EL MUNDO DE ENTREGUERRAS (1919-1939) | De la hiperinflación alemana al crack del 29

The Turbulent Interwar Period: Prelude to World War II

Overview of the Interwar Years

• The period between World War I and World War II (1919-1939) was marked by significant social, political, and economic turmoil that ultimately led to a second global conflict.

• This era transitioned from the euphoria of the 1920s to the severe crises of the 1930s, setting the stage for renewed hostilities.

Aftermath of World War I

• The First World War concluded in November 1918 with Germany's surrender, formalized at the Paris Peace Conference in early 1919.

• Key victors included France, England, and notably the United States under President Woodrow Wilson, who played a pivotal role in shaping peace treaties.

Wilson's Fourteen Points

• Wilson's peace framework consisted of fourteen points aimed at restructuring Europe post-war.

• Key aspects included:

• Reorganization of European borders following the collapse of empires.

• Creation of new nations based on national identities (e.g., Austria-Hungary).

• Prohibition of secret diplomacy which had contributed to previous conflicts.

• Establishment of a supranational organization (League of Nations) to prevent future wars.

Treaty of Versailles

• The Treaty imposed harsh penalties on Germany including territorial losses (e.g., Alsace-Lorraine returned to France), military restrictions, and reparations payments.

• Germany faced significant military limitations; its army was minimized and militarization in border areas was prohibited.

Economic Consequences for Germany

• Reparations were astronomical; Germany struggled economically due to these burdens which persisted until 2010.

• The treaty also forced Germany into accepting sole responsibility for initiating the war, leading to national humiliation.

Weimar Republic Challenges

• Following WWI, Germany transformed into the Weimar Republic amidst economic hardship and political instability characterized by radical movements (socialists, communists, fascists).

• Hyperinflation became rampant as reparations caused severe devaluation; everyday items required exorbitant amounts of currency (e.g., millions of marks for basic goods).

The Economic Impact of the 1929 Crash

The Context of Hyperinflation in Germany

• In post-war Germany, hyperinflation reached extreme levels, with prices soaring to 80 billion marks for basic goods. This phenomenon remains a critical study in economics for understanding currency and price dynamics.

• The crisis began to ease in 1924 when the U.S. started providing credits to Germany, aiding the political stabilization of the Weimar Republic.

The Roaring Twenties in the United States

• The U.S. entered World War I in 1917 at a strategic moment, emerging as a global superpower while Europe was collapsing.

• The 1920s were characterized as "the Roaring Twenties," marked by economic prosperity driven by capitalism and consumerism, including innovations like automobiles and household appliances.

• Mass entertainment flourished during this era, with jazz music, dance styles like Charleston, and cinema becoming popular cultural phenomena.

Stock Market Boom and Its Collapse

• Between 1924 and 1929, Europe also experienced economic growth due to American loans; however, this period ended dramatically with the stock market crash of October 1929.

• Leading up to the crash, stock prices had been rising consistently due to investor confidence but peaked unsustainably.

• On October 24th (Black Thursday), panic selling ensued as investors feared an end to rising prices; this led to massive sell-offs that triggered further declines.

Consequences of the Great Depression

• Following Black Thursday's chaos came Black Tuesday on October 29th; nearly all companies listed on the stock exchange faced catastrophic losses.

• The aftermath resulted in widespread economic collapse known as the Great Depression: factories closed down and unemployment soared with around 15 million people losing their jobs.

Global Repercussions and Political Ramifications

• The financial turmoil extended beyond America; European economies reliant on U.S. credit faced severe downturns leading directly to political instability.

• Particularly in Germany, these conditions contributed significantly to the rise of Nazism as economic despair fueled radicalization.

Lessons from History: Credit Crisis Parallels

• Reflecting on past crises reveals patterns; similar reckless lending practices preceded both historical events—the Great Depression and recent financial crises linked to mortgage lending.

Recovery Efforts During the Great Depression

The Shift in Economic Policy: Roosevelt and Keynesianism

Roosevelt's Break with Capitalism

• Roosevelt's new deal marked a significant departure from traditional capitalism, emphasizing increased state intervention in the economy.

• This approach is often referred to as "mixed economy" or "Keynesianism," named after British economist John Maynard Keynes, who advocated for government action to address economic crises.

• The discussion highlights the context of economic challenges faced during the 1920s and 1930s, particularly in Europe.