The Search for Stability

From 1921 to 1936

What Caused Unrest

A peace settlement at the end of World War 1 tried to fulfill the dream of nationalism by creating new states and boundaries. However, this settlement made people unhappy from the start. There were border disputes which effected the relations between several Eastern European countries. A great number of German citizens wanted to change the Treaty of Versailles.

Effects of Unrest

A Weak League of Nations-President Woodrow Wilson realized that the peace settlements could lead to new sources of conflict in Eastern Europe. He hoped that the League of Nations would heed good results. However, it was not good in maintaining peace.


French Demands-French demanded increased security, so they wanted strict reinforcement of the Treaty of Versailles. This, in turn, made Germans pay for damages done in the war. In April of 1921, the Allied Reparations Commission determined that Germany owed an equivalent of 33 billion U.S. dollars.

Inflation In Germany

The German government adopted a policy of passive resistance to French occupation. German workers went on strike, and the government mainly paid their salaries by printing more paper money. This only added to the inflation that had begun in Germany by the end of the war. evidence of runaway inflation was everywhere. In 1924, an international commission produced a new plan for repairs. The Dawes Plan, coordinated Germany's annual payments with its ability to pay. The plan also granted an initial $200 million dollars to loan for German recovery. This loan soon opened the door to heavy American investment in Europe.

The Treaty of Locarno

A spirit of cooperation was fostered by the foreign ministers of Germany and France, Gustav Stresemann and Aristide Briand. In 1925, they signed The Treaty of Locarno, which guaranteed Germany's new Western borders with France and Belgium. The new cooperation grew even stronger when germany joined League of Nations in March 1926. Unfortunately, the spirit of Locarno was based on little real substance. Promises not to go to war were worthless without a way to reinforce these promises.

Causes of the Depression

Two factors played an important role in the start of the Great Depression. The first was the downturns of economics of the individual nations. The prices of farm produce were falling rapidly.

The second factor was an international financial crisis involving the US stock market. In 1929, the US stock market took a huge plunge with all the prices crashing. With all the crashes, the Americans had to pull money and investments out of the German banks, drastically changing the German economy.

Democratic States after the War

Germany

A German democratic state known as the Weimar Republic was created after the rule of Imperial Germany ended. The republic had no truly outstanding political leaders. One of Germany's big war heroes, Paul von Hindenburg, did not support the republic.

The republic also faced many different economic issues. In 1923 & 1922. Most all workers in Germany saw a huge pay cut. These workers decided to become hostile towards the republic. from 1924-1929, Germany had a huge prosperity, until the Depression finally hit them in 1930.

France

After defeating Germany, France became the strongest power in Europe. France still suffered financial problems after the war though. France didn't begin to feel the Depression until after everybody else got hit by it. This threw France into political chaos, which made 6 different cabinets. In 1936, these cabinets formed the Popular Front Government. This government started a program for all workers. This gave them the right to collectively bargain a 40 hour workweek.

Great Britain

Britain lost most of its markets to the US and Japan. After the war, the industrial market declined, leading to a rise of unemployment. 2 million out of work. But they soon rebounded to experience a state of prosperity in 1925-1929. The Labour Party had become the largest part in Britain, failed to solve the nations economic depression. Leaders never listened to John Keynes, British economist and publisher of General theory of Employment, Interest, and Money. He said the the government should not intervene during a time of depression. He said that the depression was created due to overproduction.