The Great Depression of the 1930s was a result of World War I. Germany had to pay off war debts to France and Britain, but in the meantime, they borrowed money from the U.S. There was a chain connecting everyone, and when Germany finally failed to pay France and Britain, the chain of money stopped. France and Britain could not pay the U.S. back, and the stock market crash ensued shortly afterwards. Its severity was due to the chain reactions and interlocking of the different countries. Germany was suffering major inflation, and simply could not pay or make up its debt to the other countries. If France and Britain were equally blamed for the war, it may not have happened, because Germany would not be supporting the countries economically.
The National Government took three decisive steps to attack the depression. First, to balance the budget, it raised taxes, cut insurance benefits to the unemployed and the unemployed and the elderly, and lowered government salaries. Its leaders argued that the fall in prices that had taken place meant that those reductions did not appreciably cut real income. Second, in September 1931, Britain went off the gold standard. The value of the British pound on the international money market fell by about 30 percent. This move somewhat stimulated exports. Third, in 1932 Parliament passed the Import Duties Bill, which placed a 10 percent ad valorem tariff on all imports except those from the empire.
Gold and free trade, the hallmarks of almost a century of British commercial policy was abandoned. The Popular Front, on June 8, 1936, immediately raised wages from 7 and 15 percent, depending on the job involved. Employers were required to recognize unions and to bargain collectively with them. Workers were given annual, paid two-week vacations. The forty-hour week was established throughout French industry. Everyone was terrified of the Third Republic.
The outflow of foreign capital from Germany beginning in 1928 undermined the economic prosperity of the Weimar Republic. The resulting economic crisis brought parliamentary government to an end. In 1928 a coalition of center parties and the Social Democrats governed. All went reasonably well until the depression struck. Then the coalition partners disagreed sharply on economic policy. The Social Democrats refused to reduce social and unemployment insurance. The more conservative parties, remembering the inflation of 1923, insisted on a balanced budget. The coalition dissolved in March 1930.
Hitler came into office by legal means, he was eventually elected Chancellor by the president and all the proper documents were completed. When the president of Germany died on August 2, 1934, Hitler combined the offices of chancellor and president. He was then the sole ruler of Germany and of the Nazi party. No, his dictatorship was not inevitable. His seizure of power was more by impersonal forces, especially because he only became ruler of Germany when the President died.
Nazi economic policies maintained private property and private capitalism, but subordinated all significant economic enterprise and decisions about prices and investment to the goals of the state. Hitler reversed the deflationary policy of the cabinets that had preceded him. He instituted a massive program of public works and spending. Many of these projects related directly or indirectly to rearmament. The government sponsored canal building, land reclamation, and the construction of a large highway system with clear military uses.
The government returned some unemployed workers to farms if they had originally come from there. Other laborers were not permitted to change jobs. The Nazi economic experiment proved that by sacrificing all political and civil liberty, destroying a free trade-union movement, preventing the private exercise of capital, and ignoring consumer satisfaction, full employment to prepare for war and aggression could be achieved.
Terror and intimidation had been major factors in the Nazi march to office. The SS had originated in the mid-1920s as a bodyguard for Hitler and had become a more elite paramilitary organization than the much larger SA. The SS was the instrument that carried out the blood purges of the party in 1934. The police character of the Nazi regime was all-pervasive, but the people who most consistently experienced the terror of the police state were the German Jews.
Hitler, Mussolini, and Stalin each used terror to achieve their goals. With terror the number one populace concern, rebellion was less omniscient. The people would worry about staying alive and doing the things that please the ruler rather than make a mistake, plan a rebellion, or
something close to that.
Stalin felt that if Russia did not industrialize there would be no way to keep up the rest of the fast-advancing Europe. The production of iron, steel, coal, electrical power, tractors, combines, railway cars and other heavy machinery was emphasized. The labor for this development was supplied internally. Capital was raised from the export of grain even at the cost of internal shortages. The fact that Russia had a five-year plan probably allowed the Soviet Union to survive the German invasion. The targets of the purges were in all areas of party life. No one can explain why some were executed, others sent to labor camps, and still others left unmolested.