Post WWI Europe and the Rise of Fascism
Economic Situation in Post-WWI Europe
Europe was left devastated physically, economically, and psychologically after World War I.
Britain and France experienced governmental instability, with incompetent governance and significant labor strikes.
Despite chaos, Western Europe managed to resist the allure of fascism and communism which were rising across the continent.
Economic Recovery and Instability
The 1920s saw Western Europe stabilize, primarily through loans from the United States.
Countries like Britain, France, and especially Germany relied heavily on credit, creating a fragile economic foundation.
Economic recovery primarily benefited the upper classes, while lower classes fell into greater poverty and resentment.
Germany's Economic Crisis
Reparations and Inflation
Payment of reparations in gold caused rampant inflation in Germany.
The government faced massive expenses that surpassed its income.
Declining exports coupled with rapid price increases destabilized the fledgling Weimar government.
France sought to enforce reparation payments through the League of Nations as Germany's economy continued to worsen.
Turmoil and Instability
The collapse of the German Mark incited public unrest and increased dissatisfaction with the government.
Workers were paid three times daily to cope with escalating prices.
Economic and political instability was paralleled by a rise in violence.
Foreign Minister Walther Rathenau sought to renegotiate reparations but was assassinated.
Hyperinflation in Germany (1923)
Definition of Hyperinflation: Hyperinflation occurs when prices increase at an extremely rapid pace, devaluing currency, leading citizens to require increasingly large amounts of money for basic goods.
Hyperinflation Metrics: The value of the German Mark in terms of gold from January 1919 to November 1923:
Jan 1919: 170 Marks/ounce of gold
Jan 1920: 1,340 Marks
Jan 1921: 1,349 Marks
Jan 1922: 3,976 Marks
Oct 1923: 24,868,950,000 Marks
Nov 1923: 8,700,000,000,000 Marks
Ultimately leading to withdrawal of 50 million Mark banknotes issued in September 1923.
Further Economic Woes in Germany
The German currency continued to plunge.
The government could no longer meet war reparations, thus announced a shift to payments in coal and other resources.
France's refusal to renegotiate prompted Germany to call for workers in the Ruhr Valley to cease work, worsening the situation.
In response to French occupation of the Ruhr, Germany printed more currency, exacerbating the crisis and spurring growth in communist sentiments.
Economic Crisis in Italy
Italy faced a dire economic situation similar to Germany's.
Discontent over the Treaty of Versailles led to existential fears about capitalism’s survival.
Various radical groups, including socialists and communists, gained popularity as reactions to the economic crisis.
By 1921, Italy evolved into the first nation to adopt fascism, electing Benito Mussolini as its leader.
The Stock Market Boom in the U.S.
Growth of the Market
The U.S. stock market experienced rapid growth throughout the 1920s.
The market attracted inexperienced investors who optimistic about the economy's upward trajectory.
Speculation Defined
Speculation: An investment strategy where an investor purchases a stock based on the expectation its value will rise rather than its actual worth in regards to the underlying business.
Many investors bought stocks on margin, paying only a fraction of the price:
Rising stock values allowed them to pay the difference later.
If stock prices fell, investors lost their investments and became indebted.
Events Leading to the Stock Market Crash
Warning Signs
On March 25, 1929, the Federal Reserve issued warnings about excessive speculation in the market.
Declining steel production and a slowdown in the construction sector underscored growing economic concerns.
By summer, market values soared yet debts accumulated among investors.
The Crash
The stock market crashed between October 24 – 29, 1929.
Panic selling by investors triggered severe market decline.
This marked the onset of a decade-long economic depression, often referred to as the "Dirty 30s".
The U.S. began demanding repayment of debts from other nations, intensifying a global economic downturn.
Causes of the Great Depression
Unequal Wealth Distribution: A majority of North American and European populations were impoverished, unable to purchase factory goods.
Overproduction: Businesses expanded rapidly, assuming consumer purchasing power exceeded reality, leading to a surplus of goods.
Debt Levels: Massive debts incurred by businesses and individuals resulted in widespread bankruptcies when repayments became unfeasible.
Drought Conditions: A severe drought in the North American prairies throughout the 1930s resulted in the loss of farms for countless agricultural workers.
International Tariffs: Governments increased tariffs to protect domestic industries further constraining global economic recovery.
Inaction by Governments: Many governments initially adopted a laissez-faire approach, erroneously believing that market forces would naturally rectify economic issues.
The Global Consequences of the Depression
Many nations lacked the economic resources available to the United States for intervention.
Countries relied on U.S. loans for economic stabilization; as the U.S. recalled debts, many governments became immobilized.
Moderate governments in Europe found themselves paralyzed and struggling to address the financial crisis.
The Rise of Fascism
Totalitarianism Explained
Totalitarianism: A political system wherein the state exerts total authority over society, aiming to control all aspects of public and private life.
It was initially viewed as a potentially positive ideal for nation-building but later viewed with skepticism in anti-communist rhetoric comparing fascism and communism.
Characteristics of Fascism
Extreme Nationalism: Fascist parties strive for unwavering loyalty, framing the world in binary notions of good and evil; promote national superiority and glorification of past greatness.
Racial Purity: Associated with superiority of one culture, advocating against multiculturalism and stressing racial separation.
Normalizing Violence: Proposes that pacifism is a weakness; militarism and aggression are virtues, criticizing moderates as lacking in courage.
Devotion to an Individual Leader: Fascist regimes cultivate a cult of personality around their leader, demanding absolute allegiance and loyalty. Examples include Hitler (Der Führer), Mussolini (Il Duce), and Franco (El Caudillo).
Creation of Scapegoats: Blame placed on minorities and 'other' groups for national woes, evident in Hitler’s and Mussolini's rhetoric against communists, Jews, and socialists.
Post-WWI Political Polarization
Countries most affected by WWI experienced political polarization, with communism perceived as an option alongside a rising fascist movement.
Many individuals who rejected socialism and communism gravitated towards charismatic leaders promising national rejuvenation.
Mussolini exploited Italy's disillusionment following the Treaty of Versailles, amid civil unrest and inflation, leading to his rise as the leader of the paramilitary group Fasci di combattimento.
Mussolini's Rise to Power
Mussolini's “Black Shirts” marched on Rome in 1922, leading to a political deal with King Emmanuel, who appointed him as prime minister.
Upon taking power, Mussolini used intimidation tactics to eliminate opposition, consolidating state control over Italian society, particularly during the Great Depression.
Hitler and the Nazi Rise
Many Germans were left furious over the Treaty of Versailles, which most viewed as a national disgrace.
Political turmoil increased drastically, and extremist political factions gained traction.
The Weimar Republic struggled yet maintained control throughout the 1920s despite the difficult conditions.
The Weimar Republic Overview
Established in 1918 post-Kaiser, situated in Weimar due to Berlin's volatility.
Seen as partially responsible for the Treaty of Versailles' signing.
By 1924, unable to fulfill reparations led to French and Belgian occupation of the Ruhr Valley.
Yearning for revenge accompanied the Weimar Republic's stabilization efforts led by loans from the U.S. until the Great Depression struck hardest.
Governance Under the Nazis
Hitler, seizing the opportunity presented by the Great Depression, quickly cultivated alliances with military and business elites.
Achieved chancellorship in 1933, believed to be under control of the established elites; however, he swiftly consolidated power amidst burgeoning chaos.
Within months, Hitler utilized legislation like the Emergency Decree and the Enabling Law to demolish democracy.
Strategies Employed
Abolished all political opposition, initiated purges of potential threats, creating the Gestapo and establishing concentration camps for dissenters.
Through coercive law, anti-Jewish measures were enacted, culminating in the Nuremberg Laws of 1935 stripping Jews of citizenship and prohibiting intermarriages.
Highlights of Jewish Persecution
November 1938 witnessed Kristallnacht, a violent pogrom against Jewish citizens following the assassination of a German diplomat by a Jewish individual.
Resulting destruction included synagogues, homes, and businesses with many Jews assaulted and murdered.
Subsequent restrictions involved expulsion from public life, forced wearing of yellow stars, and ghettoization leading to further persecution.
Hitler’s Foreign Policy Goals
Reversing the Treaty of Versailles
Sought to negate reparations, reclaim territory lost, and expand military forces, reflecting a broader nationalist ambition.
Expansionist Ambitions
Unification of German-Speaking Peoples
Aimed to create a synonymous “Greater Germany” by annexing Austria and Czechoslovakia's Sudetenland.
lebensraum Concept
Promoted the idea of expanding living space for Germans, advocating for the invasion of Poland and later the Soviet Union.
Harbored animosity toward both Poles and Soviets based on racial and ideological grounds.