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Europe & The Great
Depression of the 1930’s
Chapter 27
Toward the Great Depression
• 1920’s > “roaring” in the US
• 1929 severe downturn
– High unemployment
– Minimal trade
– Low Production
• Fight for economic security
• Governments abandon market economy >
lean toward mixed economy
– More govt. involvement
• 3 reason for severity and length of depression
– Financial crisis from war & peace settlement
– Crisis in production & distribution of goods in world
market
– Lack of leadership from major powers
Financial Tailspin
• Uncontrolled inflation
– Nations seek to keep value of their currency
– Germany > example
• War-debt another issue
– France & US sought reparations aggressively
• Germany > main target for money
– Reparations made normal business difficult
• Small trade & low production > increases unemployment
• American investments
– Dawes Plan > smoothed debt payments
– US > loaning money > loans invested in the stock market
> crash > major issue
• No more loaning money (Europe) > US can barely solve its own
problems
• End of reparations
– German economy on the edge of collapse
– Herbert Hoover gives one-year moratorium > prelude to
the end of reparations > official in 1932
Problems in Agricultural Commodities
• Market for European goods shrinks in the
1920’s
– Why?
• Improved farming methods across the globe
• World supply of grain increases
• Trouble for European farmers
– Goods they used more expensive
– Prices for their commodities plummeted
• Result > stagnation & depression
Depression & Government Policy
• New economic sectors develop
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Automobiles
Radios
Synthetics
Service industries
• People working are frustrated > not moving up
the ladder
• Governments not fit to confront problems
• New economic thought emerges
– Based on John Maynard Keynes
• Govt. needs to step in when market is in a downturn
• More govt. spending to stimulate economy
– Private enterprise now subject to regulations
Confronting the Great
Depression in the Democracies
• Political life changes in Great Britain and
France
• Great Britain
– New coalition govt.
– Abandonment of old sacred economic policies
• France
– Creation of political and economic program
Great Britain: The National Govt.
• 1929 > unemployment > major issue
– Labour party in charge > what to do?
– Ramsay MacDonald > prime minister
• Slash budget
• Reduce govt. salaries
• Cut unemployment benefits
– MacDonald forms coalition ministry made up of
labour, liberal, and conservatives called the
National Govt.
• Tried to balance budget
• Britain went off the gold standard
• Import Duties Bill
– Britain first to restore production in Europe (1934)
• Unemployment persisted
– Neville Chamberlain takes over in 1937
• Seen as a more progressive thinker
France: The Popular Front
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Not affected by depression until 1931
Major problem > industrial stagnation
– Coalition Govt. (radical) > lower govt. spending & increase
interest rates
– Reparation payments end
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Right wing violence
– Groups favoring monarchy or military rule grew
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Resembled fascists in Italy
Reeked havoc on political life
– Stavisky Affair > showed corruption in rep. govt.
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Left wing cooperation
– Popular Front est. 1935 > coalition of left wing parties
– Controlled govt. under Leon Blum
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Blum’s Govt.
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Pursued socialism through democratic govt.
Labor strikes > major problem
Blum > raised wages, recognized unions, est. 40 hr. work week, govt.
loans to small industry, etc.
Pressure causes halt in reform
Political life in jeopardy again > no faith in republic
Germany: The Nazi Seizure of Power
• Most remarkable political event stemming
from Great Depression
– National Socialists (Nazis) coming to power
• Took advantage of fragile economy and Weimar
constitution
Depression and Political Deadlock
• 1928 end of parliamentary govt. in
Germany
– Coalition of parties governed
• Dissolves in 1930 > could not solve economic issues
• President > Hindenburg
• Chancellor > Heinrich Bruning
• Bruning governs through decrees
– Weimar Republic becomes authoritarian
regime
• Unemployment rises to 6 million in 1930
• Nazis gain seats in Reichstag
– Use terror & intimidation
– Gain power legally through impressive
electoral results
Hitler Comes to Power
• 1932 Hindenburg up for reelection
– Hitler runs against him > loses narrowly in a run
off
• Franz Papen made chancellor
– Govt. needs support Nazis have
– Nazis gain more seats in Reichstag
• Papen resigns > Kurt Schleicher takes over
– Tried to gain Nazi support without Hitler
• Fails > political disorder in Reichstag
– No support from Hindenburg Schleicher resigns
• Hitler becomes chancellor in 1933
– Occurs b/c of political turmoil created by
depression
– Draws support from farmers, war veterans, and
the young
– Promise of security and effective govt. > also
restore Germany to power
– Not afraid to address issues in Germany
Hitler’s Consolidation of Power
• Moves quickly to consolidate control
– Capture full legal authority
– Crush alternative political groups
– Purge rivals within
• Reichstag fire
– Excuse to take care of communist threat
– Under Article 48 issues an emergency decree to
suspend civil liberties
• Enabling Act
– Hitler could now rule by decree > no limits
• Eliminates all potential opposition
• Party Purges
– SA officers a threat > so they are killed
– Hindenburg dies
• Hitler combines both offices > becomes sole ruler
The Police State and Anti-Semitism
• Germany becomes a police state
• Police surveillance > SS
– Lead by Himmler > very close to Hitler
– Previously they were Hitler’s bodyguards
• Jews main target of terror
– Nuremburg Laws > robbed Jews of
citizenship
– Who is defined as a Jew?
• Depends on the number of Jewish parents &
grandparents
• Very complex
• Kristallnacht
– Jews forbidden to engage in business
– Nov. 9 and 10, 1938 Jewish businesses
and synagogues burned
• Final Solution
Racial Ideology & the Lives of Women
• Women’s job
– Reserve racial purity
• Give birth to pure Germans
• Only certain women seen as racially fit to give
birth
• Policy of selective breeding
• Focus is on the state not individual
• Nazi legislation gave breaks to
families who followed this policy
• Nazis protected women’s jobs
– Pursue jobs “natural” to their character
• Examples?
• Women seen as the protector of
German cultural values
Nazi Economic Policy
• Hitler successful at attacking
unemployment
– This success gave his regime
credibility
– Give up political and civil liberties and
you can achieve full employment
– Major programs of public works and
spending
• Most related to rearmament
• Improved transportation (for military)
• Govt. controlled all aspects of
economy
• 1935 Germany renounces Treaty
of Versailles
Italy: Fascist Economies
• Fascists sought to stabilize social & economic life
– Mussolini attempts to make Italy self-sufficient
• Depression > obstacle > production, exports, and wages fell
• Economic policy > corporatism
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Medium between socialism and liberalism
Private ownership of capital
Govt. arbitration of labor disputes
Syndicates formed > made up of labor and management
• After 1930, syndicates reorganized into corporations
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Group industries into a major area > example > agriculture
22 in total
Chamber of Deputies replaced > Chamber of Corporations
Govt. now has more control not owners and consumers
• 1935 Italy invades Ethiopia
– League of Nations issue economic sanctions
Stalin’s Soviet Union
• Russia experienced industrial advance
during the Great Depression
• Economic growth achieved through the
death of millions
The Decision for Rapid Industrialization
• Stalin’s Goal?
– Overtake the productive capacity of its enemies
– Build up industries, such as iron, steel,
electricity, etc.
• Organized five year plans
– Gosplan > set goals and work to achieve them
• Rapid expansion of industry
– Large factory labor force
• Workers lived in deplorable conditions
• Used propaganda to ensure cooperation
– Appealed to the young
• Production grew rapidly
– From 1928 to 1940 > rose 400%
– Human cost for this was appalling
The Collectivization of Agriculture
• Agricultural productivity had always been a problem
– When the govt. bought grain, they set prices >
leads to hoarding
• Stalin’s solution?
– Collectivize grain and other products for domestic
use and foreign export (collectivization)
– Huge state run farms > collectives
– Blamed kulaks (small prosperous peasant
farmers) for economic problem with the grain
issue
• Eventually, sought to eliminate them
• Caused chaos and violence in the countryside
• Peasants who resisted outright were killed
• Result?
– Millions dead
– Still could not produce enough food
Flight to the Soviet Cities
• 12 million peasants flee the countryside
• Many move to the cities
– Urban population grows rapidly
• Huge migration is a direct result of the violence the
govt. inflicted on the countryside
Urban Consumer Shortages
• Housing issue
– Many workers lived in barracks
– Cramped apartments
• Shortage of food and clothes
– Consumed less food than the Russian
Revolution
• City infrastructure was lacking
– Poor transportation and sewerage
– Water and electricity were issues
– Crime and disease widespread
• Mode of coping known as the blat
Foreign Reactions & Repercussions
• Capitalist nations shocked at
the how quickly the Soviet
economy had grown
• Foreign policy shift
– Stalin afraid of Nazi Germany
– Allows communist parties to
cooperate with non communist
parties against fascism
The Purges
• Stalin’s policies aroused internal opposition
– Opposition found amongst lower level parties
• Stalin’s paranoia leads to the Great Purges
– Most mysterious and horrendous political events of
the 20th century
– Pretext > assassination of Sergei Kirov
– Prior sabotage and disloyalty was met with death
• Show trials 1936-38 held in Moscow
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Included former high soviet leaders killed
Lower level party members killed
Possibly millions of ordinary citizens killed > no trial
Then came govt. officials and members of the military
• Justification?
– Settle old scores and create discipline
– Fear for his own power and ruthless determination to
preserve and increase it