power of labor, many middle-class Europeans turned decisively conservative.

Overview: 1930’s

  • In Europe, unlike the US, the 1920’s had not been “roaring.” Many see the problems in Europe as the prelude to the Great Depression.

  • The GD began in 1929 and was the most severe downturn in the history of capitalism. There was widespread high unemployment, low production, financial instability, and shrinking trade.

  • Marxists and many others thought that the final downfall of capitalism was at hand.

  • Voters thus looked out more for economic security than anything else.

  • The GD also gave rise to the social states and mixed economies of Europe: gov became directly involved in economic decisions alongside business and labor.

Causes of the Great Depression

1. Financial Crisis

Overvalued Currencies

  • After the war and until 1921, there was generally high inflation as consumers started buying products that they had been without for four years.

  • Inflation in general depreciates the value of a nation’s currency.

  • Due to the German hyperinflation disaster, however, European countries were steadfast in their refusal to allow their currencies to weaken.

  • China today has an undervalued currency. This allows its economy to grow faster than it otherwise would.

  • The results in Europe were the exact opposite. Their overvalued currencies stifled economic growth and led to high unemployment, like in GB.

Reparations and War Debt

  • France was determined to receive reparations. Germany had made France pay reparations before, so the French wanted to see the Germans pay. France was counting on these reparations to weaken the German economy (and thus the military) while financing its own postwar recovery.

  • The US also wanted to see the reparations paid. This was because if GB and France got paid by Germany, those countries could pay back American loans.

  • In 1922, GB declared that it would lessen Germany’s reparations load. It would only require as much in reparations as was necessary to pay back American debts. France, of course, was incensed by this.

  • Germany would only be able to pay the reparations if its economy got stronger. The constant drain of money prevented the German economy from gaining a solid footprint, however. Reparations also caused inflation in France and GB, putting further pressure on their currencies. Thus, reparations caused financial instability after WWI.

American Investments

  • In 1924, the US proposed the Dawes Plan. The Dawes Plan would grant short term loans to Germany for it to pay its reparations to France and GB. This helped stabilize the European economies between 1925 and 1928. The only problem was that Germany had become hooked on American loans to pay its debts.

  • As the New York stock market boomed, however, fewer and fewer banks would loan to Germany. Instead, they speculated their cash in the stock market.

  • The crash in 1929 virtually eliminated any remaining loans that Germany could get. There simply wasn’t enough cash to go around. This lack of capital helped propel Germany into trouble.

The End of Reparations

  • The end of American loans caused a financial crisis on the Continent. A major bank in Vienna collapsed in 1931, and the German banking system was heavily strained.

  • In 1931, to prevent the bankruptcy of the German gov, Herbert Hoover delayed all reparation payments by one year.

  • This caused a constriction of capital in France, leading to depression there. France had been doing okay until 1931, because of German reparation payments.

  • The Lausanne Conference of 1932 ended all German reparations. The US agreed to stop collecting on its loans to Europe. This helped free up necessary capital on the continent, but it was too little, too late.

2. Problems in Agriculture and Industrial Production

  • The 1920s saw the demand for European goods shrink in comparison to production capacity. This meant people became unemployed.

  • Much of these problems were caused by agriculture. The Americans had fed the world during the war. Now that the Europeans were back, there was a vast increase in grain production. This led to a decrease in price.

  • Farming income started to fall across Europe. Farmers began to have difficulty paying back their mortgages or buying any manufactured goods.

  • Many farmers faced a bleak credit squeeze. In Germany and Italy, they became a major source of support for the fascists. They didn’t think that democracies could solve their problems.

  • Farmers also faced low prices in many European and former European economies. They could thus no longer afford to buy European manufactured goods. This further restricted industrial demand.

3. Lack of Economic Leadership or Coordination

  • The economic downturn was partially tempered by the rise of new industries: movies, cars, radios, and TV.

  • There was a great amount of social discontent, however. People didn’t know how long they could live with such meager means. They saw no upside to their situation.

  • Many governments at this time resorted to market mechanisms to fix the problems. They cut spending and balanced their books. But nothing happened.

  • John Meynard Keynes and his theory of deficit spending had not yet been invented. Nobody really knew how to confront the situation.

  • But people demanded action, however. So governments became involved in their economies. Countries loaned money to industries. As these companies defaulted on the loans, the gov came in and took over. Govs soon ran the economies of much of Europe.

  • Each country started to further raise tariffs to protect its own industries. This prevented trade and hurt much more than it helped.

  • Countries tried to solve their problems individually and failed. If they had worked together, they may have succeeded.


Italy after WWI

  • Fascism, right-wing dictatorships arising across Europe between wars, came to Italy from fears of spread of Bolshevism.

  • Fascists were anti-democratic, anti-Marxist, antiparliamentary, and frequently anti-Semitic. Marxism was a spreading fear after the Russian Revolution.

  • Fascists sought to make world safe for middle class, small businesses, owners of moderate amounts of property, and small farmers.

  • Fascists rejected 1800’s liberalism.

  • Fascist movements were nationalistic. They thought that a squabbling parliament (and democracy overall) degraded the image and honor of a nation.

  • They wanted to overcome the party conflict of liberalism by consolidation various groups/classes in the nation on the basis of nationalism.

  • Mussolini, 1931: “The fascist conception of the state is all-embracing, and outside of the state no human or spiritual values can exist, let alone be desirable.”

  • These governments usually single-party dictatorships characterized by terrorism and police surveillance.

Rise of Mussolini

  • Fasci di Combattimento formed in Milan in 1919. It was composed of war veterans who felt Paris conference cheated Italy of hard-won fruits of victory. They feared spread of socialism and effects of inflation

  • Their leader was Mussolini, editor of socialist newspaper Avanti in 1912. He came from a working-class background.

  • Over time, Mussolini changed his views. By 1914, nationalism replaced socialism as his ideology for a national revolution that would transform the weak liberal state.

  • Mussolini established his own paper “Il Popolo d’Italia”

Postwar Italian Political Turmoil

  • During conflict, Italian Parliament virtually ceased to function. The ministers were given the power to rule by decree.

  • At this time though, many Italians were dissatisfied w/ the Parliament anyways, and felt Italy deserved more after the war. They thought that Italy had not gained Great Power status (ala France, GB, Germany, and the US).

  • Main spokesperson for the discontent was extreme nationalist writer Gabriele D’Annunzio. He set up his own army and invaded nearby cities that Italy had wanted but failed to get in the Treaty of Versailles. The Italian gov had to drive him out (this made the gov look bad—was it anti-Italy?). D’Annunzio showed how a nongovernmental military force could be put to political use.

  • Between 1919 and 1921, Italy experienced considerable internal social turmoil. Many industrial strikes occurred, and workers occupied factories. Peasants seized uncultivated land from large estates

  • There was deadlock between the Socialist Party (with communist sympathies) and the Catholic Party. Democracy seemed incapable of dealing with the problems.

  • Many thought that the unrest was the first signs of a communist revolution.

Early Fascist Organization

  • Mussolini was a flip flopper – he first supported factory occupations and land seizures. He then saw that upper/middle-class Italians were scared of inflation and of losing their land. They didn’t care for workers and peasants. Mussolini came around to this view. He also thought that anyone working for their own good was working against nationalism and a greater Italy.

  • Mussolini formed local squads of terrorists who disrupted Socialist Party meetings, beat up socialist leaders, and intimidated socialist supporters. They attacked strikers/farm workers and protected strikebreakers.

  • Conservative land/factory owners grateful, and b/c these people held the power, the institutions of the law ignored the crimes of the fascist squads.

  • By early 1922, fascists used arson, beatings, and murder against local officials in northern Italy. They controlled many local governments.

March on Rome

  • In election of 1921, Mussolini and 34 of his supporters were elected to Chamber of Deputies

  • In Oct 1922, fascists marched on Rome, known as Black Shirt March (fascists were known for wearing black shirts).

  • King Victor Emmanuel III refused to allow the army to stop the march. Probably no other single decision so ensured a fascist seizure of power.

  • Cabinet resigned in protest at the king’s inaction.

  • With the government in disarray, within two days the king calls on Mussolini to become PM (Oct 30, 1922).

  • It is important to note that Mussolini did not gain power through force/violence. Instead, he flexed his political muscles by sponsoring a relatively peaceful march of popular support. He only became PM because he had support from political and popular sections of Italy.

  • Mussolini had no majority or near majority in the Chamber. He used terrorist intimidation to keep power. Nonfascist politicians thought his ministry would be brief, but they were wrong

The Fascists in Power

  • Mussolini’s success was due to impotence of rivals, effective use of his office, power over the masses, and sheer ruthlessness

  • Nov 23, 1922 – Mussolini granted dictatorial authority for 1 yr to bring order to local/regional gov

Repression of Opposition

  • In 1924, a new election law was passed. Parties would not have representation in the Chamber of Deputies in equal to how many votes they got. Instead, the party with the most votes got 2/3rds of the seats. The rest were given out in proportion. This meant that weak coalitions were no longer necessary.

  • Fascists won great victory and complete control of Chamber in 1924.

  • They ended the legitimate Italian democracy, allowing Mussolini to rule by decree.

  • By 1926, all other political parties dissolved

  • Fascists controlled the police forces, and their terrorist squads became official gov militias.

  • Giacomo Matteotti – leading noncommunist socialist leader/member of Parliament. He criticized Mussolini and was murdered by fascist thugs. The opposition withdrew from the Parliament in protest, but they were not allowed back in. This meant that Mussolini controlled the Chamber.

  • Fascists used propaganda effectively. Mussolini had good oratory skills, and good general knowledge skills. He easily wowed crowds and held his own in debates.

  • Many Italians admired Mussolini for saving them from Bolshevism.

  • People who opposed him were usually sent into exile or killed.

  • Mussolini also made peace with the papacy. Ever since Italian unification, the papacy had opposed the governments of Italy. The peace earned him brownie points in heavily Catholic Italy.

  • In the Lateran Accord of 1929, the pope was recognized as the legitimate ruler of Vatican City. Italy paid reparations to the Vatican for the Papal States that it had confiscated in the 1860’s. Catholicism became the official religion of Italy and the church was exempted from state taxes.

Motherhood for the Nation in Fascist Italy

  • Fascist policy encouraged Italian women to have more children and to stay at home to rear them for good of Italian state

  • Gov instituted policies like maternity leaves, insurance, subsidies to large families, and dissemination of information about sound child-rearing practices

  • Information about outlawing contraception and abortion and discouraging publication of info about sexuality/reproduction made it so women didn’t know better

  • Italian wages were low, so families relied on gov to send kids to school, which were fascist schools, so these families were dependent on gov. Gov also provided welfare benefits to many women, making them dependent on the state.

  • 25% of Italian work force was women (very high). The gov still discouraged female participation in work force or sought to keep women in lower skilled jobs

  • Laws protecting women from exploitation limited their access to labor market

  • 1938 – gov/private offices forbidden from having > 10% women employees

  • This all degraded women’s place in the workforce and clearly hurt Italy more than it helped Mussolini’s nationalist cause.

  • By 1940, women’s participation in Italian labor force more part time/low skilled than before fascists took power

Italy in the Great Depression

  • During the 1920s, Mussolini undertook vast public works. It also introduced protective tariffs. Mussolini wanted to make Italy self-sufficient (he obviously didn’t know any economics—trade is good).

  • Mussolini made special strides to prevent foreign food from entering Italy. Wheat production soared in the country.

  • During the Great Depression (GD), production, exports, and wages fell. Food prices started to rise, worsening the situation.

Syndicalism and Corporatism

  • The fascists sought to steer an economic course between socialism and the laissez-faire system. Their policy was known as corporatism (a form of syndicalism).

  • Syndicalism is one of the three most common ideologies of egalitarian, pre-managed economic and labour structure, together with socialism and communism. It states, on an ethical basis, that all participants in an organized trade internally share equal ownership of its production and therefore deserve equal earnings and benefits within that trade, regardless of position or duty. By contrast, socialism emphasises distributing output among trades as required by each trade, not necessarily considering how trades organize internally. Syndicalism is compatible with privatism, unlike communism. Communism rejects government-sanctioned private ownership and private earnings in favor of making all property legally public, and therefore directly and solely managed by the people themselves.

  • Corporatism or corporativism refers to a political or economic system in which power is given to civic assemblies that represent economic, industrial, agrarian, and professional groups. These civic assemblies, known as corporations (not necessarily the same as contemporary business corporations) are unelected bodies with an internal hierarchy; their purpose is to exert control over their respective areas of social or economic life. Thus, for example, a steel corporation would be a cartel composed of all the business leaders in the steel industry, coming together to discuss a common policy on prices and wages. When much political and economic power rests in the hands of such groups, then a corporatist system is in place.

  • Corporatism doesn’t have to do with corporations, it has to do with business cartels.

  • In the Italian system, the economy was planned economy linked to the private ownership of capital and the gov control of wages.

  • This was supposed to increase productivity, which would make Italy great.

  • From the mid-1920s onwards, labor unions lost the ability to strike. Management clearly benefited from the system.

Conditions in the 1930’s

  • 22 “corporations” (cartels representing different types of industries) were established in Italy. In 1938, the Chamber of Deputies was abolished and replaced with a Chamber of Corporations.

  • The vast organization framework of corporatism did not increase production; instead, bureaucracy and corruption proliferated.

  • The state gained partial ownership of business by extending loans through the Institute for Industrial Reconstruction.

  • The economic situation in Italy was bad before the GD. Wages were lower than elsewhere in Europe; Italy was the weak man of the Continent. After the GD, the situation was really bad.

  • In 1935, Italy invaded Ethiopia. The economy was put on a wartime footing. Other countries put sanctions on Italy, which hurt (a little—remember, Italy was moving towards self-sufficiency anyway). Taxes rose (people were forced to buy gov bonds) and wages were depressed. The state kept taking more and more control of the economy as companies started to fail. The situation was dire.


France after WWI

  • France and GB seemed tame next to Russia and Italy. Yet this surface calm was rather illusory. Both France and GB were troubled democracies.

France: The Search for Security

  • French voters elected a doggedly conservative Chamber of Deputies after war

  • Got nickname “Blue Horizon Chamber” b/c many military officers in blue uniforms were members.

  • Conservative chamber asserted its power when it kicked out Georges Clemenceau from the presidency. This was b/c of alleged leniency of the Paris treaties and Clemenceau’s failure to establish a separate Rhineland state (note: these are very conservative positions).

  • Deputies wanted security against Germany and Russian communism. They also intended to make as few concessions to domestic social reform as possible.

  • Between the end of the war and 1933, France was governed by no fewer than 27 different prime ministers.

New Alliances

  • The French plan after WWI was to keep Germany weak through enforcement of the Treaty and to set up a new series of alliances with the new eastern European states (obviously, continuation of the alliance with Russia was impossible).

  • Czechoslovakia, Romania, and Yugoslavia formed the Little Entente. France made an alliance with these countries plus Poland.

  • These alliances were weaker than the original Franco-Russian alliance. The small countries had little military power and they squabbled a lot among themselves.

  • This new system of alliances alienated Russia and Germany. In 1922, they signed a treaty of their own. It was only diplomatic in nature, but it helped both nations through tough times.

Quest for Reparations

  • In 1923, GB and France declared that Germany was in default (behind in payments) on its reparations.

  • In response, France (under conservative PM Poincare) ordered its troops to occupy Germany’s Ruhr mining and manufacturing districts.

  • The Germans responded by calling a general strike and passive resistance. France then took direct control of German companies in the Ruhr valley. Faced with economic occupation, Germany paid its reparations by printing massive amounts of money.

  • The French win was costly. The English were incensed at the tactic and took no part in the occupation.

  • The increase in inflation hurt both France and Germany.

  • The liberals gained power in France after this debacle for a few years. Under Edouard Herriot and Aristide Briand, France recognized the Soviet Union and tried to open up to Germany. When the new gov couldn’t stop the inflation, the conservatives came back to power under Poincare.

  • Poincare’s gov was able to stabilize the economy in the 1920’s somewhat. The GD didn’t hit France until 1931.

France in the Great Depression

  • The GD came later but lasted longer in France than elsewhere.

  • Unemployment wasn’t a big problem, though. The fact that wages were falling was a problem, however.

  • The gov raised tariffs to protect industry. The tariffs have never come down since on French agricultural products.

  • The tariffs seemed to stabilize the home market. Relation between labor and management were tense, however.

  • The radical liberals came to power in 1932. They pursued a deflationary economic policy.

  • Also in 1932, Germany stopped paying reparations. This hurt the gov budget and the French economy.

Right-wing Violence

  • Politics grew ugly. Various right wing groups with authoritarian tendencies became active. Together, these groups had more than 2 mil members.

  • Some of them wanted monarchy, others military rule. All were against parliamentary, socialist, and communist governments. They wanted to increase the glory of France. They were basically fascists.

  • The activities and propaganda of these groups lowered loyalty to the republican gov.

  • The caused the Stavisky affair, which led to extraordinary havoc that produced important long-range political consequences.

  • The Stavisky affair was the last of the scandals of the Third Republic. Serge Stavisky was a mobster with gov connections. One of his schemes fell apart in 1933, and he committed suicide when arrested by the police in 1934.

  • The official handling of the matter suggested a political cover-up. This symbolized to many people the seaminess, immorality, and corruption of republican gov.

  • In Feb 1934, there were large right-wing demonstrations in Paris. They tried to storm the Chamber of Deputies. 14 people were killed in the biggest disturbance in Paris since 1871.

  • The right-wing groups seemed to win, however, when political changes were made after the clashes. The prime minister and his gov (the executive branch) was replaced by a committee of all still-living PM’s. This committee could rule by decree.

  • People started to fear a right-wing coup, however (doesn’t the clash sound a little like the Black Shirt March?). This fear prevented any right-wing group from taking over.

Socialist-Communist Cooperation

  • In 1920, the French Communists had split from the Socialists. The Communists joined the Comintern, the Socialists did not.

  • Between 1934 and 1936, the French left started to make peace within itself. The united parties formed the Popular Front in 1935 under Leon Blum.

  • In 1936, the Popular Front won a majority in the Chamber of Deputies. They dissolved this committee and named their own gov. Leon Blum was the first Jewish PM of France.

Blum’s Government

  • In May, 1936, strikes started to spread through France. In June, work stoppages hit endemic levels. People started to fear a labor revolution.

  • Blum acted swiftly to bring together labor and management. On June 8th (two days after taking office), new labor agreements were announced.

  • People got wage increases across the country. They also got the 40-hour work week and were given 2 weeks of paid vacation time a year. Employers were forced to recognize unions.

  • Blum followed his labor policy with other bold departures. He raised gov salaries and started a public works program. He increased military expenditures and gave loans to businesses. He instituted state control over the agricultural markets. He also devalued the franc.

  • Businesses forced Blum to stop the reforms in 1937. The Popular Front became angry with this stoppage, and Blum resigned in June. The Popular Front lost the elections of 1938 to the radical socialists.

  • By 1939, French industrial production reached 1929 levels.

  • By 1939, French citizens began to wonder whether the republic was worth preserving. Business found the republic inefficient. The right hated the republic on principle (ironic, isn’t it?). By 1940 and WWII, too many people had lost faith in the republic to help save it.

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