Roaring Twenties Politics and 1930s Economic Crisis

The Roaring Twenties

Policy was very different after the war. Regimes passed from democratic to authoritarian empires. The first years developed serious social unrest in some countries, involving workers and peasants. Among the middle and upper classes, fear that a communist revolution had occurred was widespread. In some countries, there were dictatorial regimes. The most important case was that of Mussolini in Italy.

International Relations in the 1920s

In the early '20s, there was great tension between Germany and France, and it seemed that a new conflict would arise. This tension increased when Germany could not pay its war reparations to France. Because of this, France was unable to pay the United States. This is why the French army occupied the Ruhr region in Germany, attempting to exploit Germany's mines and keep the benefits. But the Germans responded with strikes, and this increased the crisis. Therefore, the USA created the Dawes Plan: this provided a loan to Germany to pay its debts to France, enabling France to pay the U.S. This led to France and Germany understanding each other better and resulted in the Locarno Treaties, which defined their borders. After that, the "spirit of Locarno" was created, representing the peace momentum that emerged.

The Crisis of the 1930s

The 1929 Stock Market Crash

The stock market crash of 1929 was a serious worldwide crisis.

Causes of the Crisis

• Overproduction: During the war, countries had focused their economies on war production. When the war ended, they returned to normal production, and there was a surplus of products.
• Speculation: Many banks had granted credits to companies that falsified accounts to show economic benefits. All this led to the closure of many companies.

Therefore, the crisis broke out in the stock market. All companies and banks sought money for their payments. On Black Thursday (October 24, 1929), there was a large sale of shares, leading to the collapse of company values and investors being ruined.

Initial Impacts and Responses

Unemployment increased, resulting in a reduction in consumption. Banks reduced loans.

Why the Crisis Persisted

The crisis dragged on for two main reasons:

• The United States reduced imports.
• U.S. banks began to repatriate borrowed capital.

The New Deal Intervention

The New Deal was implemented, which imposed greater state participation and intervention in the economy.