What was the impact of the Depression on International Relations?
The Great Depression that followed the Wall Street Crash had a great impact on International relations. High levels of unemployment contributed to an increase in extremism in many countries. Loans such as the Young Plan that had been in place prior to the financial meltdown were no longer viable. The downturn in economic fortunes led some to look to history for reasons for, and solutions to, their problems.
The mid to late 1920’s had seen a softening in attitude of the Allies towards Germany. Under the leadership of men such as Gustav Stresemann the German nation began to recover economically and in terms of its International Reputation. In 1924 the Dawes Plan had been introduced. This provided loans to the Germans which enabled them to make their reparations payments; stablised their currency; provided Allied support for the restructuring of the Reichsbank and promoted economic growth in Germany. Whilst making the German economy reliant on the US, it ensured that the German economy had the basis to recover and begin to prosper. As this recovery took place through the period 1924-1929 unemployment levels dropped and Germans enjoyed a cultural revival. The longer the revival lasted, the less some Germans dwelt on the end of the First World War. The Dawes Plan was replaced by a new plan to support the German economy in 1929. The new plan, the Young Plan, provided similar support to Germany as had been in the Dawes Plan.
The changing attitude of the Allies in the 1920’s also helped to improve things. The Dawes Plan led to the removal of French and Belgian troops from the Rhineland; The Locarno Pact saw agreements relating to borders and allowed the admission of Germany into the League of Nations and the Kellog-Briand Pact of 1928 saw a widespread renunciation of war. The economic boom of the 1920’s was contributing to warmer, more positive relations between countries.
The Wall Street Crash and the subsequent worldwide depression changed the situation. No longer could the US afford to support the German economy to the same levels. As economies around the world suffered the consequences of the crash there were reductions in exports and a subsequent loss of jobs in many nations. Economically this was disastrous for Germany. The government tried and failed to tackle rising unemployment and more and more people looked to parties that offered alternatives to the failing democratic system. These parties, particularly the right wing parties, were still angry about the terms of the Treaty of Versailles. They saw reparations as unfair, the land losses unjustified, restrictions on the size of the armed forces as humiliating. They vowed, if they ever got into power, to rectify the situation.
The Depression also impacted on Japan. No longer were other nations buying Japanese goods in large quantities and as a result Japanese industry was struggling to source raw materials at affordable prices. In the past, when there had been economic problems in Japan, many people had chosen to migrate to America. However one US response to the Depression was to restrict the number of migrants allowed into the country. These issues led the Japanese to look for alternative ways of ensuring that they were a powerful nation: expansion.
In the prosperous mid to late 1920’s there was increased communication between the Allies and the Germans.
Financial aid was provided to Germany by the US under the Dawes and Young Plans. After the Wall Street Crash the US could not afford to support Germany in this way.
The Depression was one of the main reasons why Hitler was able to get into power. The economic problems led to many Germans viewing the Peace settlement as a cause of the problems, leading to more assertive foreign policies.