Paris Peace Treaties & 1929 Crisis: Origins & Impact

Peace of Paris and the Treaty of Versailles (1919-1920)

The Paris Peace Conference refers to all treaties signed by the defeated countries; these included the Treaty of Versailles. The ideological basis of the Peace of Paris was the Fourteen Points outlined by President Wilson. He had three goals: preventing the resurgence of Germany, achieving a balance of power, and keeping Russia isolated.

Other Consequences of the War

The Treaty of Versailles was not a peace agreement, but an imposition that the Germans had to accept. Germany would never accept this imposition. All this encouraged a desire for revenge that was crucial later. Following one of Wilson's Fourteen Points, the League of Nations, based in Geneva, was created. It would bring together the principal countries of the world to solve international problems peacefully. Although the League of Nations failed to resolve the serious problems it faced, it is important because it was the first organization of this type in history, and a precursor to the UN.

The Origin of the Crisis of 1929

The causes of the crisis of 1929 were overproduction and speculation.

• Overproduction: During the First World War, the countries involved had focused their economies on war production. After the war, these countries returned to their usual production, generating a surplus of products.
• Speculation: The U.S. economy was based largely on real estate speculation and the stock market. The banks had given out many loans. They used that money to falsify their accounts and pretend that they had economic benefits.

The invested capital did not cause an increase in the interest rate and led to the ruin of many businesses. The crisis broke out following the stock market crash. On "Black Thursday", there was a massive sale of shares, causing the collapse of corporate value and the ruin of investors.

Consequences of the Crisis and Attempts at Resolution

The crisis produced a large increase in unemployment. Banks had to reduce loans. U.S. imports were reduced. Capital provided abroad began to be repatriated. This caused the crisis to spread throughout Europe. A policy to end the crisis was implemented. In the U.S., President Roosevelt launched a program called the New Deal, which imposed greater state intervention in the economy. The state invested heavily in public works and provided subsidies for agriculture.

Political Consequences

Workers and farmers increased their support for communist parties. The middle classes and the bourgeoisie began supporting right-wing parties. In this environment, there was a new wave of dictatorships, including the victory of the Nazi regime, led by Hitler.