The period between the end of the First World War in 1918 and the beginning of the Second World War in 1939 is usually called the interwar period. It was a time when mass culture originated in the United States and began to spread around the world. But most characteristic was the economic downturn that hit the Western world and paved the way for fascism and Nazism in Europe.
Spanish flu affects the world
The period began as badly as it ended, 1918-1919 Europe and the world were affected by the so-called Spanish disease . Epidemic, an unusually deadly form of influenza, is one of the worst pandemics to hit humanity, claiming more than 20 million lives.
The happy 1920s
But in the 1920s, things got better. It was a decade when a lot changed. After the terrible war years during the First World War , people wanted it to be more pleasant.
In the United States, a new kind of music emerged, jazz. To it you could dance foxtrot, charleston and other modern dances. Many older people were horrified by what they saw and heard. The new hairstyles and the new fashion also upset many. Women had their hair cut to the time-typical short “shingle hairstyle”.
During the period, the clothing fashion of the time spread among the people in a more extensive way than before. Influences came, among other things, from Hollywood after cinemas became commonplace in cities.
In the 1920s, it also became common to listen to radio. At the same time, interest in film increased. In the beginning it was silent film, but in the late 1920s the sound film broke through.
People had more time left for fun. From the United States, the new mass culture spread around the world. It was in connection with this that the term “the happy 20s” was coined.
Germany suffers from hyperinflation
The German Weimar Republic had a hard time catching on to the happy twenties. In 1923, the country was hit by a deep-seated inflation crisis. The reason was primarily the onerous war damages that Germany was forced to bear in connection with the Peace of Versailles after the First World War .
In the early 1920s, Germany had trouble paying. To squeeze money out of the German state, France had the Ruhr area, which was the industrial heart of Germany, occupied. Strikes then broke out among the German workers, which soon led to a shortage of goods and higher prices in society.
Many German industries perished due to the strike. As a result, unemployment rose. The German government now had to arrange money both for the unemployed and for the enormous war damages. The easiest way to solve the problem was to print more money. It was not long after that before the increased money supply caused strong and difficult to stop inflation. The German money eventually became useless. The incident led to countless banks going bankrupt and many German citizens being ruined.
The economic crisis paved the way for the Nazis
The economic crisis caused the middle class to lose confidence in the government, which could not protect their savings. This later facilitated the Nazi takeover as the people became more tolerant of dictatorial solutions to problems. As early as 1923, the Nazis had created a power base in Germany.
The United States became an economic superpower
In the rest of Europe and the United States, the happy twenties continued. Society became more and more a consumer society. The industry was doing well. But it went best for the United States, which at this time became an economic superpower. The country had a huge industrial capacity and produced more goods than any other country in the world.
A large portion of the economic surplus in the United States was invested in equities. During the 1920s, therefore, the value of shares rose steadily on the American stock market. The value of the shares multiplied during the period.
Stock market crash of 1929
The increased interest in stock speculation eventually led to the shares being sharply overvalued. When people discovered the weaknesses of the system, they immediately stopped buying stocks and started selling instead. At the end of October 1929, the stock bubble burst after panic broke out on the New York Stock Exchange .
The reason for the stock market crash was that the shares had continued to rise in value even after the industry had deteriorated. The share value could then no longer be reconciled with the companies’ fair value. It all ended with the shares falling to such an extent that they became largely worthless. The economy immediately turned down. The happy twenties were over.
The stock market crash contributed to creating a worldwide economic crisis
In connection with the stock market crash, the banks that lent large sums to the share buyers had difficulty in repaying the loans. At the same time, many people took the opportunity to withdraw their savings from the banks because they no longer trusted them. As a result, many banks were forced to close. At this time, the world economy was so interconnected that what happened in the United States had consequences elsewhere as well. It was therefore not long before the stock market crisis had spread to Europe.
The great economic crisis of the 1930s
Another reason for the economic crisis that arose in the 1930s was that technological advances in industry had led to higher unemployment. The work process had been made more efficient. This meant that fewer workers could perform the same work as several had done before. The industry also produced more goods than before. But in order for the industry to continue producing goods to the same extent, people must buy them.
In connection with rising unemployment, the purchasing power of the people decreased. This hit back at the industry, which found it more difficult to sell its products. As a result, many industries had to lay off workers while others were laid off. As a result, unemployment increased, which in turn further reduced purchasing power.
The fall in the US exchange rate also led to a shortage of capital in Europe, with rising interest rates as a result. This made it even more difficult for the industry. Unemployment continued to grow. Economic development was in a downward spiral. In the USA and Europe, therefore, the 1930s came to be characterized by an extensive recession and economic depression with mass unemployment as a result.
Adolf Hitler and the Nazis take power in Germany
Of the countries of Europe, Germany was hit particularly hard by the stock market crash in the United States in 1929 and the economic crisis. The German Weimar Republic had been dependent on American loans since the Peace of Versailles in 1919. After the stock market crash, these loans ceased at the same time as the US banks demanded the money back. By 1931, the German economy had collapsed. Banks were forced to close and unemployment soared. In 1932, about a third of all able-bodied Germans were unemployed.
The German Nazi Party and Adolf Hitler were able to use the recession to strengthen their power. Hitler turned to the economically vulnerable groups in society and blamed scapegoats instead of pointing to the recession. Nevertheless, he largely succeeded in resolving the economic crisis in Germany. At the same time, he connected with the unemployed and economically affected social groups by alluding to a kind of socialism.
Nazi election propaganda also exploited the widespread communist terror. Adolf Hitler was portrayed as the savior and the only alternative before the Communists.
In 1932, the National Socialist German Workers’ Party (NSDAP) became the largest party in the German parliament. At the beginning of 1933, Hitler was elected Chancellor. Other political parties were banned. Hitler immediately launched a major rearmament, despite the Treaty of Versailles’ ban on a strong German military. At the same time, the Nazi regime began the persecution of Jews and others who did not correspond to their distorted human ideal.
Prelude to World War II – “A people, a kingdom, a leader”
In the mid-1930s, Hitler began to claim more living space for the German people. In 1936, the Rhineland was occupied by German troops. The action was a violation of the Treaty of Versailles, according to which the Rhineland would constitute a demilitarized buffer zone between France and Germany. Subsequently, Austria was annexed and thus joined the Greater Germany.
Europe sat on the spectator bench. The reason was that they wanted to avoid another great war. But when German troops marched into Sudetområdena in Czechoslovakia (today’s Czech Republic and Slovakia ) 1938, decided the Allies because it would be Hitler’s last territorial claim. The Allies had woken up and realized that the concession policy was no longer sustainable. Poland was now promised help if the country were to be attacked. When Germany then attacked Poland, in September 1939, the alliance was put into play. The interwar period thus turned into World War II .
Useful concepts
Share: Share in a limited liability company that corresponds to a capital investment from the owner, and which forms the company’s share capital. A share is basically a right to the company’s assets.
Aktiebolag (AB): A form of company which i.a. is characterized by the fact that the number of shareholders is unlimited and that a required capital, so-called share capital, is required to become a partner.
Stock exchange: A market where you buy and sell shares at market price.
Share price: Shows the value of the share.
Allied: State linked to another state by agreement. Usually, this means that the states promise to help each other in war.
Economic depression: Extreme and prolonged recession. Simply put, this means a period of economic decline with reduced investment, high unemployment and low production.
Hyperinflation: Extreme inflation.
Inflation: When the value of money deteriorates – the price level increases and purchasing power decreases.
Capital: Assets in the form of e.g. money, real estate and machinery.
Recession: A period when there is low economic activity and the total demand for goods and services is less than what could be produced. When orders do not arrive, companies find it difficult to retain their employees, as well as less resources to invest in new technology. Unemployment is rising, which in turn is reducing the purchasing power of the people.
Peace of Versailles: A peace treaty after the First World War in 1919 which France, Great Britain and the United States concluded with the defeated Germany and the other countries that were part of the Triple Alliance. The peace treaty became extremely harsh for Germany, which was forced to pay enormous war damages and commit itself to having only a small army without a navy and air force. In addition, Germany had to cede large tracts of land and renounce all its colonies.
Weimar Republic: The democratic Germany created at the request of the victorious powers at the Peace of Versailles in 1919. The state was characterized by political instability which was exacerbated by several political assassinations and coup attempts. In connection with the stock market crash in New York in 1929 and the subsequent economic depression that hit Germany particularly hard, the economic and political situation in Germany became unsustainable. The crisis was exploited by the Nazis who were able to take power in 1933
