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UNIT 7
THE INTERWAR YEARS AND
THE SECOND WORLD WAR
1. RUSSIA: FROM THE TSAR TO THE USSR
2. THE USSR AND ITS DEVELOPMENT
3. POST-WAR YEARS: CRISIS AND RECOVERY IN THE 1920S
4. THE 1929 CRISIS AND THE GREAT DEPRESSION
5. AUTHORITARIANISM AND TOTALITARIANISM
6. THE RISE OF NAZISM IN GERMANY
7. THE GERMAN THIRD REICH
8. THE SECOND WORLD WAR
9. THE SECOND WORLD WAR: CONSEQUENCES
1. RUSSIA: FROM THE TSAR TO THE USSR
1. Russia before the Revolution: the Russian Empire
Pre-revolutionary Russia (Early 20th century):
• Political situation: autocratic regime.
• Supported by local bureaucracy, a powerful army and the Orthodox Church.
• Absolute power of the Tsar.
Pre-revolutionary Russia (Early 20th
century):
• Agricultural base of economy.
• Large landowners, poor peasants.
Semi-feudal regime.
• Lack of industrial development
(late 19th, St Petersburg and
Moscow). Little railway and heavy
industries.
• Social characteristics:
• One of the least developed and
poorest in all Europe.
• Peasants and factory workers
suffered hard working conditions,
low wages, long working days, and
paid high taxes.
Pre-revolutionary Russia (Early 20th century):
Political parties:
- Kadet (Democratic Constitutional Party). Bourgeois liberalism.
- Esers (Social-Revolutionary Party). Peasant revolution.
- Russian Social Democratic Party. Marxist and working-class militants.
- 1912: Mensheviks  Moderate. Allegiance with Kadet for overthrowing the
Tsar.
- Bolsheviks  Revolutionary.
Early 20th century: the tsar (Nicholas
II Romanov, since 1894) started
losing power:
1. Social dissatisfaction: high taxes,
scarce rights and periodic
shortages of food.
2. Colonial defeats: in 1905 the
Russian Empire was defeated by
Japan, what was interpreted as
an international humiliation.
3. The appearance of political
parties and proletariat
organizations, which were
severely repressed.
2. The causes of the Revolution and first attempt
THE 1905 REVOLUTION
§ 1905  Defeat in the Russo-Japanese War è Revolts  Harsh repression (Bloody
Sunday in St Petersburg, Odessa, etc.)
Battleship Potemkin
§ Workers, peasants and soldiers organised in
Soviets (councils) è Strikes and
demonstrations
§ Russian Social Democratic Workers’ Party,
divided into the Mensheviks (moderate
socialists) and the Bolsheviks (radical
Marxists) gained more importance.
§ 1906  Tsar agreed to elections by
universal suffrage (Duma) and an
agricultural reform.
§ Never fulfilled. Autocracy reinstalled.
First World War → Scarcity, discontent, etc. Also, military
defeats è Discontent è February Revolution (Julian
Calendar. March in Gregorian Calendar)
23rd February (7th March), 1917 
• Huge demonstration in Petrograd (St. Petersburg),
general strike and riots in military barracks.
• Soviets by workers, soldiers and peasants demanding
better working conditions, higher salaries, political
reforms and the withdrawal from the war.
3. The bourgeois revolution of February 1917
The February 1917 revolution...grew out of prewar political and economic instability,
technological backwardness, and fundamental social divisions, coupled with gross
mismanagement of the war effort, continuing military defeats, domestic economic
dislocation, and outrageous scandals surrounding the monarchy (Alexander Rabinowitch).
The situation escalated 
End of Tsarism: abdication of Nicholas II in March.
Creation of a Republic (power between the
Provisional Government and the Petrograd Soviet).
Menshevik control of the
provisional government (Lvov
and Kerensky)  Moves
towards a parliamentary
democracy (constitutive
elections), political and social
reforms.
But still in WWI.
Slow progress + war + poverty
è Popular discontent.
4. The provisional government
Bolsheviks  Wanted no participation
in WWI è Demanded resignation of
the government.
Vladímir Ilich Uliánov, Lenin  April
Theses
• All power to the soviets (as supreme
political power).
• Communist ideas.
• Peace with Germany.
• Land to the peasants.
1) In our attitude towards the war, which under the new [provisional]
government of Lvov and Co. unquestionably remains on Russia’s part a
predatory imperialist war owing to the capitalist nature of that government,
not the slightest concession to “revolutionary defencism” is permissible. […]
2) The specific feature of the present situation in Russia is that the country
is passing from the first stage of the revolution—which, owing to the
insufficient class-consciousness and organisation of the proletariat, placed
power in the hands of the bourgeoisie—to its second stage, which must
place power in the hands of the proletariat and the poorest sections of the
peasants. […]
5) Not a parliamentary republic—to return to a parliamentary republic from the
Soviets of Workers’ Deputies would be a retrograde step—but a republic of
Soviets of Workers’, Agricultural Labourers’ and Peasants’ Deputies
throughout the country, from top to bottom.
Abolition of the police, the army and the bureaucracy.
8) It is not our immediate task to “introduce” socialism, but only to bring social
production and the distribution of products at once under the control of the
Soviets of Workers’ Deputies. April Theses. Lenin
5. The October Revolution
25th October, 1917 (7th November) è Bolshevik (with soviets and Red Guards)
uprising in Petrograd  Kerensky overthrown.
Assault of the Winter Palace.
Quickly spread.
New government  Lenin (workers’ government) è Revolutionary measures:
• expropriation of land and division among
the peasants.
• factories taken over by workers’
committees.
• Brest-Litovsk Treaty (1918).
• creation of the Comitern (Third
International) to coordinate communist
parties globally.
• New Economic Policy (NEP): gave the state
control of the most important sectors, but
admitted some capitalist practices, such as
national trading and small land properties.
“The most equitable settlement of the land question is to be as follows:
(1) Private ownership of land shall be abolished forever; land shall not
be sold, purchased, leased, mortgaged, or otherwise alienated.
All land, whether state, crown, monastery, church, factory, entailed,
private, public, peasant, etc., shall be confiscated without
compensation and become the property of the whole people, and pass
into the use of all those who cultivate it.
(2) All mineral wealth, ore, oil, coal, salt, etc., and also all forests and
waters of state importance, shall pass into the exclusive use of the state.
All the small streams, lakes, woods, etc., shall pass into the use of the
communes, to be administered by the local self-government bodies.
(6) The right to use the land shall be accorded to all citizens of the
Russian state (without distinction of sex) desiring to cultivate it by their
own labour, with the help of their families, or in partnership, but only
as long as they are able to cultivate it. The employment of hired labour
is not permitted.
(8) All land, when alienated, shall become part of the national land
fund.”
Lenin. Decree on Land.
Elections in November 1917  25 % for Bolsheviks è Lenin dissolved the Assembly (fear
of counter-revolutionaries) è End of political pluralism.
"[Because] the proletariat is still so divided,
so degraded, so corrupted in parts ... that
an organization taking in the whole
proletariat cannot directly exercise
proletarian dictatorship. It can be exercised
only by a vanguard that has absorbed the
revolutionary energy of the class.“
V. Lenin
TSARISTS AND LIBERALS
WHITE ARMY
BOLSHEVIKS
RED ARMY
(led by Trostky)
Early 1918
Rebellion Vs Soviet gov.
6. The Civil War (1918-21)
Civil War  Misery, food shortages, political reprisals, etc.
War communism  Collectivisations, nationalisations,
harvests to the State.
Summer 1918  Romanov family executed.
1921  Red Army defeats the White Army è Communist Party (Bolsheviks) in power 
Prosecution of political rivals, repression of counter-revolutionary activities (Cheka).
1922  Formation of the Union of
Socialist Soviet Republics (USSR).
2. THE USSR AND ITS DEVELOPMENT
1. The formation of the USSR
Federal State, from the imperial nationalities (Slavic, Caucasians, Muslims, Russians, etc.).
Power in the hands of the Communist Party of the Soviet Union (CPSU). Other parties
banished.
1924  Constitution.
Legislative
power
SUPREME
SOVIET
Head of State
PRESIDIUM
Executive power
COUNCIL OF
PEOPLE’S
COMMISSARS
Indirect universal suffrage
DICTATORSHIP
TOTALITARIAN STATE è Identified with the party
2. Stalinism
Ths struggle for
power after Lenin’s
death (1924) è
Trotsky and Stalin. Export the revolution
(internationalisation)
Socialism in one country è
Strengthening the internal
structure è USSR superpower
è Future revolutions.
Sole leader  Stalin
Trotsky exiled (1940, killed in Mexico)
Stalin  Personal dictatorship
(even, personality cult).
Stalinism:
- No regard to previous revolutionary principles.
- The CPSU gained power.
- Very harsh repression  Enemies, party members, ordinary people, etc. è Crimes
against the State. è Gulags (forced labour camps)
- Great Purge  Massive political repression led by the NKVD (Soviet Secret Police).
Around 1 million people killed.
Moscow Trials (1936-8)  Old Bolshevik leaders, Trotskyists, political dissidents,
army officers è Gulag, execution or jail.
“Stalin committed a very grave crime against the Communist party, the socialist state,
Soviet people and worldwide revolutionary movement... Together with Stalin, the
responsibility for the abuse of law, mass unwarranted repressions and death of many
thousands of wholly innocent people also lies on Molotov, Kaganovich, Malenkov...”
Shvernik Commission, 1963.
Stalin’s state planned economy
- Planned, state-managed economy → Five-year
plans.
- Collectivisation of economy. No private property.
- Rapid industrial development: heavy industry,
energy production, infrastructures.
- Problem: agriculture fell behind. No high
production of consumer goods.
By 1930: one of
the great powers
of the world. No
great effect of the
1929 crisis.
3. POST-WAR YEARS: CRISIS AND RECOVERY IN THE 1920S
Economic and cultural reconstruction after WWI.
o Demographic catastrophe.
o Economic disaster.
o High unemployment.
o Shortages of products and higher prices.
o From creditors to debtors (to USA)
1. Post-war crisis in Europe (1918-23)
• Germany  Very severe situation. Unable to pay war compensations (Treaty of Versailles):
- Hyperinflation (loss of value of the Deutsch Mark)
- High unemployment.
- Decline in the standard of living.
- Mid 1920s  USA loaned more funds (1924) and negotiated the restructuring of
German debt.
“No other nation has experienced anything comparable to the events of 1923 in Germany. All
nations went through the Great War, and most of them have also experienced revolutions,
social crises, strikes, redistributions of wealth, and currency devaluation. None but Germany
has undergone the fantastic, grotesque extreme of all of these together; none has
experienced the gigantic, carnival dance of death, the unending, bloody Saturnalia, in which
not only money but all standards lost their value.
[…] Anyone who had savings in a bank or bonds saw their value disappear overnight. Soon it
did not matter whether it was a penny put away for a rainy day or a vast fortune. Everything
was obliterated...A pound of potatoes which yesterday had cost fifty thousand marks now
cost a hundred thousand. The salary of sixty-five thousand marks brought home the previous
Friday was no longer sufficient to buy a packet of cigarettes on Tuesday...In August, the dollar
reached a million [marks]....In September, a million marks no longer had any practical
value...At the end of October, it was a billion...The atmosphere became revolutionary once
again.“
Sebastian Haffner, Defying Hitler. A Memoir (1939)
WWI  Economic disaster for Europe.
USA  Great prosperity: supply of food, arms and industrial goods.
Largest creditor in the world  Loans to European nations.
Half of the world’s gold reserves è Dollar as strong currency.
Bank of America  World’s main investor.
WORLD’S
LEADING
ECONOMIC
AND
FINANCIAL
POWER
2. The USA: the roaring twenties (1924-29)
PROSPERITY IN THE USA
Second Industrial Revolution: Use of new energy sources
(oil and electricity), new industries (automobile, electrical
devices) and new media (radio, telegraph, cinema).
Workers’ wages increased
Improvement of the standard of living
Consumer society (Mass consumption)
The middle classes’ spending capacity allows consumerism
THE ‘AMERICAN WAY OF LIFE’
Cultural input  American way of life
- Promotion of specific values (initiative,
personal effort, etc.) to help people to
achieve success and well-being.
- Based on consumption of goods and media
(advertising, propaganda).
- Mass entertainment  Cinema, sports,
cabaret, theatre, etc.
- New trends, less uptight and more focused
on fun (instead of protocol)
- Jazz, Charleston, blues, etc.
4. THE 1929 CRISIS AND THE GREAT DEPRESSION
1. The 1929 Stock Market Crash
24th October, 1929  The Roaring Twenties abruptly ended è Collapse of the New York
Stock Exchange è THE GREAT DEPRESSION.
CAUSES OF THE STOCK EXCHANGE CRASH:
- Overproduction  Larger offer than demand è Too much stock accumulated è Prices
dropped è Many business went bankrupt.
- Stock market speculation  Easy investment and large profits in the 1920 in the stock
markets è Huge demand (small shareholders even asked for loans for buying more) è
Shares rose value è Not backed by real productivity (speculative bubble).
Black Thursday (24th October, 1929)
- Several problems during 1929: mini crash in
March, decline in production and sales, amount
of private debt.
- Realisation about the difference between real
value and stock exchange value
MASSIVE SELL-OUT NO BUYERS
Law of supply and demand
If no demand è Fall of prices
STOCK MARKET CRASH
Black Thursday, Black Monday and Black Tuesday
Immediate economic consequences
BANKING CRISIS
SHORTAGES OF
CASH
LOSSES OF MONEY
(investors and
companies)
MASSIVE ECONOMIC
RECESSION
• Great economic recession  Banking crisis, bankruptcy of private investors and
companies, closures of factories, high unemployment, very low consumption, etc.
• Unemployment  By 1932, 13 million people (about 25 % active population). Many
families in poverty.
0
5
10
15
20
25
1920
1930
1934
1938
1942
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
US Unemployment (1920-2014)
% of active population
2. The Great Depression
International spread è
• The US Government withdrew their
capital from Europe, asked to return
loans, American companies stopped
investments, reduction of imports in the
US, decrease of trade.
1. THE USA’S NEW DEAL
• President Franklin Delano Roosevelt (1932-1945) NEW DEAL  Political programme
based on the intervention of the state in economy.
3. The fight against the crisis
• public expenditure and creation of
public companies.
• aid to private companies in
difficulties.
• agricultural stocks to be destroyed
(control supply and demand).
• banking controls and low-interest
loans.
• public works  for tackling
unemployment.
• encouragement to wage raises è
More consumption.
• reduction of the working hours to
40 per week.
1. PROPOSALS FOR EUROPE
1933 → London Economic Conference
Purposes:
• agreement on measures to
fight global depression
• revive international trade
• stabilize currency exchange rates.
No agreement reached.
Proposals for economic recovery →
Keynesian economies: State intervention
in the economy with the objective of
stimulating investment, employment and
consumption.

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UNIT 7 - The Interwar Years and the World War II (I).pdf

  • 1. UNIT 7 THE INTERWAR YEARS AND THE SECOND WORLD WAR
  • 2. 1. RUSSIA: FROM THE TSAR TO THE USSR 2. THE USSR AND ITS DEVELOPMENT 3. POST-WAR YEARS: CRISIS AND RECOVERY IN THE 1920S 4. THE 1929 CRISIS AND THE GREAT DEPRESSION 5. AUTHORITARIANISM AND TOTALITARIANISM 6. THE RISE OF NAZISM IN GERMANY 7. THE GERMAN THIRD REICH 8. THE SECOND WORLD WAR 9. THE SECOND WORLD WAR: CONSEQUENCES
  • 3.
  • 4. 1. RUSSIA: FROM THE TSAR TO THE USSR 1. Russia before the Revolution: the Russian Empire Pre-revolutionary Russia (Early 20th century): • Political situation: autocratic regime. • Supported by local bureaucracy, a powerful army and the Orthodox Church. • Absolute power of the Tsar.
  • 5. Pre-revolutionary Russia (Early 20th century): • Agricultural base of economy. • Large landowners, poor peasants. Semi-feudal regime. • Lack of industrial development (late 19th, St Petersburg and Moscow). Little railway and heavy industries. • Social characteristics: • One of the least developed and poorest in all Europe. • Peasants and factory workers suffered hard working conditions, low wages, long working days, and paid high taxes.
  • 6. Pre-revolutionary Russia (Early 20th century): Political parties: - Kadet (Democratic Constitutional Party). Bourgeois liberalism. - Esers (Social-Revolutionary Party). Peasant revolution. - Russian Social Democratic Party. Marxist and working-class militants. - 1912: Mensheviks  Moderate. Allegiance with Kadet for overthrowing the Tsar. - Bolsheviks  Revolutionary.
  • 7. Early 20th century: the tsar (Nicholas II Romanov, since 1894) started losing power: 1. Social dissatisfaction: high taxes, scarce rights and periodic shortages of food. 2. Colonial defeats: in 1905 the Russian Empire was defeated by Japan, what was interpreted as an international humiliation. 3. The appearance of political parties and proletariat organizations, which were severely repressed. 2. The causes of the Revolution and first attempt
  • 8. THE 1905 REVOLUTION § 1905  Defeat in the Russo-Japanese War è Revolts  Harsh repression (Bloody Sunday in St Petersburg, Odessa, etc.)
  • 10. § Workers, peasants and soldiers organised in Soviets (councils) è Strikes and demonstrations § Russian Social Democratic Workers’ Party, divided into the Mensheviks (moderate socialists) and the Bolsheviks (radical Marxists) gained more importance. § 1906  Tsar agreed to elections by universal suffrage (Duma) and an agricultural reform. § Never fulfilled. Autocracy reinstalled.
  • 11. First World War → Scarcity, discontent, etc. Also, military defeats è Discontent è February Revolution (Julian Calendar. March in Gregorian Calendar) 23rd February (7th March), 1917  • Huge demonstration in Petrograd (St. Petersburg), general strike and riots in military barracks. • Soviets by workers, soldiers and peasants demanding better working conditions, higher salaries, political reforms and the withdrawal from the war. 3. The bourgeois revolution of February 1917
  • 12. The February 1917 revolution...grew out of prewar political and economic instability, technological backwardness, and fundamental social divisions, coupled with gross mismanagement of the war effort, continuing military defeats, domestic economic dislocation, and outrageous scandals surrounding the monarchy (Alexander Rabinowitch).
  • 13. The situation escalated  End of Tsarism: abdication of Nicholas II in March. Creation of a Republic (power between the Provisional Government and the Petrograd Soviet).
  • 14. Menshevik control of the provisional government (Lvov and Kerensky)  Moves towards a parliamentary democracy (constitutive elections), political and social reforms. But still in WWI. Slow progress + war + poverty è Popular discontent. 4. The provisional government
  • 15. Bolsheviks  Wanted no participation in WWI è Demanded resignation of the government. Vladímir Ilich Uliánov, Lenin  April Theses • All power to the soviets (as supreme political power). • Communist ideas. • Peace with Germany. • Land to the peasants.
  • 16. 1) In our attitude towards the war, which under the new [provisional] government of Lvov and Co. unquestionably remains on Russia’s part a predatory imperialist war owing to the capitalist nature of that government, not the slightest concession to “revolutionary defencism” is permissible. […] 2) The specific feature of the present situation in Russia is that the country is passing from the first stage of the revolution—which, owing to the insufficient class-consciousness and organisation of the proletariat, placed power in the hands of the bourgeoisie—to its second stage, which must place power in the hands of the proletariat and the poorest sections of the peasants. […] 5) Not a parliamentary republic—to return to a parliamentary republic from the Soviets of Workers’ Deputies would be a retrograde step—but a republic of Soviets of Workers’, Agricultural Labourers’ and Peasants’ Deputies throughout the country, from top to bottom. Abolition of the police, the army and the bureaucracy. 8) It is not our immediate task to “introduce” socialism, but only to bring social production and the distribution of products at once under the control of the Soviets of Workers’ Deputies. April Theses. Lenin
  • 17. 5. The October Revolution 25th October, 1917 (7th November) è Bolshevik (with soviets and Red Guards) uprising in Petrograd  Kerensky overthrown. Assault of the Winter Palace. Quickly spread.
  • 18.
  • 19. New government  Lenin (workers’ government) è Revolutionary measures: • expropriation of land and division among the peasants. • factories taken over by workers’ committees. • Brest-Litovsk Treaty (1918). • creation of the Comitern (Third International) to coordinate communist parties globally. • New Economic Policy (NEP): gave the state control of the most important sectors, but admitted some capitalist practices, such as national trading and small land properties.
  • 20. “The most equitable settlement of the land question is to be as follows: (1) Private ownership of land shall be abolished forever; land shall not be sold, purchased, leased, mortgaged, or otherwise alienated. All land, whether state, crown, monastery, church, factory, entailed, private, public, peasant, etc., shall be confiscated without compensation and become the property of the whole people, and pass into the use of all those who cultivate it. (2) All mineral wealth, ore, oil, coal, salt, etc., and also all forests and waters of state importance, shall pass into the exclusive use of the state. All the small streams, lakes, woods, etc., shall pass into the use of the communes, to be administered by the local self-government bodies. (6) The right to use the land shall be accorded to all citizens of the Russian state (without distinction of sex) desiring to cultivate it by their own labour, with the help of their families, or in partnership, but only as long as they are able to cultivate it. The employment of hired labour is not permitted. (8) All land, when alienated, shall become part of the national land fund.” Lenin. Decree on Land.
  • 21. Elections in November 1917  25 % for Bolsheviks è Lenin dissolved the Assembly (fear of counter-revolutionaries) è End of political pluralism. "[Because] the proletariat is still so divided, so degraded, so corrupted in parts ... that an organization taking in the whole proletariat cannot directly exercise proletarian dictatorship. It can be exercised only by a vanguard that has absorbed the revolutionary energy of the class.“ V. Lenin
  • 22. TSARISTS AND LIBERALS WHITE ARMY BOLSHEVIKS RED ARMY (led by Trostky) Early 1918 Rebellion Vs Soviet gov. 6. The Civil War (1918-21)
  • 23. Civil War  Misery, food shortages, political reprisals, etc. War communism  Collectivisations, nationalisations, harvests to the State. Summer 1918  Romanov family executed.
  • 24. 1921  Red Army defeats the White Army è Communist Party (Bolsheviks) in power  Prosecution of political rivals, repression of counter-revolutionary activities (Cheka).
  • 25. 1922  Formation of the Union of Socialist Soviet Republics (USSR). 2. THE USSR AND ITS DEVELOPMENT 1. The formation of the USSR
  • 26. Federal State, from the imperial nationalities (Slavic, Caucasians, Muslims, Russians, etc.).
  • 27.
  • 28. Power in the hands of the Communist Party of the Soviet Union (CPSU). Other parties banished.
  • 29. 1924  Constitution. Legislative power SUPREME SOVIET Head of State PRESIDIUM Executive power COUNCIL OF PEOPLE’S COMMISSARS Indirect universal suffrage DICTATORSHIP TOTALITARIAN STATE è Identified with the party
  • 30. 2. Stalinism Ths struggle for power after Lenin’s death (1924) è Trotsky and Stalin. Export the revolution (internationalisation) Socialism in one country è Strengthening the internal structure è USSR superpower è Future revolutions.
  • 31. Sole leader  Stalin Trotsky exiled (1940, killed in Mexico) Stalin  Personal dictatorship (even, personality cult).
  • 32.
  • 33. Stalinism: - No regard to previous revolutionary principles. - The CPSU gained power. - Very harsh repression  Enemies, party members, ordinary people, etc. è Crimes against the State. è Gulags (forced labour camps) - Great Purge  Massive political repression led by the NKVD (Soviet Secret Police). Around 1 million people killed. Moscow Trials (1936-8)  Old Bolshevik leaders, Trotskyists, political dissidents, army officers è Gulag, execution or jail. “Stalin committed a very grave crime against the Communist party, the socialist state, Soviet people and worldwide revolutionary movement... Together with Stalin, the responsibility for the abuse of law, mass unwarranted repressions and death of many thousands of wholly innocent people also lies on Molotov, Kaganovich, Malenkov...” Shvernik Commission, 1963.
  • 34.
  • 35.
  • 36. Stalin’s state planned economy - Planned, state-managed economy → Five-year plans. - Collectivisation of economy. No private property. - Rapid industrial development: heavy industry, energy production, infrastructures. - Problem: agriculture fell behind. No high production of consumer goods. By 1930: one of the great powers of the world. No great effect of the 1929 crisis.
  • 37. 3. POST-WAR YEARS: CRISIS AND RECOVERY IN THE 1920S Economic and cultural reconstruction after WWI. o Demographic catastrophe. o Economic disaster. o High unemployment. o Shortages of products and higher prices. o From creditors to debtors (to USA) 1. Post-war crisis in Europe (1918-23)
  • 38. • Germany  Very severe situation. Unable to pay war compensations (Treaty of Versailles): - Hyperinflation (loss of value of the Deutsch Mark) - High unemployment. - Decline in the standard of living. - Mid 1920s  USA loaned more funds (1924) and negotiated the restructuring of German debt.
  • 39.
  • 40. “No other nation has experienced anything comparable to the events of 1923 in Germany. All nations went through the Great War, and most of them have also experienced revolutions, social crises, strikes, redistributions of wealth, and currency devaluation. None but Germany has undergone the fantastic, grotesque extreme of all of these together; none has experienced the gigantic, carnival dance of death, the unending, bloody Saturnalia, in which not only money but all standards lost their value. […] Anyone who had savings in a bank or bonds saw their value disappear overnight. Soon it did not matter whether it was a penny put away for a rainy day or a vast fortune. Everything was obliterated...A pound of potatoes which yesterday had cost fifty thousand marks now cost a hundred thousand. The salary of sixty-five thousand marks brought home the previous Friday was no longer sufficient to buy a packet of cigarettes on Tuesday...In August, the dollar reached a million [marks]....In September, a million marks no longer had any practical value...At the end of October, it was a billion...The atmosphere became revolutionary once again.“ Sebastian Haffner, Defying Hitler. A Memoir (1939)
  • 41. WWI  Economic disaster for Europe. USA  Great prosperity: supply of food, arms and industrial goods. Largest creditor in the world  Loans to European nations. Half of the world’s gold reserves è Dollar as strong currency. Bank of America  World’s main investor. WORLD’S LEADING ECONOMIC AND FINANCIAL POWER 2. The USA: the roaring twenties (1924-29)
  • 42. PROSPERITY IN THE USA Second Industrial Revolution: Use of new energy sources (oil and electricity), new industries (automobile, electrical devices) and new media (radio, telegraph, cinema).
  • 43. Workers’ wages increased Improvement of the standard of living Consumer society (Mass consumption) The middle classes’ spending capacity allows consumerism
  • 44. THE ‘AMERICAN WAY OF LIFE’ Cultural input  American way of life - Promotion of specific values (initiative, personal effort, etc.) to help people to achieve success and well-being. - Based on consumption of goods and media (advertising, propaganda). - Mass entertainment  Cinema, sports, cabaret, theatre, etc. - New trends, less uptight and more focused on fun (instead of protocol) - Jazz, Charleston, blues, etc.
  • 45. 4. THE 1929 CRISIS AND THE GREAT DEPRESSION 1. The 1929 Stock Market Crash 24th October, 1929  The Roaring Twenties abruptly ended è Collapse of the New York Stock Exchange è THE GREAT DEPRESSION.
  • 46. CAUSES OF THE STOCK EXCHANGE CRASH: - Overproduction  Larger offer than demand è Too much stock accumulated è Prices dropped è Many business went bankrupt. - Stock market speculation  Easy investment and large profits in the 1920 in the stock markets è Huge demand (small shareholders even asked for loans for buying more) è Shares rose value è Not backed by real productivity (speculative bubble).
  • 47. Black Thursday (24th October, 1929) - Several problems during 1929: mini crash in March, decline in production and sales, amount of private debt. - Realisation about the difference between real value and stock exchange value MASSIVE SELL-OUT NO BUYERS Law of supply and demand If no demand è Fall of prices STOCK MARKET CRASH Black Thursday, Black Monday and Black Tuesday
  • 48. Immediate economic consequences BANKING CRISIS SHORTAGES OF CASH LOSSES OF MONEY (investors and companies) MASSIVE ECONOMIC RECESSION
  • 49. • Great economic recession  Banking crisis, bankruptcy of private investors and companies, closures of factories, high unemployment, very low consumption, etc. • Unemployment  By 1932, 13 million people (about 25 % active population). Many families in poverty. 0 5 10 15 20 25 1920 1930 1934 1938 1942 1946 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 US Unemployment (1920-2014) % of active population 2. The Great Depression
  • 50.
  • 51. International spread è • The US Government withdrew their capital from Europe, asked to return loans, American companies stopped investments, reduction of imports in the US, decrease of trade.
  • 52. 1. THE USA’S NEW DEAL • President Franklin Delano Roosevelt (1932-1945) NEW DEAL  Political programme based on the intervention of the state in economy. 3. The fight against the crisis
  • 53. • public expenditure and creation of public companies. • aid to private companies in difficulties. • agricultural stocks to be destroyed (control supply and demand). • banking controls and low-interest loans. • public works  for tackling unemployment. • encouragement to wage raises è More consumption. • reduction of the working hours to 40 per week.
  • 54.
  • 55. 1. PROPOSALS FOR EUROPE 1933 → London Economic Conference Purposes: • agreement on measures to fight global depression • revive international trade • stabilize currency exchange rates. No agreement reached. Proposals for economic recovery → Keynesian economies: State intervention in the economy with the objective of stimulating investment, employment and consumption.