Worldwide Depression and Rise of Fascism Notes
Lesson 2: A Worldwide Depression
Setting the Stage
By the late 1920s, European nations were recovering from WWI with the help of US loans.
The US and Japan were in better financial shape after the war.
The US economy appeared prosperous, but had underlying weaknesses.
The Big Idea
An economic depression in the United States spread worldwide and lasted for a decade.
Many social and economic programs introduced to combat the Great Depression are still operating.
Key Terms and People
Coalition government: A temporary alliance of several parties to form a parliamentary majority.
Weimar Republic: Germany's new democratic government established in 1919, named after the city where the national assembly met.
Great Depression: A long period of economic decline characterized by low production, a shrinking economy, high unemployment, and business losses.
Recession: A period of low or reduced economic activity.
Franklin D. Roosevelt: US President elected in 1932, who initiated the New Deal to combat the Great Depression.
New Deal: A program of government reform initiated by Franklin D. Roosevelt to provide jobs, financial aid, and reform the stock market and banking system.
John Maynard Keynes: British economist who advocated government intervention to cure unemployment, influencing Roosevelt's policies.
Postwar Europe
World War I was costly in terms of both human suffering and economic impact, leaving major European countries bankrupt.
Europe's global dominance declined after the war.
Unstable New Democracies
New democracies emerged after WWI as absolute rulers were overthrown.
Russia formed the first new government in 1917, but it soon fell to a Communist dictatorship.
Many citizens in new democracies lacked experience with representative government.
Coalition governments, temporary alliances of multiple parties, were common but unstable due to policy disagreements.
Frequent government changes hindered strong leadership and long-term goals.
The weaknesses of coalition governments made some voters willing to sacrifice democracy for authoritarian leadership.
The Weimar Republic
Germany's democratic government established in 1919, faced serious weaknesses.
Germany lacked a strong democratic tradition.
The Weimar Republic had multiple major and minor political parties.
Many Germans blamed the Weimar government for the country’s defeat and the humiliation caused by the Versailles Treaty.
Inflation Causes Crisis in Germany
Germany faced severe economic problems that began during the war.
Germany printed money to pay for the war, causing the mark to lose value after the defeat.
Burdened with war debt and reparations, Germany printed more money, leading to hyperinflation.
The value of the mark fell sharply; for example, a loaf of bread cost less than a mark in 1918, over 160 marks in 1922, and 200 billion marks in late 1923.
Many Germans lost faith in their new democratic government.
Attempts at Economic Stability
Germany recovered from the 1923 inflation due to the Dawes Plan, an international committee headed by American banker Charles Dawes.
The Dawes Plan provided a million loan from American banks to stabilize German currency and strengthen its economy.
The plan also set a more realistic schedule for Germany’s reparations payments.
The Dawes Plan, implemented in 1924, helped slow inflation.
As the German economy recovered, it attracted more loans and investments from the US.
By 1929, German factories produced as much as before the war.
Efforts at a Lasting Peace
As prosperity returned, German Foreign Minister Gustav Stresemann and French Foreign Minister Aristide Briand worked to improve relations.
In 1925, they signed a treaty in Locarno, Switzerland, promising that France and Germany would never again make war against each other.
Germany agreed to respect the existing borders of France and Belgium and was admitted to the League of Nations.
In 1928, the Kellogg-Briand peace pact, arranged by U.S. Secretary of State Frank Kellogg and France’s Briand, was signed by almost every country.
The pact pledged to renounce war as an instrument of national policy but lacked enforcement mechanisms.
The League of Nations, weakened by the US refusal to join, was the obvious choice for enforcement.
Despite its weaknesses, the peace agreements seemed promising.
Financial Collapse
In the late 1920s, American economic prosperity largely sustained the world economy.
A weakened US economy risked collapsing the entire global economic system, which happened in 1929.
A Flawed U.S. Economy
Weaknesses in the US economy included uneven distribution of wealth, overproduction, and reduced consumer spending.
In 1929, American factories produced nearly half of the world’s industrial goods.
The richest percent of the population received percent of all personal income, while percent of families earned less than per year.
Most families were too poor to buy the goods being produced, leading to cuts in orders from factories and worker layoffs.
A downward economic spiral began as more workers lost their jobs, leading to further reductions in production.
Overproduction also affected American farmers, who faced competition and declining prices.
The Stock Market Crashes
In 1929, New York City was the financial capital of the world.
Optimism about the US economy led to soaring stock prices.
Many middle-income people bought stocks on margin, paying a small percentage and borrowing the rest.
This system worked as long as stock prices rose, but investors risked losing money if prices fell.
In September 1929, some investors began selling stocks, fearing prices would decline.
On October 24, stock prices began to slide, causing panic.
On October 29, a record million shares were sold, and the market collapsed.
Life in the Depression
During the Great Depression (1929–1939), millions worldwide lost jobs or farms.
Unemployed people depended on charity for food, clothing, and shelter, often living in makeshift shacks.
Soup kitchens provided free food.
People waited in long lines for available jobs, which paid low wages.
American culture changed due to mass migrations to the West.
Americans focused inward and revisited their roots, with a resurgence of interest in traditional folk culture.
The Great Depression
People could not repay margin purchases, and stocks became worthless.
Unemployment rates rose as industrial production, prices, and wages declined.
The stock market crash did not cause the Great Depression alone, but it accelerated the economic collapse.
By 1932, factory production was halved, businesses failed, and banks closed.
Around million people lost their savings when banks failed.
Farmers lost lands due to inability to make mortgage payments.
By 1933, one-fourth of American workers were unemployed.
Isolationist Policy
The US generally followed a policy of isolation after World War I and turned even more inward after the Great Depression.
The US government focused on recovery and relief, even with the rise of fascism and the Japanese invasion of Manchuria in 1931.
The US remained committed to isolationism, but it did not recognize or support territory taken aggressively by other nations.
Franklin D. Roosevelt's election led to a slow shift toward intervention in foreign affairs.
A Global Depression
The collapse of the American economy sent shock waves around the world.
American bankers demanded repayment of overseas loans, and investors withdrew money from Europe.
The American market for European goods dropped as the US Congress placed high tariffs on imported goods, backfiring as other nations imposed their own tariffs.
World trade dropped by percent, contributing to the economic downturn.
Unemployment rates soared.
Effects Throughout the World
Germany and Austria were particularly hard hit due to war debts and dependence on American loans and investments.
In 1931, Austria’s largest bank failed.
In Asia, both farmers and urban workers suffered as the value of exports fell by half between 1929 and 1931.
Latin America was also heavily affected as demand for products like sugar, beef, and copper dropped, causing prices to collapse.
The World Confronts the Crisis
The Depression challenged the economic and political systems of democracies, with each country responding differently.
Britain Takes Steps to Improve Its Economy
Britain was severely hit by the Depression and elected a multiparty coalition government.
The government passed high protective tariffs, increased taxes, regulated the currency, and lowered interest rates.
By 1937, unemployment had been cut in half, and production had risen above 1929 levels.
Britain avoided political extremes and preserved democracy.
France Responds to the Economic Crisis
France had a more self-sufficient, agricultural economy.
By 1935, one million French workers were unemployed, contributing to political instability.
In 1936, moderates, socialists, and Communists formed the Popular Front.
The Popular Front initiated reforms to help workers, but price increases offset wage gains, and unemployment remained high.
France preserved democratic government.
Socialist Governments Find Solutions
Scandinavian countries (Denmark, Sweden, Norway) met the crisis successfully by building on community action.
Sweden sponsored massive public works projects.
Scandinavian countries increased pensions for the elderly, unemployment insurance, housing subsidies, and other welfare benefits, funded by taxes on all citizens.
Democracy remained intact.
Recovery in the United States
Herbert Hoover's administration failed to help Americans during the Great Depression.
In 1932, Franklin D. Roosevelt was elected and initiated the New Deal.
Large public works projects provided jobs for the unemployed.
Government agencies gave financial help to businesses and farms.
Large amounts of public money were spent on welfare and relief programs.
Regulations were imposed to reform the stock market and banking system.
The New Deal reformed the American economic system and preserved faith in the democratic system.
Keynesian Economics
John Maynard Keynes's General Theory of Employment, Interest, and Money advocated government intervention to cure unemployment.
Keynesian economics suggested government job programs, tax policy changes, and public funding modifications.
This was a new approach to capitalist economic theory, contrasting with Adam Smith's laissez-faire approach.
Roosevelt adopted Keynesian economics in some policies after the recession of 1936–1937.
Lesson 3: Fascism Rises in Europe
Setting the Stage
While some democracies remained strong, many people lost faith in democratic government and turned to new economic movements and ideologies like fascism.
These movements conflicted with those of democratic societies.
The Big Idea
In response to political turmoil and economic crises, Italy and Germany turned to totalitarian dictators.
These dictators changed the course of history, and the world is still recovering from their abuse of power.
Key Terms and People
Fascism: A new, militant political movement that emphasised loyalty to the state and obedience to its leader.
Benito Mussolini: Leader of the Fascist Party in Italy who became dictator in the mid-1920s.
Adolf Hitler: Leader of the Nazi Party in Germany.
Nazism: The German brand of fascism.
Mein Kampf: Book written by Hitler outlining his beliefs and goals for Germany.
Lebensraum: Living space that Hitler believed Germany needed, to be gained through imperialism.
Fascism
Fascism had no clearly defined theory or program, but shared ideas such as extreme nationalism.
Fascists believed nations must struggle, pledged loyalty to an authoritarian leader, and used uniforms, salutes, and mass rallies.
Characteristics of Fascism:
Authoritarianism, state more important than the individual, charismatic leader, action-oriented.
Economic functions controlled by state corporations or the state itself.
Nationalist, racist (in Nazism), one-party rule, supreme leader.
Supported by middle class, industrialists, and military.
Censorship, indoctrination, secret police.
Mussolini Takes Control
Fascism's rise in Italy was fueled by disappointment over territorial gains after WWI, rising inflation, and unemployment.
The democratic government seemed unable to deal with the country’s problems.
Benito Mussolini promised to rescue Italy, revive its economy, and rebuild its armed forces.
He founded the Fascist Party in 1919, gaining popularity as economic conditions worsened.
Groups of fascists attacked Communists and socialists, winning support from the middle classes, aristocracy, and industrial leaders.
In October 1922, fascists marched on Rome, demanding Mussolini be put in charge, leading to his legal assumption of power.
Il Duce’s Leadership
Mussolini became Il Duce, abolished democracy, and outlawed other political parties.
He used terror and violence, with secret police jailing opponents.
Government censors controlled media, broadcasting only fascist doctrines.
Mussolini allied fascists with industrialists and landowners, but never achieved total control like Stalin or Hitler.
Hitler Rises to Power in Germany
When Mussolini became dictator of Italy, Adolf Hitler was a little-known political leader.
The Rise of the Nazis
Hitler joined a right-wing political group that believed Germany had to overturn the Treaty of Versailles and combat communism.
The group became the National Socialist German Workers’ Party (Nazi).
Nazism formed the German brand of fascism.
The party adopted the swastika as its symbol and set up a private militia called the storm troopers.
Hitler Becomes Chancellor
Hitler's success as an organizer and speaker led him to become the leader of the Nazi party.
Inspired by Mussolini's march on Rome, Hitler and the Nazis plotted to seize power in Munich in 1923, but the attempt failed.
While in jail, Hitler wrote Mein Kampf, outlining his beliefs and goals.
He asserted that Germans were a master race and that non-Aryan races were inferior.
He vowed to regain German lands, reversing the Versailles Treaty.
The Great Depression helped Hitler's cause, as Germans sought security and firm leadership.
Hitler declared Germany needed lebensraum and promised to get it through imperialism.
The Führer Is Supreme
Hitler used his power to turn Germany into a totalitarian state, banning political parties and arresting opponents.
The SS (Schutzstaffel) was created, loyal only to Hitler, and the Gestapo enforced obedience through terror.
The Nazis took command of the economy, banning strikes and giving the government authority over business and labor.
Millions of Germans were put to work in factories, building highways, manufacturing weapons, and serving in the military, reducing unemployment.
Hitler controlled every aspect of German life, using propaganda in press, radio, literature, painting, and film.
Books that did not conform to Nazi beliefs were burned, and churches were forbidden to criticize the Nazis.
Schoolchildren joined the Hitler Youth or the League of German Girls.
Hitler Makes War on the Jews
Hatred of Jews or anti-Semitism was a key part of Nazi ideology.
Jews were used as scapegoats for Germany’s problems.
From 1933, laws were passed depriving Jews of their rights, leading to violence.
Kristallnacht (Night of the Broken Glass) signaled the real start of the process of eliminating Jews.
Hitler’s “Final Solution” was to exterminate the Jewish population in Europe, which became known as the Holocaust, resulting in the deaths of six million Jews.
Other Countries Fall to Dictators
Nations in eastern Europe after World War I fell to dictators.
Hungary, Poland, Yugoslavia, Albania, Bulgaria, and Romania turned to strong-man rule, suspending constitutions and silencing foes.
By 1935, only Czechoslovakia remained a democracy in eastern Europe.
Only in European nations with strong democratic traditions did democracy survive.
By the mid-1930s, the world was split into democratic and totalitarian camps as the fascist dictatorships showed a willingness to use military aggression.
Although all of these dictatorships restricted civil rights, none asserted control with the brutality of the Russian Communists or the Nazis.