Impact of domestic economic issues on the foreign policies of Italy and Germany Notes

The Impact of Domestic Economic Issues on the Foreign Policies of Italy and Germany

The Impact of the Great Depression on Italy

1. The Wall Street Crash (1929) hit Italy hard, and rapidly changed Mussolini's attitude towards foreign policy.
2. During the 1920s, much of Italy’s economy was sustained in food, fuel and raw materials imports and exports of some manufactured goods to Britain, France and the US.
3. But now these trading partners were applying protectionism, Mussolini turned his attention to other markets like Yugoslavia, Austria, Hungary, Bulgaria and Romania.
4. These new trading partners made Mussolini more bald in foreign policy, as he didn’t worry about retaliation from the Western countries.
5. Additionally, he had to face the immediate domestic impact of the crisis:
   1. Unemployment rising to over 2 million by 1933 and a mandatory wage cut for industrial workers.
   2. Agricultural workers also dropped between 20 and 40% during the decade.
6. The broken relations with Britain and France would also foster closer ties with Germany.

The Impact of the Great Depression on Germany

1. In the case of Germany, the Great Depression had a very significant role in the rise to power of Hitler.
2. The Weimar Republic had experienced some economic stability and even growth between 1924-1929, but this was torn apart when the Depression hit.
3. As we have seen, in the second half of the 1920, under Stresemann, Germany had followed a “Fulfillment Policy”. This meant abiding by all the clauses of the Treaty of Versailles.
4. And it also allowed Germany to be rehabilitated in the arena of international relations.
   1. It signed the Locarno Pact and in 1926 joined the League of Nations.
5. More importantly, it gave Germany access to international loans, especially from the US. The most important of these loans was a programme called the Dawes Plan.
   1. But as the Depression started building up in the US, the loans were recalled and this made Germany’s economy and social structure crumble.
6. In early 1928, the Nazis had only 3% of the seats in the Reichstag (German Parliament), but in mid 1932 they had 32% of the seats and became the largest party.
   1. Unemployment grew massively, and there is a clear correlation between unemployment growing and vote for the Nazi party also rising.
   2. With this public support and other strategies, Hitler was able to put pressure on the Weimar Republic leaders and became chancellor in January 1933.
   3. Within a few months Hitler had established a single party state and immediate starting rearmament and reorganized the economy to prepare for war.
   4. His racial vision and his need for Lebensraum made him challenge Versailles and all other international order since the get go.