23. The Democracies Between the Wars

Clearly the greatest challenge to the Western democracies between the wars was the Great Depression.  Yet both Britain and France experienced a decade of economic difficulties even before the Depression began in 1929.  Narrative overviews of the British and French experience follow, but, first, a brief description of the Great Depression.

The Great Depression

How to summarize the Great Depression, 1929 - 1940?  Very simply, the Depression was the general collapse of the major industrial capitalist economies: the United States, Britain, France, Italy, Germany, and Japan.  It was caused by numerous factors, but, basically the 1920s saw an artificial prosperity financed by easily available credit. This led to an over-extension of credit. In the United States, agricultural overproduction in the 1920s caused the collapse of crop prices.            

            The Depression was characterized by the collapse of investments, beginning with the 1929 New York Stock Market Crash.  In all industrial societies credit collapsed as banks, unable to recover their loans, failed, causing millions to lose their savings. Bank failures, in turn, meant the loss of investment capital. Industrial productivity collapsed resulting in massive unemployment. By 1932 – 1933, the prevailing mood was one of uncertainty, pessimism, and fear. (Of the major industrial states, only the Soviet Union escaped the Depression. As the capitalist economies were collapsing, the Soviet economy was expanding under the Five Year Plan.)

           What were the responses to the Depression? In the Western countries, state-sponsored programs intended to provide relief, recovery, and reform were initiated.   Other actions included economic retrenchment (contraction), the imposition of currency controls, and protectionism through high protective tariffs and quotas limiting imports. World trade declined. Some states experienced political redirection as evidenced in the rise of fascism in Germany and militarism in Japan.

            As we have seen, the political chaos caused by Germany’s economic collapse brought the Nazis to power in 1933. Hitler’s policies for rearmament and the emerging totalitarianism of the Nazi dictatorship, in effect, underlay Germany’s economic recovery. In the Western democracies, Britain and France, the period between the wars was one of both economic difficulty and political redirection.

Britain between the Wars

The British economy remained depressed throughout the interwar years and was plagued by such problems as unemployment and labor difficulties.  By 1921 over two million workers were out of a job and receiving unemployment compensation.  Unemployment insurance had been in place since 1911, and, along with old-age pensions, government-subsidized housing, and other social welfare benefits, helped relieve economic distress and prevent drastic decline of living standards.  Nonetheless, the costs of unemployment and other benefits were extremely high and required high taxes. 

            In 1926 a major strike by coal miners led to a general strike of workers across British industry.  In response to the Coal Strike the government declared a state of emergency and authorized military intervention to keep essential services going.  Legislation was passed outlawing general strikes of sympathy whereby workers in one industry would cease working in order to support striking workers in another industry.

            The Labour Party emerged as Britain’s second major political party, eclipsing the Liberal Party in the 1922 parliamentary elections.  In parliamentary elections in 1924 Labour won the largest number of seats in the Commons and, through a coalition with the Liberals, secured a parliamentary majority.  There was controversy arising from the Labour Government’s extending diplomatic recognition to and authorizing loans to the Soviet Union.  With the discovery of the “Red Letter” (also known as the “Zinoviev Letter”) wherein a Soviet leader (Gregori Zinoviev – then one of the members of the USSR’s “Collective Leadership”) allegedly authorized the Comintern to foment revolution in Britain, Labour lost its majority and the Conservatives returned to power. It was a Conservative government that reacted to the Coal Strike in 1926.  The Conservatives, however, failed to move the country to economic health and a Labour-Liberal majority was returned in 1929.  

            The Depression hit Britain hard, making a bad situation worse with unemployment rising to over three million.  Prime Minister Ramsay MacDonald, seeking to cut back on government spending, announced the intention to reduce unemployment compensation.  So stunned were the majority of the Labour Party by MacDonald’s betrayal of long-held Labour principles that he was expelled from the Party’s leadership.  He remained Prime Minister, however, by forming a National Government, a coalition of loyal Labourites, Liberals, and Conservatives.  MacDonald remained Prime Minister until 1931, when leadership of the coalition passed to the Conservative leader, Stanley Baldwin.  In 1937 Baldwin was succeeded by another Conservative, Neville Chamberlain, who headed the National Government until 1940.  By then Britain and the rest of Europe were heavily engaged in World War Two.  Under the National Government Britain concentrated on economic nationalist measures (raising tariffs) rather than on fundamental changes in the overall economic system.  There was some modest recovery but unemployment persisted until the outbreak of the war in 1939. 

            On the background of these economic problems, Britain also faced other problems.  Ireland was a constant thorn in the British side. During the war an Irish rebellion (the 1916 Easter Rebellion) was suppressed with armed force. In 1919 - 1920 Britain quashed another Irish rebellion (the War of the “Black and Tans,” so-called because of the color of the British military uniforms).  In 1922 Britain granted autonomy to Ireland, recognizing it as the Irish Free State and granting it self-governing dominion status (as was held by Canada, South Africa, Australia, and New Zealand).  The Protestant majority in Ulster (the six counties of Northern Ireland) refused to be part of the new Irish Free State and remained under British sovereignty.  The Irish issue was not resolved as the Irish Free State refused to accept continued British sovereignty over Northern Ireland and agitated for the annexation of Ulster.

            Postwar nationalism also affected Britain’s other Dominions (Canada, South Africa, Australia, and New Zealand) and, in 1931, led to the Statute of Westminster whereby they received equal status with each other and with Britain itself.  By the Westminster agreement, no law passed by the British Parliament was binding on the Dominions without their consent.  The Dominions, now sovereign, still continued to follow the British lead in regard to the exercise of foreign and military policy.

            And the British monarchy?  King George V died in early 1936 and was succeeded by his son Edward VIII.  Somewhat of a playboy with little concern for the proprieties of monarchy, Edward was smitten with an American divorcee, Wallis Simpson.  When it was announced that the King would marry Mrs. Simpson, Britain was rocked with widespread outrage.  With the marriage opposed by Parliament, the Anglican Church, and most of the British population, Edward abdicated in favor of the “woman I love.”  His monarchy had lasted only ten months.[1] Edward’s younger brother succeeded to the crown as George VI.  (George VI was the father of Queen Elizabeth II and grandfather of the present monarch Charles III.)  

France between the Wars

The postwar years found France still caught between the extremes of Left and Right.  Under the constitutional system that created the Third Republic (1875), the French government was a parliamentary democracy.  While there was a ceremonial presidency, actual executive power was exercised by a premier and cabinet dependent upon a majority in the Chamber of Deputies, the lower house of the National Assembly.  As was the case before the War, France’s numerous political parties made the achievement of a parliamentary majority in the Chamber of Deputies difficult and contentious.   Governing coalitions survived only as long as the aligned parties avoided controversy.  The slightest difference of position on policy could break up a coalition and compel new parliamentary elections. 

              Compounding the political complexity that was France were various interest groups that also had political agendas.  On the Right were anti-republican, anti-democratic, and / or monarchist fascist-type “leagues” such as the Action Française and the Croix de Feu (“Cross of Fire”). On the Left France’s Communist Party looked to the Soviet Union for direction and support. 

             A weak economy exasperated the political situation as France’s working and business classes called for political solutions to such problems as unemployment and sluggish recovery of the regions devastated during the war.  During the war France had accumulated a huge public debt and had lost valued foreign investments, especially those in Russia which had been seized by the Communists. 

           France faced a severe economic crisis in 1923 when Germany defaulted on its reparations payments.  French national budgeting was based in part on German payments and shipments of coal and other resources required by the Treaty of Versailles.   When German workers went on strike, France sent troops into the industrial Ruhr Valley to force the Germans back to work.  Across Germany angry workers joined the strike and the government’s disastrous attempt to pay them with newly-printed marks resulted in a devastating collapse of the German economy.  In 1924 the American-sponsored Dawes Plan restructured Germany’s reparations payment schedule and the French troops were withdrawn.  Fortunately, the inspired leadership of Raymond Poincaré prevented a similar collapse in France. Poincaré prevailed upon the Deputies to approve laws cutting government spending and imposing new taxes. Reevaluation of the franc at 1/5 of its former value “saved” the franc from runaway inflation, but in so-doing repudiated 4/5ths of the national debt. While these policies were unpopular with France’s creditors and those dependent upon pensions and fixed incomes, they did result in economic stabilization.  As Europe’s overall economy strengthened in 1925 - 1926, France, too, began to prosper.  French commerce grew but overall manufacturing lagged behind and unemployment remained a serious issue. There were sporadic strikes and labor unions split as Communist workers broke with non-Communist workers over union principles and objectives.

           In the early 1930s France was hit by the Great Depression.  The failure of the republican government to take strong measures to deal with the crisis led to further polarization of the French political nation.  The Socialists and Communists called for major reconstruction of France’s economic foundations. The right-wing elements criticized the republic as outmoded and ineffective and called for its replacement by a fascist-type political system.

           In 1934 the country was rocked by a financial scandal known as the “Stavisky Affair.”  Serge Stavisky, an unscrupulous financier with government connections, supposedly committed suicide when a phony bond scheme that he had devised became public knowledge.  As the actual circumstances of Stavisky’s death were unknown, the press alleged that he had been murdered by police on government orders.  While seemingly little more than a political scandal fed by rumors and allegations, the Stavisky Affair threatened the very life of the republic. The Right called for the end of the republic altogether and rioting mobs attacked government buildings in Paris.  Police responded with gunfire killing several and injuring hundreds.  Democrats, liberals, unionists, Socialists, and even Communists rallied in support of the government and the republic. The republic survived, and the Left gained political ascendancy.

          In 1936 several Leftist parties, including the Socialists and Communists, joined in a coalition called the Popular Front.[2] In that year’s parliamentary elections the Popular Front won a convincing majority in the Chamber of Deputies.  Led by Léon Blum, the head of the Socialist Party, the Popular Front instituted a series of significant laws intended to bring about economic recovery and reform.  Among the Popular Front’s program were …

 - a 40-hour work week for all workers;

 - vacations with pay for all workers;

- unions received the right to collective bargaining with employers;

- nationalization of the armament and aviation industries;

- the Bank of France was put under stricter government regulation;

- agricultural price fixing, farm subsidies, and government purchases of wheat to aid farmers;

- fascist armed leagues were dissolved and outlawed.

            The Popular Front provoked the bitter hostility of the Right. Extremist rhetoric warned of an impending Communist revolution in France. Under Blum, Catholic France was now in the hands of a godless Marxist Jew; and that for the future “better Hitler than Léon Blum.” 

            The benefits expected from the Popular Front’s program were marginal at best.  Industries passed on rising production costs to consumers by charging higher prices for manufactured goods.  As consumers, workers saw their pay raises negated by rising prices.  The 40-hour work week was applied inconsistently across French industry as many businesses shut down for two days a week rather than operate in shifts over seven days, as the law had intended.  An unfavorable balance of trade contributed to the slow recovery.  By 1938 the French economy had grown only by some five percent over its lowest Depression level.  French economic recovery lagged far behind that of the rapidly rearming Nazi-dominated Germany.

            International events undid the Popular Front. In the summer of 1936 the Spanish Civil War broke out.  The rebelling Spanish Fascists received direct military support from both Italy and Germany.  Rather than support the anti-Fascist forces in Spain, Blum’s government followed Britain’s lead and refused any assistance. The French Communists, consequently, withdrew from the coalition. The Blum government resigned and the Popular Front government collapsed after less than a year in office. The Radical Socialist Party (which, despite its name, was moderate-to-liberal in its political identity) formed a coalition with the conservatives and won control of the Deputies in 1938.  The new government, led by Edouard Daladier, repealed the 40-hour law.  In response France’s labor unions called for a general strike, but the strike failed to generate a popular reaction.  France’s attentions were now focused on an increasingly assertive Germany.  It was time to rearm. 

Sources for The Democracies between the Wars 

Gilbert, Felix.  The End of the European Era: 1890 to the Present. New York: Norton, 1970.

Langer, William, ed. An Encyclopedia of World History. Boston: Houghton Mifflin, 1968.

Merriman, John. A History of Modern Europe. New York: Norton, 1996.

Palmer, Robert et al. A History of the Modern World. New York: McGraw Hill, 2002.

[1] Edward was awarded the title Duke of Windsor and married Mrs. Simpson in 1937.  They spent most of their lives living abroad, first in the Bahamas then in France.  Edward died in 1972.

[2] The rise of fascism in Italy and Germany and the attraction to fascism by right-wing elements in other countries caused the Comintern in Moscow to call upon Communists in all countries to ally with bourgeois political parties in opposition to fascism.  Thus it was that the French Communist Party joined in the alliance to form the Popular Front.  In the 1936 elections the Communist representation in the Chamber of Deputies increased from 10 to 72 seats.