THE SEARCH FOR STABILITY

1. INTRODUCTION The peace settlement of World War I left many nations unhappy, and the League of Nations proved unable to deal with the crises following the war. The brief period of prosperity that began in Europe during the early 1920s ended in 1929 with the beginning of the Great Depression. This economic collapse shook peoples confidence in political democracy and paved the way for fear and the rise of extremist parties that offered solutions to the hardships that many were enduring. Discontent with the Treaty of Versailles and a weak League of Nations opened the door to new problems in the interwar years. 2. UNEASY PEACE, UNCERTAIN SECURITY The peace settlement at the end of World War I made many nations unhappy. Some of the provisions in the settlement led to border disputes in eastern Europe. The League of Nations was not very effective in maintaining peace. This was partly because the League could not agree to use military force against aggression. It was also due to the fact that the United States was not in the League. (The U.S. Senate refused to ratify (approve) the Treaty of Versailles. This
meant that the United States could not be a member of the League of Nations)

The Germans, in particular, were unhappy with the peace settlement. The French government demanded strict enforcement of the Treaty of Versailles. In April 1921, the Allied Reparations Commission determined that Germany had to pay 33 billion dollars for reparations!! (the payments Germany was required to make for war damages). Germany tried to make these payments, but after one year, they announced that they could no longer afford to pay. France sent troops to occupy the Ruhr Valley, the chief industrial and mining center of Germany. The French intended to collect reparations by operating the Ruhr mines and factories. German workers resisted by going on strike. To pay the workers, the German government printed more and more paper money. This added to the inflation (rise in prices) that had already begun in Germany. The German mark (Germanys currency) soon became worthless.
Actually, workers took their weekly pay home in wheelbarrows!

A German woman is using her worthless money to start a fire in her kitchen stove

The Allies could see that this situation could not continue. In August 1924, a new plan for reparations, the Dawes Plan, was produced. It reduced the total amount that Germany had to pay. The plan also granted a $200 million loan to Germany. This loan opened the door to American investments in Europe. There was a brief period of prosperity from 1924 to 1929. In 1925, France and Germany signed the Treaty of Locarno. This treaty guaranteed Germanys new western borders. This treaty was viewed by many as the beginning of a new era of European peace. Germany joined the League of Nations in 1926.

These nations pledged to renounce war as an instrument of national policy. Unfortunately, most nations were unwilling to risk their national security by reducing their military forces. Weak of League of Nations (U.S. not there) Strict demands of France to Germany send troops to Ruhr Crisis in Germany: more money printed + inflation Dawes plan to help Germany : reduce the payment and U.S. Invest there Treaty of Locarno: try to settle peace, but nation distrust each other.

3. THE GREAT DEPRESSION The brief period of prosperity that began in 1924 ended in an economic collapse that became known as the Great Depression. A depression is a period of low economic activity and rising unemployment. At least two factors played an important role in the start of the Great Depression. The first factor was a series of downturns in the economies of individual nations during the second half of the 1920s. The second factor was an international financial crisis involving the U.S. stock market. During the 1920s, the United States stock market was booming. American investors, who had been making loans to Germany, began to pull money out of Germany to invest it in the stock market. Then, in October 1929, the stock market crashed. American investors withdrew even more money from Germany and other European markets. This weakened the banks of Germany and other European countries.

By 1931, trade was slowing down, industrial production was declining, and unemployment was rising.

During 1932, the worst year of the depression, 25 percent of British workers were unemployed, and 40 percent of the German workforce was without work. Governments did not know how to deal with the crisis. Traditional

solutions, such as cutting costs by lowering wages, made matters worse. DO WE HAVE LEARNT ANYTHING FROM HISTORY OR JUST WE KEEP MAKING THE SAME MISTAKES?
The Great Depression had serious political effects. First, governments became more and more involved in the economies of their countries. Second, Communism became more popular. Marx had predicted that capitalism would eventually destroy itself through overproduction, and this seemed to be coming true. Finally, masses of people began to follow dictators who offered solutions.

4. DEMOCRATIC STATES AFTER THE WAR In 1919, most European countries had democratic governments. In many nations, women could now vote. GERMANY In Germany, the imperial government had come to an end. A German democratic state known as the Weimar Republic was created, but it had problems. First, it had no outstanding political leaders. In 1925, Paul von Hindenburg was elected president. He was a military hero and did not fully endorse the republic that he was elected to lead. The Weimar Republic also had serious economic problems. Inflation caused savings to become worthless. This

pushed the middle class toward political parties that opposed the republic. After a brief period of prosperity, the Great Depression struck and led to mass unemployment. Fear seized the country and led to the rise of extremist parties. FRANCE After the war, France was the strongest European power. Because its economy was more balanced than the economies of other nations, the French did not experience the full effects of the Great Depression until 1932. The economic problems had political effects. The government changed six times in less than two years. Finally, in 1936, a coalition of leftist parties (Communists, Socialists, and Radicals) formed the Popular Front government. This government gave workers the right to collective bargaining, (the right of unions to negotiate with employers over wages and hours), a 40-hour workweek a two week paid vacation minimum wage.

But the Popular Fronts policies were unable to solve the problems of the depression. UK During the war, Great Britain had lost many of the markets for its products to the United States and Japan. This led to a rise in unemployment. From 1925 to 1929, however, Britain had a period of prosperity. After the Great Depression struck, the Labour Party was unable to solve the countrys problems and fell from power in 1931. A new government, led by the Conservatives, took credit for bringing Britain out of the worst stages of the depression. Most of the political leaders in Britain ignored the new ideas of a British economist, John Maynard Keynes . Keynes believed that unemployment came from a decline in demand, not from overproduction. He believed that the government should increase demand by putting people back to work building highways and public buildings. He believed that governments should finance these projects even if this meant deficit spending (going into debt).

U.S.A. After Germany, no nation was more affected by the Great Depression than the United States. By 1933, over 12 million people were unemployed!. Under these circumstances, Franklin Delano Roosevelt was elected to the presidency in 1932. He introduced an economic policy called the New Deal . The New Deal included an increased program of public works. The Roosevelt administration also introduced new legislation that began the U.S. welfare system. In 1935, the Social Security Act created old-age pensions and unemployment insurance. However, the New Deal alone could not solve the unemployment problems of the Great Depression. In 1938, more than 10 million Americans were still unemployed.

ACTIVITIES 1. Why was the League of Nations not very effective in maintaining peace? 2. How did the crash of the U.S. stock market affect Germany and other European countries?

3. What was the New Deal? 4. Explain the significance of: Ruhr, Dawes Plan, Treaty of Locarno, depression, collective bargaining, Weimar Republic, Keynes, New Deal, deficit spending. 5. Identify two causes and two effects of the Great Depression