Post-WWI reparations led to severe economic issues in Germany, triggering a global downturn.
Key causes of the Great Depression: agricultural overproduction, the US stock market crash, war debts, and international bank failures.
The crisis affected countries worldwide, with Germany being particularly hard hit. The withdrawal of American investments led to further international economic decline.

Global Responses to Economic Crisis

Let’s explore what kind of strategies were utilized for a path for economic recovery.

🇺🇸 United States: President Franklin D. Roosevelt, based on Keynesian Economics, aimed to revive the economy.
🌐 International Trade: Many nations chose to impose taxes on imports (tariffs), encouraging consumers to buy local goods.
🇯🇵 Japan: Devalued currency and overseas imperialism helped recover its economy.

Russia and Mexico Post World War Two

It’s time to see how Russia and Mexico were impacted by the post-war economy.

🇨🇳 The USSR: Lenin's New Economic Plan (NEP) and Stalin's Five-Year Plan focused on industrialization and collectivized agriculture, leading to significant hardships, including famines.

After Lenin died, Joseph Stalin took power over the Politburo. He made himself dictator.
- Through his Five-Year Plan, Stalin’s collectivized agriculture in an attempt to industrialize the USSR and make it a world superpower. Following this, lots of people moved to cities for better job opportunities, but there wasn’t enough goods to support the population. Many people starved, causing civilian revolts.
Today, Stalin is generally condemned for his political actions.
- He restricted all free speech, including press.
- Political dissenters were sent to gulags (labor camps) for life or executed.
- His agricultural policies caused millions to die from starvation.

🇲🇽 Mexico: the Institutional Revolutionary Party (PRI) had political control for most of the 1900s, bringing great improvements to Mexico’s economy.

In 1938, Lazaro Cardenas (then President of Mexico) nationalized Mexico’s oil industry. Petroleos Mexicanos (PEMEX) became one of the world’s biggest state owned companies. His land reform plans were also successful.

The Rise of Fascism in Europe

Following WWI, Fascist regimes emerged in Italy and Spain, driven by economic woes and political instability.

🇮🇹 Italy: Mussolini capitalized on post-war grievances and economic struggles to establish a fascist government, promoting corporatism, military expansion, and aggressive nationalism.
🇪🇸Spain: The Spanish Civil War (1936-1939) featured Franco's Nationalists, backed by fellow fascist regimes, overthrowing the Republic, leading to a long dictatorship under Franco.
- Despite the European nonintervention agreement, they were backed by Hitler (Germany), Antonio Salazar (Portugal), and Mussolini (Italy).
- The Republicans or Loyalists (backed by France, the US, and The USSR) fought the Nationalists to protect the Spanish Republic.
- The Nationalists defeated the Republican army, and Franco was dictator of Spain until he died in 1975.

The Rise of Fascism in Latin America

🇧🇷 As Brazil industrialized, middle class civilians were outraged at the large landowners that monopolized the economy. In 1930, Getulio Vargas became president after overthrowing of the Brazilian government.

Urban middle class civilians supported Vargas, believing his pro-industrial policies would bring democracy. This turned out wrong, as Vargas’s political decisions mirrored existing fascist regimes in Europe:
- Individual rights were taken away.
- The press was censored by the government through his Estado Novo (”New State”) program.
- Political dissenters were imprisoned.
- Political parties were abolished.
- Hypernationalism was upheld.
Unlike other fascist governments, Brazil didn’t use violence to exert control over its citizens.

Terms to Remember

Term	Definition + Significance
Communism	The political and economic system in which the government manages businesses and production, directly opposing capitalism. It was on the rise in eastern Europe, Asia, and Latin America during the 1930s.
Capitalism	The political and economic system in which private entities manage businesses and production. This was upheld by the USA and Britain during the Great Depression in the 1930s.
Fascism	Political and economic systems that strongly oppose communism and any forms of dissent while enforcing extreme nationalism, glorifying militarism, and using ethnic minorities as scapegoats for societal issues. Many countries in eastern Europe fell to fascism in the 1930s, including Germany leading up to and during World War Two.
Great Depression	A time period during the 1930s where the entire world fell into deep economic failure. This was a result of: Germany’s skyrocketing inflation following World War One, the American stock market crash in 1929, and agricultural overproduction.
Keynesian Economics	Economic idea found by John Maynard Keynes proposing that the government should be intentionally involved in the economy to improve it, directly opposing laissez-faire economics.
New Deal	Collection of government programs and policies that intended to get America out of its economic depression through relief, recovery, and government reform. This directly challenged laissez-faire economics.
New Economic Plan	Vladimir Lenin reintroduced private trade on a small-scale to combat the USSR’s economic failure.
Politburo	The Communist Party’s central committee. Stalin took control of it after Lenin’s death.
Five-Year Plan	Stalin’s plan to industrialize the USSR into a world superpower, in which he revoked citizen autonomy by seizing the means of agricultural production, enraging farmers.
Corporatism	A political theory that divides the economy into separate sectors (employers, labor unions, and government officials) that each allegedly have organizational autonomy, so long as they support the whole. In reality, Italy’s fascist government took control of each sector.
Totalitarianism	A political and economic system in which the state controls all aspects of life.
Guernica	For one of the first times in history, civilians were targets of an aerial bombing when Germany and Italy bombed civilians in Guernica, Spain. Picasso immortalized this tragedy in his abstract painting titled “Guernica,” that illustrates the chaos and suffering of the bombing.

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AMSCO Notes

AMSCO 7.4 Economy in the Interwar Period Notes

1 min read•june 18, 2024