Economy in the Interwar Period and Causes of World War II

Economy in the Interwar Period - Overview and Essential Question - Franklin Delano Roosevelt Quote (1936): "We had to struggle with the old enemies of peace-business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering." - Essential Question: How did different governments respond to economic crises after $1900$? - Global Impact: Not long after the global trauma of World War I ($WWI$), a global economic crisis resulted in the Great Depression of the $1930s$, eventually leading to World War II ($WWII$). - Economic Ideology Transition: The crisis undermined faith in market-based economics that had previously delivered wealth during the era of imperialist expansion. - Government Intervention: As unemployment, hunger, and homelessness increased, citizens turned to governments for help. Historically, governments were essential to capitalism (building roads and schools, regulating trade), but intervention increased significantly in the $1930s$. - Ideological Shifts: The United States became more liberal under President Roosevelt, while countries like Germany, Italy, and Japan turned radically to the right. Russia implemented government economic control through repressive Five-Year Plans and production quotas. # The Great Depression and German Hyperinflation - Impact of World War I: Although small compared to the destruction of $WWII$, the effects of $WWI$ were massive. Allied nations (victors) lost millions of citizens and spent tremendous amounts of money. Defeated Central Powers, especially Germany and former Austro-Hungarian territories, suffered greater losses. - German Reparations: The Treaty of Versailles forced Germany to pay billions of dollars in reparations. Unable to pay, the government printed more paper money in the $1920s$, causing inflation. - Inflation Definition: A general rise in prices leading to a drastic decrease in the value of money. - Visual Evidence of Inflation: Common food items in the Weimar Republic reached astronomical prices: $40,000\,\text{marks}$ for a tomato or four eggs, and $50,000\,\text{marks}$ for a loaf of bread. The total cost of food on a table in an Albert Harlingue photo was $1\,\text{million}\,\text{marks}$. - Postwar Loan Cycle: France and Britain struggled to repay wartime loans to the United States because Germany could not pay reparations. Additionally, the Soviet government refused to pay prerevolutionary Russian debts. # Global Downturn and the Causes of the Depression - End of Stability: The modest economic gains of the $1920s$ were ended by the Great Depression. - Major Causes: Agricultural overproduction and the United States' stock market crash in $1929$. - Financial Contagion: American investors withdrew money from German banks after the crash, leading to bank failures in Germany. Germany suffered more than any other Western nation. - Colonial Dependency: Economies in Africa, Asia, and Latin America suffered because they depended on imperial nations experiencing the downturn. - Japan's Trade Crisis: Japan's economy depended on foreign trade; its exports were cut in half between $1929$ and $1931$. # The Global Economy Data ($1929$ to $1938$) - The following values represent changes from the $1929$ level base of $100$: - $1929$: Total Global Production ($100$), Total Global Trade ($100$) - $1930$: Total Global Production ($86$), Total Global Trade ($89$) - $1931$: Total Global Production ($77$), Total Global Trade ($81$) - $1932$: Total Global Production ($70$), Total Global Trade ($74$) - $1933$: Total Global Production ($79$), Total Global Trade ($76$) - $1934$: Total Global Production ($95$), Total Global Trade ($79$) - $1935$: Total Global Production ($98$), Total Global Trade ($82$) - $1936$: Total Global Production ($110$), Total Global Trade ($86$) - $1937$: Total Global Production ($120$), Total Global Trade ($98$) - $1938$: Total Global Production ($111$), Total Global Trade ($89$) # Keynesian Economics and the New Deal - John Maynard Keynes: British economist who rejected the laissez-faire ideal. He argued that intentional government action could improve the economy. - Deficit Spending: Keynes advocated for governments to spend more than they take in during a depression to stimulate economic activity. - Expansionary Policy: By cutting taxes and increasing spending, governments would spur growth and end unemployment. - The New Deal: President Roosevelt implemented Keynesian ideas through policies under the goal of "Relief, Recovery, and Reform." - Relief: For citizens suffering (poor, unemployed, farmers, minorities, women). - Recovery: To bring the nation out of depression via government spending. - Reform: To change government policies to avoid future disasters. - Results and Reversals: By $1937$, unemployment fell and production rose. Roosevelt then reversed course due to fears of large deficits, causing unemployment to grow again. The Depression finally ended in $1941$ with massive deficit military spending for $WWII$. # Global Impact on Trade and Japan's Economic Recovery - Universal Unemployment: By $1932$, more than $30\,\text{million}$ people worldwide were jobless. - Trade Barriers: Nations imposed strict tariffs (taxes on imports) to protect domestic jobs, which worsened the decline in international trade. - Japanese Response: Japan devalued its currency (lowered the value in relation to foreign currencies) to make Japanese products cheaper than imports. - Military Stimulation: Japan's overseas expansionism increased the need for military goods, stimulating its domestic economy. # Political Revolutions in Russia and the Soviet Union - Context: Rebellions against authoritarian governments in Mexico, China, and Russia in the early $20\text{th}$ century influenced interwar economic management. - Russian Civil War ($1918$-$1921$): Despite the promise of "peace, land, and bread," the Bolsheviks faced starvation, strikes by factory workers and sailors, and peasant food hoarding. Production dropped sharply. - New Economic Plan ($NEP$): In $1921$, Lenin instituted a temporary retreat from communist policies, allowing private trade and small-scale farming to prevent complete collapse. The government maintained strict political control. - Rise of Joseph Stalin: After Lenin died in $1924$, Stalin took control of the Politburo and became a dictator for nearly $30\,\text{years}$. - Five-Year Plans: Stalin abandoned the $NEP$ for plans meant to transform the $USSR$ from an agricultural nation into an industrial power. - Collectivization: Farmland was taken from private owners and given to collectives (kolkhoz) to manage. Theoretically voluntary; in practice, peasants were forced by the state to reach specific production goals. - Consequences of Collectivization: Farmers retaliated by burning crops and killing livestock. The government seized food for cities, leading to millions of deaths by starvation, especially in the Ukraine. - Industrial Growth: Heavy industry grew tremendously in the $1930s$. There were many factory jobs and low costs of living, though consumer goods were scarce. - Atrocities: Stalin used gulags (labor camps) for political opponents and kept control of the press to hide his atrocities. # Political Revolutions and State Rule in Mexico - Institutional Revolutionary Party ($PRI$): Dominated Mexico for most of the $20\text{th}$ century. - Corporatist System: The $PRI$ claimed favors (education, jobs via infrastructure) for its constituents. - Economic Improvements ($1930$-$1970s$): Successful land reform occurred under L%C3%A1zaro C%C3%A1rdenas in the $1930s$. - Nationalization: In $1938$, C%C3%A1rdenas nationalized the mostly foreign-owned oil industry, creating Petroleos Mexicanos ($PEMEX$), then the second-largest state-owned company in the world. - Social Hierarchy: Despite reforms, the interwar period saw little change in social hierarchy. # The Rise of Fascism and Right-Wing Governments - Fascism Definition: A political system appealing to extreme nationalism, glorifying the military and armed struggle, and blaming ethnic minorities for national problems. - Characteristics: Suppression of political parties, independent trade unions, and protests; use of violence to achieve goals; strongly anti-communist. - Italy under Benito Mussolini: Mussolini coined "fascism" from "fasces" (ancient Roman symbol of authority). - Italian Corporatism: A theory that sectors of the economy (employers, unions, state officials) are separate organs of the same body. In practice, the state imposed its will on all, creating a totalitarian state. - Rise to Power: Discontent from receiving little territory at the $1919$ Paris Peace Conference allowed Mussolini to take control of parliment. He became a dictator ("Il Duce") and used militaristic propaganda in schools. - Conquest of Abyssinia: Italy seized Libya and Somaliland in the $19\text{th}$ century but was defeated by Abyssinia in the $1890s$. In $1935$, Mussolini sent $100,000$ troops to conquer Abyssinia, defying the League of Nations. - Credibility Crisis: The Abyssinian crisis destroyed the League of Nations' credibility. Germany and Italy formed an alliance in $1936$. # The Spanish Civil War ($1936$-$1939$) - Origins: Opposing ideologies (Democracy vs. Fascism) battled for control. The Spanish Republic formed in $1931$ after King Alfonso VIII abdicated. - Popular Front: Left-wing coalition elected in $1936$ promising land reform; opposed by conservatives, the Catholic Church, and the military. - The Conflict: In July $1936$, Spanish troops in Morocco revolted. General Francisco Franco led the Nationalists (insurgents) against the Republicans (Loyalists). - Foreign Involvement: Hitler (Germany), Mussolini (Italy), and Antonio Salazar (Portugal) provided arms to Nationalists. The $USSR$, Britain, the $U.S.$, and France sent civilian volunteers for the Loyalists. - Guernica: A massacre where German and Italian planes (Luftwaffe) bombed civilians in the Basque region as a military exercise. Immortalized by Pablo Picasso in his $1937$ painting. - Outcome: Franco won and ruled as a dictator until $1975$. Spain remained officially neutral in $WWII$ but aided the Axis. # Repressive Regime in Brazil - Conflict of Interest: Large landowners dominated the agricultural economy, frustrating the urban middle class. Discontent led to Getulio Vargas seizing power in a $1930$ coup. - Estado Novo ("New State"): Vargas instituted policies similar to Mussolini's corporate state: censorship, abolition of parties, and imprisonment of opponents. - Hypernationalism: Single-minded promotion of national interests and belief in national superiority. - WWII Alignment: Brazil sided with the Allies because of trade ties to the $U.S.$. Fighting fascism abroad led Brazilians to later push for democracy at home to end the contradiction of domestic dictatorship. # Comparison of Modern Industrial Societies - Communism: Government owns/manages business; supports internationalism/anti-colonialism; believes peace follows capitalism's defeat; supports equality; advocates atheism. - Capitalism: Private ownership and competition; mixed nationalism/internationalism; mixed attitudes to war; supports political but not economic equality; allows religious liberty. - Fascism: Private ownership with government restricted competition; strong nationalism; opposes peace as awakening society; opposes political/economic equality; uses religion to build nationalism. # Unresolved Tensions After World War I - Declaration of Purna Swaraj ($1930$): The Indian National Congress declared that British rule debased India economically, politically, culturally, and spiritually. - Essential Question: How did continuities and changes in territorial holdings create tensions after $WWI$? - Anti-colonial Resistance: Growing in Asia and Africa due to nationalism and the example of Turkey's self-determination. - Colonial Expectations: Colonial troops from Africa and Asia fought for the Allies, leading to hopes for self-determination as outlined in Wilson's Fourteen Points. - Reality of Peace: The "Big Three" (Lloyd George, Wilson, Clemenceau) only granted self-determination to white countries in Eastern Europe. Former Ottoman and German lands became mandates. - Vietnamese Nationalism: Woodrow Wilson refused to meet Ho Chi Minh, fueling stronger nationalist movements in Southeast Asia. # The Mandate System - Mandate System Definition: A form of colonization where the League of Nations charter (Article $22$) claimed colonized people needed "tutelage" from "advanced" nations. - Middle East Transfers: Palestine, Transjordan, Lebanon, Syria, and Iraq became mandates of Great Britain and France. - Pan-Arabism: An ideology calling for the unification of all lands in North Africa and the Middle East. - Balfour Declaration ($1917$): British statement that Palestine should be a home for European Jews (Zionists). # Anti-Colonialism in South Asia - Amritsar Massacre ($1919$): Indians gathered in a garden in Punjab to protest arrests; British forces fired on the unarmed crowd, killing $379$ and wounding $1,200$. This radicalized moderate nationalists. - Mohandas Gandhi: Led the Satyagraha ("devotion-to-truth") movement. - Civil Disobedience: Campaign of breaking unjust laws and serving jail time to stir international consciousness. - Boycotts and Homespun: Gandhi wore the "dhoti" and boycotted British cotton to protest inflated prices. - Salt March ($1930$): Gandhi led thousands to the Arabian Sea to pick up salt in defiance of the British salt monopoly. - Two-State Solution: Muhammad Ali Jinnah proposed a separate state (Pakistan) for the Muslim minority, fearing Hindu dominance in the Indian National Congress. # Nationalism and Conflict in East Asia - March First Movement (Korea, $1919$): Following the death of the Korean emperor and Japanese takeover in $1910$, $2\,\text{million}$ Koreans protested. Japanese forces killed thousands. - May Fourth Movement (China, $1919$): Protests erupted when the Paris Peace Conference gave German-controlled Shandong Peninsula to Japan instead of China. - Chinese Communist Party ($CCP$): Founded in $1921$ by Mao Zedong, who believed the revolution should be based on the peasant majority. - Kuomintang (Nationalist Party): Initially led by Sun Yat-sen; later by Chiang Kai-shek, who attacked the $CCP$ in $1927$, starting the Chinese Civil War. - Long March ($1934$-$1935$): A $6,000\text{-mile}$ retreat by the $CCP$ through mountains and deserts. Of the $80,000$ who started, only $10,000$ survived. - Mukden Incident ($1931$): Tensions over a Japanese-owned railway in Manchuria led to a full-scale Japanese invasion. - Manchukuo: A puppet state created by Japan in $1932$ with the last Chinese emperor on the throne. - Greater East Asia Co-Prosperity Sphere: Japan's empire including the Philippines, Dutch East Indies, Malaya, and Burma. # Resistance in West Africa - Intellectual Leadership: Pro-independence movements led by European-educated elites like Jomo Kenyatta (Kenya) and L%C3%A9opold Senghor (Senegal). - Labor Action: Railway strike ($1917$) and general strike ($1946$) across Senegal, Benin, Ivory Coast, and Guinea for better wages and benefits. # Causes of World War II - Path to War: Economic instability, failure of the League of Nations, and the rise of the Nazi Party in Germany. - Weimar Republic: Democratically elected but unpopular during the Great Depression due to unemployment and perceived weakness. - Adolf Hitler: Wrote "Mein Kampf" ($1924$); became Chancellor through legal elections ($1933$) and President after Hindenburg's death ($1934$). - Reichstag Fire: Staged burning of parliament used as an excuse to outlaw other political parties. - Scientific Racism and Anti-Semitism: Hitler claimed certain races were genetically superior and blamed Jews for domestic problems. - Nuremberg Laws ($1935$): Forbade marriage between Jews and gentiles and stripped Jews of citizenship. - Axis Powers: Rome-Berlin Axis with Italy ($1936$) and Anti-Comintern Pact with Japan. - Kristallnacht (Nov $9$, $1938$): Engineering anti-Jewish riots resulting in $90$ deaths, destruction of $7,000$ shops, and arrest of $30,000$ Jews. # Nazi Aggressive Militarism and Path to War - Treaty Violations: Hitler created an air force and began conscription ($1935$). - Rhineland ($1936$): Hitler sent troops into the buffer zone; Britain and France protested but took no action. - Appeasement: Policy followed by British Prime Minister Neville Chamberlain of giving in to demands to keep peace. - Third Reich Expansion: Anschluss with Austria in March $1938$. - Munich Agreement ($1938$): Allowed Hitler to annex the Sudetenland in exchange for a promise to stop. Hitler subsequently seized all of Czechoslovakia in $1939$. - Germano-Soviet Nonaggression Pact (Aug $23$, $1939$): Stalin and Hitler pledged not to attack each other; Hitler secretly offered Stalin control of eastern Poland. - Start of the War: Germany invaded Poland on September $1$, $1939$. Britain and France declared war, officially starting $WWII$ in Europe. Full-scale invasion of China ($1937$) had already started $WWII$ in Asia. # Questions & Discussion - Essential Question 1: How did different governments respond to economic crises after $1900$? (Answer: Through shifts toward either liberalism/Keynesianism or radical right-wing fascism and repressive communism). - Essential Question 2: How did continuities and changes in territorial holdings create tensions after $WWI$? (Answer: The Mandate system and refusal of self-determination to colonies led to radicalized nationalist movements). - Essential Question 3: What were the causes and consequences of World War II? (Answer: Economic instability, unresolved treaty issues, militarism, and the failure of appeasement). - Connect Questions: Connect the $USSR$ to Marxism (Topic $5.8$), compare interwar religious tensions in India to earlier history (Topic $1.3$), and trace Japan's path from isolation to imperialism (Topic $5.6$).