Ch. 28: Europe and the Great Depression of the 1930s
Key Topics:
• Financial collapse and depression in Europe
• The emergence of the National Government in Great Britain and the Popular Front in France
in response to the political pressures caused by the Depression
• The Nazi seizure of power and the establishment of a police state and racial laws in Germany
• Forces industrialization and agricultural collectivization in the Soviet Union, and the purges
in the Soviet Communist Party and Soviet army under Stalin
I. Toward the Great Depression
i. The extended length and severity of the Great Depression was caused by three factors:
1. financial crisis stemming from the war and peace settlement
2. crisis in production and distribution of goods in the world market
3. neither Europe nor America offered strong economic leadership or acted responsibly
ii. The Financial Tailspin
a) Europe experienced mild inflation during/after the war, but after the German financial
disaster of 1923, many feared inflation as a source of social and political turmoil
b) Reparations and War Debts: France and the US, by demanding the payment of war debts,
caused the other European nations to adopt policies that discouraged trade and production
and hurt employment
1. France was determined to received reparations and finance its postwar recovery
through them
2. The US demanded payment for its wartime loans, and many European nations sought to
repay these debts through German reparations
3. The reparations and the war debts made normal business, capital investment, and
international trade difficult and expensive for European nations, and encouraged high
tariff policies.
c) American Investments: The Dawes Plan smoothed reparations and debt repayments to the
US and increased prosperity in Europe; however, the Wall Street crash of October 1929
stopped all US lending to Europe.
1. 1924: the Dawes Plan reorganized the administration and transfer of reparations and in
turn smoothed the debt repayments to the US. Increased US capital in Europe (shortterm loans) provided the basis for Europe's brief prosperity after 1925
2. 1929 October, The Wall Street crash caused many US banks to fail and demand
immediate repayment from European loans
d) The End of Reparations: As credit ran out, Europe experienced a major financial crisis. As a
result, reparations came to an end and debts owed to the US were settled.
1. 1931 May, Kreditanstalt, major bank in Vienna, collapsed
2. 1931 June, US president Hoover announced a one-year moratorium on all payments of
international debts (hurt the French economy)
3. 1932, The Lausanne Conference effectively ended the era of reparations
4. 1933, debts to the US were settled through small token payments or default
iii. Problems in Agricultural Commodities: Increased agricultural production lowered prices
while higher industrial wages increased the prices of industrial goods, hurting eastern
European farms. At the same time, overproduction in underdeveloped nations led to lower
demand for European industrial goods, resulting in stagnation and depression for European
industry and widespread unemployment.
a) farmers were unable to pay off their operational costs and debts
b) redistribution of land in eastern Europe resulted in inefficient farms, hurting the farmers
c) protective tariffs often prevented grain exportation
d) eastern European and German farmers became disillusioned with liberal politics--many
German farmers supported the Nazis
iv. Depression and Government Policy: Before Keynes, orthodox economic policy called for cuts
in government spending to prevent inflation. However, the severity of the depression prompted
the European government to interfere with the economy through new trade, labor, and
currency regulations
a) new economic sectors (new industries) and the service industries did well during the
Depression
b) general anxiety created social discontent, even among people who weren't ruined by the
economy
II. Confronting the Great Depression in the Democracies
i. Great Britain: The National Government
a) Ramsay MacDonald, Labour Party PM, formed a coalition ministry (National Government)
composed of Labour, Conservative, and Liberal ministers. The National Government avoided
the extreme wings of both Labour and Conservative parties, and:
1. balanced the budget: raised taxes, cut benefits, lowered gov salaries
2. left the gold standard, stimulating exports
3. Import Duties Bill in 1932 placed a 10% ad valorem tariff on imported goods
4. This allowed Great Britain to avoid the banking crisis that hit other countries, and to
restore the 1920s rate of production (basically, economy remained stagnant instead of
tanking)
b) 1932, Sir Oswald Mosely founded the (unpopular) British Union of Fascists
ii. France: The Popular Front
a) The Great Depression came later and lasted longer in France. Wages were lowered and the
government enacted protective tariffs, maintaining the home market.
1. 1932: a Radical coalition government was elected, and implemented a deflationary
policy. Reparations payments stopped.
2. the economic crisis strained parliamentary and political life
b) Right-Wing Violence: Various right-wing groups with authoritarian tendencies spread
unrest and violence throughout France, to the end that Radicals, Socialists, and Communists
realized that a right-wing coup might be possible.
1. Action Française and Croix de Feu were some right-wing leagues
2. hostile to parliamentary government, socialism and communism; loyalty to republican
government weakened
3. the Stavinsky affair/scandal symbolized all the immorality and corruption of republican
politics
4. 1934 Feb 6, a violent right-wing demonstration occurred in Paris
5. a government composed of all living former premiers replaced the Radical ministry, and
had the ability to deal with economic matters by decree
c) Socialist-Communist Cooperation: The communists, socialists, and radicals formed the
Popular Front, a coalition of all left wing parties, in 1935, with the purpose of preserving
the republic and pressing for social reform. Leon Blum, a French Socialist, became premier
on June 5, 1936, and pursued socialism through a democratic, parliamentary government.
d) Blum's Government: Blum succeeded in reorganizing management-labor relations and
increased government involvement in the economy; however, his moves upset the
conservative banking communities, and after his resignation in 1937, France was divided
and bitter.
1. June 8 reorganizations required employers to collectively bargain and established the
40 hour work week.
2. Blum raised salaries, instituted a program of public works, gave loans to small industry,
increased spending on armaments, and also devalued the French currency, though too
late to help French exports.
3. After his resignation, the left remained divided and the right came to hate the republic in
principle, leaving the French weak (not motivated) to defend the Republic in 1940.
III. Germany: The Nazi Seizure of Power
i. Depression and Political Deadlock: The Nazi's used the political deadlock and economic
turmoil of the late 1920s to come into power in the 1930s.
a) 1928: outflow of American capital undermined Germany's brief economic prosperity
b) 1928: coalition government formed of center parties and the Social Democrats
c) 1930: coalition government dissolved
d) 1930: President von Hindenburg appointed Heinrich Bruning chancellor, who ruled in an
authoritarian manner through emergency presidential decrees authorized by Article 48
e) 1930: the SA was huge, and the Nazis won 107 seats in the Reichstag
1. The Nazis used the turmoil and economic frustration to gain political power
ii. Hitler Comes to Power: Hitler became chancellor of Germany in 1933; the Nazis had support
across the social spectrum (especially farmers, war veterans, and the young), attracting those
who wanted social reform (Socialists) and were nationalistic (Conservatives)
a) 1932 election Hindenburg remained chancellor against Hitler
b) 1932: Hindenburg appointed Franz von Papen as chancellor
c) 1932: General Kurt von Schleicher became chancellor, and tried to prevent a left/right civil
war by building a coalition of conservatives and trade unionists. However, this frightened
Hindenburg
d) 1933: Hitler became chancellor; Papen as vice-chancellor to restrain him; Hitler promised:
1. security against communists and socialists
2. effective government
3. uncompromising nationalist vision of a strong restored Germany
iii. Hitler's Consolidation of Power
a) Hitler immediately moved to consolidate his control through three facets:
1. capture of full legal authority
2. crushing of alternative political groups
3. purging of rivals within the Nazi Party
b) Reichstag Fire: After the 1933 fire, the Nazis claimed there was an immediate communist
threat, and Hitler used Article 48 to issue the February Emergency Decree and suspend
civil liberties and proceeded to arrest communists.
c) The Enabling Act: Hitler suppressed and outlawed all opposition to the Nazi Party by the
end of 1933
1. 1933 March 23, the Enabling Act allowed Hitler to rule by decree
2. Hitler ended trade unions and outlawed all other German political powers
d) Internal Nazi Party Purges: Hitler purged his Party of any possible dissent, most notably
ordering the murder of key SA officers, including Ernst Roehm. He had over 100 people
killed June-July 1934
1. 1934 August 2, Hitler combined the offices of chancellor and president after the death
of president Hindenburg.
iv. Cinema of the Political Left and Right: The Soviet Union and Nazi Germany used the cinema
as a powerful propaganda tool. In the Soviet Union, Sergei Eisenstein produced phenomenal
films in line with Stalin's strict censorship. In Germany, Leni Riefenstahl also produced films
supporting the Nazi cause, but later claimed that her works were art, not propaganda, although
her films were shunned in the US.
v. The Police State and Anti-Semitism: Hitler consolidated his power and oversaw the
organization of a police state
a) SS Organization: The SS (Schutzstaffel), commanded by Heinrich Himmler, was the chief
vehicle of police surveillance, and Himmler was second only to Hitler.
b) Attack on Jewish Economic Life: Anti-Semitism was a key plank of the Nazi program, and
was based on 19th century biological racial theories. In 1933, the Nazis excluded Jews from
civil service, and also encouraged boycotts of Jewish businesses, with little public support.
c) Racial Legislation: The 1935 Nuremberg Laws robbed German Jews of their citizenship,
closing them off from professions and major occupations and prohibiting marriage between
Jews and non-Jews. The Nazis carefully (and somewhat arbitrarily) delineated who would be
considered Jewish.
d) Kristallnacht: In 1938, the persecution of Jews increased, and on November 9 and 10,
thousands of Jewish stores and synagogues were burned and destroyed on Nazi orders. The
Jewish community was required to pay for the damages. The Nazis used persecuting of the
Jews to popularize the concept of the German "Aryan" master race
e) The Final Solution: Hitler decided in 1941 and 1942 to destroy the Jews in Europe, leading to
the deaths of over 6 million Jews.
vi. Racial Ideology and the Lives of Women: German women were giving the special task of
preserving German racial purity, health, and culture by giving birth to and raising strong,
healthy German children. This was achieved through a policy of selective breeding or
antinatalism and promotion of love of the German nation.
a) Women considered unfit racially, physically, or mentally were often sterilized or forced to
have abortions
b) Nazis encouraged marriage and motherhood by giving husbands loans, tax breaks, and child
allowances if they would have families and raise children
c) The number of women working increased under the Nazi regime, although they remained in
"women's" jobs
vii. Nazi Economic Policy: Hitler's economic policy was incredibly successful, and focused on
tackling unemployment and preparing for war. By sacrificing liberty, destroying trade-unions,
and subordinating everything to the good of the state, full employment to prepare for war was
achieved, and gave the regime considerable legitimacy.
a) Hitler instituted a massive program of public works and government spending to increase
armaments after the 1935 renunciation of the military provisions of the Versailles treaty
b) 1936, Hermann Goring was appointed to prepare the army and economy for war in four
years and to make Germany economically self-sufficient
c) 1933: crushing of free trade unions made strikes illegal; labor disputed were handed by
government compulsory arbitration.
d) The Labor Front supported labor with "Strength Through Joy" and sought to show that
class conflict had ended
IV. Italy: Fascist Economies: Mussolini undertook public works, instituted protective tariffs, and
expanded wheat farming in an attempt to make Italy self-sufficient. However, production, exports,
and wages fell, while the price of food rose.
i. Syndicates: The fascists implemented a policy of corporatism, in which a planned economy
linked to the private ownership of capital and to compulsory government arbitration of
labor disputes. Major industries were organized into syndicates representing labor and
management, which would supposedly look to the greater goal of productivity for the nation.
ii. Corporations:Fascism brought economic dislocation and a falling standard of living.
a) After 1930, the industrial syndicates were reorganized into corporations, which grouped all
industries relating to a major area of production, from raw materials through finished
products and distribution, into one entity.
b) However, this only caused bureaucracy and corruption to proliferate, and the fascist
government gained increasingly more power in the economy.
c) In 1935, Italy invaded Ethiopia, putting the economy on a wartime footing. League of Nations
sanctions had no effect, but taxes rose and wages fell.
V. The Soviet Union: Central Economic Planning, Collectivization, and Party Purges
i. During the 1930s, the Soviet Union undertook a tremendous industrial advance, using state
coercion and terror and costing literally millions of human lives
ii. The Decision for Rapid Industrialization: Stalin pushed for rapid industrialization through a
series of five year plans to strengthen the Soviet Union against capitalist rivals. From 1928 to
1940, production rose 400%, and new heavy industries developed, but at great social and human
cost
a) 1928: the Party Congress implemented rapid industrialization, a sharp departure from
Lenin's New Economic Policy
b) Gosplan: (State Planning Commission) oversaw the programs, setting goals and
coordinating all facets of production. Enormous economic disruption occurred throughout
the economy
c) The expansion of the industrial base created a large factory labor force, drawn from the
countryside and urban unemployed. These workers worked in new work districts or new
cities in often deplorable conditions.
d) The Party used propaganda to stress the benefits of increased industrialization, and
promoted hard workers, such as the legendary coal miner Stakhanov
iii. The Collectivization of Agriculture: Beginning in 1929, Stalin undertook collectivization to
increase grain production, achieve control over the farming sector, and free peasant labor for
factories. However, the plan met with much resistance, ruined the lives of many farmers, and
did not achieve an increased output of food.
a) Under the NEP, kulaks (landowners) prospered, few consumer goods were produced, and the
cities experienced food shortages
b) 1929: Collectivization was vaguely outlined, and included eliminating the kulak class (kulak
= anyone who resists collectivization), transporting farmers to industrial areas (in Siberia, or
to prison camps), and harassing religious teachers.
c) Peasants, often led by women, sabotaged collectivization by slaughtering millions of horses
and cattle from 1929 to 1933
iv. Flight to the Soviet Cities: Collectivization spurred great rural-to-urban migration, with 12M
peasants leaving the countryside--mostly young males. Women and the elderly lived in villages
in great poverty. Increased urbanization under Soviet rule contrasted urbanization in western
Europe in that it arose from government-sponsored turmoil in the countryside.
v. Urban Consumer Shortage: The Soviet Union suffered from chronic shortages of urban
housing, consumer goods, food, and urban infrastructure. The people survived through the blat,
an informal mode of coping including black marketeering, farming on tiny private plots,
bartering, and pilfering from the state.
a) any goods produced were reserved for party members; there existed a sharp inequality
between the minority of party members and the general Soviet population
b) many cities lacked adequate transport systems, sewer systems, running water, and electric
lighting. Urban crime and disease were widespread
vi. Foreign Reactions and Repercussions: Many foreign contemporaries admired the benefits of
the Soviet Union without knowing of the shortages in consumer goods and great social costs.
a) In 1934, Stalin changed the requirements in Comintern policy to allow communist parties to
cooperate against Nazism and fascism; this allowed the Popular Front Government to form
in France
vii. The Purges: Stalin began his purges after the assassination of Politiburo member Sergei Kirov,
and after 1937 began purging out of the Party itself, to the effect that he created a party
absolutely subservient to him, not to the ideals of Belshevism.
a) 1933: turmoil in the countryside and and economic dislocation in the industrializing section
led Stalin to fear he was losing control
b) 1934 December 1, Sergei Kirov was assassinated, leading to the arrest, expulsion, and exile
to labor camps of thousands of people.
c) 1936-1938, show trials in Moscow, of high Soviet leaders confessing to fake crimes and
being executed. Many lower-level party members were also executed, and even members of
the Soviet army--the number ran into the millions.
d) This self-destructive cascade of accusations, imprisonments, and executions occurred
throughout the process, and was termed "centrally authorized chaos" and created a new
party structure entirely subservient to Stalin
VI. In Perspective
By the middle of the 1930s, dictators of the right and left had established themselves across much of Europe.
Political tyranny was hardly new to Europe, but several factors combined to give these rulers unique
characteristics. The dictators of the 1930s held more extensive sway over their nations than any other group of
rulers who had ever governed on the Continent thanks to:
• Mass political support:
◦ As long as the new rulers seemed successful, they did not lack support
◦ Many citizens believed these leaders had ended the pettiness of everyday politics
▪ well-organized political parties
▪ nationalism
▪ the social and economic frustration of the Great Depression
▪ political ideologies that promised to transform the social and political order
▪ a practical monopoly over mass communications
▪ ability to propagandize large populations and compel people to obey them and their followers
• the monopoly of police and military power; terror and coercive power
▪ armies
▪ police forces
▪ party discipline
• technological capacity
◦ as a result of the Second Industrial Revolution, dictators commanded a vast amount of
technologyand a capacity for immense destruction. Earlier rulers in Europe may have shared the
ruthless ambitions of Hitler, Mussolini, and Stalin, but they had lacked the ready implements of
physical force to impose their wills
Soon the issue would become whether these dictators would be able to maintain peace among themselves and
with their democratic neighbors.