Transcript Ch 27-lect. 3

The Search for Peace and
Political Stability
Treaty
of Versailles left a shaky
truce!
Trying to create international order.
War debts and disrupted trade.
Economic crash ruins all hope./
Germany and the Western
Powers
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Reparations Payments
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France
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Vital necessity
Hold Germany down indefinitely
Finally reach goal of security
Great Britain
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Second best market
Maynard Keynes
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Economic Consequence of the Peace-1919
Created sympathy for Germany in English speaking
countries/
Germany and the Western
Powers
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French Alliances
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Russia hostile and communist
England and U.S. unwilling to commit
Eastern Europe
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1921-mutual defense pact with Poland
Little Entente-against Hungary
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Czechoslovakia
Romania
Yugoslavia
Germany and the Western
Powers
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Reparations and the Great Inflation
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Germany made first payment in 1921
Unable to pay second payment
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Inflation, assassination, hostility and
arrogance of Weimar Republic
Proposed moratorium
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Prime Minister Raymond Poincare-call bluff
or see peace settlement dissolve.
France’s Response
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January 1923
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France and Belgium moved out on the
Rhineland
Occupied the Ruhr
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Industrial city
**Most serious international crisis of the
1920s
France would force Germany to accept
the Treaty of Versailles
Germany’s Response
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Ordered people to stop working
passively resist occupation
French Response:
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Cut off Rhineland and Ruhr
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Only enough food to prevent starvation
Sent in 40,000 colonial troops
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“Black shame”-African soldiers savages,
will brutalize women
Racial panic intensified relations
German support to its people
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In order to pay the passive workers
Germany printed money (mark).
RESULT: runaway INFLATION
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Prices rose
German money lost all value
Civilian Response to Inflation
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Germans felt betrayed
**Hated and blamed Western
government, their own government,
big business, the Jews, the workers,
and the communists for their
misfortune.
Adolf Hitler and Nazi Party capitalized
on the feeling of discontent.
Gustav Stresemann
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pg 875
1878-1929
Assumed leadership of German
government
Compromise
Called off passive resistance in the
Ruhr and agreed to pay reparations**
Question: What to do with reparations?
Hope in Foreign Affairs
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1924-Dawes Plan
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Put forth by Charles G Dawes-American
Banker
Accepted by France, Germany and Great
Britain
Reparations linked to level of economic
prosperity.
Receive loans from the US to promote
recovery
Germany takes out
large loans from the
United States
Germany pays reparations
to France and Great Britain
France and Britain
repay debts to the
United States
Political Settlements
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Locarno, Switzerland
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Germany and France accepted their
common border
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Britain and Italy would enter a war if one
attacked the other
Germany settled boundary disputes with
Poland and Czechoslovakia-NO
permanent borders
Cautious Optimism
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“spirit of Locarno”
1926- Germany joined League of
Nations
Kellogg-Briand Pact- 1928
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“renounce (war) as an instrument of
international policy”-settle disputes
peacefully
German Stabilization
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1923 Liberal democracy
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Elections held regularly
Growing in support of Germans
Hitler’s entrance-beer hall=prison
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Mein Kampf (My Struggle)
Hitler’s National Socialist Party
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Anti-Semites, ultra-nationalists, ex-servicemen
Economy stabilized
Still divided
French Stabilization
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Communists and Socialists battle for
support of the workers.
Rebuilt war-torn Northern region
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Inflation
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10% of pre-war value
Social Harmony in Great
Britain
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Unemployment after WWI and its effect on
government policy
Rise of the Labour Party-decline of old liberal ideals
of competitive capitalism, limited government
control, and individual responsibility
Labour Party replaced the Liberal Party as
opposition to Conservatives
Moved toward socialism
Granted Ireland full autonomy in 1922
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Except for Ulster
Great Depression
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Social and political consequences
Mass unemployment
Failing farms
Social welfare programs
Shattered political stability of the mid-1920s
Encouraged growth of extremists
Democratic government faltered
Authoritarian fascist parties gained power
Spark of Great Depression
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October of 1929-Crash of Stock
Market in US
American stock boom was built on
borrowed money- “On Margin”
People started to sell all at
once=financial panic
Impact of the Financial Panic
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Investors and speculators were wiped
out
Started to by fewer goods
Prices fell, production began to slow
down, unemployment began to rise
SPIRALING DECLINE in AMERICA
International Financial Crisis
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New York bankers began recalling the
short-term loans
Gold reserves began to flow rapidly out of
Europe
Hard for European business people to
borrow money
Public begins to withdraw savings from
banks
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Austria 1931 largest bank crashes
Crisis of Production
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1929-1933
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World output falls 38%
Each country tried to manage alone
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Going off gold standard
Raising protective tariffs
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limiting international trade
Relentless slide to the bottom
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International economy lacked
leadership
Poor national economic policy in
almost every country
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Governments cut their budgets when
they should have raised them and run
large deficits
“counter-cyclical policy”-Keynes
Mass Unemployment
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Financial crisis led to cuts in
production
Workers lost their jobs
Little money to buy goods
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1932- 1 in 3 were jobless in Germany
1932- 33% unemployed in US
Governments pumped money into
economy to break cycle of decline
Social Problems due to
Unemployment
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Poverty
Unemployment benefits and public aid
to prevent starvation
Other effects:
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Postpone marriages
Birthrates fell sharply
Increase in suicides and mental illness
“Social Powder Keg”
Herbert Hoover’s Response
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1929-1933
Banks fell and unemployment soared1931
Industrial production fell 50% between
1929-1932
Roosevelt’s Response
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1933-1945
“New Deal for the forgotten men”
Reform capitalism in order to preserve it
Rejected socialism and government
ownership of industry-1933
HOWEVER: advocated forceful government
intervention in economy and instituted social
programs
RESULT---Europe followed suit
New Deal Acts
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Agricultural Adjustment Act (1933)Attempted to raise prices and farm
income by limiting production
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Farmers repaid Roosevelt with
overwhelming support in the next election
National Labor Relations Act (1935)Helped unions by declaring collective
bargaining to be the law of the land
New Deal Programs
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The National Recovery Administration
(NRA)-Attempted to fix prices and wages
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Most ambitious attempt to control and plan the
economy
Did not work and declared unconstitutional in
1935
The Works Progress Administration (1933)Built public works projects such as building,
bridges, and highways
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1/5 of the entire US labor population
Checked social revolution
Legacy of the New Deal
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Though achieving some social reform,
it failed to pull the United States out of
the depression: it took the Second
World War to accomplish that.
Scandinavian Response to the
Depression
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Responded successfully
Social Democracy built on cooperative
community action
Large-scale deficits to finance public works
and maintain production and therefore
employment
Had to tax heavily
Private and cooperative enterprise thrived,
also democracy
Orthodox Economic Theory in
Britain
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Ramsey MacDonald’s Labour
government and then the conservative
governments followed by balancing the
budget and controlling spending.
Economy recovered and total
production was up 20% in 1937
compared to 1929
Explaining British
Improvement
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National market
New industries-demand increased
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Automobiles and electrical appliances
Low interest rates=housing boom
The French Malaise
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Economy declined steadily until 1935
Governments remained unstable
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1933 alone 5 formed and failed
The Popular Front-1936
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Formed for the national elections of
May 1936
Alliance of Communist, Socialists, and
Radicals formed in response to the
growing strength of fascists at home
and abroad.
The Popular Front
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Won the election
Launched a program of social reform
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Spanish Civil War
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Support for unions, paid vacations, 40-hour work
week
Political extremism growing
Coalition collapsed in 1937
“An anxious and divided France drifted
aimlessly once again, preoccupied by Hitler
and German rearmament”