The Impact of Domestic Economic Issues on the Foreign Policies of Italy and Germany
The Impact of the Great Depression on Italy
Note- The Wall Street crash has been labeled by some historians as the “third great catastrophe” of the 20th Century, alongside the two world wars.
- Between 1929 and 1932, world trade declined around 70%, leading to mass unemployment in many countries.
- There was also a banking crisis, so there were no loans available and industrial activity plunged into even more recession.
- To safeguard the domestic economy, many nations turned to protectionist measures.
- This means that they raised tariffs (imports-exports taxes) in order to stimulate internal production and consumption.
- But of course this meant even less international trade and the crisis only got worse, especially for countries that were dependent on international loans and commerce.
- The Wall Street Crash (1929) hit Italy hard, and rapidly changed Mussolini's attitude towards foreign policy.
- 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.
- But now these trading partners were applying protectionism, Mussolini turned his attention to other markets like Yugoslavia, Austria, Hungary, Bulgaria and Romania.
- These new trading partners made Mussolini more bald in foreign policy, as he didn’t worry about retaliation from the Western countries.
- Additionally, he had to face the immediate domestic impact of the crisis:
- Unemployment rising to over 2 million by 1933 and a mandatory wage cut for industrial workers.
- Agricultural workers also dropped between 20 and 40% during the decade.
- The broken relations with Britain and France would also foster closer ties with Germany.
It is a combination of domestic need and a “nothing to lose” feeling that explains why Mussolini works towards an explicitly aggressive foreign policy in the 1930s.
