The Impact of the Depression on the League of Nations (Cambridge (CIE) IGCSE History)

The Wall Street Crash

• Throughout the 1920s, the USA experienced a boom in their economy

  • Britain and France were repaying their wartime loans to the USA

  • As a result, the USA had a surplus of money in their economy

• The USA’s economy was growing at such a rapid rate that, by October 1929, stockbrokers began to speculate that the market would decline

  • Americans from all areas of society had bought shares in the 1920s. Working-class Americans could not afford for their share prices to drop too far

  • Share prices began to fall

  • Shareholders rushed to sell their shares before their value dropped too significantly

• Between 24th and 30th October 1929, the USA’s economy collapsed

  • The worst day was ‘Black Thursday’

    • People sold 13 million shares

    • Prices plummeted due to the amount of shares available

  • Shares that were worth $20,000 on the morning of 24th October 1929 were worth $1,000 by the end of the day

  • By 30th October 1929, investors had lost $4 billion

• This event is called the ‘Wall Street Crash’ as Wall Street is where the Stock Exchange is based in New York

Impact of the Depression

• The Wall Street Crash caused a worldwide depression in the 1930s because:

  • The Dawes and Young Plans connected the US economy to European countries

    • To save their economy, the US recalled all of their loans

    • Germany’s economy could not cope without US intervention

  • Trade between countries slowed

    • Leaders encouraged their populations to buy domestic products to boost employment

    • Governments increased trade tariffs for foreign products

    • Reduced trade caused more damage to worldwide economies 

A map showing the global impacts of the Great Depression

Extremism and Militarism

• Due to economic issues, many people began to turn against their governments

Why Did Extremism Increase in the 1930s?

• People blamed their governments for the economic crash

• Extremist parties offered alternatives to government policies during the Great Depression

  • The Nazi Party promised to reverse the Treaty of Versailles and make Germany strong again

• A rise in dictatorships

  • By 1939, there were four key dictators in Europe:

    • Mussolini (Italy, 1922)

    • Stalin (USSR, 1924)

    • Hitler (Germany, dictator by 1934)

    • Franco (Spain, 1939)

  • Some populations believed a strong, autocratic leader could rebuild the economy better than a democratic government

Why was Extremism an Issue for the League of Nations in the 1930s?

• Extremist parties promised their citizens radical solutions

• Extremist leaders only cared about their own country

  • Fascism and communism are opposite opinions

    • Fascist and communist dictators are less likely to work together

  • To prioritise their country, extremists adopted an aggressive foreign policy

    • They had no respect or interest in the League of Nations

• Non-extremist leaders began to ignore their duties to the League of Nations

  • They prioritised protecting their people from the threats of communism and fascism

  • They wanted to strengthen their country through nationalism

A Solution to the Great Depression - Militarism

• Militarism is the belief that a country must have strong armed forces

• Militarism distracted countries from the Depression because:

  • It created employment in the rearmament businesses

  • It made civilians feel proud of their country again

Why was Militarism an Issue for the League of Nations in the 1930s?

• Militarism went against the League’s core aim of disarmament

• The League would have to stop aggressive actions from countries who:

  • Threatened others using their large armed forces

  • Invaded countries to expand empires

  • Started wars

• The League lacked the USA’s military force

  • France and Britain were unwilling to spend money to stop international aggression

    • They were still recovering from the Great Depression

  • Countries knew that the League was weak in the 1930s

    • A strong military would scare the League to rule in the country’s favour

Rearmament and Unemployment

• In Germany, the Nazis used rearmament to reduce unemployment

  • In 1933, Germany left the League of Nations over Europe’s refusal to disarm

    • Hitler felt this gave him the right to rearm Germany

  • In 1935, Hitler introduced compulsory conscription 

  • By 1938, Germany spent 20% of their GDP on rearmament

    • This created millions of jobs for the unemployed

Impact of Rearmament to Nazi Germany