The Impact of the Great Depression on International Relations

Report
U.S. Gold Certificate (1882-1933)
Gold “parity” in 1913:
₤1.00
=
$4.86
=
RM 23.07
(8.26 grams) (1.70 grams) (0.358 grams)
The gold standard was imposed on Germany with the Dawes
Plan in 1924 and readopted by France & Great Britain in 1926.
THE ONSET OF THE GREAT DEPRESSION
1926-29: The “Price Scissors” (prolonged decline of world
commodities prices vs. those for manufactured goods)
October 25-29, 1929: Wall Street Crash
March 1930: Fall of the Great Coalition in Germany; resort
to government by presidential emergency decree
April-June 1930: Outbreak of tariff wars (new food tariffs in
Germany provoke the U.S. Smoot-Hawley Tariff)
May-July 1931: Bank Crisis in Austria & Germany stimulates
the Hoover Moratorium
September 1931: Great Britain abandons the gold
standard, prompting competitive devaluations
1932: Unemployment rate nears 40% in Germany and USA
Wall Street on “Black Tuesday,” October 29, 1929
“Black Tuesday” was the third trading session of the last four
in which the market lost more than 10% of its value
Hunger Marchers have arrived in Chester on their way to
Washington DC, December 2, 1932
In Germany the Great Coalition formed in June 1928 united
Social Democrats and liberals, but they could not agree on
measures to finance unemployment insurance in March 1930
Stresemann explains the Young Plan in a turbulent
Reichstag session, 1929; unfortunately, its final version
was not much different from the Dawes Plan.
Germany
would
continue to
owe
around 2
billion
marks per
year in war
reparations
for 50
years….
DNVP chairman Alfred Hugenberg and the leaders of the
Stahlhelm allied with the NSDAP to combat the Young Plan
“Unto the third generation must
you slave away!”
(“Freedom Law” referendum
campaign poster, 1929)
GERMANY’S UNEMPLOYED
(IN MILLIONS OF WORKERS)
THE POLARIZATION OF THE GERMAN
ELECTORATE IN THE GREAT DEPRESSION:
In the election campaign of July 1932,
many felt that Germany was on the brink of civil war.
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Communist
Social Democrat
Moderate (Libs + RC)
Con./Nationalist
Nazi
1919 1928 1930 Jul-32 Nov32
Chancellor Heinrich
Brüning
(1885-1970):
The Center Party’s
expert on fiscal
policy; a decorated
combat veteran
with a Ph.D. in
economics.
He lived an austere
life and preached
austerity.
BRÜNING’S ASSUMPTIONS
That Germany’s budget must be balanced, because any
deficit would cause a run on the mark-- (TRUE, because
memories of hyper-inflation made investors panicky and
ruined German government’s credit)
That deflation, i.e., systematic lowering of German wages
& prices, would revive German export industries and
employment– (but deflation also slows the velocity of the
circulation of money)
That the government could distribute sacrifices fairly
among all social classes– (FALSE, because Hindenburg
insisted that landowners receive debt relief and food tariff
hikes, and the military was spared any budget cuts)
That reparations must be abolished before the German
economy could recover (?).
Ramsay MacDonald (1866-1937)
 Raised a Scottish
Presbyterian, became a
Christian pacifist
 Resigned as Labour Party
chair in August 1914
 First Labour prime minister,
1924 and 1929-31
 Formed a National
Government with the
Conservatives in September
1931
 Sponsored Round Table
Conference with Gandhi and
Statute of Westminster in
1932
Statement issued by Brüning as he left to meet with
MacDonald at Chequers in June 1931
“The limit of the privations which we can impose on our
people has been reached. The premises on which the
Young Plan was based have proved to be erroneous as
a result of the development undergone by the world.
The Young Plan has failed to give the German people
the relief which according to the intentions of all
concerned it was meant to give and of which it at first
held out promise. The Government realizes that the
extremely precarious economic and financial situation
of the Reich imperiously requires Germany’s relief from
unbearable reparations obligations. This is also a
prerequisite for the economic recuperation of the
world.”
President Herbert Hoover (1874-1964)
A wealthy mining
engineer, he organized
food relief for wartime
Belgium and for millions
of Central Europeans
after 1918.
In June 1931 he offered
a one-year moratorium
on the collection of war
debts, if France & Great
Britain suspended
collection of reparations.
Henry L. Stimson (on right),
Hoover’s Secretary of State,
with predecessor Frank Kellogg
Brüning & Foreign Minister
Curtius bid Stimson
farewell, Berlin, July 1931
Brüning secured Mussolini’s support for the abolition
of reparations during a visit to Rome in August 1931
“Resignation &
Discussion,”
photo by Walter
Ballhause from the
series
“Unemployment”
(1930)
Brüning united a broad
front from the SPD to
moderate conservatives
to secure Hindenburg’s
reelection against Hitler
in April 1932
THE FALL OF BRÜNING, MAY 1932
Hindenburg was deeply wounded when most of his
monarchist friends endorsed Hitler for President.
In April 1932 Brüning banned the SA and sought to
partition bankrupt agricultural estates for homesteaders.
Hindenburg appointed the right-wing Catholic
monarchist Franz von Papen to replace Brüning at the
end of May, hoping that his government would be
tolerated by the Center Party and NSDAP.
Brüning’s many friends in Washington, London, and
Rome interpreted these events as a military coup and
anticipated a dangerous revival of German militarism.
Chancellor Franz von
Papen and his
defense minister,
General Kurt von
Schleicher, openly
sought German
rearmament, not
French disarmament.
THE UNRAVELLING OF
THE INTERNATIONAL ORDER
World Disarmament Conference, Geneva, February
1932-January 1934: appears to make progress in
April/May 1932 but then deadlocks; Hitler withdraws
German delegation in October 1933.
Lausanne Reparations Conference, June 1932:
abolishes reparations permanently, but USA refuses to
prolong the Hoover Moratorium on war debts; France &
Great Britain soon default on their debts to the USA.
World Economic Conference, London, June-July
1933: collapses after FDR prohibits U.S. delegation from
signing any agreement on tariffs or exchange rates.
King George V welcomes delegates to the World Economic
Conference, London, 12 June 1933. Alfred Hugenberg’s
demand for the return of Germany’s African colonies led to
his dismissal from the Hitler cabinet on June 27.
“The Accused”
(French cartoon,
early 1934)
When Hitler walked out
of the Geneva
Disarmament Conference
in October 1933,
American and British
leaders blamed France.

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