The Depression and its costs
The environment of the 1920s—diplomatic initiatives for disarmament and resolving disputes
through peaceful means, the spreading of democracy, the celebration of capitalism as the basis of
economic progress, and more open cultural norms—depended on the continued economic
prosperity of the United States. In retrospect, that prosperity rested on a shaky foundation. The
collapse of the U.S. economy from 1929 generated an international downturn of unparalleled
severity in the modern world. The resulting political and cultural changes set the stage for World
War II.
The Great Depression
The Stock Market crash exposed myriad flaws in the American economy on which the 1920s
prosperity rested.

First, despite its status as the world’s leading economic power, the United States
embraced protectionism and tried to keep foreign imports out of its market.

Second, U.S. economic growth relied heavily upon consumer spending, presupposing that
the middle class would continue to possess sufficient disposable income to purchase
luxury items.

Third, a few heavy industries (automobiles and steel) dominated U.S. economic
indicators, so a downturn in either could plunge the economy into recession.

Fourth, prosperity was not evenly distributed in the U.S. economy of the 1920s, since the
nation’s agricultural sector was in sustained depression throughout the decade.

Fifth, lax or non-existent government regulation allowed too many stocks to be purchased
through short-term loans without sufficient collateral, encouraging speculation and
threatening catastrophic losses when the market’s value stopped rising.
The stock market crash. Between 1923 and 1929, the volume of shares traded on the New
York Stock Exchange quadrupled. But this unprecedented “bull market” ended suddenly and
sharply. Stocks became desperately overvalued, and finance capital outstripped the capacity of
consumers to buy. On October 24, 1929, “Black Thursday,” disaster struck. That day, on which
nearly 13 million shares were sold, and paper losses mounted to $3 billion, marked the beginning
of the Great Crash. In just over one month, stock prices plummeted from an index of 216 to 145.
Over the next three years, they pursued an unsteady descent to bottom out at 34—from a value of
$87 billion at their peak to $18 billion at their low. The collapse in stock values set off a chain of
events resulting in the Great Depression. Banks, allowed by U.S. law to invest their deposits in
the Stock Market, had participated in the speculative excess of 1928–1929. Confronting
enormous losses after the crash, they called in the loans that had funded the investment frenzy.
When their debtors could not pay, banks collapsed, cheating depositors of their savings. Those
deposits were uninsured (in the United States, insurance of bank deposits under $100,000 was
instituted only in 1933). Life savings were lost. Public confidence plummeted.
The banking crisis combined with larger economic trends to create monumental hardship.
U.S. industrial production fell 50 percent from 1929 to 1932. Wages plummeted; by 1932 the
number of unemployed rose to more than 13 million, or almost 30 percent of the U.S. workforce.
Since workers were also consumers, spending declined, especially on big-ticket items such as
housing and automobiles whose high rate of sales was an index of prosperity. The economy
suffered from a deflationary spiral, in which wages and income fell faster than did prices. As a
result, even necessities cost too much for many people.
The U.S. government’s initial solutions only worsened the Depression’s effects. In 1930,
Congress enacted the Hawley-Smoot Tariff in 1930—raising the tariff rate on imports to the
unprecedented high of about 48 percent. The new law all but closed off the U.S. market to
foreign goods. Trade collapsed, and production and employment levels fell even more.
The Depression in Europe. The effects of the stock market crash rocketed around the
globe. American investment overseas dropped drastically from 1929 to 1933, then virtually
ceased for the rest of the 1930s. As U.S. bankers called in their loans from European borrowers,
the flow of gold and coin to the United States swelled. European banks failed if they could not
respond to American calls for repayment. In 1931, the Austrian giant Kreditanstalt, drained by
withdrawals of foreign funds, closed its doors, setting off financial panic in Europe. Even Britain
had to repudiate the gold standard that had long anchored the pound, which lost 28 percent of its
value in 1931.
In response, Britain and its trading partners (including members of the newly founded
Commonwealth of Nations) abandoned gold and joined together in the Ottawa System. The
United States maintained the gold standard (aside from a brief interlude, and subsequent
devaluation of the dollar), along with France, Belgium, the Netherlands, and Switzerland. These
nations formed a separate trading bloc, distinct from the British. In addition to these two groups,
a third bloc developed in central Europe, led by Germany. The barriers between these three
isolated, exclusionary trading blocs were bolstered by high tariffs, installed to protect domestic
manufactures by discouraging foreign imports. The integrated trading network of the West in its
boom years had vanished. All sides suffered, but Britain’s longstanding reliance on foreign
commerce made the island nation particularly vulnerable. As Prime Minister Ramsay
MacDonald explained at the time, “I dread tariff wars. Of all big countries in the world we are in
perhaps the weakest position to engage in such conflicts.”
The fall of the Weimar republic
During the 1920s, the growth of democracy was linked with the expansion of a liberal capitalist
order led by the United States. The trials of capitalism benefited totalitarianism, especially in
Germany, where economic crisis paved the way for a Nazi takeover.
Of all the European states, Germany was the most vulnerable to the world economic
downturn, both intellectually and practically. The nation’s psyche had not recovered from the
hyperinflation of 1923. On the economic front, since the Dawes Plan linked German stability to
continued U.S. loans, the Depression arrived in Germany before the rest of Europe. In 1928 and
1929, deposits from U.S. banks that might otherwise have been sent abroad poured into
American stocks and funds. Quick, dramatic returns appealed more to bankers than the slow
growth of distant enterprises. Loans to Germany shrank from $277 to $29.5 million in just over a
year.
On October 3, 1929, as if to symbolize the passing of an era, Gustav Stresemann, the
Weimar Republic’s foremost statesman, suffered a stroke and died. Within two months of the
Stock Market crash, 3.2 million Germans were unemployed. At least one million more could
obtain only reduced workweeks.
The Nazis advance. Since its founding, the Nazi Party had cultivated chaos. Now, the
economic downturn provided an opening for a demagogue of Hitler’s unparalleled abilities. But,
as occurred with Mussolini’s rise in Italy, Hitler’s triumph required assistance from established
right-wing political forces. Indeed, critical in the assault on the Weimar Republic was Paul von
Hindenburg (1847-1934). An old-line conservative who was narrowly elected president of
Germany in 1925, the former wartime general wanted to remove the SPD from any
policymaking position in government. In March 1930, as economic unrest weakened the sitting
government, Hindenburg exercised his authority under Article 48 of the Weimar Constitution.
He dismissed the SPD-led cabinet and installed as chancellor Heinrich Brüning (1885-1970).
Brüning, from the conservative fringe of the Catholic Centre Party, sought to contain inflation by
drastically curtailing government spending. When the Reichstag rejected his finance bill, the new
chancellor received from Hindenburg authority to call for new parliamentary elections. In the
interim, he would govern by presidential decree.
Given the fragility of German democracy, scheduling elections during severe economic
distress was an act of monumental foolishness. As politicians of authoritarian tendencies,
however, Hindenburg and Brüning worried little about the Weimar constitution’s survival. In the
1930 campaign, the Nazis promised to make Germany great again. Just two years before, the
party had captured only 12 seats. But in 1930, which one newspaper termed the “bitterness
election,” the Nazis tallied 18.3 percent of the vote (6.5 million votes) and received 107 seats.
This result left them the Reichstag’s second-largest party, trailing only the SPD. The big losers
were the democratic parties of the center and right, who soon would be entirely marginalized.
Over the next 18 months, Brüning’s rigidly deflationary policies (limiting the supply of
money, slashing government spending) helped to prevent a repeat of the 1923 hyperinflation. But
by holding down the amount private capital available for loans and blocking public works
programs, Brüning’s efforts did nothing to alleviate Germany’s unemployment crisis. The
economic and political environment, therefore, provided fertile ground for the Nazis’ demagogic
rhetoric, which blamed joblessness on Jews, foreign capitalists, and communists. Meanwhile,
representatives of big business, the armed forces, and right-wing intellectuals noticed the party’s
growing political strength and began making overtures to the Nazis. Since Hitler had never
articulated a coherent economic philosophy in any case, he shifted to more conservative
positions on economic questions in order to boost his support among the right.
Weimar Teeters. In 1932, Hindenburg’s assault on the Weimar Constitution continued,
when he ousted the SPD government of Germany’s largest state, Prussia, even though he lacked
constitutional authority to do so. He also dismissed Brüning as chancellor and appointed an even
more anti-democratic cabinet, headed by Franz von Papen (1879-1969). The Papen cabinet lifted
the ban on the SA, a move that triggered a wave of violence amidst the 1932 Reichstag elections.
In a campaign that produced more than 100 politically motivated killings, the Nazis captured 37
percent of the vote, becoming the legislature’s largest party.
Ominously for the Weimar Republic’s future, the election gave the Nazis and the KPD a
“negative majority.” These two parties, which combined to hold more than 50 percent of the
Reichstag seats, were committed to ending German democracy. The Nazis’ motives were
obvious, but the KPD acted for more complicated reasons. The German left had been divided
since Ebert’s suppression of the Spartacist rebellion in 1919. During the 1920s, while the SPD
embodied the Weimar democracy, the KPD appealed to Germans who had lost faith in the
system, especially the unemployed. Moreover, after 1928, the KPD followed the Comintern’s
hard-left line, which directed European communist parties to target the “social fascists” of the
Social Democratic movement. Stalin understood that in the short term, disarray among the left
could allow the European right to assume power. But, he and Comintern ideologues believed, a
brief era of right-wing rule would radicalize Europe and pave the way for an ultimate
Communist triumph.
Just as the negative coalition formed and Weimar seemed doomed, Hitler’s ascent to
power stalled. Hindenburg envisioned a Germany ruled by the old-line aristocracy, not the new
Radical Right. Revealing his class bias, he fumed that he would never name a “Bohemian
corporal”—Hitler—as chancellor of the German Reich. Autumn 1932 elections mandated by yet
another government breakdown (after Papen lost Hindenburg’s confidence and was ousted as
chancellor) produced a decline in Nazi support—the party won 196 seats, down from 230.
But divisions among the political elite would give Hitler another opening. Hindenburg
and his counselors wanted to create an authoritarian political system, but without the formal
participation of the Nazis. When forced to choose between these goals, they would sacrifice their
concerns about Hitler before giving up on ending the Weimar Republic.
The 1930s: totalitarianism ascendant
During the 1930s, totalitarianism—on both the right and the left—dominated European affairs.
On the right, Adolf Hitler’s Nazi regime eliminated all vestiges of German democracy and began
implementing its leader’s horrific agenda. On the left, Josef Stalin’s (1879-1953) Communist
government embarked on a series of purges that left as many as five million Soviet citizens
accused of imagined crimes against the state. In the middle, the democracies struggled with the
economic and ideological climate created by the Depression.
Hitler comes to power
With a background of mass unemployment, the bewildering array of elections and changes of
government made it seem as if politics had no impact on the common German citizen. In January
1933, Papen, seeing an alliance with Hitler as a chance to revive his political fortunes, persuaded
Hindenburg to appoint a new coalition government with Hitler as chancellor and Papen as vice
chancellor. Hitler thus assumed Germany’s most powerful office through constitutional means.
The Nazis gained power for a variety of reasons. Given their poor showings in the 1924
and 1928 elections, they would have remained on the fringe of the political spectrum absent the
worldwide economic downturn. Second, Nazis tapped into deep-rooted sentiments within
German political culture: a chauvinistic nationalism, intensified by anger at the terms of
Versailles; hostility to radicalism, with a preference for order above freedom; and anti-Semitism,
even though Jews comprised less than one percent of the country’s population. Third, the party
benefited from the anti-democratic environment of the Depression years and the structural
collapse of the Weimar system. Even with all of these factors, however, the Nazis needed two
additional developments to prevail. The first was Hitler’s ability as a political leader, both as a
tactician and as a speaker who could rally public support. The second was the refusal of
Germany’s conservative elite to defend the Weimar Republic in any way, even to prevent a
fascist dictatorship.
Upon learning of the decision to name Hitler chancellor, Erich Ludendorff, Hitler’s
onetime ally in the Beer Hall Putsch, wrote a scathing letter to Hindenburg, his former General
Staff colleague. “You have delivered up our holy German fatherland,” Ludendorff lamented, “to
one of the greatest demagogues of all time. I solemnly prophesy that this accursed man will cast
our Reich into the abyss and bring our nation to inconceivable misery. Future generations will
damn you in your grave for what you have done.”
Hitler consolidates power
Papen and his allies assured Hindenburg that they could control Hitler, since the Nazis lacked a
majority in the new cabinet. They would not be the last political figures to underestimate the new
chancellor.
Within one month of Hitler coming to power, the Weimar constitution’s civil liberties—
the most advanced in the world at that time—were abolished. Within two months, the Reichstag
had surrendered its authority to the chancellor and Hitler had established the first concentration
camp, at Dachau, to house political prisoners. Within four months, the government had dissolved
all German trade unions. Within seven months, all opposition political parties had been
suppressed. Within a year of Hitler becoming chancellor, the state governments had lost their
sovereignty. Within 18 months, the office of the presidency had been eliminated, and Hitler
assumed the position of Führer (“leader”). By July 1934, the Nazi leader possessed absolute
political authority within Germany.
The nightmarish ideology outlined in Mein Kampf guided Hitler’s policies. The regime
arrested more than 100,000 political prisoners between February and September. But Hitler’s
main priority was eliminating Jews from German society. This new era of persecution began
with a call to boycott Jewish businesses in April 1933. The regime and its collaborators expelled
Jews from their positions in universities and the civil service. In time, the government denied all
German Jews of their citizenship, confiscated their properties, and forced them to wear the
yellow Star of David on their clothing.
Opportunism or partial sympathy led many non-Nazi rightists to acquiesce in the Nazi
transformation of German society. As University of Heidelberg rector Willy Andreas (1884-
1967) explained in his 1933 commencement address, “National Socialism has become
Germany’s destiny.” Though Nazi racial policies resulted in the firing of nearly one-third of the
country’s university teachers, the purge of Jewish faculty met with almost total silence among
the German professoriate. Non-Nazi faculty volunteered to defend Hitler’s policies to their
colleagues from other countries, and embraced the regime’s desire to create a “political
university” that would uphold “Aryan” values. Younger professors in particular endorsed the
application of a “German spirit” in scholarship, based on nationalism, racism, anti-Semitism, and
a dismissal of objectivity in research.
As the Nazis transformed the universities, they also assumed greater control over
religion, although here they encountered somewhat greater resistance. Abolition of the Centre
Party removed the Roman Catholic Church from an active role in politics, and in 1933 Pope Pius
XI (r. 1929-1939) negotiated a concordat with Hitler that accommodated the German church to
Nazi rule. Creation of a pro-Nazi Protestant Reich Church was resisted by prominent clerics,
such as Karl Barth and Dietrich Bonhoeffer. In 1934, the duo and likeminded colleagues, such as
Pastor Martin Niemöller (1892-1984), founded the breakaway Confessing Church and urged
Christians to resist Nazism as a false religion. The regime’s retaliation was swift. Barth resigned
his professorship at the University of Bonn and fled to Switzerland; Bonhoeffer and Niemöller
were arrested and sent to Nazi concentration camps.
Despite such policies, Hitler’s domestic popularity remained high for most of the 1930s.
He was helped by a turnaround in Germany’s economic performance. In a Depression
characterized by deflation, Hitler’s agenda of massive government spending proved
(unintentionally) effective as economic policy. The Nazis’ eclectic program—economic
nationalism, promotion of barter in foreign trade, and dramatically increasing spending on the
military and public works—restored prosperity. Hitler entered office with two-fifths of German
workers jobless; by the late 1930s, Germany achieved an annual growth rate of 4.2 percent and
was at close to full employment.
Hitler publicized his economic and social projects by speeches, radio announcements,
and other forms of propaganda. With their simple rhetoric and bald misrepresentation of truth,
these addresses effectively shaped popular attitudes. The aim was not to educate the elite, but to
win instant recognition from the ignorant. “The larger the mass of men to be reached,” Hitler
advised in Mein Kampf, “the lower its purely intellectual level will have to be set.” In view of the
“primitive simplicity” of the minds of the masses, Hitler argued, the true leader must use a “big
lie” to win their trust.
The “Night of the Long Knives.” Even those unconvinced by Nazi propaganda took
notice of the regime’s ruthless brutality. The brown-shirted SA—about two million strong,
essentially professional thugs—had helped raise Hitler to power. But once he became Führer,
the organization provided an alternative power base to potential rivals, such as SA head Ernst
Röhm (1887-1934). Its continued existence also poisoned relations between Hitler and the
professional military. By this point, Hitler had created an alternative to the SA, the Schutzstaffel
(“Protective Squadron”), or SS. Headed by Heinrich Himmler (1900-1945), the SS acted as the
Nazis’ elite paramilitary unit. It selected members after careful racial and ideological screening.
From 1934 onwards, the SS oversaw the Nazis’ secret police, the Gestapo, as well as Germany’s
concentration camps.
In a preemptive strike on June 30, 1934, Hitler used the SS to purge the SA leadership. In
the “Night of the Long Knives,” SS forces murdered between 80 and 200 SA leaders, including
Röhm. Several of Hitler’s former political rivals also were killed. By this massacre, Hitler
detached himself from his early supporters while expanding the power of the SS, which assumed
the position of a state within a state.
Stalinism
The Nazi record of political brutality was matched in only one other nation: Stalin’s Soviet
Union. Forcing his way to power on Lenin’s death, Stalin was heir to the totalitarian features of
Bolshevism. These he soon surpassed in a regime characterized by relentless violence against the
people and principles it claimed to serve.
Lenin’s death in 1924 bequeathed a power struggle among top Soviet leaders. As general
secretary of the Communist Party, Stalin was well positioned to prevail. Indeed, by the time of
Lenin’s death, he might already have possessed more power than his superior. An effective
manager with a reputation for executing instructions ruthlessly, Stalin quickly “exposed” each of
his potential rivals in turn as extremists or deviationists. (To give a sense of new leader’s
mindset, in 1934 he described the “Red Terror” of the Civil War in the following way: “When
the Bolsheviks came to power, they were soft and easy with their enemies.”) By 1930, Stalin had
expelled his rivals all from the Politburo and surrounded himself with lackeys. By 1940, each of
the six men with whom he shared power in 1924 had been killed. Stalin’s agents tracked Trotsky,
the last, to Mexico. A Spanish agent of the Soviet secret police murdered him with a
mountaineer’s ice pick.
As Stalin consolidated power, political debate within the Soviet Union essentially ceased.
All decisions proceeded from the dictator. Even the information presented to him, in time, was
filtered so as not to challenge his presuppositions. Beginning in 1928, Stalin abandoned Lenin’s
hope for international revolution and proposed a different goal for which to strive: “socialism in
one country.” Isolating the communist state, ironically, minimized the Depression’s effect on the
Soviet Union, whose annual economic growth rate was 4.3 percent between 1929 and 1938.
Collectivization. But these economic achievements came at a horrific cost. Stalin ended
the capitalistic flirtation with the NEP and forcibly created an industrialized and socialized
economy. Five-year plans issued from Moscow set absurdly high quotas for agricultural and
industrial production. Industrial workers toiled under brutal conditions. Stalin herded the
peasantry onto collective farms, dispossessing the one rural class that had shown enterprise and
leadership—the kulaks, whom he now vilified as representatives of capitalism. Far from wealthy,
these small landholders more closely resembled a struggling middle class, and their state-ordered
demise triggered a famine that caused about 10 million deaths. The tactics yielded positive
statistics: by 1938, the Soviet Union outperformed Britain, and nearly equaled Germany, as a
producer of pig iron and steel.
Democracy on the defensive
As totalitarianism advanced, the forces of democracy were placed on the defensive. France
experienced seven weak cabinets between 1930 and 1935, all wedded to a counterproductive
policy of maintaining the gold standard at all costs. France’s Third Republic earned the
nickname of the “stalemate society,” as parliamentary instability prevented bold governmental
initiatives. In Britain, the Labour Party split over the issue of reducing government spending on
unemployment benefits. Ramsay MacDonald, in his second stint as prime minister, led a
Labourite faction into a national unity government. Eventually, the Conservatives assumed
command, with first Stanley Baldwin (1867-1947) and then Neville Chamberlain (1869-1940) as
prime minister. Both implemented an unimaginative policy of minimizing government spending,
which did little to solve a Depression characterized by ferocious deflationary spirals.
Among the continent’s smaller democracies, Sweden’s performance stood out. Swedish
unemployment peaked at nearly 25 percent in early 1933, but thereafter its economy made a
remarkable comeback. A coalition government led by the Social Democrats adapted the
teachings of British economist John Maynard Keynes (1883-1946), who recommended shortterm deficit spending as a way to jump-start economies suffering from depression. By 1936,
increased government appropriations and new public works projects helped industrial production
rise 50 percent above its 1929 level, while unemployment fell to five percent. The Swedes also
benefited from an economic rivalry between Britain and Germany. Both wooed the resource-rich
nation, seeing predominance in the Swedish market as a way to assume economic dominance
over Scandinavia.
While Sweden survived the Depression relatively unscathed, Eastern Europe’s weak
nations suffered at the mercy of broader international forces. Less stable democratic regimes,
such as those in the Baltic States, collapsed altogether, replaced by right-wing dictatorships. By
1935, the only democratic government remaining in eastern or central Europe was
Czechoslovakia. Wilson’s hope that World War I would create a world “safe for democracy” had
failed.
In the United States, a “New Deal.” Among the leading democracies, only the United
States provided a hint of imaginative leadership in meeting the economic crisis. In the 1932
presidential election, Democratic nominee Franklin Delano Roosevelt (1882-1945), the governor
of New York, easily prevailed. Roosevelt constructed a disparate coalition of liberal intellectuals,
African-Americans, urban ethnics, and Southern white voters. Hoping to create a new political
atmosphere after the pessimism of the previous three years, Roosevelt’s campaign song was
“Happy Days Are Here Again.” In his inaugural address, he proclaimed, “We have nothing to
fear but fear itself.”
Roosevelt’s program, which he termed the “New Deal,” brought elements of a Europeanstyle welfare state to America. The Social Security Act (1935) established a system of old-age
insurance. The Wagner Act (1935) ensured the right of labor unions to engage in collective
bargaining. Roosevelt also departed from the monetary thought that dominated the cautious
British and French governments of the early 1930s, engaging in short-term government spending
to create jobs.
Conclusion: the bubble bursts
The early promise of the 1920s did not last. The progress towards democratic governance and
international cooperation, accompanied by a new cultural vibrancy and broadened opportunities
for women, was halted by the trend to authoritarianism and totalitarianism, hastened by
economic collapse. By the mid-1930s, though all was not yet known about the malice of the
Nazis or the hell of the gulag, the mood turned fearful and bitter. In this environment, though it
was the most hateful, indeed unthinkable outcome, another war loomed.
Pathways to war: 1931-1938
As the 1930s unfolded, Italy and Japan joined Hitler’s Germany in a common goal: overturning
the international system established by the Versailles Treaty. Versailles had denied Italy its terra
irredenta, or “unrecovered land,” and saddled Germany with the full burden of war guilt. The
League of Nations, the offspring of the 1919 treaty, restrained Italian ambitions in Africa and
Japanese expansionism in East Asia.
During the 1930s, each of these states embarked on expansionist projects in defiance of
the Versailles system: imperial Japan in northeast Asia; fascist Italy in Ethiopia; and Nazi
Germany, of these the sole totalitarian power, in central Europe. Hopes of a world order
governed by collective security against military aggressors and disarmament treaties had
vanished. In the new environment, the radical right would use force to expand. And force would
lead inexorably to war.
The Manchurian incident
The path to World War II began in northeast Asia, far from Europe and its concerns. For Japan,
the Great Depression slashed international demand for its exports, especially silks and rice. The
resulting economic crisis provided the impetus for militarist elements to act. Nationalists in the
Japanese military never had accepted the legitimacy of the postwar parliamentary regime, which
had supported an internationalist foreign policy and negotiated disarmament treaties. After Japan
accepted the London Naval Treaty of 1930, a right-wing fanatic assassinated Prime Minister
Osachi Hamaguchi (1870-1931).
Instead of disarmament treaties, militarists wanted a Japanese sphere of influence on the
Asian continent, free from Western control. The army also worried about the gathering strength
of the Soviet Union to Japan’s north, and, to Japan’s west, the growing power of the Chinese
Nationalist Party, led by Chiang Kai-shek (Jiang Jieshi; 1887-1975). Tensions were especially
acute in Manchuria, where Japanese power dated from the Russo-Japanese War of 1904-1905.
During World War I, when China’s central authority collapsed, Japan stationed on Manchurian
soil the 10,000-man Kwantung Army. Thereafter, Japan’s role steadily increased in China’s
northeasternmost province, which provided a ready supply of oil, coal, iron, and soybeans. By
1931, Manchuria housed more than 800 Japanese-owned factories.
The Kwantung Army’s leadership included ardent expansionists, unwilling to accept
orders from civilians in Tokyo. On September 18, 1931, Japanese troops blew up a section of
railway just north of Mukden, blamed Chinese provocateurs, and undertook a military campaign
to conquer the province. When the Japanese public hailed the Army’s actions, the civilian
cabinet in Tokyo accepted the fait accompli. Soon Japan’s government lapsed into a quasimilitary dictatorship.
Since Japan’s actions violated the League of Nations covenant, the Nine-Power Treaty,
and the Kellogg-Briand Pact, on October 24, 1931, the League passed a resolution demanding
that Japan withdraw its forces. As expected, the Tokyo government refused to do so. Amidst the
suffering of the Depression, little support existed in Europe for invoking the League’s collective
security provisions against Japan. Instead, the League appointed an investigatory commission.
By the time the commission delivered its report in September 1932, Japan’s conquest of
Manchuria was complete. The Japanese established the puppet state of Manchukuo (nominally
ruled by the last emperor of China, who had abdicated in 1911) and then withdrew from the
League.
The Manchurian Incident previewed the League’s inability to implement collective
security against regimes determined to overturn the post-World War I status quo. Indeed, the
Depression years coincided with an intellectual and cultural reaction in Western public opinion
against use of force in any form internationally. In 1929, Erich Maria Remarque’s antiwar novel,
All Quiet on the Western Front, was an international best seller; an Oscar-winning movie based
on the book appeared in 1930. Accounts of the war’s origins by revisionist scholars in the United
States and Europe bolstered claims of German nationalists that the Versailles Treaty unfairly
singled out Berlin for the outbreak of World War I. Support for pacifism was perhaps best
exemplified in 1933, when the Oxford Student Union in Britain ended a debate by proclaiming:
“Resolved, that we will in no circumstances fight for king and country.”
Hitler’s ambitions
Into this international environment Adolf Hitler (1889-1945) came to power. The Nazi leader’s
foreign policy, which balanced ideology and a strategic desire to expand common among many
German right-wing nationalists, was oriented around four themes. First, he wanted to eliminate
all restrictions that the Versailles Treaty imposed on Germany. Second, he championed
“Lebensraum”—seizing territory in the East, which German settlers would then populate. Third,
Hitler viewed foreign policy as part of his all-encompassing aim of racially purifying Europe and
establishing the superiority of what he termed the Aryan race. (This allegedly superior race of
peoples derived from Northern and Western European stock.) Finally, reflecting a social
Darwinist approach to international affairs, the German dictator believed that only the militarily
strong countries would survive.
During his first few years of rule, Hitler set about accomplishing these goals through
three tactics. First, he rapidly rearmed Germany. Second, he undermined cooperation among
Germany’s potential foes. And third, he oversaw a propaganda campaign alleging that Germany
desired not conquest but only to rectify the unfairness of the postwar peace settlement.
On October 14, 1933, Germany withdrew from international disarmament discussions
and initiated a massive rearmament program. Though the arms buildup violated the terms of the
Versailles Treaty, France and Britain issued no challenge. In the diplomatic sphere, Hitler
negotiated several arrangements that weakened France’s network of European alliances. The
most important of these came in 1934, when Germany signed a non-aggression pact with Poland,
effectively nullifying the Franco-Polish alliance of 1921.
In only one early international endeavor did Hitler’s efforts backfire. In neighboring
Austria, local Nazis agitated for an Anschluss (“merger”) between Germany and Austria. This
idea was not new: British and French opposition had blocked an Austro-German political union
in 1919 and a customs union in 1931. With the Nazis ruling in Berlin, however, Austrian
conservatives looked less favorably on losing their independence. In early 1933, Chancellor
Engelbert Dollfuss (1892-1934) dissolved parliament, fearing that the Nazis might win a free
election. He merged his Christian Social Party with right-wing paramilitary organizations and
established a new regime, which he termed the Fatherland Front. Later that year, Dollfuss even
banned the Nazi Party. Though an anti-Nazi, Dollfuss was no democrat: he also outlawed the
Social Democrats and promulgated a new constitution modeled on Fascist Italy’s.
As an Austrian native himself, Hitler eagerly anticipated an Anschluss. But he wished to
do so without generating protests from the major powers. Instead, on July 25, 1934, Austrian
Nazis seized the initiative and attempted a coup. When the plotters assassinated Dollfuss, it
seemed as if they might succeed. But, worried about sharing a border with an expansionist
Germany (his own nation had a small German minority population in the Tyrol), Italian duce
Benito Mussolini (1883-1945) mobilized his forces. Hitler had no desire to provoke a war with
Italy, and so he announced that Germany would not send troops to aid the Austrian Nazis. With
the prospect of German intervention eliminated, Fatherland Front leader Kurt Schuschnigg
(1897-1977) squelched the coup and installed himself as Dollfuss’ successor.
The rise and fall of the Stresa front
The outcome of the Austrian crisis convinced the French and British governments that they
might be able to contain Hitler by appeasing Mussolini. In April 1935, at the Italian town of
Stresa, representatives of Britain, France, and Italy pledged to cooperate to resist German
expansionism. For the British and the French, the Stresa Front represented a chance to preserve
the status quo without having to take action themselves. Mussolini, on the other hand, reveled in
being treated as the leader of a major military power. He believed that the British and French
would now give him a free hand to expand in the Mediterranean.
These very different expectations produced the quick demise of the Stresa Front. Despite
the martial rhetoric associated with Italian fascism, Mussolini never developed a formidable
military. Ethiopia, however, was a weak foe, and held symbolic importance for Italian
nationalists. Conquering the African nation would undo the embarrassment of Italy’s defeat to
Ethiopian forces at Adowa in 1895. Seeking to avoid a war, the British pressed Emperor Haile
Selassie (1892-1975) to cede parts of northern Ethiopia to Italy. The Ethiopians refused, and on
October 3, 1935, Italy attacked. Four days later, the League of Nations unanimously declared
Italy an aggressor state and imposed economic sanctions.
Publicly, the British and French respected the League’s actions; privately, they promised
Mussolini that they would ignore the embargo and recognize Italian conquests. Otherwise, the
British and French understood, they would lose the Italian dictator as an ally. When this secret
policy was leaked to the press in December 1935, however, public outrage forced the
resignations of both the British foreign secretary and the French premier. In Africa, meanwhile,
the Italian troops, in a forerunner of their poor performance during World War II, required seven
months to vanquish their badly outmatched Ethiopian foes.
The Ethiopian affair ended the brief cooperation between the Western democracies and
Italy. It also fundamentally compromised whatever credibility remained with the League. In July
1936, Denmark, the Netherlands, Norway, Spain, Sweden, and Switzerland declared “that, so
long as the Covenant as a whole is applied so incompletely and inconsistently,” they no longer
felt obliged to participate in sanctions against an aggressor state. The League would not
implement collective security—even in the limited form of economic sanctions—against the
Nazis.
Hitler benefited from the democracies’ disarray. The German dictator considered his
potential foes immobilized by fear of war. He based his perceptions of Britain, France, and
Belgium not on diplomatic reports, which he generally ignored, but instead on his analysis of
Western culture. He devoured copies of Western news clippings, and regularly screened British
and French films. Confident of the likely outcome, on March 7, 1936, Hitler ordered the
reoccupation of the Rhineland, the German territory west of the Rhine, which the Versailles
Treaty ordered demilitarized. German generals, worried that the French and Belgians might
intervene, ordered the troops to turn back if they encountered any outside resistance. But, as
Hitler anticipated, the French did not act. Indeed, sensing a shift in the balance of power, the
Belgian government soon thereafter repudiated its alliance with France and resumed its preWorld War I policy of neutrality.
Three months after his actions in the Rhineland, Hitler’s effort to present himself to the
world as a responsible leader reached its zenith. For two weeks in August 1936, Berlin hosted the
Summer Olympics. With international media attention focused on Germany, the regime
downplayed its racist and anti-Semitic rhetoric. Instead, Nazi propaganda focused on identifying
alleged racial links between Aryans and the original Greek Olympians. Talks of boycotting the
Games by some democratic states fizzled, and the event, even now recalled as the “Nazi
Olympics,” accomplished Hitler’s goals. German athletes led the medals’ race. Most newspaper
accounts echoed the New York Times report that the Games brought the Germans “back in the
fold of nations,” even making them “more human again.”
After the Berlin Olympics, Hitler focused less on presenting a “more human” face for his
regime. Domestically, persecution of Jews, Gypsies, and political opponents resumed.
Internationally, the Nazi leader entered into a formal alliance with Italy, which Mussolini
proclaimed on October 25, 1936 as the Rome–Berlin axis. By this point, the two dictators were
showing what kind of world order they desired. In violation of international law, Hitler and
Mussolini decided to assist fascist forces in the Spanish Civil War.
The Spanish Civil War
From 1936 to 1939, civil war raged in Spain, a nation long on the periphery of continental
events. An elected center-left government eventually was toppled by a military revolt, which
installed an authoritarian regime. While the European democracies stayed aloof, totalitarian
powers—both communist and fascist—sent soldiers and supplies. Their intervention made the
Spanish Civil War a rehearsal for the larger conflict of World War II.
The civil war developed out of a longstanding conflict in Spain between liberalism on
one side and monarchy and entrenched elites on the other. Spain’s era of greatness was long
gone by 1898, when it lost the last of its major colonies after a war against the United States.
King Alfonso XIII (r. 1902–1931) ruled weakly thereafter as a constitutional monarch, bolstered
by the Roman Catholic clergy and military leaders. Amid labor unrest and separatist revolts,
Alfonso turned to the right. In 1923, Prime Minister José Antonio Primo de Rivera (1870–1930)
suspended the constitution, censored the press, and clamped down on universities, which he
perceived as hotbeds of radicalism. When the Depression came in 1929, these tactics proved to
be unsustainable.
In 1931, leftist Republican parties triumphed in elections, forcing Alfonso to flee Spain.
A new constituent assembly was elected, dominated by socialists, communists, and anarchists.
This body drafted a liberal constitution granting universal suffrage, basic freedoms, separation of
church and state, secular control of mass education, and the nationalization of church property.
Elections in 1936 resulted in a coalition government of communists, socialists, and left-of-center
democratic parties.
The new regime alarmed the wealthy, the clergy, and the military. On July 17, 1936, a
rebellion broke out among army officers in Spanish Morocco, who eventually came under the
leadership of General Francisco Franco (1892–1975). Ferried back to Spain in Italian ships, the
Nationalists seized control of central Spain, which supported the uprising. The Loyalists—forces
loyal to the Spanish Republic—held the capital at Madrid, the Basque Country, and the
developed eastern seaboard, including Catalonia and its cosmopolitan capital of Barcelona.
In theory, the elected government should have easily prevailed against a handful of
insurgent generals. But the democracies, fearful of triggering a wider war and with important
domestic constituencies openly sympathetic to Franco, refused to aid the Spanish government.
Right-wing dictatorships, on the other hand, intervened vigorously. Mussolini’s Italy sent the
bulk of the outside assistance, providing guns, tanks, planes, and men. Hitler unleashed his air
force, or Luftwaffe. Its elite Condor Legion practiced in Spain the tactics it would use in the
larger conflict to come. Their blanket bombing of the Basque town of Guernica, in which 1,800
civilians died, introduced the military tactic of deliberately bombing unarmed civilian
populations.
Desperate for assistance, the Republic welcomed the International Brigades—about
40,000 volunteers from Europe and the United States. The Brigades included democrats,
socialists, communists, and workers eager to fight for the Republic, which they saw as
embodying a new order committed to social justice. Thus strengthened, the Loyalists fought
desperately against Franco and his supporters, which included the Roman Catholic Church.
Loyalist forces, in turn, murdered more than 1000 priests and nearly 300 nuns.
The Loyalists, however, needed weapons and money to counter German and Italian
support for the Nationalists. With no alternative, the Republic turned to the Soviet Union.
Stalin’s motives for aiding the Loyalists were complex. First, a pro-Spanish foreign policy
provided a good propaganda opportunity. By this point, it was clear that the German
communists’ intense opposition to the SPD rather than the Nazis had helped pave the way for the
installation of Hitler’s dictatorship. And so, in 1934, Stalin abandoned his previous policy and
told European communist parties to join “Popular Front” governments with other anti-fascist
parties—as the Spanish communists did. Second, Stalin hoped to influence the internal political
struggles within the Republic. The Soviets funneled their aid to the most radical elements within
the Republican coalition. Had the Loyalists won the Civil War, the result would most likely have
been not a liberal democracy but a Soviet satellite. Finally, if the Spanish conflict expanded into
a wider European war between fascism and its enemies, the initial center of fighting would be far
from the Soviet homeland.
In the end, Soviet assistance was not sufficient. Armed with continued Nazi and Fascist
support, Franco’s forces seized Catalonia by the end of 1938. The following spring, they took
Madrid, and Franco installed himself as dictator. The Loyalists and their international volunteers
fled, or were captured, tortured, and murdered. Between 500,000 and 1,000,000 people died in
the conflict. Fascism was on the march.
Democracy falters
What explains the record of German international successes throughout the 1930s? First, Hitler’s
tactical flexibility allowed him to outmaneuver his diplomatic foes. Second, the German dictator
understood the role of bluff and intimidation in international relations. Throughout the 1930s,
even though they were slow to rearm, the French and British militaries had an advantage over
Germany’s. But Hitler was consistently perceived as stronger than he actually was. Third, unlike
his counterparts in the West, Hitler’s basic foreign policy goal—overturning the system imposed
by the Versailles Treaty—enjoyed solid domestic support. Fourth, and perhaps most important,
he encountered a weak, irresolute international opposition.
Britain and France, the leading Western powers, adopted a policy of appeasement—that
is, repeatedly giving Hitler what he wanted, in the hopes that doing so would satisfy the Nazi
leader’s urge to expand. British and French political leaders were, understandably, haunted by
the memory of the huge casualties of the previous war. Ironically, their desire to avoid this
bloodbath precipitated a far greater bloodbath. Adopting a defensive posture of maintaining the
status quo, beset by deep internal political and cultural divisions, fearful of the cost of war in
money and men, the British and French leadership during the 1930s proved no match for Hitler.
The irresolute response of the democracies to the Spanish Civil War previewed their
handling of other European issues between 1936 and 1939. Political polarization was especially
pronounced in France. The military was split between officers ideologically committed to a
republican form of government and those (such as Maurice Gamelin, 1872-1958, commander of
the French General Staff at the start of World War II) from a deeply conservative, Catholic
background. Some officers even yearned for a restoration of the French monarchy. In the
political realm, many French conservatives considered Stalin, not Hitler, the nation’s prime
threat.
Meanwhile, in the mid-1930s, French foreign and domestic policies took a notable turn to
the left. In 1935, taking advantage of Stalin’s new “anti-fascist” policy, France concluded a
military alliance with the Soviet Union. The following year, elections produced a strong showing
for left-of-center parties, which formed a Popular Front government headed by socialist Léon
Blum (1872-1950), a French Jew. Some conservatives, horrified at the outcome, proclaimed,
“Better Hitler than Blum.” The French right opposed funds for the Popular Front’s social
programs, such as the 40-hour week, paid holidays for workers, collective bargaining, and
nationalizing the arms industry. Under constant pressure, Blum’s fragile coalition collapsed in
early 1938, and a centrist, Édouard Daladier (1884-1970), replaced him as premier. Daladier, a
longtime machine politician, would prove ill-suited to lead France in the turbulent late 1930s.
Britain also lacked bold leadership. Stanley Baldwin focused on reducing government
spending, including on the military. “With two lunatics like Mussolini and Hitler,” the prime
minister mused in April 1936, “you can never be sure of anything. But I am determined to keep
the country out of war.”
When Baldwin resigned in 1937, Neville Chamberlain, who had a similar philosophy,
succeeded him. In one of his first acts as prime minister, Chamberlaim sent a special emissary,
Lord Halifax (1881-1959), to meet with the Nazi leadership. Halifax expressed sympathy for
Hitler’s desire to readjust Germany’s boundaries with Poland, Czechoslovakia, and Austria, and
only urged Hitler to accomplish his goals peacefully. To the deeply conservative Halifax and
Chamberlain, the German dictator seemed like someone with whom they could work. He might,
they reasoned, even provide a bulwark against communist expansion on the continent.
Chamberlain and Halifax had more personal reasons for remaining loyal to an
appeasement policy. Beginning in the mid-1930s, backbenchers in the governing Conservative
Party, led by Winston Churchill (1874-1965), demanded a more aggressive response to the Nazi
regime. Every time Chamberlain publicly dismissed Churchill’s criticisms, he had more
incentive to make appeasement work. In many ways, the prime minister and his followers staked
their domestic credibility on the merits of their response to Hitler.
Only one European leader remained faithful to the earlier internationalist spirit, built
around principles of collective security, support for self-determination, and a belief in a
prominent role for the League of Nations. Eduard Beneš became president of Czechoslovakia in
1935, after having served for 17 years as the nation’s first foreign minister and several terms as
President of the League of Nations’ Council. By 1935, Beneš was the only prominent figure
from the Paris Peace Conference who still played an important role in European affairs. Working
cooperatively to confront aggression, the new Czech president believed, represented the best way
to deal with Hitler. In 1935, Czechoslovakia reaffirmed its ties to France. That same year, it
became the first central European nation to negotiate a military alliance with the Soviet Union.
Under the terms of this pact, the Soviets committed to aid the Czechs if Germany attacked—but
only if France honored the terms of its alliance with Beneš.
Like France, however, Czechoslovakia suffered from internal divisions. Nineteen
political parties sent representatives to its 300-member parliament. The second largest faction
belonged to the pro-Nazi Sudeten German Party, led by Konrad Henlein (1898-1945). Moreover,
as the only remaining democratic state east of the Rhine, Czechoslovakia was ideologically
isolated. By the mid-1930s, Greece, Bulgaria, and Yugoslavia in the Balkans; Hungary, Poland,
and Austria in central Europe; the Baltic states of Lithuania, Latvia, and Estonia; and Spain and
Portugal on the Iberian Peninsula had all abandoned democracy. In a few of these nations—
notably Latvia, Estonia, and Austria—authoritarian rulers seized power to prevent likely
electoral triumphs by Nazi-aligned movements. But in most of Europe, right-wing authoritarians
ruled in league with kings and military elites, often, as in Italy and Spain, with the support of the
Roman Catholic Church.