The Depression and its costs - Web viewGiven the fragility of German democracy, ... the growing power of the Chinese Nationalist Party, led by Chiang Kai-shek (Jiang Jieshi; 1887-1975)

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 short-

term 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 European-

style 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 quasi-

military 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 pre-

World 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.