Economy During the Interwar Period

The Great Depression

• Germany could not afford to pay the reparations they owed as a result of the Treaty of Versailles, so the government printed more money causing inflation.

• Inflation: General rise in prices and fall of the value of money.

• The Great Depression was the international economic crisis following world war one.

• Causes of the Great Depression included:

  • United States stock market crash.

  • Agricultural overproduction.

• Germany suffered from bank failures caused by American investors withdrawing.

• Africa, Asia, Latin America, and Japan all depended on the imperial countries’ economies, thus suffered from their downturns.

• Deficit Spending: Action of spending more than the government takes in. British economist John Maynard Keynes suggested the strategy to stimulate economic activity.

• The New Deal: FDR’s set of domestic policies for relief of citizens suffering from the Great Depression.'

• The Great Depression finally ended when the U.S. joined WW2 and raised military spending.

• As unemployment increased rapidly across the world, trade declined.

• Japan made it out of the depression quickly through lowering the value of their money.

Political Revolutions in Russia and Mexico

• Russian Civil War (1918-1921): Russian and Ukrainian revolts and strikes against the Russian government.

• Russian economy collapsed due to drops in industrial and agricultural production.

• Lenin New Economic Plan: Temporary retreat from communism in Russia, reintroduced private trade and economic liberties.

• Joseph Stalin took control of Russia’s Politburo and became a dictator.

• Five Year Plan: Stalin’s plan to transform the soviet union into an industrial power.

• Collectivized: Process in which farmland was taken from private owners and given to kolkhoz.

• Kolkhoz: Group of peasants who freely joined together to farm a portion of land.

• Russian farmers retaliated and moved to the cities.

• The USSR’s brutal success posed a threat to capitalist countries experiencing unemployment.

• The Institutional Revolutionary Party dominated Mexican politics in the interwar period and favored land reforms, access to jobs and education, land reforms, and improvement of infastructure.

• PEMEX: This oil company became the second largest state owned company in the world.

Right Wing Governments

• Germany and other countries turned to Fascism: A political system that promotes extreme nationalism, military glorification, denial of individuals rights, and putting blame on ethnic minorities.

• Italy’s fascist movement was based of Corporatism: A political idea that different groups in society should take part in political decisions.

• Italy imposed it’s fascist movement on everyone, becoming a Totalitarian State.

• Italy was given little territory from the Treaty of Versailles.

• Dictator Benito Mussolini of Italy conquered Libya, Somalia, and Abyssinia (Ethiopia), destroying the League of Nations credibility and forming an alliance with Adolf Hitler of Germany.

• Spanish Civil War was sparked by the opposing ideologies in Spain, democracy and fascism.

• The Popular Front: Electoral alliance in Spain, formed by left wing parties.

• Nationalists led by Francisco Franco vs defenders of the new Spanish republic, the Republicans/Loyalists.

• Despite a non-intervention agreement, Germany, Italy, and Portugal aided the nationalists, while the U.S, USSR, Britain, and France aided the Loyalists.

• Guernica Attack: Aerial bombing on citizens in the northern basque region, exercised the German air force.

• Franco and the nationalists won in 1939, and Franco ruled as dictator until his death.

• Brazil had a very slow switch from agricultural to industry based economy, as a result they struggled bad from the Great Depression.

• Getulio Vargas took power as president of Brazil, his actions were similar to Mussolini’s as he:

  • Implemented pro-industrial policies.

  • Strict government censorship of differing political beliefs.

  • Hyper nationalism: Belief that one’s nation is superior over all others.

• Brazil joined the Allies in WW2, causing them to also push for democratic government in their own country.