Europe and The Great Depression

Economic Hardshipand Political Change

Toward the Great Depression

Three factors combined for intense severity and length of Great Depression:1) financial crisis from WWI and settlement2) crisis in production and distribution of goods in world market 3) west European nations and US didn’t act responsibly and lead others

The Financial Tailspin

Most of Europe emerged from WWI with inflation demand for consumer and industrial

goods drove up prices, Price and wage increases stopped

after 1921, but inflation remained haunted governments as source of political and social instability

Reparations and War Debts:

France/US determined to get reparations much of the money European powers got

from Germany went to US 1922, Great Britain announced it would

receive reparations only to pay US; war debts made normal business,

investment, and trade difficult and expensive for European powers,

currency speculation drew funds away from capital investment

American Investments:

1924, Dawes Plan reorganized administration and war debts; afterwards, private US currency flowed into

Europe in short-term loans

1928, this lending contracted as American money was withdrawn from Europe and put into New York stock market US banks loaned customers money, they invested in stock market: huge amounts of money were lost in Oct 1929

stock market crash, little US money available for Europe

The End of Reparations

Credit ran out, financial crisis struck Continent; Kreditanstalt, major bank in Vienna, collapsed May1931

Germany couldn’t make next payment,

Hoover announced 1-yr moratorium on all paymentsFrench agreed to moratorium reluctantly; little alternative Germany’s economy almost collapsed Lausanne Conference in 1932 ended era of

reparations 1933 debts owed to US settled

Problems in Agricultural Commodities

Production and trade went down less demand meant idle factories/fewer jobs new wheat farming methods sent world wheat prices

to record lows: good at first for consumers and bad for farmers farm problems pressing in eastern Europe new farms were inefficient – German farmers were major

source of support for Nazis

Outside Europe agricultural commodity producers had similar

problems production had outstripped world demand collapse in agricultural prices/financial turmoil led to

stagnation/depression for Europe: depression sustaining itself

Depression and Government Policy

People with work always outnumbered people w/o work, Feared they would be next,

created social discontent

John Maynard Keynes’ General Theory of Employment, Interest, and Money -1936 orthodox economic policy called for cuts in

govt spending to prevent inflation govt involvement in the economy increased

rapidly from west to east across Continent furthered political experimentation

America: Causes of European Economic Crisis

Black Tuesday, October 29, 1929Stock Market CrashesPanic followsRun on the BanksBanks FailUS investment in Europe stops1/3 of Americans unemployedGlobal Consequences

Great Britain

Struggles to Recover from WWI Merchant fleet was devastated Sale of oversees investments to

finance war Production falls to 80% of prewar levels New industries require renovation and

capital investment, little to be found. Return to gold standard makes pound

to expensive, sales drop in foreign markets

Great Britain: A Nation DividedRamsey McDonald, Labour Party,

Inexperienced Economic Advisors

American trade and credit dries upUnemployment Doubled, Labour splitsConservative Landslide – The National Economy

Cut unemployment, balanced the budget, raised taxes Macdonald replaced by Conservative Neville

Chamberlain Regional differences, based on industries Abandoned the Gold Standard, Pound Fell

Leads to a Gradual RecoveryRise of the Welfare State

FranceGenerally had recovered from WWI Maintained high tariffs Plunged France into the Depression

Conservative Government Fails Radical Government replaces them

Stavisky Scandal almost leads to civil war New Coalition of Middle Class and Working

Class unite to combat Fascism

The Popular Front (Leon Blum) Raised Taxes, Cut Spending, Recognized

Unions, 40 hour work week, raised wages

Germany- the Nazis

Depression and Political Deadlock Weimar Republic hit hard by the Depression

Coalition government could not decide on economic reforms

Hindenburg appointed Heinrich Bruning as chancellor Governed under emergency decrees

German unemployment rose Situation benefited the extreme political parties

Nazis gained seats in Reichstag Gained seats through elections, violent attacks and

mass rallies

Hitler comes to power

1930-32- political, social and economic situation did not improve Hitler ran against Hindenburg in 1932

Earned enough votes to convince Hindenburg that Bruning was no longer effective

Appointed Franz von Papen as chancellor Removed the ban on Nazi meetings Called for a Reichstag election

Nazis gained 37% of the seats Hitler demanded to be appointed chancellor

November- Papen resigns Replaced with General Kurt von Schleicher

Attempted to create a coalition with the Nazis Schleicher resigns due to his own ineffectiveness

January 28 1933- Hindenburg’s advisors convince him to appoint Hitler chancellor In a vain attempt to control him Papen would be Vice Chancellor

January 30 1933- Hitler appointed Chancellor Supported by a wide spectrum of German groups

Hitler’s Consolidation of Power

Reichstag Fire

Feb 27 1933- Reichstag set on fire Nazis claim it is a communist plot Hitler issues an emergency decree

suspending civil liberties and arrested communists. Remained in forced until 1945

The Enabling Act

March 23 1933- Reichstag passed the Enabling Act which allowed Hitler to rule by decree No legal limits to his authority

Hitler used the Act to go after other political parties Outlawed all other political parties by

June/July 1933

Internal Nazi Purges

By 1933 there were 1 million SA (stormtroopers) Led by Ernst Roehm Hitler feared Roehm as a potential

rival June 30 1933- Hitler orders the

assassination of Roehm, and other key SA officers- more than 100 killed

The Police State and Anti-Semitism

The SS (Schutzstaffel)- security units Commanded by Heinrich Himmler Elite body guard for Hitler Carried out the SA purges Head of police system

Attack on Jewish Economic Life and Racial legislation

1933- Exclusion from civil service jobsEnforced boycotts against Jewish businesses

1935- Nuremburg Laws Robbed German Jews of their citizenship Professional life became limited Marriage restrictions Legal exclusion and humiliation became the law

All people with at least 3 Jewish grandparents were Jewish etc . . .

Kristallnacht

1938 – Nov 9 and 10- Thousands of Jewish stores and synagogues were burned Jewish community had to pay for the cleanup

Final Solution

Hitler’s plan to eliminate the Jewish population of Europe, More than 6 million Jews were killed in

mass executions.

Nazis and Women

Hitler’s policies were similar to Mussolini’s Encouraged women to have children Opposite policy used against “inferior”

groups- Jews, Gypsies, and other groups Jewish women were targeted for death due to

potential for bearing children Protected jobs of working women

Pushed for “natural” jobs for women- teaching, nursing, secretarial etc . .

Nazi Economic Policy

Destroyed unions Strikes became illegal

Limited private exercise of capitalAllowed private property and capitalismGovernment controlled prices and investmentCreated government projects to stimulate the economy Built the Autobahn Government farms Prepared the military for war

Italy: Fascist EconomicsBegan in 1920’s “Battle of Wheat”Corporatism Industrial Syndicates Planned Economy Government Arbitrators

Corporations Unified common industries 22 Corporations Corruption, increased oversight Shift to War Economy 1935

Stalin’s Soviet Union

Central Economic PlanningRapid industrialization Five Year Plans Gosplan (State Planning Commission)

Massive investment in infrastructureSupported by widespread propagandaCollectivization, assault on the Kulaks Cost- Millions of innocent lives

Urban Struggles and Growth

Peasant flight to the cities 12 Million migrate to the cities Housing Shortages Lack of consumer products

The Great Purge The Soviet Holocaust Stalin’s Paranoia, targets all enemies

Achieves rapid economic and industrial growth