Italian and German Expansion 1933-1939

A worldwide economic crisis in October 1929 which plunged the USA and the world into an economic depression

• World trade declined by 70% leading to mass unemployment in most industrialized nations
• USA suffered from 25% unemployment, with Germany faring worse with 26%
• Global banking industry was in crisis and loands were recalled as stocks lost value and industry shrank
• When US loands were recalled and not extended, many countries were immediately affected, especially Germany
• Banks all over the world began to collapse
• Starvation 

TRADE BARRIERS:

• To keep money and investment within their own borders, most nations erected trade barriers by taxing imports, further hindering world trade and economic recovery 
• US trade barriers caused a 61% decline in German industrial production overall
• British international trade declined by 60%
• USA saw its international trade retract by 70%

The USA:

• Republican party fell from political power when it lost control of presidency and both divisions of congress in elections at end of 1932
• Roosevelt adovcated a policy of deficit spending, while Republicans opposed this policy and continued to advocate a reduction in Government power and in spending, and for the depression to run its natural cause
• Republican policies were unpopular because they had not alleviated the effects of the Great Depression from 1930 to 1932

Britain

• The government was headed by the labour party until 1931
• The government spent money to help the unemployed, but, as more and more people lost jobs, government tax revenue also decreased, leading them to attempt to borrow money from US banks
• These banks were also stressed and therefore placed many conditions and guarantees on Britain that the government was unwilling to accept 
• The labour government entered into a coalition with other parties in August 1931, forming the National Government. 
• National Government continued throughout the 1930s and brought a measure of economic stability by 1934; this was done partly through imperial preference
• Britain did not have the funds to invest in rearmament
• Instead, it worked to limit armaments, specifically warships, through treaties signed in 1930 and 1935

France: 

• Was self-sufficient in food production
• The Government established a very strict quota on imports of all kinds, including food 
• A very thorough system of imperial preference was created whereby france and its colonies formed an exclusive trade zone
• Government wages were reduced by about 12% and government spending was slashed
• France did not suffer from mass unemployment partly because large numbers of people were employed in agriculture and the huge french army used conscription to keep young men occupied 
• In 1935 France only had 500,000 unemployed
• French Government was extremely unstable during this period

How did Mussolini’s government respond to the crisis of 1929?

• Took greater control of its industries

• Borrowed large sums of money

• Government made large orders with co-operating industries

• Workers would spend their pay on food and consumer goods

• Newly employed people would spend their pay in markets and shops, keeping the economy healthy

• The army and navy were both massively expanded, providing jobs for up to 1 million men by late 1935

• Mussolini was better prepared for a more aggressive foreign policy as a result of the Great Depression

League of Nations:

• By 1933 had included almost all European states
• Had been weakened by recent international events
• The Manchurian crisis had proved that the leagues collective security policy was fundamentally flawed 
• It was weak 
• The strongest states involved were Britain and France and they were not particularly strong

France:

• Tried to enforce as much of the Treaty of Versailles as possible
• France had created an alliance of states on Germany borders in eastern and central Europe that would come to its aid if it was attacked again by Germany (Early 1920s)
• The French also worked to coerce Britain into a formal alliance, which they believed would guarantee their safety; Britain refused. 
• France was aware that Italy desired some of its territories in France's southeast and the Island of Corsica, but ignored this as Italy was weak. 
• Through the Treaty of Versailles, France and its allies forced Germany to reduce its military to 100,000 men, with no aircraft, no tanks, few ships and other restrictions, and were successful in doing so
• Government instability meant that foreign policy could be inconsistent in order to appease various political factions in France
• Socialist and communist parties also grew dramatically in France. These groups opposed the French fascists and conservatives as well as military build-up, believing that funds for the military would be better spent in social welfare programmes
• The Most difficult year of the Great Depression for France was 1935, with rising unemployment and growing political unrest

Britain:

• Foreign policy was quite different from that of France
• Britain wanted Germany's economic rehabilitation
• Britain was more concerned with the Soviet Union and its communist government than it was with Germany
• Britain feared the spread of communist governments into Europe and Germany in particular.
• There had been several failed communist uprisings there after WW1 and in the early 1930s the Communist Party in Germany was becoming increasingly popular 
• Britain wanted Germany to return to normalcy in world affairs, but on British terms
• This would allow Britain and Germany to develo stronger economic relations, which both countries needed desperately in the early years of the Great Depression

Germany:

• The foreign policy until 1933 was similar to German foreign policy after 1933 in terms of what it wanted
• Germans first and foremost wanted the humilation imposed on them in the Treaty of Versailles ended
• War reparations were suspended by 1932 as a result of the Great Depression, removing one key issue. 
• While Germany had pledged to respect its western borders with belgium and france, it did not accept its borders in the east but had agreed that any territorial adjustments had to be through negotiation and not war
• While the Germans could not financially afford a large military in the early 1930s, it was humiliating that they had no way to defend themselves against anyone, especially Poland and France, both of which were hostile to Germany and had huge militaries

Soviet Union:

• It was primarily concerned with its own development
• Stalin, its leader, believed that the country needed economic and political reorganization if it was to survive
• In the late 1920s, the Soviets began massive industrialization of agriculture, and the building of dams, railways, roads, factories and entire cities in central Asia.
• This reorganization of the economy was chaotic and led to millions starving to death
• The soviets, busy with their own affairs and not particularly affected by the Great Depression, were relatively uninvolved in world diplomacy
• They did not want any foreign entanglements, but certainly encouraged other communist groups such as those in Germany and France
• By the mid 1930s , the Soviets had perceived Nazi Germany as a threat, along with Italy and Japan, helping bring them into the League of Nations
• Most countries remained wary of the Soviets and hesitated to co-operate with them throughout the 1930s