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Interwar period (1918-1939)

"This is not peace; it is an armistice for twenty years".

​Ferdinand Foch, Marshal of France and Commander-in-Chief of the Allied Armies during the First World War., on the Treaty of Versailles (1919)

1. Economic Changes

2. The Crash of '29 and the Great Depression

3. Causes for the Rise of Totalitarian Regimes

4. Fascism in Italy

5. German Nazism

6. The Paranoid Totalitarianism of Joseph Stalin

7. 1929-1939: The Road to Another War

Review Game and Test

1. Economic Changes After WWI

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1.1. The European Crisis and the U.S. as a Creditor

 

Europe was left in ruins. The human cost was staggering: 17 million dead from the war, plus another 20 million from the 1918 flu pandemic. Industry was shattered, and farmland was devastated.

Germany was hit with massive war reparations— the equivalent of 31 billion euros today— owed to civilian populations, France, and England. Unable to pay, Germany saw France occupy its key industrial region, the Ruhr Valley, from 1923 to 1925. The German economy collapsed. The government printed more money, devaluing the currency and causing hyperinflation (imagine a loaf of bread costing billions of marks!).

This crisis bred deep resentment in Germany towards France and fueled a radical nationalism, creating the perfect conditions for extremist groups like the Nazis to rise.

Meanwhile, European nations were bankrupt and struggling to repay their war loans, primarily to the United States, which emerged as the world's main creditor.

Seeing Germany's collapse and its inability to pay (it finally finished paying off its reparations in 2010!), the U.S. launched the Dawes Plan (1924). This plan:

  • Broke Germany's payments into smaller, manageable chunks.

  • Provided U.S. loans to help German industry recover.The idea was a cycle: a recovered Germany could pay France and Britain, who could then pay back the U.S. This plan was working until it was derailed by the U.S. stock market crash of 1929.

2. The Crash of 1929 and the Great Depression

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2.1 The Crisis in the United States

 

To understand the U.S. crash, we need to see the bigger picture. Before WWI, Britain and France were economic powers with strong import/export economies. After the war, they were ruined, and the U.S. became the dominant economic force. It was the world's banker and a major exporter, but it imported very little. While this made the U.S. incredibly wealthy, it was a problem: if all your customers are poor, eventually they stop buying your products. European countries could no longer afford American goods or repay their debts.

This is why the Dawes Plan was created: to get the global economy moving again. But then, the sudden collapsae of 1929 took place. The crash didn't happen overnight; warning signs were there:

 

  • Agriculture: During WWI, U.S. farmers fed Europe, making huge profits and taking out loans to buy more land. When the war ended, European farms resumed production, leaving the U.S. with a massive overproduction of food no one would buy. Farmers went bankrupt, couldn't pay their loans, and banks seized land they couldn't sell. The financial system was weakened.

  • Industry: Factories kept producing consumer goods (like cars and appliances) and farm equipment, assuming demand would last forever. But with farmers broke, demand plummeted. Overproduction led to huge unsold inventories.

  • Stock Market Speculation: During World War I, the U.S. government issued "Liberty Bonds" to fund military operations. These bonds functioned as a public loan; citizens would purchase a bond, thereby lending money to the government for the war effort, and would be repaid with interest after a set period. For many middle-class Americans, this was their first foray into investing, When the war ended, these new investors sought similar opportunities for profit and turned to the stock market. The influx of millions of new buyers drove stock prices to artificially high levels, generating substantial paper gains for investors. This environment created a powerful allure of quick and easy wealth, fueling a speculative bubble that was destined to collapse. With so many people buying, stock prices soared based on speculation, not real company value. It was seen as a way to get "easy money." This couldn't last. Stock prices are supposed to reflect company health, and companies were struggling. On October 24, 1929 ("Black Thursday"), the stock market collapsed and panic hit. People rushed to sell their stocks. Banks tried to artificially prop up prices, but on October 28th and 29th ("Black Tuesday"), the crash was uncontrollable. The Domino Effect was as follows:

    • 1.People lost their life savings in the crash.

    • 2.They rushed to banks to withdraw cash, causing bank runs.

    • 3.Banks, who had lost money on bad loans and the stock market, had no cash and closed.

    • 4.With no banks, businesses couldn't get loans to operate. They stopped investing and laid off workers.

    • 5.Unemployed workers couldn't buy goods, so more businesses failed, creating more unemployment. It was a vicious cycle.

    • To make things worse, the Dust Bowl of the 1930s—a severe ecological disaster of dust storms—destroyed farms across the Great Plains, pushing thousands more into poverty.

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2.2 The Crisis Spreads to Europe

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The U.S. crisis immediately spread to Europe. American banks stopped giving out the loans that were propping up economies like Germany's (the Dawes Plan). European economies collapsed.The solution in the U.S. was Keynesian economics, implemented by President Franklin D. Roosevelt's New Deal. The idea was that the government must step in to create jobs (e.g., building public works projects) and stimulate the economy, even if it meant raising taxes on the wealthy. The U.S. also devalued its currency to make its exports cheaper. This worked slowly. Germany adopted similar government-led projects and also began to recover. However, instead of a coordinated global recovery, European nations turned inward. Nationalism grew stronger, each country looked out only for itself, and the continent slid toward collective misery, paving the way for World War II.

3. Causes for the Rise of Totalitarian Regimes

 

After WWI, there was a cultural shift in Europe away from Enlightenment ideals like reason, liberty, and democracy. To many, democracy had failed. In the interwar period, over twelve democracies became dictatorships (Italy, Spain, Portugal, Rumania, Hungary, Bulgaria, etc.) The causes are broken into three categories:

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3.1. Ideological Causes:

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  • Cult of the Leader: Propaganda machines portrayed the leader (Hitler, Mussolini) as a heroic, almost God-like savior. Logic was replaced with appeals to emotion—patriotism, race, national destiny.

  • Social Darwinism: A twisted misuse of Darwin's theory. It was used to argue that nations and races were in a struggle for survival, and that some were inherently superior to others.

  • Rejection of Reason: A philosophy ("Vitalism") that rejected cold logic and celebrated instinct, action, and emotion.

  • Imperialism: The belief that a nation deserved to expand its territory (e.g., Italy's irredentismo, Germany's lebensraum—"living space").

  • Elite Theory: The idea that the masses needed to be led by a special class of "elite" rulers.

  • Cult of Youth: Aggressive slogans like "Step aside, old ones!" promoted the idea that young people were the engine of radical change.

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3.2. Political Causes:

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  • Lack of Democratic Tradition: In countries like Germany, the post-WWI Weimar Republic was seen as weak and forced upon them by the Treaty of Versailles.

  • Weak Governments: Democratic governments were ineffective and unable to control violence from extremist groups.

  • Fear of Communism: The 1917 Russian Revolution and the creation of the USSR in 1922 terrified many Europeans. Fascist parties presented themselves as a strong, nationalist alternative to communist revolution.

 

 

3.3. Economic Causes:

 

  • Post-War Crisis: Losers (Germany) were crushed by reparations. Winners (France, UK) were buried in debt and destruction.

  • The Great Depression: The economic collapse made the "easy solutions" promised by dictators seem very attractive to desperate populations.

           I do not want an

      intellectual education.

  Knowledge has made us proud

and arrogant, and we do not need

that. What we need is a healthy

body and a strong will to defend

                the Reich.

4. Fascism in Italy: A Case Study

 

 

4.1 The Rise of Mussolini

 

Benito Mussolini formed a paramilitary group, the Fasci di Combattimento (Blackshirts), in 1919.They used violence and intimidation—often with police looking the other way—to attack socialists, communists, and union organizers.

In 1921, he formed the National Fascist Party (PNF). It was a vague, populist party mixing hyper-nationalism, militarism, and promises to workers, capitalizing on national anger after WWI (la vittoria mutilata).

 

 

4.2 The March on Rome and Seizure of Power (1922)

 

In October 1922, Mussolini staged a power grab, the March on Rome, where 30,000 Camicie Nere gathered to demand power. Rather than resist, King Victor Emmanuel III, pressured by conservatives and fearing civil war, appointed Mussolini Prime Minister. By 1924, Mussolini held a fake election, used violence and threats to win, and then dismantled Italy's democracy to build his dictatorship.

 

 

4.3 Italian Society Under Fascism

 

  • Support Base: Fascism had strong support from landowners in the countryside (who liked its defense of private property) and some industrialists in cities (who liked its attacks on unions and communists).

  • Differences from Nazism: Italian Fascism was generally less extreme than German Nazism in the 1920s/early 30s. Mussolini never fully abolished the monarchy (the King remained and was the Heads of State).

  • Widespread, systematic terror: like the Holocaust did not initially exist (though political murders, like that of socialist Giacomo Matteotti (June 1924), did).

  • Racist laws were not a core part of early fascist doctrine but were introduced later (1938) as Mussolini allied with Hitler.

5. The Rise of Hitler and the NSDAP

 

Like Mussolini's rise in Italy, the ascent of Adolf Hitler and his NSDAP (National Socialist German Workers' Party) was fueled by a powerful fear of communist revolution. Many German industrialists and business leaders, terrified by economic crisis, worker strikes, and left-wing revolts, threw their financial support behind Hitler as a bulwark against communism.

Adolf Hitler, a failed artist and former corporal in WWI, joined the small German Workers' Party in 1919. By 1921, he had taken total control. In 1923, he attempted a coup known as the Beer Hall Putsch in Munich. It failed, and Hitler was sentenced to prison. During his brief eight-month stint (out of a five-year sentence), he wrote Mein Kampf (My Struggle). This book outlined his nationalist vision, blamed Germany's problems on the politicians who surrendered in WWI (the "November Criminals"), and scapegoated Jewish people, whom he falsely accused of controlling left-wing parties and the press.

After his release, Hitler's fiery, charismatic speeches—promising pan-Germanism (uniting all German-speaking peoples), and spewing anti-Semitism and anti-communism—gained him a following, though his party performed poorly in elections.

However, in January 1933, amid backroom political deals, he was appointed Chancellor of Germany. A key event followed in February 1933: the Reichstag Fire. The Nazis falsely blamed communists for the arson attack on the German parliament building and used it as an excuse to suspend civil rights.

In the March 1933 federal elections, the Nazi party won 44% of the vote (17 million voters!). Once in power, Hitler moved quickly to establish a brutal dictatorship:

  • The Night of the Long Knives (June 30, 1934): To eliminate rivals and consolidate power, Hitler ordered the murder of over 80 people, including Ernst Röhm, the leader of the SA (Sturmabteilung or "Storm Detachment"). The SA's street violence had been useful for intimidating opponents, but now Hitler needed to appear respectable to the army and industrialists. The murders were carried out by the SS (Schutzstaffel, "Protection Squadron") under Heinrich Himmler and the Gestapo (secret police), which became the main instruments of Nazi terror.

  • Nuremberg Laws (1935): These racist laws made anti-Semitism official state policy. They stripped Jewish people of their citizenship and forbade marriage or relations between Jews and "ethnic Germans."

  • Kristallnacht (Night of Broken Glass, November 9, 1938): A state-coordinated nationwide pogrom. Nazi paramilitaries and civilians destroyed Jewish homes, businesses, and synagogues. It marked a major escalation from discrimination to open, violent persecution.

 

 

5.2 Foreign Alliances

 

Hitler steadily built alliances with other fascist powers:

  • The Anschluss (March 1938): The annexation of Austria into Germany.

  • Munich Agreement (September 1938): Where Britain and France appeased Hitler by allowing him to take parts of Czechoslovakia.

  • Pact of Steel (May 1939): A military alliance with Mussolini's Italy.

  • Tripartite Pact (September 1940): Formalized the Axis Powers alliance between Germany, Italy, and Japan.

 

 

5.3 Nazi Society and Economy

 

  • Economy: Hitler pursued autarky (economic self-sufficiency). Major companies (like Siemens, Bayer, Porsche, and Hugo Boss) supported the regime because it crushed unions, communists, and strikes. The state financed massive public works projects and, most significantly, a huge rearmament and weapons industry, which solved unemployment.

  • Society: Total Control.

The Nazi Party infiltrated every aspect of life. Every club, association, or group needed party approval. The state's massive propaganda machine, run by Joseph Goebbels, controlled all media, art, and information.

6.The Paranoid Totalitarianism of Joseph Stalin

 

 

6.1 Rise to Power and Consolidation

 

Joseph Stalin came from a humble background in Georgia. He rose through the ranks of the Communist Party and, just before Lenin's death, secured the critical position of General Secretary of the Central Committee. This role, which seemed bureaucratic, allowed him to control party appointments and build a base of support. When Lenin died in 1924, Stalin outmaneuvered his rivals and was positioned to succeed him.

Initially, he ruled as part of a collective leadership with figures like Lev Kamenev and Grigory Zinoviev. However, Stalin soon turned on them. By 1936, in a shocking display of his absolute power, he had them executed after show trials. His main rival, Leon Trotsky, who criticized Stalin's concept of "Socialism in One Country" (focusing on building communism within the USSR rather than promoting worldwide revolution), was exiled in 1929 and assassinated on Stalin's orders in 1940.

 

 

6.2 The Great Terror and the GULAG

 

Driven by intense paranoia, Stalin launched a campaign to eliminate anyone who could possibly challenge him or was suspected of disloyalty. This period, known as the Great Purge or the Great Terror (1936-1938), saw between 700,000 and 1.2 million people executed.

The GULAG: This was the acronym for the Chief Administration of Corrective Labor Camps. It was a vast network of forced labor camps where "enemies of the state" were sent. Over a million and a half people died in these camps from starvation, disease, and overwork.

Purge of the Military: A particularly devastating aspect of the Purge was the execution of a huge portion of the Red Army's leadership—its most experienced generals and officers. This severely weakened the Soviet military on the eve of World War II.

 

 

6.3 Economic Policy: The Five-Year Plans and Famine

 

Stalin abruptly ended Lenin's NEP (New Economic Policy) and replaced it with a rigid command economy run by the state through Five-Year Plans. The goal was to rapidly transform the USSR from an agricultural society into an industrial superpower.The human cost of this forced industrialization was catastrophic, especially in Ukraine. To pay for industrial machinery with exports, the state forcibly seized grain from Ukrainian farmers, even their seed grain for the next planting season. This led to an artificial, man-made famine known as the Holodomor (1932-1933), in which millions of people (estimates exceed 2 million) starved to death.

 

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6.4 Foreign Policy and WWII

 

Stalin's foreign policy was initially defined by "Socialism in One Country." He was wary of conflict with the West but supported communist movements abroad through the Comintern and provided aid to the Republicans in the Spanish Civil War.

In 1939, seeing war on the horizon, he tried to form an alliance with Britain and France against Hitler. When that failed, he made a stunning reversal and signed the Nazi-Soviet Non-Aggression Pact (Molotov-Ribbentrop Pact) with Germany. This pact included a secret agreement to divide Poland between them. Shortly after, the USSR invaded eastern Poland and later the Baltic states.The pact was a temporary strategy for Stalin. It collapsed in 1941 when Hitler launched Operation Barbarossa, the surprise invasion of the Soviet Union. This forced Stalin to join the Allies (the U.S. and Britain), entering World War II on their side.

7. 1929-1939: The Road to Another War

 

The period between 1929 and 1939 saw a dramatic shift from the fragile hope of the post-WWI era back to the hostile alliances and aggression that would inevitably lead to a second, even more devastating, global conflict. The Great Depression was the engine that drove this disastrous turn.

 

 

7.1 The Descent Begins (1929-1933):

 

  • Economic Collapse Breeds Extremism: With 34% unemployment, Germany was in chaos and utterly unable to pay war reparations. International conferences failed to find a solution. This desperation created the perfect conditions for Adolf Hitler's rise to power.

  • Germany Rearms and Withdraws: In October 1933, Hitler's Germany defiantly announced it would not disarm but would instead rearm. It then withdrew from the League of Nations, openly rejecting international cooperation. The era of reconciliation was over.

  • Japan's Imperial Ambitions: In Asia, Japan pursued its own imperialist "living space" (Greater East Asia Co-Prosperity Sphere) by invading Manchuria in 1931 after staging the Mukden Incident, a false-flag attack. The League of Nations' weak response proved it was powerless to stop aggressive nations.

  • The Return of the Peace Trough Strength policy and Alliances (1934-1935): Just as before WWI, Europe split into competing alliances during a period of "Peace through Strength":

    • The Stresa Front (UK, France, Italy) aimed to contain Germany. The Franco-Soviet Pact was a mutual defense treaty.

    • The Anglo-German Naval Agreement secretly allowed Germany to rebuild its navy to 35% of Britain's, undermining the League of Nations and legitimizing German rearmament.

  • The Point of No Return (1935-1939): A series of aggressive acts by fascist powers, met with weak responses from democracies, made war inevitable:

    • 1.Italy Invades Abyssinia (1935): Mussolini, seeking an empire and revenge for an 1896 defeat, invaded Ethiopia. The League of Nations condemned it but did little. This pushed the isolated Italy toward the similarly isolated Germany.

    • 2.The Rome-Berlin Axis (1936): Hitler and Mussolini formalized their alliance, creating the Rome-Berlin Axis. They soon tested their partnership by aiding General Franco's nationalist forces in the Spanish Civil War.

    • 3.Anschluss with Austria (March 1938): With Mussolini's support, Germany annexed Austria. The rest of Europe watched apprehensively but did nothing.

    • 4.The Munich Agreement (September 1938): Hitler demanded the Sudetenland, a region of Czechoslovakia with a large German population. At the Munich Conference, Britain and France, desperate to avoid war, agreed to his demands without consulting Czechoslovakia—a shameful act of appeasement. Hitler promised this was his "last territorial demand."

    • 5.The Pact of Steel (May 1939): Germany and Italy solidified their military alliance, clearly defining the opposing blocs in Europe.

    • 6.The Nazi-Soviet Non-Aggression Pact (August 1939): Seeing that Britain and France were willing to let Hitler expand eastward, Stalin made a shocking deal with his ideological enemy. The Molotov-Ribbentrop Pact promised non-aggression and secretly planned for the division of Poland between the USSR and Germany.

  • The War Begins (September 1939):

    • September 1, 1939: Germany invaded Poland from the west.

    • September 3, 1939: Honoring their pledge to defend Poland, Britain and France declared war on Germany.

    • September 17, 1939: The Soviet Union invaded Poland from the east, as agreed with Hitler. World War II had begun. The policy of appeasement had failed, and the aggressive expansion of the Axis powers could only be stopped by total war.

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